Foreclosure in Elmira

[ThePickleReport]

This was on the Northeast PA board, I edited it for relevant content.


From today's news on All Access:

Wednesday, July 16, 2008
Backer Forecloses On Radio Group
WALLERSUTTON 2000 LP, financial backer and 50% owner of several radio stations with ROUTE 81 RADIO, has foreclosed on ROUTE 81 and is taking ROUTE 81's 50% interest in the stations for its WS2K RADIO LLC. Classic Hits WGMM (GEM 98.7), Talk WENI-A and Sports WCBA-A (FOX SPORTS 1350)/CORNING, NY; AC WENI-F/BIG FLATS, NY; Talk WENY-A and AC WENY-F/ELMIRA, NY. WALLERSUTTON 2000 foreclosed at a public foreclosure sale on MONDAY (7/14).

 

[SeenItAll]

Route 81 makes George Harris look like a genius and a big time radio operator which is not easy to do!

 

[Kenroberts]

Route 81 makes George Harris look like a genius and a big time radio operator which is not easy to do!

Was Route 81 that bad? I had heard they have been trying to sell for a few years. No takers. They needed a few FM's with cash flow to get the job done.

 

[BrigThomson]

In case you're interested, the Route 81 people are such stand-up types, that they actually missed their July 15th payroll. All their employees got stiffed. Apparently they managed to get the checks out today. But their people were just told that they'd "have to wait" and they were "sorry for any inconvenience". And people used to think that Bob & Al Lessner were schlock operators! They make Heckle & Jeckle look like Westinghouse.

 

[Radknowski]

"Sorry for any convenience."

It really sucks when employees have to "race each other to the bank" every payday. Wish you could tell that to the bank when your mortgage is due every month. How 'bout if employees took one of the station computers, cart decks or control boards home and held it in escrow until those "Firestone paychecks" cleared the bank?

"Sorry for any inconvenience."

The employees should have called the NYS Departyment of Labor and the Attorney General's Office as soon as the paychecks were overdue.

"Sorry for any inconvenience."

Say what you will about Backyard, at least the company is solvent and their employees get paid on time. Don't be surprised if Backyard inquires about purchasing those two class A's in Elmira-Corning if not the whole Route 81 group.

 

[Mark Giardina]

Having started my radio career in Corning back in 1973 it's sad to read what has happened to that market and especially my old employer, WCBA.

During a recent visit to Corning to visit family I got the opportunity to tour the WCBA-WCLI studios on Market Street. What a nice looking operation, but I noticed only two employees in the building; a far cry from when I worked out of a flood-ravaged old house across from a 7/11. The house was converted to a radio station and we had employees there all the time. What we would have given to work at with state-of the art equipment and have windows facing Market Street.

 

[Radknowski]

Ever think of being an owner, Mr. G?

 

[MichaelWilliams]

What's the saying? "Best way to make a small fortune in radio is to start with a large one"!

Michael

 

[Mark Giardina]

Ever think of being an owner, Mr. G?

Sure Mr.R as soon as I can pick those six winning lottery numbers
Trouble is I keep on missing five of them.

 

[SirRoxalot]

Hey, at less than a buck a share...

So, Mark, you're saying that decades as a radio newsman didn't leave you rich as well as famous?

Shocking...

 

[Mark Giardina]

Re: Hey, at less than a buck a share...

So, Mark, you're saying that decades as a radio newsman didn't leave you rich as well as famous?

Shocking...

Yeah tell me about it. After 30 + years in the biz you would think I'd be enjoying fishing
off my yacht and spending summers at my home off Canandiagua Lake.

At least I should have been considered an "icon."

 

[icycool7227]

Ever think of being an owner, Mr. G?

Should ask me that same question. My answer is "yes, yes, yes" many MANY times! I would love to own my own station and it be 24/7 requests of songs people want to hear not just what the station thinks should be played.

 

[Element9]

Serious question, especially for the locals who know the economy and state of the business on Market Street: How much would this particular cluster cost.

Please consider stick values, good will, real estate and most importantly, billing and cash flow. (Hey... it's a small town and the regulars on this board know a thing or two.) Your appraisal is appreciated.

-9-

 

[RK]

I'll give you all the quarters in my pocket. ;D

But on a more serious note, only a large corporation will have the cash flow to purchase this cluster, even at reduced pricing, therefore another cookie cutter company will purchase the cluster and simulcast the frequencies, or let them go to waste and eventually sell to another big name corporation which in turn will attempt to squeeze every penny again, (not caring about product), and the ugly cycle will repeat itself over and over again.

Not sure about the rest of you, but I think i hate the word..."Corporate"...

Just my 2 cents from my pocket.

 

[Element9]

A reasonable assessment. Yet, it may be that NO corporate offers may be tendered. Perhaps Backyard or Harris will consider, only because they already have a stake in the market and equity in their present stations. Lending institutions prefer to deal with companies that have a successful track record and equity positions.

Conversely, 81 may not want to sell the stations piecemeal, believing that doing so would diminish the group's value. Still, it's a buyers market... IF the buyers can be found.

I posed the question primarily about the Elmira-Corning cluster because it may be that the only feelers that Route 81 gets is from purchasers that are interested in doing small market radio one market cluster at a time. It isn't as if there'll be a line of potential buyers for 81. The financial lending market being what it is, any purchaser would have to endure a stringent qualification process and may have to come up with as much as a 40% down payment to secure a loan. This would immediately strap the buyer, no matter how well-positioned it is. As a rough example, a $1M sales price (which may be considered "low") would require $400k to buy into Corning. This is a tough nut.

Naturally, voice-tracking and automation would be used to defray expenses: Live morning shows with local news on the FMs, followed by voice-tracks. The AMs would be brokered in order to generate as much cash as possible. The only hope would be that as a new buyer gets situated and cash flow increases, more local people would be added to the air staff. The real challenge would be to find capable sales people that could generate sales revenue, given respectable commissions paid on collections, rather than sales.

There is some truth to a previous poster's humorous lament that the only way to make a little money in broadcasting is to start with a lot of money.

 

[Mark Giardina]

As a rough example, a $1M sales price (which may be considered "low") would require $400k to buy into Corning. This is a tough nut.

Considering today's economy, and the size of the Corning market, $400K wouldn't be an impossible figure to ask for: getting that amount is a different story.

IMHO only a person with deep pockets, or an existing broadcasting company, would be able to come in and purchase the Corning stations. Say you, or I, having to put up collateral, might have more difficultly getting a loan from a bank, or finding business partners.

I would love to see Corning/Elmira radio return to the old "farm system" where young people starting out could get the training needed to go on to bigger markets. However considering the few on-air jobs left in radio these days, I agree that in order to make these stations profitable the AM's would have to be automated and play syndicated programs, while the FM's could have live morning drive, but the rest of the day run by automation.

Also take into account the size of the Corning/Elmira market and how much revenue it generates. When i worked in Corning there were numerous Mom and Pop operations that purchased air time. But I believe that the "big box" stores have taken over and run a number of these family-owned operations out of business. And these big-box stores don't or won't spend money on some small-town radio station. Broadcasting local sporting events, like High School and College games might generate some revenue.

Now if I won the lottery, or inherited a great deal of money, I could give serious thought to buy the Corning/Elmira stations. First thing I would do is bring "local" back to these stations by hiring some experienced talent who might currently be out of work, or individuals who show promise. Of course I would lose money for a few years but it would be nice to see radio return to the days where both the listeners and the staff had "fun" rather than see the continuation of what some radio stations have turned into. However I keep on picking the wrong six numbers in the lottery, so there is another "pipe dream" down the drain.

 

[BrigThomson]

As a clarification, Route 81 Radio per se no longer exists. The actual original Route 81 passed into history, after Waller-Sutton forclosed on the other financial partner Avalon Equity. The new entity is Waller-Sutton Y2K Radio, LLC. Now with that said, Waller is so eager to get rid of all the old Route 81 holdings, it is very likely that they will sell everything and anything to anyone who can come up with the price. Waller wants to get rid of this turkey as fast as they possibly can. They are investment bankers, and they never wanted to own radio stations. They wanted to lend money at credit card interest rates..not own & run broadcast stations. Be on the watch for a very fast sell off of what's left of the Route 81 properties. They have already sold their stations in Carlisle & Hazleton, the original station in West Chester is almost sold. Then you will see them get rid of what's left in NEPA, and then bye-bye to Elmira-Corning. E-C is their most valuable cluster, and it will fetch the most money. Expect them to get out the polish and shine up E-C so that someone will come along and pay a pretty penny for it, helping to erase some of the miserable loss that Avalon & Waller suffered on this group. There is a rumour floating around that Bold Gold Media out of NEPA has a real interest in their only PA FM, and the E-C cluster. Another circulating story is that Waller would consider a long-term LMA of any and/or all existing properties just to keep them from having to fund their operations any longer.

 

[SirRoxalot]

Another circulating story is that Waller would consider a long-term LMA of any and/or all existing properties just to keep them from having to fund their operations any longer.

Wow. Rent-to-own comes to radio.

 

[Element9]

Great line, Rox. Sad but true... and we're seeing it with larger groups as (not so) well.

Thanks Brig, for the inside skinny, re: Waller-Sutton Y2K Radio, LLC.

These venture capitalist-loan sharks got just what they deserved. Problem now is they're stuck holding a 50 pound bag of horsesh*t that any potential buyer can see and smell from a mile. Only so much lipstick can be put on a pig. It won't be easy to hoodwink any well-funded group that has a modicum of business acumen. It's a very selective buyer's market, as witnessed by some of what's going on in the large-medium markets, even those that are performing well. For this reason, it's likely that a company like Backyard Broadcasting and/or George Harris' company would be better positioned to purchase the E-C stations at reasonable terms. Backyard recently sold its Jackson, Mississippi properties, which means it could have some cash to re-invest.

Hell, Funtner's box of bolts might be negotiated as part of the deal (a very long shot, admittedly.)

 

[Mark Giardina]

There is a company, Stephens Media, which recently paid over 13 million for three FM stations here in Rochester. Most of their stations are in markets like Corning so maybe they might be interested, who knows?

Just for curiosity sake how many stations are we talking about and anyone know the exact asking price?