Foreclosure in Elmira

[Mark Giardina]

I'd expect them to own their AM sites, but in many cases, the FM antennas and transmitter are parked on a TV tower. In E-C, I believe it's the shiny, new, tall, Public TV tower.
Years ago a friend in the biz told me that one of his company was looking at a mid-market FM which had an antenna lease that included inventory for the TV station in morning an afternoon drive during the May and November sweeps for the entire term of the lease! The weekly inventory was valued at thousands of dollars and it was not pre-emptable. Try getting out of that deal! You'd be surprised at how many companies lease their FM sites. Somebody called it "rent to own." That's an apt description. It's absurd. To me, it's a deal breaker.

One heck of a way to run a railroad isn't it?

 

[BrigThomson]

They also did not own their Carlisle, West Chester, Hazleton or Carbondale AM xmter sites either.

What kind of business people are they to buy radio stations but yet not own their own transmitter sites? That just doesn't make any sense to me.

This is a perfect example of what happens when novices play radio.

I cannot understand why a company would not own one of their absolute most important assets. In the case of FM, it is true that the tower space is often leased, but that makes sense. Many FMs are on TV towers or other structures designed for that purpose. But in the case of AM, how can you NOT own your site? Standing on the the roof of your studio yelling into a bull horn is a poor substitute for a transmitter and tower.

 

[SirRoxalot]

Who Owns What?

Seems like Route 81 sold off anything of value, hoping to forestall bankruptcy. They certainly didn't pursue a long-term strategy, unless they sold the AM tower locations to a holding company that wasn't involved in the bankruptcy. If they had a long-term lease in place, it might generate needed cash, and create income from whoever buys the stations next in case they did go under. Does anybody know who actually owns the tower facilities for the AMs?

This could be a rare opportunity for a local group to get into the radio biz at a reasonable price. The price may include significant hidden costs for equipment and new technical facilities. The nice thing about AM is that you can put in a tower system on land that can't be used for other buildings (i.e. flood plain). Just be sure to put your towers on really tall concrete pylons to keep the bases out of the local river.

Now, if Giardina and Smith pool their retirement funds, and get some engineering help from Savage...

 

[Mark Giardina]

Re: Who Owns What?

Now, if Giardina and Smith pool their retirement funds, and get some engineering help from Savage...

Between Smith and myself I think we can scrape up about $300.00 from our retirement funds.

Savage is the one rolling in the dough. I've even spotted him burying his money behind one of WYSL's towers one Saturday morning.

 

[SirRoxalot]

Re: Who Owns What?

Now, if Giardina and Smith pool their retirement funds, and get some engineering help from Savage...

Savage is the one rolling in the dough. I've even spotted him burying his money behind one of WYSL's towers one Saturday morning.

He's heavily invested in copper, huh?

 

[BrigThomson]

Re: Who Owns What?

Seems like Route 81 sold off anything of value, hoping to forestall bankruptcy. They certainly didn't pursue a long-term strategy, unless they sold the AM tower locations to a holding company that wasn't involved in the bankruptcy. If they had a long-term lease in place, it might generate needed cash, and create income from whoever buys the stations next in case they did go under. Does anybody know who actually owns the tower facilities for the AMs?

This could be a rare opportunity for a local group to get into the radio biz at a reasonable price. The price may include significant hidden costs for equipment and new technical facilities. The nice thing about AM is that you can put in a tower system on land that can't be used for other buildings (i.e. flood plain). Just be sure to put your towers on really tall concrete pylons to keep the bases out of the local river.

Now, if Giardina and Smith pool their retirement funds, and get some engineering help from Savage...

Route 81 started with a decent idea. Lloyd Roach the owner of WCOJ believed that if someone was to buy some of the small-power local stations that had been bought up in the Telecom '96 frenzy and return them to their local towns, people would support them again. With the exception of the E-C group, they really weren't into cluster ownership. They set up a collection of stand alones..WCOJ in West Chester, WHYL in Carlisle, WAZL in Hazleton, WCDL in Carbondale, a simulcast of WNAK Nanticoke and what had been WCDL-FM in Carbondale, and then, the E-C cluster. At the start, the company was funded by Avalon Equity partners. It was originally set up so that they would lend the money, and hold a percentage of the company as collateral on their loans, and then Lloyd would be the CEO and have a percentage for WCOJ. If things had followed a logical progression to the end, the money would have been paid back to Avalon, and Lloyd would have been the majority stockholder of Route 81. But..in early 2004, Route 81 made a disasterous decision to make a deal with the devil and buy some radio stations in Utica from Ed Levine. To do the deal, they needed more capital, and that's when Waller-Sutton was brought into the picture. Most people who remember, will know that dealing with Ed Levine is at best dangerous, and this turned out to be a huge disaster, that was fought over legally for some time. All the legal wrangling over the Levine properties drained Route 81 of a lot of needed capital, and of course the projected revenues from the Utica stations messed up the cash flow, and started the dominos tumbling. In mid 2005, Waller pushed for an independent consultant to take a look at Route 81. The board hired Ira Rosenblatt. Anyone who knows Ira, knows that he has a reputation for cost-cutting & staff cuttting. In September of 2005, the combined board voted Lloyd off the island, and installed Ira as the CEO. So now what you had was 2 investment banker groups owning radio stations that they didn't want to own, being run by someone who wasn't an owner and had no real stake in the company's success. There are people who have opinions about Lloyd, but opinions aside, the problem with Route 81 in September of 2005, was that the company had lost the person who had designed the company, and had come up with it's mission and vision. Without that, Route 81 was a collection of stations that didn't for the most part make any money, and Avalon & Waller now had to fund. At what amounted to the 5 year mark of the company Avalon & Waller got in a fight over who owed who money, and Waller wanted to get out and get out as fast as possible. So in the end, they pushed whatever financial papers that they had against Avalon, and foreclosed on their interests, and kicked Avalon out, much in the same way the 2 groups had forced out Lloyd Roach earlier. Then they moved as quick as possible to start getting rid of the properties, so that they could go home and lick their wounds. So the command is now, sell, Sell, SELL!!! and Carlisle is gone, as is Hazleton, and Wset Chester is nearly gone, and soon it will be time to clear out the rest of northeast PA, and then out with E-C. Anybody got any money???

 

[ThePickleReport]

Elmira-Corning: Three Class A FMs, three kiloWatt AMs: $1.7 million, 33% down, remainder financed at 7.8% over seven years, callable in the fifth anniversary date of the loan. Risky.

Is that legit Mike? Where did you find that?

 

[Radknowski]

Good question. I should have qualified the figure and where it came from. It was offered by a sales person who had recently worked in Elmira-Corning, knew the market very well and speculated/calculated the price based on billing, market economics and Route 81 assets.

To some degree, Brig's analysis here gives credence to the situation at hand in E-C with Avalon and Waller-Sutton (missed payroll, inter-company brawling, poor business decisions, ownership of transmitter sites, etc.) If you believe I deserve to be called out for suggesting a sale price based on another person's estimate, made without attribution, I'll take my lashes. Deservedly so.

The terms came from another radio vet who has been through a few sales and speculated as to the terms, given the condition of the company. He said the $1.7M was a reasonable figure, although a firesale number, then suggested the stringent terms that might be imposed given such a figure. He noted there could be so many variables that the actual figure could be a million more. Would the sale price include assumption of debt or would it be strictly "cash for assets?" How high are the payables. Who gets the receivables? Are there charges against the corpoartion? Leins? Leases that must be honored. Existing fines. Pending judgments against the local company?

The actual figure open to debate, so if a rep from Keith Horton & Company (a respected radio broker) came on here and told us the 1.7M figure was "soft," I'd believe him.

As many posters on the Buffalo Board know, I'm a radio ex-patriot who now works in my family's modest home remodeling business (OK, I paint and mud drywall. But it's such glamorous work.) I do however, try my best to keep my ear to the ground and stay in touch with a number of knowledgeable men and women who are in the business and are well-versed in these matters. Some of those professionals are well-placed and have access to very sound information.

Again, my apologies.

 

[BrigThomson]

Don't be surprised if the Waller gang actually takes LESS than 1.7 mil. Also from what I am hearing there are no terms to be given. They don't want to hold the paper. Sort of like J.G. Wentworth...they want "cash now!!"

 

[The Voice of Reason]

From the comments I've read on here it sounds to me that this Route 81 group knows as much about broadcasting as Roseann does about singing the National Anthem.
I mean how could someone purchase a radio station without also buying the tower?
This is a perfect example of how the Telecommunications Act of 96 has placed the lid on radio's coffin by allowing broadcasting wannabes the opportunity to gobble up radio stations en masse'.
I hate to sound vindictive but I am glad to read where one of these mini-me conglomerates is drowning in a sea of red ink. Maybe people who really care about bringing radio back as an entertainment and informational venue will buy these stations at dirt-cheap prices and put some money into them by hiring local staff. Maybe this is the start of the return of localism, at least to some rural stations.

 

[Radknowski]

VOR, your sentiments are understandable, but the people who work in the small jobs are always the ones who get hurt by stupid business decisions. I feel a sense of compassion for those people (because I once was in their shoes): Sales people who are living hand to mouth, office-traffic people who are wondering where their next checks are coming from and a few jocks who probably have to restrain themselves from saying "this place sucks" ever time they open the mic, then put on a happy face. How about the PDs who have to hold the place together. No wonder GM Paul Lyle booked for East Mudville, Missouri a few months back.

Come to think of it, "This Place Sucks" (97.7 WTPS or 98.7 WTPB) would be a funny bit, in a dark-comedic vein. Rather than leading with call letters and frequency every mic break, the jocks lead with "This Place Sucks!" followed by the call letters and frequency. Bet THAT would get some attention.

Hmm, how about Ninety Eight Point Seven, Chapter Eleven... here's Daughtry...

 

[BrigThomson]

I see you mentioned Paul Lyle. He was a truly fine gentleman, and a good broadcaster. There are far too few people like that left in this business.

 

[The Voice of Reason]

VOR, your sentiments are understandable, but the people who work in the small jobs are always the ones who get hurt by stupid business decisions. I feel a sense of compassion for those people (because I once was in their shoes): Sales people who are living hand to mouth, office-traffic people who are wondering where their next checks are coming from and a few jocks who probably have to restrain themselves from saying "this place sucks" ever time they open the mic, then put on a happy face. How about the PDs who have to hold the place together. No wonder GM Paul Lyle booked for East Mudville, Missouri a few months back.

Mike:
In no way was I disrespecting those people who actually work at these stations. I know what it's like to go out and try to sell a product to the public; that's what I do for a living. But it's just a darn shame that there are a few people who have spoiled it for so many ( in the broadcasting industry).
For someone, like myself, who travels a lot and listens to the radio between business trips, I find it so frustrating to hear the same music format from one city to another; one town to another. My car CD player hasn't been used such much in years. I would love to see some of the people who post on this board come up with the money to purchase E/C and return it to what it was; real live radio.

 

[kfitz]

Regarding owning transmitter sites; Indeed many FM's are on leased sites. It is much easier (unless you are a grandfathered shortspaced facility) to move an FM to a different site. 97.7 & 98.7 are on the 420 ft. tower on Higman along with the Met and FLN translators, and a bunch of two way stations. 92.7 is on the Comfort Hill 300 ft. tower. These are all owned by the same local tower company. These stations have many options. The AM's are more difficult. Lucky for Route 81 that they own their AM sites in Elm-Corn. It is much harder to move an AM. Application costs are very high and the cost of installing a ground system is significant. It could easily cost 5 to 10 times more to move an AM station, sometimes not worth it for a marginal AM station. And if an AM is directional...WOW, forget about it. Hundreds of thousands to move easily.

 

[ThePickleReport]

Good question. I should have qualified the figure and where it came from. It was offered by a sales person who had recently worked in Elmira-Corning, knew the market very well and speculated/calculated the price based on billing, market economics and Route 81 assets.

Not a problem, Mike. That sounds about right to me actually. That fire-sale price is probably based almost on stick value. Three Class A FM's and very marginal AM's. There isn't much airstaff and there is some real estate issues (obviously some rented sites and studio locations). I'd say "cash talks" in this situation.

 

[Mark Giardina]

Does anyone if the Market Street studios/offices is rented or is the building owned by the current station owner?

Reason I'm asking is because that could also factor into an asking price.

 

[BrigThomson]

Does anyone if the Market Street studios/offices is rented or is the building owned by the current station owner?

Reason I'm asking is because that could also factor into an asking price.

They rent it.

 

[BrigThomson]

Regarding owning transmitter sites; Indeed many FM's are on leased sites. It is much easier (unless you are a grandfathered shortspaced facility) to move an FM to a different site. 97.7 & 98.7 are on the 420 ft. tower on Higman along with the Met and FLN translators, and a bunch of two way stations. 92.7 is on the Comfort Hill 300 ft. tower. These are all owned by the same local tower company. These stations have many options. The AM's are more difficult. Lucky for Route 81 that they own their AM sites in Elm-Corn. It is much harder to move an AM. Application costs are very high and the cost of installing a ground system is significant. It could easily cost 5 to 10 times more to move an AM station, sometimes not worth it for a marginal AM station. And if an AM is directional...WOW, forget about it. Hundreds of thousands to move easily.

Kevin..I was just thinking...you could practically retire on the cost of the copper alone!!

 

[Mark Giardina]

Does anyone if the Market Street studios/offices is rented or is the building owned by the current station owner?
Reason I'm asking is because that could also factor into an asking price.

They rent it.

That would factor into the cost of the Corning/Elmira stations, especially if the current owner is in arrears with the rent.

 

[BrigThomson]

Does anyone if the Market Street studios/offices is rented or is the building owned by the current station owner?
Reason I'm asking is because that could also factor into an asking price.

They rent it.

That would factor into the cost of the Corning/Elmira stations, especially if the current owner is in arrears with the rent.

That seems to be the case at the other properties.......