If we knew then what we know now...

[Fran]

There are good operators in radio today....

. . . and many of these good operators are ready to expand. All it takes is for the banks to open up their coffers. Like in ’92, when that happens, you will see a big turnaround in station acquisitions.

I know of two good veteran owners who have made offers to consolidators that have been accepted, problem is the banks will not loan the money. I am talking about owners who have never missed a payment (the banks receive their payment through automatic electronic withdrawals). The sellers are consolidators who turned down offers two years ago that were $3M higher than the offer they just accepted. Other than the banks, the other problem is, no owner financing when dealing with consolidators. . . that too may change.

With a number of smaller companies offering owner financing on some of their stations. . . things will start to happen in ’10.

Imagine if you could have purchased every station in your market. Right now you’d probably want to sell a few, even those with good signals. . . the stage is being set.

 

[davideduardo]

Imagine if you could have purchased every station in your market. Right now you’d probably want to sell a few, even those with good signals. . . the stage is being set.

I only got up to owning and operating 9 stations in one market, but that was in 1964 and radio was growing. I probably would have gone to around 15 stations before the impossibility of managing them and differentiating between them for sales would have stopped further in market growth. 15 would have been a third of the viable signals in the market.

And that 1/3 point is likely the limit in most markets today... again, based on viable signals.

But I can think of a couple of dozen places I would put money before buying radio stations today. I'll bet lenders look at it that way, too.

 

[Prais]

David said, "I can think of a couple of dozen places I would put money before buying radio stations today. "

YOU ARE CORRECT, SIR. I've said this a dozen times on these boards.

 

[gr8oldies]

Clear Channel has markets in Ohio that aren't even in Aloha they can't sell, including Lima and Chillicothe. They sold a few to a company called BAS (and everyone is bitching because BAS hasn't hired a truckload of DJs). The banks aren't lending to any kind of business and radio is not going to be an exception. In a few cases I know of where clusters have shed a property or two they've gone to opertators like KLove (that way no competition for ad dollars)
There are a few returning owners like Tom Ingstad and Larry Wilson but not many. Forget about the insurance and tire companies getting back in.
Who is pushing for the feds to own stations and would they? "and now, the diversity training hour".

 

[Nostalgia]

Clear Channel has markets in Ohio that aren't even in Aloha they can't sell, including Lima and Chillicothe.

Which station(s) in Chillicothe? Perhaps I can dream about buying the first station I ever worked at back in 1964, WBEX AM and FM, and relive my rock 'n roll fantasy! : Whats the price? I just got back from McDonalds and have some cash left over from lunch.

 

[gr8oldies]

If I'm not mistaken WBEX would be one of them. My guess is it would cost more than a Big Mac coupon.

 

[davideduardo]

David said, "I can think of a couple of dozen places I would put money before buying radio stations today. "

YOU ARE CORRECT, SIR. I've said this a dozen times on these boards.

The real bottom line is to ask people who have owned stations whether they would take their own money and buy one, even severely discounted from the peak, today.

I recently explored buying into a group in a rated market in the West, and realized that there was a poor prospect for capital preservation and a bleak outlook for short term profitability. I could see investing at the right price in the same manner I might buy a gas or oil trust... the returns exceed 10%, often up to 20%, but the oil and gas eventually run out and you have nothing. I can't see the current returns justifying the long term expectation of value preservation.

 

[TheBigA]

. . . and many of these good operators are ready to expand. All it takes is for the banks to open up their coffers. Like in ’92, when that happens, you will see a big turnaround in station acquisitions.

The assumption is that if different people own these stations, they'll immediately start hiring air talent, expanding playlists, and spening money. That's not what they're doing.

I know of several owners who are not consolidators who have cut staffing more than the corporate stations in their town. They have to. They have no money.

I've also been watching Larry Wilson in Portland. The first thing he did when he bought KUPL was fire the morning guy. The next thing wass replace the 7 to midnight with syndication. The third thing was take all his stations and put them all into one building.

The biggest problem I see in this entire thread is that no one is talking about ways if increasing revenue at radio. No one knows how. If anyone did, we'd all follow the leader. Until someone comes up with an answer, stations will continue to cut staff, regardless of the regulations.

 

[Oldbones]

As the ’96 Bill was being formulated the Senators, on their own, decided that because so many radio stations were losing money that the best course of action would be to have a hand full people buy up most of the stations.

Wasn't broadcast deregulation only a small part of the 1996 telcom act?

 

[Fran]

Wasn't broadcast deregulation only a small part of the 1996 telcom act?

Radio was a spec, a gnat, a midge, a piece of lint attached to the bottom of the bill. The ’96 bill was all about big money . . . . wireless, telephone, cable, TV, etc. Because so much attention was given to the big entities, and very little to radio, the entire radio industry was turned upside down. The telecommunications bill of the thirties went out of its way to assure that radio would not be overtaken by a hand full of owners.

I recall in the late eighties an owner of TV and Radio stations I worked for was against LMAs because he thought the FCC would come down hard on owners leasing out their stations. His thoughts were influenced by the days when the FCC had real power . . . he had not realized that the FCC had been turned into nothing more than Barney with a bullet. . . . the FCC of old had been diminished into handing out parking tickets. The thought of someone owning dozens of radio stations was unheard of. . . in spite of some of the weird stuff you read on this board that everyone knew about it because it was part of the congressional record (it’s truly laughable).

 

[TheBigA]

The telecommunications bill of the thirties went out of its way to assure that radio would not be overtaken by a hand full of owners.

When that law was passed, there were just a few hundred radio stations in the entire country. And it was possible for one company to own stations in all major cities, plus a network that programmed to hundreds more. There was in fact far more concentration of ownership then than now. And in fact, a handful of owners controlled most of radio, in terms of content and revenue.

In the years following the 34 Act, some were concerned about the networks like NBC and CBS owning stations in NY, Chicago, and LA. But the fact that those companies didn't need to own those stations to be able to program them, or derive revenue from them. That's the way the network system was built. Today, if CC was forced to sell all of its stations, its syndication company could still provide programming to those stations, make money from those stations, and offer alternatives to local hiring. Just as NBC, CBS, and Mutual did in the 30s.

The thought of someone owning dozens of radio stations was unheard of. . . in spite of some of the weird stuff you read on this board that everyone knew about it because it was part of the congressional record (it’s truly laughable).

Everyone knew about it because it was reported in the trade press, who had reporters covering the hearings, and saw copies of the law before it was voted on. Even in the pre-internet 90s, there were numerous trade magazines, newspapers, and newsletters. They all had Washington Bureaus, and they all covered the hearings on the law. Had you read any of them, you'd know what was going on. Ignorance is no excuse.

 

[Fran]

Thats's right, everybody knew about the Bill except Lowery Mays. . . .do you have nothing better to do than spam folks on your keyboard with you Idiocy?

To help you out next time I will set you up with a Big A topic tab, that way people can come to you. . . cool huh? Next time. . .

 

[gr8oldies]

If you were in the business and paying attention, you knew about it. But we all know that if consolodation never happened, Fran would be a star in a top 10 market. There would be no automation, no syndication, and even overnight jocks would be bringing in 6 figures. Owners would only buy stations to play good music for the fans. Workplaces would stop down every time a DJ opened his mouth.
Of course no one knew precisely how the bill would play out. The market I live in was a top 50 market in the 70s. It's somewhere in the 60s now. In the 70s, the viable commercial stations were owned by four companies. Now, with a lower market rank there are 3. In addition there are several religious and pubcasters with good signals.
Even a couple of locally owned independent AMs that are holding their own. So is there more or less ownership diversity than 1975? Again, if we divided Clear Channel, Cox's and Mainline's signals up, so that ad revenue is divided 15 ways instead of 3, how do you make a credible case that all 15 of these stations would be hiring highly paid air personalities and news staffs? You can't because there has never been more than 4 viable radio companies in town.
None of us can truthfully say how things would have played out had '96 never happened. You don't KNOW you'd have a gig today.
You can ascribe the worst possible motivations to everyone who pushed for deregulation, but ultimately it does no more good than a UAW worker telling us Japan paid off Nixon to not keep Toyotas out of the country.

 

[gr8oldies]

What did Big A say that was factually innacurate?
More innacurate than your insistence that 7/7/7 was in effect on Dec 31, 1995?

 

[Prais]

Russ Withers? Really? I worked for WMIX in the 80's. HMMMMM