KEYS Corpus Christi Changes

[clouseau]

I noticed a change for KEYS has been approved. This will change KEYS from a "B" to a "D". Daytime power remains at 1000 watts, but three of the direcrtional towers are going away and the nighttime power will be cut to....

(Drumroll)

69 Watts.

https://radio-locator.com/cgi-bin/patg?id=KEYS-AM&s=C&h=N


This means the "Local" 2.5 MV signal doesn't reach Everhart and SPID at night. Wonder hoow many Cowboys fans and Ranger fans are going to like listening to their games DX on the south side of Corpus Christi. (Don't even mention the Spurs.) They should have sold this station if they wanted to make it basically a daytimer. Bihg coverage hit to avoid rebuilding a couple of towers. My, how the mighty have fallen.

 

[b-turner]

This has much to do with the financial viability of an AM radio station. When land is priced by the square foot in cities and you need 10 acres for your towers, the revenue potential has to match or exceed the costs. I think it is a smart move on their part, likely one that allows them to operate in the black.

What you don't realize is advertisers buy typically daytime hours on weekdays and those ads are for local consumption for people right there in Corpus. To reach 100 miles means more expense and zero extra dollars. In fact, if they had sold they would have sold for a low price with the overhead of a B. With a D class, the value of the station likely increased. Best of all, in those nighttime hours where there is zero revenue and the expense of operating as a B station, now they can just sign off because they have under 250 watts after sunset.

When people buy stations they look at the fixed operating cost versus revenue potential. The more it takes to operate, the less the price based on the potential revenue. That potential revenue really doesn't change no matter how far your station reaches as long as you cover your city. In short, you buy based on profit or stick value. If going from class B to class D means their operation cost is lowered by 25% that means they make about 25% more than they did considering cost versus profit. That alone increases the radio station's value. And it likely will mean now they can get and operate a translator for around the same dollars, maybe even fewer dollars.

 

[Kent]

I also suspect KEYS will try to get an FM translator in this window that's opening up. If I owned an AM like that, I'd only promote the FM. The average listener would have no idea the AM even existed as its only mention would be the legal ID, which would make no mention of it being an AM station.

 

[b-turner]

I'd do the same.

 

[clouseau]

What you don't realize is advertisers buy typically daytime hours on weekdays and those ads are for local consumption for people right there in Corpus. To reach 100 miles means more expense and zero extra dollars. In fact, if they had sold they would have sold for a low price with the overhead of a B. With a D class, the value of the station likely increased. Best of all, in those nighttime hours where there is zero revenue and the expense of operating as a B station, now they can just sign off because they have under 250 watts after sunset.

OK, I don't even know where to start here. Everything you say is factual, but they are becoming a daytimer. BIG mistake. They make decent money on Rangers, Spurs and Cowboys. There's really no land cost savings as they will be retaining the site. They also are in a relatively competitive situation with talk KKTX and they do a bunch of sports like KSIX. This move makes almost no sense. They can not get granted a license before the translator window opens and therefore will participate as a "b". They will need to buy something as there are basically no new translators possible. The New KEYS doesn't cover the population center. It's just BAD management. And Just as an aside, I don't know you and you don't know me. Consider the possibility that I do know about what advertisers want. A daytimer is not why KEYS is running a live show from 5-7 PM. It's a bad idea, sorry.

 

[davideduardo]

T
When people buy stations they look at the fixed operating cost versus revenue potential. The more it takes to operate, the less the price based on the potential revenue. That potential revenue really doesn't change no matter how far your station reaches as long as you cover your city. In short, you buy based on profit or stick value. If going from class B to class D means their operation cost is lowered by 25% that means they make about 25% more than they did considering cost versus profit. That alone increases the radio station's value. And it likely will mean now they can get and operate a translator for around the same dollars, maybe even fewer dollars.

Part of the issue is that the whole market has just under $11 million dollars in gross revenue, and there are 34 commercial stations licensed somewhere in the metro. Nearly 70% of the metro population is in Nueces County, and this not being a market with much national and agency business, that's where the local direct accounts are, too.

The top 10 stations, all FM, take $8.5 million out of the market, leaving $2.5 million for the remaining 24 stations to chop up.

The owner has the #2 and #7 billers in the market, so they are not incompetent. They did a cost vs. benefit analysis and decided that a lesser facility was better than just signing it off and spending the money on land, taxes, maintenance and the like was no longer viable for a station billing less than $20 k a month.

 

[davideduardo]

OK, I don't even know where to start here. Everything you say is factual, but they are becoming a daytimer. BIG mistake. They make decent money on Rangers, Spurs and Cowboys.

Not really. They are 18th in billing in the market, and likely just at break-even. The choices seem to have been to shut down or to reduce the cost of operation.

There's really no land cost savings as they will be retaining the site.

They can now sell the extra land and save the taxes. The reduction in the valuation of the site installation may reduce taxation, too. And there is definitely major savings in not having a directional system to maintain.

They also are in a relatively competitive situation with talk KKTX and they do a bunch of sports like KSIX.

KKTX outbills them by about 2.5 to 1. KSIX bills about 1/6th of what KKTX bills.

This move makes almost no sense. They can not get granted a license before the translator window opens and therefore will participate as a "b". They will need to buy something as there are basically no new translators possible. The New KEYS doesn't cover the population center. It's just BAD management. And Just as an aside, I don't know you and you don't know me. Consider the possibility that I do know about what advertisers want. A daytimer is not why KEYS is running a live show from 5-7 PM. It's a bad idea, sorry.

Again, I think the analysis came down to "can we sell it, can we turn it off or can we reduce costs". The winner was reducing costs, even though the station has very low billing. The average Pizza Hut has more than 4 times the annual revenue of that radio station.

 

[b-turner]

You make excellent points. I think it might boil down to this: they simply feel the move will make them more profitable. It might be possible that the income versus expenses might not be matching up. That is not always evident.

I knew a lady that ran a newspaper and produced about $100,000 a year as the county's only newspaper. It appeared she had a decent amount of advertising and she actually had a nice list of subscribers, actually a bit better than the norm based on subscribers as a percentage of population. Hers was the official Public Notice paper for the county, her city and the county school district. Even so, after paying for printing and postage, she just wasn't able to take a salary. She had low expenses: an owned office (burned the note years before) and only two employees collectively earning minimum wage totaling under 60 hours a week. From all appearances the paper was doing well. She shut down the paper. I say this because the station might seem to be doing pretty well and actually have the listeners but be hurting.

With what you say about the tower site and such. The move does not seem logical. They might ask the FCC to 'process an application' for a translator only if the downgrade is approved. I know radio dials are crowded but somebody always seems to find a hole for a translator when I felt there was no chance. Something else we might not know about could be a series of moves to allow another station to upgrade elsewhere. There might be some cash waved under their nose to do this but I have no clue as to whether that might be the case.

 

[Ryan Williams]

There are some interesting comments in this discussion. I think the real reason they made this change is obvious: AM Revitalization Translator Window. Spectrum for a "good" translator in Corpus is limited and would be exhausted by the time the window opens for the B and A class AM stations. So they applied to downgrade to a D and was granted a CP. They can now participate in this first translator Window and hopefully get something decent. If they do, they can proceed with their CP. If not, I would expect the CP to be dismissed and KEYS continues with the current license.

The transmitter site is surrounded by junkyards in an industrial part of town. It is not prime real estate.

 

[Ryan Williams]

KKTX outbills them by about 2.5 to 1. KSIX bills about 1/6th of what KKTX bills.

I have no inside information and I am not doubting that the market research firm shows KSIX at 8k or less per month in billing, but I would be very surprised if it is actually that that low. They have two FM translators plus the AM. KSIX and KEYS share a transmitter site. Those rentals along with a studio and even a barebones staff, electricity, insurance, etc. is likely a lot more than that billings estimate.

I think in some of the smaller markets, the estimates tend to be more fuzzy because there is so much direct business and it is not very transactional.

 

[b-turner]

I can attest to billing not always appearing. I worked for one guy who had several businesses. One of the ways he saved on taxes was by moving radio income through those companies: Station sells company A owned by the radio station owner bulk airtime at a rate far below what the rate charged the client. The client bought the time from company A versus the radio station. Company A paid the discounted rate but the surplus went to company A. The structure had two reasons for existing: to keep his companies paying less in taxes and to create a difficult scenario in the event a suit against the station was ever filed. At least that was how it was explained to me.