KIXI Begging?

[DN14224]

What a thread. This is one for the record books. Started out as radio charity, moved to church music then to jazz and now, shoes.

 

[semoochie]

What type of church did you go to? I've been to three types of churches in my life. I was raised Catholic, and you definitely did not hear anything sung in church on the radio. I left for the Lutheran church down the street from the church I had been going to, and that was much more contemporary, but still only had a few songs I knew from the radio. The church I just left with the move was more a Pentacostal church, and I didn't know a lot of the music before coming, but that was because outside of camp, I was quite out of touch with what was hot in Christian music. Now though, if I turn on the Christian station especially Air1, I usually hear something I know from church within an hour.

Why are you asking me? I was agreeing with you! I can say that since you live in Vancouver, 89.5 is pretty close to "church music".

 

[iamarussianpirate]

KCMS and their other stations still hold fundraisers on an on-going basis and yet they're a commercial station, so it's not entirely new.

I haven't listened to KIXI since they let Dan Murphy go. He was that entire station for the past decade and I hate that he's not there anymore. Hubbard pushed one of the best in the business out of their building.

 

[LITTLEBOYBLUE]

I haven't listened to KIXI since they let Dan Murphy go. He was that entire station for the past decade and I hate that he's not there anymore. Hubbard pushed one of the best in the business out of their building.

Agree 200%. And they did it for no apparent GOOD reason.
Having one person dedicated to a format and deciding they are an expensive "cost center" told me EVERYTHING I needed to know about Hubbard's values.

 

[Kelly A]

Agree 200%. And they did it for no apparent GOOD reason.
Having one person dedicated to a format and deciding they are an expensive "cost center" told me EVERYTHING I needed to know about Hubbard's values.

I doubt Hubbard corporate folks know Dan from Adam. All that anyone is looking at are numbers. And the numbers show a no/low rated 50kW AM station with a super-oldies music format that doesn't make any money in the middle of a pandemic-stirred recession. How much are the expenses? Utilities, maintenance, leases, and wait...it has a Full Time Employee?? None of our other stand alone AM stations have dedicated employees..

For as much as I personally like Dan, companies don't keep FTE costs around because they're good folks.

 

[vchimpanzee]

Danny and the Juniors are okay but what I want to hear is Frank Sinatra, Nat King Cole, Perry Como, Dean Martin, Tony Bennett, Jack Jones, Roger Williams, Ferrante & Teicher, Bert Kaempfert, Herb Alpert, The Vogues, The Lettermen, Patsy Cline, Brenda Lee, Rosemary Clooney, Peggy Lee and Patti Page.

Let me add Elvis and Ray Charles.

 

[fordranger797]

I used to listen to a lot of KIXI as a child, as my parents owned a car with an AM radio only. Of course, KIXI was one of the few stations airing music programming, even in the 1990's. I am surprised that the format has lasted this long on 880am. I always wondered if Hubbard would sell off their weaker (relatively speaking) 1150 signal, and keep the stronger 880 signal to air the brokered format. I would imagine that the biggest source of revenue for KIXI is the specialty programs and informercials that they air over the weekends.

 

[Kelly A]

I used to listen to a lot of KIXI as a child, as my parents owned a car with an AM radio only. Of course, KIXI was one of the few stations airing music programming, even in the 1990's. I am surprised that the format has lasted this long on 880am. I always wondered if Hubbard would sell off their weaker (relatively speaking) 1150 signal, and keep the stronger 880 signal to air the brokered format. I would imagine that the biggest source of revenue for KIXI is the specialty programs and informercials that they air over the weekends.

Sell either station to who? Nobody is buying AM stations these days.

I'll bet the brokered paid programs hardly even cover the big power bill every month.

 

[bobdavcav]

A friend and I would gladly take it off Hubbard's hands if we could afford it. As for reality though? It seems the only options for it would be a religious or ethnic group.

 

[Kelly A]

A friend and I would gladly take it off Hubbard's hands if we could afford it. As for reality though? It seems the only options for it would be a religious or ethnic group.

You should contact Hubbard and make them an offer. Be sure you have financing to cover your offer and enough disposable cash in the bank to operate the station without any incoming revenue for at least a year.

Religious broadcasters aren't interested in acquiring AM stations anymore. If Harold Camping of Family Radio were still alive, he might, but that's about the last of the religious networks with AM stations.

 

[b-turner]

Not only are religious broadcasters going FM, when I was managing an AM in Houston, many of the ethnic programmers opted for an HD channel with a translator lease. In Houston most of the ethnic communities were concentrated in a portion of the metro that could be serviced with a decent translator. There were a couple of ethnic groups that tended to scatter throughout the metro but those were normally set on stations reaching most of that community. And those who would still buy AM generally couldn't afford to pay much.

 

[fordranger797]

Sell either station to who? Nobody is buying AM stations these days.

I'll bet the brokered paid programs hardly even cover the big power bill every month.

It's a tough, if not impossible sell. With that being said, isn't it true that the engineering costs are higher for AM radio stations in contrast to FM stations? If that is indeed the case, it seems like that would be more than enough for a media company to justify a reduction in their local portfolio (especially when the two AM properties in question are weak performers). At this point, it would be extremely unlikely for the value of stations like KKNW or KIXI to increase in value, so reducing and/or eliminating some of their operating costs would be an extremely wise move for Hubbard in this current economic climate. I'd rather sell off the property for little or no profit than continue to throw money at high operating costs.

 

[boombox4]

I wonder how KIXI's AM numbers compare with their HD3 numbers? On Warm's HD3, they're even in stereo.

 

[davideduardo]

I wonder how KIXI's AM numbers compare with their HD3 numbers? On Warm's HD3, they're even in stereo.

Unless the station specifically requests a total simulcast to be listed separately, simulcasts are combined in the Nielsen data (both public and subscriber versions).

Stations hardly ever (maybe never) want separate listings as it makes each source show up separately in the data, and ad buyers see them rated lower than if the numbers are combined.

 

[davideduardo]

It's a tough, if not impossible sell. With that being said, isn't it true that the engineering costs are higher for AM radio stations in contrast to FM stations? If that is indeed the case, it seems like that would be more than enough for a media company to justify a reduction in their local portfolio (especially when the two AM properties in question are weak performers). At this point, it would be extremely unlikely for the value of stations like KKNW or KIXI to increase in value, so reducing and/or eliminating some of their operating costs would be an extremely wise move for Hubbard in this current economic climate. I'd rather sell off the property for little or no profit than continue to throw money at high operating costs.

In many cases, the real estate for the transmitter is worth more than the station. In those cases, if a station can't be diplexed with another, then closing it is the best thing to do.

I have a suspicion that lenders, feeling the risk on their broadcast loans increasing, will be asking about the costs / benefits of AM stations and pressuring companies to shed or close under-performing AMs.

 

[Kelly A]

In many cases, the real estate for the transmitter is worth more than the station. In those cases, if a station can't be diplexed with another, then closing it is the best thing to do.

I have a suspicion that lenders, feeling the risk on their broadcast loans increasing, will be asking about the costs / benefits of AM stations and pressuring companies to shed or close under-performing AMs.

And that's what a lot of groups/owners have faced. If the land is worth more than the station, it's easy to justify to the Board or lenders to move, or liquidate a station, and potentially turn in the license.

Since even an-under/no performing AM station is still considered a secured asset on an original merger/purchase or balance sheet, it can be a tough slog to just shut it down. It's not impossible, but most higher-up corporate folks don't want to look like they're eating a s*it sandwich in front of their lenders, when they try to explain one or more of their expensive assets have become a big sea anchor for the company.

 

[davideduardo]

And that's what a lot of groups/owners have faced. If the land is worth more than the station, it's easy to justify to the Board or lenders to move, or liquidate a station, and potentially turn in the license.

Since even an-under/no performing AM station is still considered a secured asset on an original merger/purchase or balance sheet, it can be a tough slog to just shut it down. It's not impossible, but most higher-up corporate folks don't want to look like they're eating a s*it sandwich in front of their lenders, when they try to explain one or more of their expensive assets have become a big sea anchor for the company.

But my point is that the lenders will see things like the shut-down of two pretty good AMs in Savannah and say to groups "have you examined closing unprofitable AMs?"

In the case of Savannah, the stations had suffered site damage and were silent. In that case, it is easy to how lenders that the rebuild was to cost more than the potential cash flow based on past operations. The next step is to show that perpetuating the operation of assets that can't make money and will likely lose money is stupid and get consent to study which AMs can be closed. I see that as an easy corner to turn.

The major lenders have broadcast specialists, so they will see the opportunity immediately, particularly if the transmitter land is of value.

 

[Kelly A]

But my point is that the lenders will see things like the shut-down of two pretty good AMs in Savannah and say to groups "have you examined closing unprofitable AMs?"

In the case of Savannah, the stations had suffered site damage and were silent. In that case, it is easy to how lenders that the rebuild was to cost more than the potential cash flow based on past operations. The next step is to show that perpetuating the operation of assets that can't make money and will likely lose money is stupid and get consent to study which AMs can be closed. I see that as an easy corner to turn.

The major lenders have broadcast specialists, so they will see the opportunity immediately, particularly if the transmitter land is of value.

You're right that some major lenders have broadcast advisors in the ranks, but not all. The reaction also depends on the company structure and size. With a recently-restructured company like iHeart, it's probably easier to negotiate the shedding of assets that don't contribute or operate at a loss, than a smaller station group who has 40%+ of their stations AM's. The other optics that one would need to consider, is the shedding of call letters reduces the oversize of your group as it appears to lenders or Wall Street.

I agree it would be great if a lender or receiver were to step up and recommend reducing the bleeding through either looking at transmitter site property values, including shut down of AM stations. It's unlikely that option would be available to many of the cases.

 

[davideduardo]

You're right that some major lenders have broadcast advisors in the ranks, but not all. The reaction also depends on the company structure and size. With a recently-restructured company like iHeart, it's probably easier to negotiate the shedding of assets that don't contribute or operate at a loss, than a smaller station group who has 40%+ of their stations AM's. The other optics that one would need to consider, is the shedding of call letters reduces the oversize of your group as it appears to lenders or Wall Street.

I agree it would be great if a lender or receiver were to step up and recommend reducing the bleeding through either looking at transmitter site property values, including shut down of AM stations. It's unlikely that option would be available to many of the cases.

I agree that this is a transitional point in the industry, and lenders will be skeptical about closing an asset. However, with huge examples now piling up of station closings I believe that any broadcast company can reference numerous examples and show this to lenders.

In a sense, it is like McDonald's or Starbucks closing under-performing stores while expanding in other places. It's just that radio companies are not used to surrendering a license, as prior to this new era the license was always worth something to somebody.

Groups that have already sold their vertical real estate to a tower company simply will have to show the declining value of the intangible assets like goodwill and the license. Most major broadcast companies have taken charges already on the overall decline in asset values, so many will have the AMs on the books at very low asset worth; "impairment charges" can be seen all over the industry among the public corporations.

 

[Kelly A]

In a sense, it is like McDonald's or Starbucks closing under-performing stores while expanding in other places.

And that's another one of the challenges AM station owners face: Expansion isn't an option, when your primary business is already running low or negative cashflow. Cutting under-performing assets is an expense no-brainer, but Shareholders and lenders want to see a plan of how that will be made up after they bless shutting some stations down. Larger groups can fall back on growth in streaming and digital assets. Smaller groups don't have that option.

Groups that have already sold their vertical real estate to a tower company simply will have to show the declining value of the intangible assets like goodwill and the license. Most major broadcast companies have taken charges already on the overall decline in asset values, so many will have the AMs on the books at very low asset worth; "impairment charges" can be seen all over the industry among the public corporations.

It seems like AM stations are run 'impaired' for an awful long time. I suspect part of that are long-term owners who would rather go down with the ship than turn in a license. Larger groups are probably looking at maximizing the end result when the tumor is finally cut out.