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KNUV asking $3.5M
- Thread starter H82BL8
- Start date
We've just done an informal survey here in the office and think it will sell for around $350,000.
Gale Tulare said:
Unless they own the land that the towers are sitting on. That alone might fetch a couple of million. Of course, that would mean that the station is dead, since no sane broadcaster would pay that much for a radio station that is less than an afterthought in this market. It would be bought out by a developer who would turn the land into a shopping center or something.
A
admanscott
Guest
People commonly make the mistake of assuming that radio stations sell for some multiplier of earnings or revenue. Nothing could be further from the truth. Radio stations are NOT sold for their business value, they are bought and sold on the value of the license, which if you have checked on it lately, they're not making any more of those. This is just like real estate, the license and its ever-increasing value is the thing they are buying and selling...just like real estate, the value may rise and fall, but because there are a finite number of licenses, the value will always increase. Remember, we haven;t even STARTED really implementing HD radio...when that becomes more common, those dead AM's will suddenly come back to life.
That is why they can command millions of dollars for sticks that don't make money.
Ask Clear Channel. It will be centuries before their investment in all those stations pay off.
That is why they can command millions of dollars for sticks that don't make money.
Ask Clear Channel. It will be centuries before their investment in all those stations pay off.
Probably more like $250,000 for the license. Less than that for the land.
Dr. Akbar said:
Oh, fantastic! The joke can spread over to the AM dial, too. Maybe "Now Including AM!" will get them off the clearance racks. ;D
Good one, Dr. Akbar... You'll be posting on the board directly from your Gremlin!
admanscott said:
A license for the worst full-time AM signal in Phoenix is worth what? Next to nothing, I'll guess, but some fool will probably far pay more than its worth for it. I really think it's impossible for any owner to make money on 1190, now or in the future. If it goes dark, not only will it not be missed, but few outside of this board will even notice - just like the last time. Again, the real estate is worth much more than a broadcasting license for a dead and irrelevant frequency.
And, implementing what? HD radio? What color is the sky on your planet? This is dead technology walking.
I got $87.50 and a case of Otter Pops (hands off Louie Blu Raspberry)
T
The Beave
Guest
my guess $500k in mexican pesos.. ($350K + a case of Bud Light to you and me.) 
admanscott said:
Nice theroy admanscott! You invest in a radio station at such a high price that it can not possibly make enough money from advertising to offer a reasonable return on investment in the hope that the lack of revenue will generate enough hype so that the investor can then sell some years later at a much higher price for a deferred profit. Well, as an investor, the ROI on a risk that great better be 100X the investment risk. Let's investigate a reasonable ROI on a $3.5 investment.
Let's keep this simple and assume you can generate an annual return of 8% compounded on $3.5M sitting in a bank. Each year you would earn, $280,000 with no risk to principle. So, if you take the money out of the bank and put it at risk to buy this radio station you have to earn $280,000 annaly to break even with the interest you could have earned with no risk at the bank. Or, about $24k per month.
Now, if you don't break even you are losing money compared to the bank. But, let's say your revenue model relies on the future sales price? Let's say you can only earn $10K per month and you roll the $14K monthly loss into the future sales price. In five years, the station must be worth an additional $840K just to break even with the interest earnings you could have realized at the bank with no risk.
Now, the break even price is $3.5M plus $840K or $4.34M but you are still at break even. But, we didn't add any expenses for human capital, operating expenses, etc. and you don't have a ROI yet. Let's say your time is worth $100K per year and your Operating Expenses are low at $80K per year. That's another $180K per year for five years to add to the sales price or $900K.
Now, the break even price is $3.5M plus $840K plus $900K or $5.24M and you still need a ROI. So, what kind of ROI do you want for a 5 year investment of $3.5M? It better be higher than a bank or you should leave your money in the bank. Let's say double the 8% the bank offered or %16 percent. That's another $560K per year to add to the sales price. So, now your AM station in Phoenix has to be worth almost $8.1M in five years to justify taking the risk on a $3.5M investment in the radio station today.
I think that resolves this issue of the future value of a present dollar. Sorry if I bored all of you.
T
The Beave
Guest
???
What bank are you getting 8% APY at? I've got an energy fund that's about to crater and I need to place to put that cash.
You can make money if you're not an idealist. You've got to resurrect NBC 1190, or some religious format, or sell time to various ethnic groups. Not glamorous, but neither is losing money. You could realistically do mid-$60s to $70k a month on expenses of half that. 11-12% cash on cash if you pay the asking price. That's better than what all the investors who bought in my building expected by renting their units - except now IndyMac owns their condo.
If they paid $3.75 mil for 1190, do you think they want to lose their shirt? Maybe they have no choice. But considering what 860 fetched... it may be marginally overpriced, but it isn't out of line. If the radio station doesn't work out, you could always go into the scrap metal business or whatever it is that's operating next to the tower site over there in the dump.
And I think you're right Dr.; we ought to campaign to give Avondale it's first local service!
You can make money if you're not an idealist. You've got to resurrect NBC 1190, or some religious format, or sell time to various ethnic groups. Not glamorous, but neither is losing money. You could realistically do mid-$60s to $70k a month on expenses of half that. 11-12% cash on cash if you pay the asking price. That's better than what all the investors who bought in my building expected by renting their units - except now IndyMac owns their condo.
If they paid $3.75 mil for 1190, do you think they want to lose their shirt? Maybe they have no choice. But considering what 860 fetched... it may be marginally overpriced, but it isn't out of line. If the radio station doesn't work out, you could always go into the scrap metal business or whatever it is that's operating next to the tower site over there in the dump.
And I think you're right Dr.; we ought to campaign to give Avondale it's first local service!
KJCB said:
Whoa, big fella...KMVP hasn't closed yet so that $3m sales price can't be used as a comp. Check out our posting on the KMVP Closing Loop. Somehow we think TMISU will have to shell out more than $800k to move the sticks to a new site.
Legend City said:
Nurse Jeff and I are pulling for Buckeye so we can have a flagship station in our hometown!
Dr. Akbar said:
And they're selling a station playing a 30-second loop.
Legend City said:
Nurse Jeff and I are pulling for Buckeye so we can have a flagship station in our hometown!
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What, 106.9 isn't good enough for you?
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