Layoffs

[SeattleRadioPro]

...the group is on the hook for $75+ million dollars to invest in a radio station with airstaff that for all practical matters, have a less than 50% chance of being successful.

Right on the money, Guru (pun intended). As much as the "townies" think ESOP/local ownership would be a win/win for everyone, practically anybody with a clue on how radio really works knows your assessment is dead on.

 

[RockJazz]

Re: ESOP speculation

I am not in a position to say if something pencils out- and didn't- just saying that it might be worth a strategic look for a few.

Buying all of 96.5 may well be to way too much but would an ESOP for 25-33% of 104.5 be too much? That or some other low price property and a partial equity talent owner stake would be what I was suggesting and then ramp that up revenues and expenses over time. Would that pull down the equity stake under or well under $10 million? It might and that equity stake could be part upfront / financed by loan or maybe limited partners and partly granted for bringing talent equity to the property equity and partly granted over time as the property equity grows.

Or you could move beyond ownership talk and just talk some degree of revenue or profit sharing in talent compensation and capture some of fremont's point. Somewhat analogous to what the top movie stars do with % of gross or gross over a figure deals but on a smaller scale.

 

[LITTLEBOYBLUE]

most purchases done since the 80's were done with a LOT LESS penciling than that! It's because it did NOT pencil out that those folks are straddled with massive debt they can't service. Probably one reason C/Channel went private ... so they could make a lot more decisions to clean up the multi-market $$ messes without having to answer to shareholder body.

 

[TVradioguru]

Re: ESOP speculation

I am not in a position to say if something pencils out- and didn't- just saying that it might be worth a strategic look for a few.

Buying all of 96.5 may well be to way too much but would an ESOP for 25-33% of 104.5 be too much? That or some other low price property and a partial equity talent owner stake would be what I was suggesting and then ramp that up revenues and expenses over time. Would that pull down the equity stake under or well under $10 million? It might and that equity stake could be part upfront / financed by loan or maybe limited partners and partly granted for bringing talent equity to the property equity and partly granted over time as the property equity grows.

Or you could move beyond ownership talk and just talk some degree of revenue or profit sharing in talent compensation and capture some of fremont's point. Somewhat analogous to what the top movie stars do with % of gross or gross over a figure deals but on a smaller scale.

What you're talking about is called an LMA, (Local Marketing Agreement or Local Management Agreement), depending on who you talk to. The idea involves a station license and ownership held by a individual or corporation, but the programming, sales, and other aspects are managed by a third party. To your example, the owner/licensee of 104.5 would be one party, the bank who loaned the money, and the LMA group. In essence the licensee or owner gets paid a pre-determined amount by the LMA group to provide programming or sales services to the licensee. The FCC has clamped down on organizations using LMA's to get around the ownership rules in a market, but that wouldn't be the case here.

Actually a 104.5 would be a good candidate for an LMA, as it appears their plans to sell a Cougar Mt. located station have fallen apart, and so has any value. The catch 22 would be that the LMA group could trash a brand new radio station, and reduce it's value further than just selling a start-up.

Now my two-cents worth on your "dream-team" idea... How's that old saying go? "One thing about the past, is it's history." It would be foolish to assume that some semi-popular radio hosts of 20 years ago would either be good at running a radio business, or attract the audience one would need to make the LMA payments. Remember, the people you hear on the air aren't the only ones who make a station succeed or not. Pat O'Day, as an example, went from talent to ownership, and it was a miserable failure on more than one occasion.

 

[RockJazz]

Followup

Thanks for the feedback.

I agree there are plenty of issues and failure to get off the ground or keep it off the ground is probably more likely than success.

Rather than risk a lot personally or claw and scratch to make something penciled out I might first float a trial balloon and see if Paul Allen could see his way to being involved to some degree with a "best in class" heavy "rock" classic rock station, local or local / international with the web. Or a station that was also syndicated like the "classic rock experience" I can pick up on Rocket 107.1 Longview to get another revenue stream in a radio industry perhaps turning more to this kind of thing? Maybe this is antithetical to the dream station concept or maybe it is the way for it to succeed.

I am not an industry insider and recognize the limited basis for my speculation so this was just a brief step onto the turf out of curiosity and the desire for something better. KZOK still has pretty strong talent but I think the playlist could be much better, fresher. Much of what was/is considered classic rock is really not rock based on what rock became. It is classic hits / pop oldies.

 

[fremont]

Good thread. There's some great insights in this post, but I'd like to point out one disagreement I have.

Remember that because CBS is a publicly traded company, they can only sell the station for more than they paid, for this discussion that number is $35 million. That means CBS may entertain an offer for $70 million cash because they will be penalized with what amounts to capital gains tax rolled into that number, so 100% markup is reasonable.

The first part of this re: CBS being a publicly traded company, therefore unable to sell for a loss is absolutely, categorically UNTRUE. I can't say it any plainer than that. The second part of the statement might be their desire, but it's a stretch.

Finally, there seem to be some contradictions. A story is painted about the terrible state of the market. To PE people, of which I am one and have been for close to 20 years, this is a TREMENDOUS opportunity, not the opposite, as you assert. There's nothing better than buying high quality assets from a major company because they are experiencing a liquidity crisis. That's how many of us cut our teeth in the late 80's / early 90's with the S&L / RTC debacle. You'd be amazed at the seller financing you can get. Many sellers will also not only hold paper but are willing to stay in for a stub piece of the equity.

I can't debate your finer points on the biz itself; you clearly know what you're talking about. I will quarrel, however, around these general corporate finance topics. I would encourage those of you intrigued by this AND with connections into these major owners to test the water by asking the question of them. You may be VERY surprised at the answer. Happy Holidays everyone.

 

[WKomm]

And btw ...

Maybe we can agree to never use the term "layoff" again when referring to radio jobs. Layoff refers to construction guys, seasonal workers, temporary factor shut-downs. None of the radio folks vacating control rooms are being "laid off." They are being fired.

 

[SeattleRadioPro]

And btw ...

Maybe we can agree to never use the term "layoff" again when referring to radio jobs. Layoff refers to construction guys, seasonal workers, temporary factor shut-downs. None of the radio folks vacating control rooms are being "laid off." They are being fired.

Many radio trades use the term "riffed" (rif=Reduction In Force) to describe the job losses.

 

[WKomm]

Riffed? Better term than "laid off." Laid-off is so passive and wimpish and implies there might be a chance of being "laid back on" in the future. Ain't gonna happen ...

 

[JustaLissner]

Why don't one of you radio greybeards buy a station, get Slaton, Mike West, Norm Gregory, Robin & Maynard, etc etc and do what is essentially an ESOP (employee ownership)?

I PROMISE I'll listen to this station 10+ hours a day.

 

[mightymoose]

Oh no-no-no. CBS can't be that bad, look....copied straight from ther KZOK web site. Would they lie to you???

KZOK FM and CBS Radio Station KZOK-FM, an equal opportunity employer, is dedicated to providing broad outreach regarding job vacancies at the station. We seek the help of local Community Organizations in referring qualified applicants to our station. Community organizations that wish to receive our vacancy information should contact Heidi Clark at Station KZOK-FM by calling (206) 805-1025.

Want a Part-Time job? Join the KZOK Street Team! Be a part of Seattle's ONLY Classic Rock Station!
Email your resume to Karly Smaciarz - [email protected]

In addition, you are encouraged to visit www.cbsradio.com for an online listing of job openings at all CBS Radio stations.

 

[KCRadionut]

I have found this discussion to be a great one thank you. I’m am surprised AQH has not chimed in. As a fairly successful business owner for the past 30 years, the collecting of local talent is a wonderful pipe dream but it will never happen. Never. No business person who has achieved the financial success to finance a pipe dream like this will not invest in local talent over the age of 60, even 50. Ask Indigo. Ask Paul Allen. Sorry guys and gals, Pat O'day, R&M, etc.

K

 

[gr229]

sorry wrong page!!