Private Versus Public

[radioprofessor]

Seattle is a good example, in my humble opinion, of the difference between private and public companies. Both of the private companies operating in Seattle, Bonneville and Sandusky, are enjoying solid ratings performance. Private companies can take the long view. For example, no public company would have blown up KBSG which was delivering solid cash flow. To simulcast that signal and then add the cost of the Mariners cost the company millions of short-term dollars. They are thinking long-term. In five years KBSG would have continued to decline as the audience aged. By investing in FM News now, they will see a big payoff in a couple of years. Similarly, by investing in the Mariners, when they are at a low point, they will see long-term benefits. They remove what drove cume for KOMO-AM so KIRO News wins and at the same time when the Mariners get strong again the sports station will win. It had to be a ten million dollar short-term loss for a long -term gain.Sandusky made a similar move going to MOVIN. By getting rid of a cash flowing AC station and going young they looked to the future. With KBKS becoming automated they are in position to invest and own the format parameter and billing. Sticking by the Soft AC and Smooth Jazz brands and not reacting has already paid off for this group. I see Bonneville and/or Sandusky picking up the remainder of the CBS assets in Seattle. Bonneville is the likely candidate since they can own all four CBS properties. Again, a smart move to buy now when prices are low, own the market and benefit when prices increase. In my humble view we need more private radio operators returning. The net result will be better radio and growth. Look at the KIRO numbers in the last couple of trends. They own Seattle radio by investing well, thinking long-term and reaping the dividends in years to come. Public corporations are too focused on short term, in my humble view.

 

[SeattleRadioPro]

Both of the private companies operating in Seattle, Bonneville and Sandusky, are enjoying solid ratings performance. Private companies can take the long view.

Apparently, "professor", you forgot about the OTHER private radio company operating here. Clear Channel.

 

[radioprofessor]

A good joke. I am assuming you are well aware that CC became CC Media Common Stock managed by Thomas H Lee and Bain Equity. It is not even close to a true private company. Semantics really. I actually traded some of my CC stock for 36$ per share and transitioned some into CC Media Common Stock. Your humor actually does bring me back to the venture capital run companies in the late 80's that just about put radio out of business. In my humble opinion the tightly held family, church, or limited partnerships may provide the best future for radio But, as your post reminded me, they should not tied to unreasonable demands by venture capital. The three true private companies in Seattle are Bonneville, Sandusky and Crista because they are not leveraged and have no VC money. Three others are common stock and the remainder are public companies we all know. The Econ 101 lecture is over. My point remains. The stations that don't have thousands of common stock or VC demands can take the long view as evidenced by Bonneville and Sandusky in the Seattle market.

 

[TakeItFromMe]

Slow down there "prof." This is a radio site not wall street so no need to school us "radio hicks" about bizness Looks like you schooled SRPro bigtime in econawmics Hah ;D

Gotta disagree with your premise there prof. You just layed a pile of consultant crap on us cowboy. Do you really believe that Bonneville by laying off 22 people and shutting down a heritage station to simulcast is takin risks ??? Come on prof. Sandusky doesn't think long or short term, those boys just Dont think period. MOVIN was arisk? Blowing up and simulcasting is a risk? The real risk in this market has been taken by Entercom, CBS, Clear Channel and the big dogs. They pay da most for morning talent like RIvers, T-Man, Fitz. Entercom blew up THE BUZZ and replaced it with a fully staffed Country operation with a big name morning show Entercom cowboyed up. Bonneville fired a bunch of folk and simulcast. Sandusky blew up an expensive station and launched MOVIN. Entercom launched the BJ shea show, CBS hired Rivers. When you think Cowboy UP in this market you aren't thinking Bone a Ville or San dusty 8) Prof you just got schooled in Seattle radio 101 by takeitfromme

 

[fremont]

Professor, just trying to clear up which VC demands you consider unreasonable. I've certainly seen a few in my years but wanted to understand your perspective.

 

[Bongwater]

Slow down there "prof." This is a radio site not wall street so no need to school us "radio hicks" about bizness Looks like you schooled SRPro bigtime in econawmics Hah ;D

Gotta disagree with your premise there prof. You just layed a pile of consultant crap on us cowboy. Do you really believe that Bonneville by laying off 22 people and shutting down a heritage station to simulcast is takin risks ??? Come on prof. Sandusky doesn't think long or short term, those boys just Dont think period. MOVIN was arisk? Blowing up and simulcasting is a risk? The real risk in this market has been taken by Entercom, CBS, Clear Channel and the big dogs. They pay da most for morning talent like RIvers, T-Man, Fitz. Entercom blew up THE BUZZ and replaced it with a fully staffed Country operation with a big name morning show Entercom cowboyed up. Bonneville fired a bunch of folk and simulcast. Sandusky blew up an expensive station and launched MOVIN. Entercom launched the BJ shea show, CBS hired Rivers. When you think Cowboy UP in this market you aren't thinking Bone a Ville or San dusty 8) Prof you just got schooled in Seattle radio 101 by takeitfromme

YEE-HAW!

I don't know if rearranging the deck chairs on the Titanic is exactly "cowboying" up. But whatever.....

 

[radioprofessor]

Typical VC return is to double money and exit in five years. That is a 20% return on investment per year, plus dividends in the 10-15% range. Those margins are just as bad as the Wall street expectation of 40% margins for stock and common stock investments. The CC Bain common stock deal is a five year play to exit with similar demands and dividends. On the other hand Bonneville looks for reasonable return on investment and since their basis is fairly low (thanks to trading properties) the ROI demands are much more reasonable allowing for prudent investment in each market, in my humble view. I would love to "cowboy up" and respond but I have no idea what "cowboy up means?" the post from TIFM is just silly. Bonneville paid millions in Mariner fees and will spend millions more in hiring a Sports staff and promoting it. They lost millions from KBSG revenue in order to transition to FM News and Talk in order to appeal to a broader demographic. I would call that a big: "cowboy up". I also have it on good authority that the same poor media stock situation that forced CBS to collapse its Seattle cluster will have an impact on Entercom in the coming months. CC budgets are also being revamped. Take it from me. Private is better than public right now in the radio world. I live outside Seattle now but have a fondness for Seattle radio. I believe posters like SeattleRadioPro and TakeItFromMe are actually smarter than they appear and are just having fun. I get the joke, but some may not know how the finance world of radio works so I responded. Back to the LA board discussion on KABC which is a bit more intelligent.