How much could I get a small AM radio station for? No more than 250 watts with a single antenna. Then format the thing with all news from some subscription service, if there are any still out there. Automate the entire thing. Maybe sell a few local spots but the rest would be from syndication. Could one make enough money (or any money) to live very modestly somewhere in the southern U-S? Seriously?
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Should I Buy a Small AM Radio Station?
- Thread starter congsec51
- Start date
K
K-Tel
Guest
Depends where the station is. 250 Watts isn't very big, and to go all off the bird = boring programming.
Would you be offended if I offered you some humor in response? 
Your question is a little bit like asking: "Should I get married?"
Marriage is a very wonderful thing if you find the right partner. Marriage is a very disastrous thing if you pair off with the WRONG choice of partner.
Your question cannot be answered with simplicity. We would have to know something about your age and your goals. Those who can expect some family inheritance at some future date can invest themselves in a business operation that will be thin and slow to pay off. Those who have children at home that you wish to send to college in the not too distant future must invest their lives in a project or a career that has a bigger payoff more quickly.
There are some $100,000 stations out there. I had a broker rather bluntly tell me that I was wasting my time to even think of acquiring a station that could be purchased for less than $450,000 and I understood his logic.
I will only consider one of the lower priced stations IF: if the community is somewhat stand-alone. By that I mean even as pathetic as the station may look to most broadcasters, it IS the community's only radio station, and the geography and economy is such that the neighboring stations do not smother you.
For 450M I can have the FM station in a community with "financial critical mass" and I will smother you if you have the low power AM in my town, or the next town over. That's not because I am mean and ugly.... it's just survival and prudent business practice.
Use the Private Message feature here on Radio-Info and send me an e-mail if you want to do some joint exploration of ideas.
Your question is a little bit like asking: "Should I get married?"
Marriage is a very wonderful thing if you find the right partner. Marriage is a very disastrous thing if you pair off with the WRONG choice of partner.
Your question cannot be answered with simplicity. We would have to know something about your age and your goals. Those who can expect some family inheritance at some future date can invest themselves in a business operation that will be thin and slow to pay off. Those who have children at home that you wish to send to college in the not too distant future must invest their lives in a project or a career that has a bigger payoff more quickly.
There are some $100,000 stations out there. I had a broker rather bluntly tell me that I was wasting my time to even think of acquiring a station that could be purchased for less than $450,000 and I understood his logic.
I will only consider one of the lower priced stations IF: if the community is somewhat stand-alone. By that I mean even as pathetic as the station may look to most broadcasters, it IS the community's only radio station, and the geography and economy is such that the neighboring stations do not smother you.
For 450M I can have the FM station in a community with "financial critical mass" and I will smother you if you have the low power AM in my town, or the next town over. That's not because I am mean and ugly.... it's just survival and prudent business practice.
Use the Private Message feature here on Radio-Info and send me an e-mail if you want to do some joint exploration of ideas.
What's the business plan? What's the competition in the market? What's the available population in the market? What's the economy of the region like? What's the source of your money? What does success look like? I'd ask myself some of those questions as step one.congsec51 said:
B
Biz Listener
Guest
congsec51 said:
You could very easily make yourself a small fortune operating a 250 watt AM station. That's assuming you started out with a large fortune.
All of the business advice in other posts was good advice, but let me add that if you think to be successful in small market, low-power AM radio, then you better have a burning passion for radio. It's not like owning a string of laundromats. If you're looking for some sort of small business to make a living at, there are lots and lots of better options than operating a radio station. But, if you have a burning desire to be a broadcaster, then you can achieve success. It'll take hard work and careful planning, and more than a little luck. But it can be done.
W
WTUX
Guest
A small, stand alone AM station? Are you nuts?
Now that I got THAT out of my system, as others have pointed out, its LOCATION, LOCATION, LOCATION.
A small town/city can still love its small AM station. But remember, if everyone in town already knows all of the businesses in town, why would they advertise? And just carrying sat news is not going to work. If you offer little or nothing local, why should they listen? If you are not involved in the community, the listeners will not be involved with your station.
There are many better ways to invest your money than in a technology that is out of date. Owning a small market AMer is like deciding to manufacture 78 rpm Victorola's.
Now that I got THAT out of my system, as others have pointed out, its LOCATION, LOCATION, LOCATION.
A small town/city can still love its small AM station. But remember, if everyone in town already knows all of the businesses in town, why would they advertise? And just carrying sat news is not going to work. If you offer little or nothing local, why should they listen? If you are not involved in the community, the listeners will not be involved with your station.
There are many better ways to invest your money than in a technology that is out of date. Owning a small market AMer is like deciding to manufacture 78 rpm Victorola's.
You normally have to pay more for a station as a purchase price that what the station in grossing. In these low-dollar stations most of the formulas about cash flow multiples, etc. are out the window. If you were to find the ideal little market with station priced at $100K, we would expect that it might be grossing revenue of $70K to $90K. Could be considerably less which means it is a problem-child property. With the station in the 100K range, you do not often get the real estate with the deal, but sometimes yes.
Sit down and build a budget of how your $80K gross might be spent. Music license. Utilities. Property taxes. Hired help. (I have come across a few operators with zero hired help. Are you ready to let the station OWN you as far as time goes.)
Now here is the killer. How much are YOU expecting out of the station? Do you have a retirement income and all you want and need is a part time paycheck? Do you have a high-earning spouse who can carry the household expenses for a while? Are you going to borrow the purchase price money and pay it off with monthly payments out of your gross revenue? If you have the money in savings, is your plan to put that money back into your savings on a monthly basis or do you plan to replenish the savings when you eventually resell the station?
It looks like you need to be at one end or the other of the journey of life to deal with one of these stations. The very young need a place to prove themselves and may be able to pull off the purchase with some family money or backing. The empty-nester mature folks who have already paid their dues and already own most of the toys they want in life can buy the station as one more toy and let it supplement their retirement income. BUT if you are in the middle of raising, feeding, clothing, educating babies..... this tiny little radio station business is probably the wrong end of the pool for you.
Sit down and build a budget of how your $80K gross might be spent. Music license. Utilities. Property taxes. Hired help. (I have come across a few operators with zero hired help. Are you ready to let the station OWN you as far as time goes.)
Now here is the killer. How much are YOU expecting out of the station? Do you have a retirement income and all you want and need is a part time paycheck? Do you have a high-earning spouse who can carry the household expenses for a while? Are you going to borrow the purchase price money and pay it off with monthly payments out of your gross revenue? If you have the money in savings, is your plan to put that money back into your savings on a monthly basis or do you plan to replenish the savings when you eventually resell the station?
It looks like you need to be at one end or the other of the journey of life to deal with one of these stations. The very young need a place to prove themselves and may be able to pull off the purchase with some family money or backing. The empty-nester mature folks who have already paid their dues and already own most of the toys they want in life can buy the station as one more toy and let it supplement their retirement income. BUT if you are in the middle of raising, feeding, clothing, educating babies..... this tiny little radio station business is probably the wrong end of the pool for you.
B
bigtalkradiofan
Guest
I'm going to be honest with you...I see a ton of "red flags" with this proposal.
These are just the initial 11 "red flags" that pop into my head after reading your post...
So let me get this straight:
Point #1 - You are interested in buying a radio station - an industry that some people contend is declining, and has seen recent declines in ad sales with the downturn in the economy.
Point #2 - You are interested in buying a station on the AM band - as some posters above noted, the AM band is an "out of date" technology.
Point #3 - You want to program it with an All News format - so you are aware that there are only a handful of All News stations left in the country.
Point #4 - With an All News format - you'll need to generate a ton of unique listeners each hour - because the listenership turns over every 15 minutes as the news gets repeated again. Unlike News-Talk stations where the hosts comments aren't usually repeated every 15 minutes, so listeners stay longer.
Point #5 - Are there any All News subscription services left?
Point #6 - Didn't the AP cancel their All News service two years ago (for a lack of stations using it anymore)?
Point #7 - The mantra in radio is that you need to be local, local, local to sell ads to local companies.
So why in the world would you automate the whole thing and have no local content?
Point #8 - People are already bombarded with tons of syndicated national news from:
* TV - CNN1, CNN2, MSNBC, Fox News, PBS, local news
* Internet - blogs, message boards and chat rooms
* Newspapers
* Cell phones
* News breaks on other radio stations
So why would someone listen to your station - when they are already getting syndicated national news from so many other media outlets?
Point #9 - My understanding is that most of the remaining All News formatted stations - tend to be heritage stations located in large metropolitan cities in the northeast and midwest.
Point #10 - I'm not aware of too many All News stations currently located in the south.
Point #11 - As noted by other posters above, there are far easier and more profitable investment vehicles than the radio industry to generate a sustainable living - especially a small, stand-alone operation in a small town.
In conclusion, these are just the initial 11 "red flags" that pop into my head after reading your post.
My advice to you - would be to investigate these 11 points further - before spending my hard-earned money on an industry I'm not familiar with.
These are just the initial 11 "red flags" that pop into my head after reading your post...
So let me get this straight:
congsec51 said:
Point #1 - You are interested in buying a radio station - an industry that some people contend is declining, and has seen recent declines in ad sales with the downturn in the economy.
Point #2 - You are interested in buying a station on the AM band - as some posters above noted, the AM band is an "out of date" technology.
congsec51 said:
Point #3 - You want to program it with an All News format - so you are aware that there are only a handful of All News stations left in the country.
Point #4 - With an All News format - you'll need to generate a ton of unique listeners each hour - because the listenership turns over every 15 minutes as the news gets repeated again. Unlike News-Talk stations where the hosts comments aren't usually repeated every 15 minutes, so listeners stay longer.
congsec51 said:
Point #5 - Are there any All News subscription services left?
Point #6 - Didn't the AP cancel their All News service two years ago (for a lack of stations using it anymore)?
congsec51 said:
Point #7 - The mantra in radio is that you need to be local, local, local to sell ads to local companies.
So why in the world would you automate the whole thing and have no local content?
Point #8 - People are already bombarded with tons of syndicated national news from:
* TV - CNN1, CNN2, MSNBC, Fox News, PBS, local news
* Internet - blogs, message boards and chat rooms
* Newspapers
* Cell phones
* News breaks on other radio stations
So why would someone listen to your station - when they are already getting syndicated national news from so many other media outlets?
congsec51 said:
Point #9 - My understanding is that most of the remaining All News formatted stations - tend to be heritage stations located in large metropolitan cities in the northeast and midwest.
Point #10 - I'm not aware of too many All News stations currently located in the south.
congsec51 said:
Point #11 - As noted by other posters above, there are far easier and more profitable investment vehicles than the radio industry to generate a sustainable living - especially a small, stand-alone operation in a small town.
In conclusion, these are just the initial 11 "red flags" that pop into my head after reading your post.
My advice to you - would be to investigate these 11 points further - before spending my hard-earned money on an industry I'm not familiar with.
D
david9396
Guest
in addition to the wise counsel listed above, let me add my .05 from a sales standpoint.
to make a living from radio, you must have inventory(spot load) for sale. the inventory needs to tie into your programming specialties and make sense to buyers, whether local, regional or national accounts.
in addition, you need to cultivate long term working relationships with the ad agencies that will represent many of your potential clients. in many cases, there will be a profound bias toward stations that have consistent or high arbitrons. your agencies can either make or break you in your local market.
take the time to hire a professional to run your office. make sure that they ride herd on accounts receivable to keep deliquencies to a minimum, because they will destroy your cash flow.
hire sales people who have a like minded passion for radio being a servant to the community in the original fcc definition of community service. pay them a base and commission to generate long term station revenue.
do activities in the community that will constructively make your presence known and welcomed. get involved in your local community--high school sports, local collegiate sports, etc.
maintain a healthy relationship with your spouse and family, as well as with GOD. allow yourself time away from your business that you reserve for your family. make sure that they understand that this is a long term committment.
i sold advertising for a stand alone am station for 4 years.
to make a living from radio, you must have inventory(spot load) for sale. the inventory needs to tie into your programming specialties and make sense to buyers, whether local, regional or national accounts.
in addition, you need to cultivate long term working relationships with the ad agencies that will represent many of your potential clients. in many cases, there will be a profound bias toward stations that have consistent or high arbitrons. your agencies can either make or break you in your local market.
take the time to hire a professional to run your office. make sure that they ride herd on accounts receivable to keep deliquencies to a minimum, because they will destroy your cash flow.
hire sales people who have a like minded passion for radio being a servant to the community in the original fcc definition of community service. pay them a base and commission to generate long term station revenue.
do activities in the community that will constructively make your presence known and welcomed. get involved in your local community--high school sports, local collegiate sports, etc.
maintain a healthy relationship with your spouse and family, as well as with GOD. allow yourself time away from your business that you reserve for your family. make sure that they understand that this is a long term committment.
i sold advertising for a stand alone am station for 4 years.
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