Should I Buy This Radio Station?

[carrington]

Here are some suggestions that you may find helpful:

Contact SCORE, the Service Corps of Retired Executives. They can provide a mentor to review your business plan. Their website has excellent templates. http://www.score.org/

Check out http://www.allbusiness.com/ for excellent articles about planning and running a small business. I found the Finance section especially helpful.

How is the economy in the area? Are jobs growing? What's happening with unemployment? How many businesses - especially retail - are available to advertise? Check out the U.S. Census website, especially the County Business Patterns section: http://censtats.census.gov/. Use the newer NAICS data.

Good luck!

 

[RadioPhillyFan]

Personally, the size of the market isn't terribly large, but only relevant in terms of which ads you'll pick up! (the smallest market I follow is Erie, it's got 289,000 however and growing fast as well, it's got a 7% increase)

Now, I highly suggest you look into demographics; is there a high black population? Is there a high older population? CATER TO WHAT IS MISSING! If the "city" is missing a Urban format, and has a high black population, cater to it.

Supply and demand, supply and demand. It works in radio too.

 

[Chuck]

Supply and demand, supply and demand. It works in radio too.

Yep. A long time ago, a very successful businessman gave me some sage advice, "Study what the other guys are doing and fill a hole they aren't serving." We weren't talking radio at the time, but it has worked well for me for many years.

 

[amfmxm]

One factor that may or not have any bearing is that this station will reach a fairly large and growing retirement area. According to the latest census, more than one-third of the population is over the age of 50 and there are many, many residents who are age 60-plus.

Yet the existing radio stations here are all either Hot Country, Hot AC or Classic Rock.

Since there are no ad agency buys here due to the small pop count, could a station targeting older listeners with Easy Listening, Adult Standards or Soft AC appeal to enough local advertisers to make this thing work?

I have a hunch that we could develop a loyal following among people who'd like a "softer" music mix and coverage of local events geared to their interests, but would this attract enough advertisers to keep the lights on?

Everydayguy, there are still so many variables that none of us know in order to make an informed recommendation. Is the station licensed and located in the principle town, or is it a "rimshot." And/or is the population and retail base concentrated in one town or spread throughout the county--in other words, does the signal cover humans and businesses? Are you a radio pro, or someone from outside the biz?

FWIW, older demos have not historically been as sellable as common sense says they should be. This may change as Boomers tilt the overall population past 55+ but there seems to be little evidence, thus far. As in most small markets, much would depend on the relationships your sellers (GM/SM) have with advertisers--and his/her ability to paint the appropriately positive picture about the station with those buyers.

Starting from scratch means that you will be in the hole for quite awhile. Considering the established print and radio competition you've described, probably most of the first year--meaning the hole gets deeper until you finally reach break-even... and thus spending most of the second year working off that deficit. So the question becomes how long you will be able to put up with the pain? If you go into this knowing that it will be 4 or 5 years until a trickle of ROI shows up, you may be alright. If you don't have that kind of foresight, patience or financial pad, then just take $175,000 and put a match to it. It'll be a lot quicker and you can get on with your life.

Or you could get extraordinarily lucky and make a fortune. Never underestimate the role of luck!

 

[in3media_be1]

Some posts from this thread have been moved to Take It Outside


http://boards.radio-info.com/smf/index.php?topic=209693.msg1876441#msg1876441

 

[joshzz]

Is the area underserved in any particular format? What are the other stations doing financially speaking?
Concerning hiring a GM. I wouldn't do it. If you want to get into radio that take the plunge and YOU become the GM. Many guys that are in the business will help you. There are a lot of nice people in radio.
Also the FCC will be your best friend. Consult with them regularly. I did and still do despite the fact we have been on the air for nine years. I knew nothing about radio, the lingo, etc., and they helped me all along the way and I can tell you that sometimes I was really broken but they pulled my through along with many radio station owners that were more than willing to share their knowledge.
You have a vision as to how you want your radio station to sound like. Carry it out and be your GM! Regarding music: Two great sources: plaympe for free music and mediabase to find out what the top radio stations inthe nation are playing 818-377-5300.
You can go far but you're going to have to work hard, be dedicated, pray a lot, talk to others willing to share their expertise, and stay in touch with the FCC. Who knows maybe you will be able to increase your power. One more thing: BE LOCAL!

 

[amfmxm]

Getting back to basics for this guy...

A county of 50,000 is a very small market. I operate stations in counties of 80,000... 35,000... and (the big one) 100,000. An educated guess would place total radio revenue in everydayguy's prospective market at somewhere in the $1 million-$2 million range. For conversation's sake, let's guesstimate it at $1.5 million. If everybody got a "fair share," we're looking at "typical" annual top-line ad revenue of around $250,000... so a monthly take of about $20,000.

Operating a standalone FM on 20 grand a month is not impossible, but it isn't easy, either. One seller (GM/SM) @ $3K/mo... one office person (traffic/billing/receptionist) @ $2K/mo... one programming employee (PD/Jock) @ $2K/mo... a contract engineer at $1K/mo... and perhaps a couple of PT folks in sales or on-air at another $2K/mo combined--and you're already at $10,000 monthly. The other $10K hopefully covers everything else: electric bill, business insurance, music licensing, legal, et cetera.

You'll note that nobody's getting rich--haven't mentioned commissions, benefits (health insurance?), promotion/marketing (sure, we sell promotion/marketing, but we have to buy it ourselves, elsewhere--or we should)... auto expense, equipment repair, et cetera.

And, from the initial description, you won't be starting with $20,000 in monthly revenue--you'll be starting at zero. Ameliorating factors? The county is growing and the economy is good. That's nice, but those things take awhile to show up in the P & L.

Reminds me of the quote from Ted Turner (?) many years ago: the best way to make a million dollars is to start with a billion!

 

[nd2023]

Can the stations from the larger market be heard in the 6kw FM's coverage area? If they're 100,000 watts in flat land, they will have a great signal 60 miles away. Your 6000 watts won't be able to rimshot the larger market, unless it's on a very tall tower or if you can get a translator closer to the larger market.

Drive to the station's transmitter site, then drive 20 miles towards the direction of the larger market from there and count the number of commercial FM stations you can get clearly (or plug the locations into FM Buddy to compare relative signal strengths of your FM vs the others). That is the real amount of competition you have, not just the 5 others in your market.

If you're going after the older audience, check the AM band too. Old habits die hard, and if there's an AM oldies station that's pretty popular, it'll be hard to get people to switch to FM just because they're in the habit of listening to that AM station.

Soft AC (like Easy 93.1) would be a good choice to be an alternative to the Hot AC for the older listeners who don't like today's artists. It could also pull in the younger listeners and be played in stores around town. AC is an easy format to sell, especially since the ad buyers might be listening to AC stations at work. Does this station have HD radio? HD is an unnecessary expense, so if it does transmit in HD, when the HD transmitter breaks it isn't worth fixing it (unless maybe you can block out a first adjacent station from the larger market). Consider combining positions, like the PD and morning drive jock. Or if a jock is good at technical stuff, that can also be your engineer. Don't be too concerned if your station is just a stepping stone for people to move to larger markets.

 

[Tom Wells]

Hmm. On one hand I see there is some desire to look for an unserved or underserved audience, but
also an ingrained refusal to imagine new types of formats or people who do not conform to stereotypes.

Carry on...

Nice little cul-de-sac....but don't expect the scenery to change much if you feel you must
stay within the well-defined stereotypes.

Deciding whether you're going to do something exactly the way "everybody" does it or try something new IS
the only deciding factor in whether to do anything.
The difference between them is the same as between commerce and art.

Depending on the area and population there will always be some unserved in their preferences.

Fine and dandy, but why jam another adultish CHR into an area where 4 already exist?

I'm reminded of a MAD magazine fake sign from the 60s...
"The man who thinks for himself smokes Vicejoys!.....Because everybody else does."

Point I'm trying to make is that a new station will likley make weak income if nothing distguishes it from the pack.
IF an unserved demo can be identified, there is business opportunity for someone with imagination.

If you've already decided that people become mellow with age, then you may have trouble getting beyond
many other "decisions and opinions" that come from the world of MBAs, marketers, and market metrics.
If so, that's a pretty darn big crimp on imagination AND creation.

 

[Casual_Observer]

Hey all -

Just started reading (skimming over) this thread, so I very well may have overlooked a key point.

Does the original poster have a decent amount of sales experience?

You can have the whole town listening, but it doesn't matter unless you're selling ads. Luckily, the converse is true as well.

--- Casual Observer

 

[Chuck]

Hey all -

Just started reading (skimming over) this thread, so I very well may have overlooked a key point.
Does the original poster have a decent amount of sales experience?
You can have the whole town listening, but it doesn't matter unless you're selling ads. Luckily, the converse is true as well.
--- Casual Observer

That's the bottom line in a nutshell....

 

[NE Miss Radio]

Here are some suggestions that you may find helpful:

Contact SCORE, the Service Corps of Retired Executives. They can provide a mentor to review your business plan. Their website has excellent templates. http://www.score.org/

Good luck!

+1 on SCORE. They are partially funded by the US Small Business Administration. Another group partially funded byt he SBA who can provide business counseling is the SBDC (SBTDC in some states) network. More SBDC than SCORE in most states. Both will have you do most of the work, they are more coach than consultant. However, the better you know your business, the more chance you have for success. http://www.sba.gov/content/small-business-development-centers-sbdcs Link toward bottom of page to find local SBDC

 

[joshzz]

One thing should be mentioned. Radio is not for the "faint of heart". The joy is in the fact that the more you put in (time and energy), the better your station will be. You will work 60 - 70 hour work weeks. You will be up at 3 AM when the transmitter/computers/power goes down due to a lightning strike. You will find out that people need to be paid and volunteers don't cut it. You will have a difficult time securing good sales people. Maybe one out of twenty will work out. You will also discover that almost all "radio personalities" have a bit of an ego problem and you will have to fire some. Worse thing is when a hot shot personality tries to take over your station and tells you that your station won't make it without him. What do you do? You fire him and never look back. You're better without him.

Despite all the ups and downs, radio is exciting and I personally love it!


_______________________________________________***

 

[amfmxm]

Does the original poster have a decent amount of sales experience?

Yeah, it sure would help. Likewise with Josh's comments about what is essentially an owner-operator situation. And in truth, that's what this guy is describing. In order to make it work, he'd need to run it himself... and he'd better be a helluva good salesman and be ready to work his ass off.

But, remember, he's not thinking of it that way. He's looking at it as in investment, and has a GM/Sales Manager ready to step in and run it.

Ain't my money, but I'd decline this "investment" opportunity.

 

[jboyd]

This poster has it...great business but NOT for a remote investor...it's the local manager that is the success (or not) of a station such as this...NE Radio and others can personally attest to this fact...in short...No.

 

[Casual_Observer]

That is certainly true. Radio is a GREAT career for those sales-oriented self-reliant owners. I own a single station FM talker in a pretty decent sized market (approximately 500,000) with LOTS of radio, tv, paper, et cetera competition, and we would never make it if I didn't do about 40% of the sales myself. I already have a great sales staff, but they work even harder when they see me out in the trenches doing sales with them. We do well because no one on staff is "immune" from at least some sales duties. I cannot even comprehend attempting to run the station absentee.

--- Casual Observer

 

[stereolane]

Background: A new 6kw FM -- new studio equipment and new transmitter/antenna included -- just signed on a month ago, no revenue, minimal staff. It has a reasonable tower lease and a cheap office lease and is for sale for under $ 175k.

Market: A county with 50,000 people that is growing steadily in an area with a good economy. The nearest larger market is 60 miles away.

Competition: A daily newspaper and five local commercial FM's are already operating in this county. Some signals from the larger market are heard here. A few format holes exist, so not many unique programming options. Most of the local FM's use satellite-fed programming.

Question: Assuming we have a solid marketing plan and can build a good sales team, does this seem like a potentially good purchase? Or is there too much existing competition?

If this has anything to do with a J-O from Colorado, who builds a station in a shed, using cheap equipment, and laughable, imaginary tower sites, then tries to lease everything back to you, my advice would be to run away like the place is on fire.