Survival of the fittest

[SirRoxalot]

Perhaps those "rimshots" need to go back and service the COL that they were originally designed for. Then they might not be losing money.

How many of those stations that aren't making money are being used as flankers to protect a bigger signal, preventing competition and thus, losing money or breaking even by design?

If the signals didn't have value, corporations would have given them up or taken them dark years ago. Corporate radio is not in the business of "not making money".

 

[davideduardo]

If the signals didn't have value, corporations would have given them up or taken them dark years ago. Corporate radio is not in the business of "not making money".

Many of the bad signals and unprofitable members of clusters came as part of acquisitions of more valuable properties. Often, the package included some junk. Examples would be long-existing AM/FM combos where the AM has seen the market expand way beyond its coverage.

Companies first tried to find uses for such stations. Finally, they have wanted to get rid of them, only to find that in today's environment they are not much desired. So they stay with the big company, which automates them to the max, or simulcasts them with an FM, and continues to pay the light bill and other expenses... and loses money on the facility. I know of more of these than I can count.

 

[SirRoxalot]

It's very simple. All they have to do is turn in the license. They WON'T do that because they're afraid that someone else WILL find a way to make money with them - possibly in direct competition with one of their stations. In that case, the station isn't a "loser", it's a flanker, protecting a bigger signal, and taking up spectrum space to serve the CORPORATION, not the PUBLIC.

 

[carolinaradio]

I've been reading posts about Entercom's stock....has anybody seen it? It closed at .55/share today, down 8 cents or 12.70%....fifty five cents a share. It closed at $5.43 a month ago and has been tumbling (significant amounts) almost every day since. Should we start the "Entercom death watch?" :-X

 

[SirRoxalot]

Death Watch

If you're going to start the "Death Watch" for Entercom, you'd better include Citadel, Cumulus, Regent, Salem, and several others who have plunged in October, and are trading under a dollar.

 

[RadioStarOne]

Heck, Warren Buffet could buy all these groups with his chump change cash.

 

[TheBigA]

It's very simple. All they have to do is turn in the license. They WON'T do that because they're afraid that someone else WILL find a way to make money with them - possibly in direct competition with one of their stations. In that case, the station isn't a "loser", it's a flanker, protecting a bigger signal, and taking up spectrum space to serve the CORPORATION, not the PUBLIC.

If you own a home, I can get you one of those licenses tomorrow, and you can all show us how to make money with a 5K AM in a medium market. You'll have to mortgage your home to do it, but I can make it happen. Are you ready to put your money where your mouth is?

 

[SirRoxalot]

You're about 20 years too late. I'm quite comfortable where I am, and ain't movin' again. I spent my time moving from market to market. Maybe one of our younger and/or more desperate brethren will take you up on the offer.

PS - Due to my past history in radio, I haven't got that much equity in the house yet anyway.

 

[davideduardo]

It's very simple. All they have to do is turn in the license. They WON'T do that because they're afraid that someone else WILL find a way to make money with them - possibly in direct competition with one of their stations. In that case, the station isn't a "loser", it's a flanker, protecting a bigger signal, and taking up spectrum space to serve the CORPORATION, not the PUBLIC.

For many years, the prospect of AMs either going to a viable digital model or being shifted to a spectum allocation in the "vacant" analog TV spectrum has kept man broadcasters hanging on to limited viability AMs. When the current asset value makes a sale have considerable write-down implications on a sales, and even greater ones on a licence surrender, nobody is going to do this in today's economy. And donations to non-profit entities are often thwarted when the entity sees the costs vs. benefit analysis.

What is likely is that we will, at some point, see move of the type of deal the Leesburg, VA, station has filed with the FCC: they bought 1190 in Annapolis so they could surrender the licence and improve the Leesburg station by upping it to 50 kw. Larger companies could do mutually beneficial deals by picking stations to close to allow others to improve; AM's biggest problem beyond demographics is the lack of decent signals (There are only about 220 viable stations in all the top 100 markets)

 

[pocket-radio]

What do you expect.. There’s too many radio stations to begin with and now the morons have added HD. And when the boom was on stations were overvalued and bought…just like the housing market.

 

[davideduardo]

What do you expect.. There’s too many radio stations to begin with and now the morons have added HD. And when the boom was on stations were overvalued and bought…just like the housing market.

There are too many stations in almost every free market in the world, from Burkina Fasso to American Samoa.

 

[Tibbs4]

It's very simple. All they have to do is turn in the license. They WON'T do that because they're afraid that someone else WILL find a way to make money with them - possibly in direct competition with one of their stations. In that case, the station isn't a "loser", it's a flanker, protecting a bigger signal, and taking up spectrum space to serve the CORPORATION, not the PUBLIC.

If you own a home, I can get you one of those licenses tomorrow, and you can all show us how to make money with a 5K AM in a medium market. You'll have to mortgage your home to do it, but I can make it happen. Are you ready to put your money where your mouth is?

Well this plan is brilliant. Why not just rob the poor guy at gunpoint, Big A? Mortgage your house to buy anything is a dumb as hell idea. Have you ever listened
to Dave Ramsey?

 

[Goat Rodeo Cowboy]

Well this plan is brilliant. Why not just rob the poor guy at gunpoint, Big A? Mortgage your house to buy anything is a dumb as hell idea. Have you ever listened
to Dave Ramsey?

Ah.... the dilemma of free enterprise, of democratic capitalism.

A menotor of mine drug me along as he became a part owner of a small family-style company. And as I watched two men who had become financially substantial become even financially stronger, my mentor explained the facts of life to me:

"To make it big, you have to be willing to bet the family grocery money on your next project.... over and over again."

The reason I don't own a radio station today is: When it came time to put it all on the table, I walked away.

 

[SirRoxalot]

Survival of the FATTEST

Smart players play with house money. They don't bet the rent.

Most radio owners don't mortgage the house to buy a radio station. They put money that they can afford to lose in play, and leverage the buy with shares owned by other investors or the bank.

If Farid was playing with his own money, you can bet that Citadel wouldn't be in the 20-cent range right now. He takes his millions off the top. Ditto the rest of the platinum parachute crowd.

Good people are losing jobs today because fat cats want to continue to get fatter, despite their failed attempts to run a broadcasting company.

 

[davideduardo]

"To make it big, you have to be willing to bet the family grocery money on your next project.... over and over again."

That reminds me of putting on my first station, a start-up in a congested market (42 fulltime signals). I had so little left over after building the station, I used a Vespa to go to the transmitter and even to call on clients. I lived with family, as I couln't afford rent or a house. A "vacation" meant sleeping till 7 AM on Sunday.

 

[Goat Rodeo Cowboy]

Re: Survival of the FATTEST

Smart players play with house money. They don't bet the rent.

Most radio owners don't mortgage the house to buy a radio station. They put money that they can afford to lose in play, and leverage the buy with shares owned by other investors or the bank.

There are at least two tracks of capitalism going on in radio, and have been as long as I can remember. One is like you describe. People to who "pocket change" may the what some of us put aside in an entire lifetime as our total net worth at retirement time. If you can hob nob with the serious commercial bankers, if financial people think you have family connections or accessible assets you can reach out and touch in an emergency, and if you have already built a track record of establishing several ventures and not one of them ever went sour, then you get to play leverage, selling shares, and protecting yourself with a corporation and not having to put a lien on your house to get the bank money. These are the people who can buy stations with a market price of $1,000,000 or more.

If you are a simple soul who has yet to take your first ownership plunge, If you have been following the radio business and making some relocations and you don't have a personal financial relationship that goes back more than four or five years, you cannot walk into a bank and tell them: I have scraped together $90,000. I need about $25,000 of that for operating capital so I have $65,000 to go toward purchase capital. I want to buy this neat little $300,000 station so I need to leverage by borrowing $235,000. Pretty well impossible in the financial climate of the last few years.

"Back in the day" there were owners who not only did radio because they loved doing it, and they wanted to be "community servants".... and when it was time to retire and sell, they remembered how they got started after The Depression with some help, and they would sell a station on contract payments. (The old capital gains tax avoidance rules almost required them to sell on term or have the tax man eat them alive.

Those days are gone.... as far as I can tell.

 

[Surfer]

It seems to me that the owners who will ultimately survive are the ones who can tell Wall Street to go away (being polite here). A positive cash flow helps and the ability to maximize your people with a few resources. Sure it's hard but, in the end, you survive and get to keep playing radio. And isn't that what it's all about?

 

[TheBigA]

Re: Survival of the FATTEST

If Farid was playing with his own money, you can bet that Citadel wouldn't be in the 20-cent range right now. He takes his millions off the top. Ditto the rest of the platinum parachute crowd.

Most of these guys, including Farid, get paid in stock, and most also invested a lot of their own money in it. You can see the specifics if you download the company's annual report.

I know Mel Karmazin bought $12 million in Sirius stock using his own money when he became CEO. Now it's worth 120,000.

 

[TheBigA]

Well this plan is brilliant. Why not just rob the poor guy at gunpoint, Big A? Mortgage your house to buy anything is a dumb as hell idea. Have you ever listened
to Dave Ramsey?

Someone has to invest in radio. If not people with passion, then it falls to big companies who don't care. Who would you rather work for? Those who have something to lose, as in their own house, will work a lot harder to keep it afloat than someone using the bank's money. Don't you think?

 

[davideduardo]

Re: Survival of the FATTEST

Most of these guys, including Farid, get paid in stock, and most also invested a lot of their own money in it. You can see the specifics if you download the company's annual report.

They all have salaries, so they are paid in cash, in money. The stock or the options are incentives or given as bonuses and rewards.