Trio goes dark!

[jmtillery]

"if it were me in Bolton's position, I'd hire new local management and a new local sales team and then terminate those who are being replaced. "

If the station can't pay its bills how are you going to hire new management and a sales force that are any good? When that is the situation, who is going to be willing to work for you for what you could pay? Do you think anyone would ask what happened to the last sales force? Would it matter to a new applicant that they were or were going to be all axed Clear Channel style? Of course it would, so hiring a new sales force that can actually make a difference wouldn't be easy and may not even be possible in some situations. If someone is any good, the conversation would go something like I illustrated - been there done that - and I am very sure you have too.

Without going into any details, I have a way it can be done, and without hiring a sales staff. I have done it before in a situation almost exact to this one involving WQLC, WGRO and WNFK. I have taken a small market FM station that was losing money each month and was on the verge of going dark, and turned it around into a break even within a week and turned its first profit within the first 90-days. In fact, the very first day I took over the station, the power company showed up within an hour of my arrival ready to turn off the power because the station had not paid its power bill. I managed to negotiate an additional week with the power company GM to pay the outstanding power bill. I had four days to come up with the money, so I pre-sold several packages and had the money to pay the bill a day early, paid the bill, and continued selling sales packages until we hit the black. I paid myself last after the station was financially stable, so, yes, I made a few sacrifices in the interim, but the delayed payoff was handsome for me and everyone else because we later sold that station, that was worth maybe $50,000 when I took over management, for over $4 million cash. I'd say that was a good run.

So you found someone (yourself) who would work for free until the situation turned around - if it ever did. Turnarounds like that are the rare exception, and not the rule especially in today's economy. You said you would fire the sales force and hire a new one, but didn't hire one in the above situation because you couldn't. Now you don't even need a sales force - good thing because as I said above there is no money to hire one.

You took that deal many years ago, and wouldn't touch it now without a guarantee or outright ownership of the station. You know why? Someone who could make it happen (read "has a track record of success") isn't working for free, or only for an "upside" on a station on its down side. It is also seriously debatable whether such a turnaround could happen in today's radio market and in this exact situation. The situation just got more complicated as the stations are now dark.

In the example I gave, I WAS the sales force until the station became financially stable in order to make it possible to hire additional staff. I also took an equity ownership position the station. I. E., although I took no salary nor even a sales commission, I became an owner in the station in exchange for my expertise, hard work, and making the station profitable. As a result, the owner realized a substantial capital gain several years later and I walked away with a percentage of said capital gain. As for any track records, I have one which dates back to 1975 when I got my first part-time on-air job at a small market radio station. The rest, as the say, is history. Whether or not the past example given can be repeated here remains to be seen as I do not have all the details of the Power Country, Inc. situation. However, there are always viable solutions to every challenge. And, should Mr. Savage desire to hire my consulting expertise, I will be very pleased to discuss any workable solutions with him. if not, then I wish him the best in solving the situation which I have no doubts he will eventually do.

 

[ok walters]

So I was right. You worked for free in hopes that the station would make a profit and you would be paid. You wouldn't have taken it without the ownership deal, and they couldn't hire you on a cash basis because they didn't have any cash. As it turns out, you claim to have done well but it could have gone the other way just as easily. In today's radio market the chances for reviving a bad situation are far worse, so as I said, finding someone capable of turning it around that will work for a possible future payoff would be almost impossible.

So the "fire the sales force and hire a new one" probably won't work in this case, and it didn't work in the case you were involved in.

 

[jmtillery]

So I was right. You worked for free in hopes that the station would make a profit and you would be paid.

There you go again assuming you know more about me then I know about myself. I didn't work for free. I just told you in a previous comment that I paid myself a salary and sales commission along with profit margin bonuses, with the owner's blessings, once the station was financially stable. I also walked away with 25% of the capital gain from the sale. I've already stated the station sold for a little over $4 million cash, so you do the math. That is hardly working for free.

 

[ok walters]

You did work for free at the start - what if the station never became "financially stable"? How much would you have been paid then? What if the power did get shut off? You did take a chance of making nothing for the possible upside of a big payoff.

 

[Kmagrill]

Seems to me that this discussion took a wrong turn somewhere. A lot of it hinges on the definition of what working for free is. Most of the time, it's a mixture of front end vs back end payouts. Often there's a small salary paid against commissions with the promise of big bonuses or profit sharing of some kind, if the venture works out well. These deals are not usually black and white.

But to get back to WQLC, it could have been kept on the air by working out an LMA with someone. Proceeds would still go to the IRS and the deal would probably have to get their approval first, but the LMA operator could keep the station on the air and turn a profit doing so.

 

[ok walters]

"I also took an equity ownership position the station. I. E., although I took no salary nor even a sales commission, I became an owner in the station in exchange for my expertise, hard work, and making the station profitable."

This statement is pretty clear. No salary or sales commission, just an ownership stake. No pay now, just upside later. That could have very easily turned out to be working for free especially when he claimed the station was only worth $50K and the power being shut off when he got the position. An upside is a long way from where he claims he started.

Who would take that deal today with a station obviously in big trouble? No one I know - so "fire the sale force and hire another one" was never an option that would work. It would have to be done just like he claims he did it - by himself with little or no help.

So the station went from being worth only $50K to selling for $4 million - hard to imagine. Would be interesting to know the call letters and when it happened and how long it took, but I am sure we will never learn that small detail. :

 

[Kmagrill]

Who would take that deal today with a station obviously in big trouble? No one I know - so "fire the sale force and hire another one" was never an option that would work. It would have to be done just like he claims he did it - by himself with little or no help.

I think there are people that'll take that deal today. If you know how to sell and have confidence in your ability to do so, then the risk is low compared to the upside. I'd suspect that a station like WQLC was probably worth better than $1,000,000 at the top of its game. If you could resurrect the station, generate billing in short order, and get it up to a reasonable cash flow in 6 to 8 months, you could reap a nice windfall for a half-year's work. Since you are going to also be paying yourself bonuses based on sales goals, you may not officially be taking a salary or commissions, but you do derive an income stream if you perform well. Also, In a small market like Lake City, you'ld probably have to ask for 40% of the capital gains to make it worthwhile.

 

[ok walters]

There is no upside anytime soon, especially in six or eight months as you predict. If the station was doing so poorly it was better off dark, it was obviously losing money pretty badly. The other unknown is how far in debt are they now besides the IRS? You may have all kinds of issues like being behind to everybody, which makes the climb out of the hole even steeper. The stations now being dark sure doesn't help either.

I guess you call low risk something different than I do. Not getting paid for at least a year if ever is a pretty big risk of time and effort, especially when you are partners with someone who let the stations get to where they are now.

 

[jmtillery]

You did work for free at the start - what if the station never became "financially stable"? How much would you have been paid then? What if the power did get shut off? You did take a chance of making nothing for the possible upside of a big payoff.

I've already stated the fact that I did not work for free, regardless how you interpret it to be.

Now, I'm going to cut through the chase and get right to the point. Why does it matter to you regarding my work ethics and business practices? Please explain that to me first, then I will be very happy to give you a truthful answer to your "interrogation" although I am not under oath. Signing off now.

 

[Kmagrill]

There is no upside anytime soon, especially in six or eight months as you predict. If the station was doing so poorly it was better off dark, it was obviously losing money pretty badly. The other unknown is how far in debt are they now besides the IRS? You may have all kinds of issues like being behind to everybody, which makes the climb out of the hole even steeper. The stations now being dark sure doesn't help either.

I guess you call low risk something different than I do. Not getting paid for at least a year if ever is a pretty big risk of time and effort, especially when you are partners with someone who let the stations get to where they are now.

There's no doubt about the fact that due diligence must be done. It's entirely possible that the financial load on the station is beyond repair. On the other hand, maybe it's not. It depends upon what can be negotiated with the creditors, including the IRS. The IRS is really in a bad position here. They have a lein on a property that loses value every day that it is off the air. They cannot operate the facility without consent of the licensee. The licensee is elderly and in poor health. IRS debt does not transfer to the estate. Not a pretty picture from their perspective at all. Since the station had been making some money prior to the IRS taking over, the debt may not be too bad, if the IRS can be persuaded to play ball.

In any case, the point, which seems to have gotten lost in the rhetoric is that taking a station dark really should not be done if there is any other way. It may seem like a good temporary solution to a bad problem, but the loss of capital value is so great that it usually far outweighs the nominal costs of keeping a facility on the air, especially, if the owner plans to sell it in the near future.

So, that's not to say that the decision to go dark is wrong.Probably, the IRS was taking all of the income so that the owner simply ran out of cash to keep paying to run the station, so he just felt that had no choice. This scenario does not necessarily have a wrong or a right answer. I would simply suggest that exploring non-traditional alternatives may prove worthwhile rather than go dark. I believe there are some workable ideas that may not have been considered, but it's definately a risk, as was pointed out.

 

[ok walters]

You did work for free at the start - what if the station never became "financially stable"? How much would you have been paid then? What if the power did get shut off? You did take a chance of making nothing for the possible upside of a big payoff.

I've already stated the fact that I did not work for free, regardless how you interpret it to be.

Now, I'm going to cut through the chase and get right to the point. Why does it matter to you regarding my work ethics and business practices? Please explain that to me first, then I will be very happy to give you a truthful answer to your "interrogation" although I am not under oath. Signing off now.

You said you would have bought the station cash if you had known it was for sale. This claim was made without any knowledge of the situation the stations face, so I posed some possible situations that may exist, and asked if you would still buy it. Then you got your panties in a bunch.

You may not have worked for free in the end, but when you took the job there was a chance you would work for free if the station didn't turn around. What if the new contracts didn't come through and the power went off? What if a tower fell down or the transmitter blew up right in the middle of this turnaround? The owner would have been forced to shut down and you would have not been paid, so yes there was a pretty good chance one way or another that you wouldn't be paid, or would be paid very little.

I am doubting such a turnaround ever happened, especially to the extent you claim. I have asked that you name the station as it would give your story some credence, but you refuse so we can all make our own judgements. I am calling BS on this one - and on your titles.

 

[jmtillery]

You did work for free at the start - what if the station never became "financially stable"? How much would you have been paid then? What if the power did get shut off? You did take a chance of making nothing for the possible upside of a big payoff.

I've already stated the fact that I did not work for free, regardless how you interpret it to be.

Now, I'm going to cut through the chase and get right to the point. Why does it matter to you regarding my work ethics and business practices? Please explain that to me first, then I will be very happy to give you a truthful answer to your "interrogation" although I am not under oath. Signing off now.

You said you would have bought the station cash if you had known it was for sale. This claim was made without any knowledge of the situation the stations face, so I posed some possible situations that may exist, and asked if you would still buy it. Then you got your panties in a bunch.

You may not have worked for free in the end, but when you took the job there was a chance you would work for free if the station didn't turn around. What if the new contracts didn't come through and the power went off? What if a tower fell down or the transmitter blew up right in the middle of this turnaround? The owner would have been forced to shut down and you would have not been paid, so yes there was a pretty good chance one way or another that you wouldn't be paid, or would be paid very little.

I am doubting such a turnaround ever happened, especially to the extent you claim. I have asked that you name the station as it would give your story some credence, but you refuse so we can all make our own judgements. I am calling BS on this one - and on your titles.

Call it whatever you want. You are making this way too much of an issue when there is no reason for it. If you concentrate half your time on managing WLBE that you are concentrating on this metaphoric witch hunt, instead of feeding us your own BS here, you can accomplish much more for yourself than you will ever accomplish as long as you spend so much time arguing over something that 1) is not of your concern; and, 2) accomplishes nothing productive.

The fact is I am very familiar with WEAG and the previous WEAG AM which is why I made the casual comment about buying the station if it were made available for sale. So, once again, you assumed I knew nothing about the subject, yet, once again, you are 100% incorrect. What I buy or don't buy is completely my business and certainly not any of yours. Even had I known nothing about the stations, again, it's my decision if I acquired it under any conditions so long as seller and buyer (me) are in agreement. I would think you would understand that simple principle instead of constantly debating a rather moot point for the sake of arguing and wanting to have the last word. The station has no license now so you can speculate from now till the end of time and it is meaningless as there is no longer a station to sell, buy, trade, or donate.

 

[ok walters]

You did work for free at the start - what if the station never became "financially stable"? How much would you have been paid then? What if the power did get shut off? You did take a chance of making nothing for the possible upside of a big payoff.

I've already stated the fact that I did not work for free, regardless how you interpret it to be.

Now, I'm going to cut through the chase and get right to the point. Why does it matter to you regarding my work ethics and business practices? Please explain that to me first, then I will be very happy to give you a truthful answer to your "interrogation" although I am not under oath. Signing off now.

You said you would have bought the station cash if you had known it was for sale. This claim was made without any knowledge of the situation the stations face, so I posed some possible situations that may exist, and asked if you would still buy it. Then you got your panties in a bunch.

You may not have worked for free in the end, but when you took the job there was a chance you would work for free if the station didn't turn around. What if the new contracts didn't come through and the power went off? What if a tower fell down or the transmitter blew up right in the middle of this turnaround? The owner would have been forced to shut down and you would have not been paid, so yes there was a pretty good chance one way or another that you wouldn't be paid, or would be paid very little.

I am doubting such a turnaround ever happened, especially to the extent you claim. I have asked that you name the station as it would give your story some credence, but you refuse so we can all make our own judgements. I am calling BS on this one - and on your titles.

Call it whatever you want. You are making this way too much of an issue when there is no reason for it. If you concentrate half your time on managing WLBE that you are concentrating on this metaphoric witch hunt, instead of feeding us your own BS here, you can accomplish much more for yourself than you will ever accomplish as long as you spend so much time arguing over something that 1) is not of your concern; and, 2) accomplishes nothing productive.

The fact is I am very familiar with WEAG and the previous WEAG AM which is why I made the casual comment about buying the station if it were made available for sale. So, once again, you assumed I knew nothing about the subject, yet, once again, you are 100% incorrect. What I buy or don't buy is completely my business and certainly not any of yours. Even had I known nothing about the stations, again, it's my decision if I acquired it under any conditions so long as seller and buyer (me) are in agreement. I would think you would understand that simple principle instead of constantly debating a rather moot point for the sake of arguing and wanting to have the last word. The station has no license now so you can speculate from now till the end of time and it is meaningless as there is no longer a station to sell, buy, trade, or donate.

Once again and like it always is, no specifics just bluster from Dr. Tillery.

 

[radio.observer]

I’ve chosen to join this thread not because of specific relevancy to this poor broadcaster’s issues, but because it contained the most recent postings. Many of you (including me) will not like what I have to say. The reason we won’t like it is because we CARE about a medium that was, just a few decades back, ultra important in people’s lives. Once, radio both informed and entertained with the seasonings of local chefs, cooking for the palate of those within a tight radius. At any given moment, there would likely be thousands tuned in, and advertisers actually had their messages heard by the enough people to yield effectiveness. Today, much of the medium has lost its relevancy. The huge sums paid by corporations to be in the broadcasting business, were offset by the management strategy of accountants. Get rid of news—too expensive. Remove live people—it’s too inefficient. Stop buying paper towels. And, so on. Bean counters should never RUN businesses. Gone are the visionaries, the innovators, the fly-by-the-seat-of-their-pants broadcasters who never lost sight of the fact that they needed lots of listeners. Big business (and the generations spawned by their foray into something once wonderful) merely think that you put something on the air and go sell advertising. If that ever really worked, it no longer does, particularly in smaller markets. Too many times now, mine eyes have seen the books. As with several other industries, radio must struggle through new owner transactions that pay less than what was paid before to acquire the facilities. Moreover, before debt service can reach a viable number in the business model, it is likely that a cycle of two or three successive buyers must take write-offs against the foolish hopes of profit that led each before to still overpay. And, it doesn’t stop at reduced debt service because someone else took a loss, either. A philosophy of investing in people must return. The broadcasters of yesteryear knew that among their biggest asset was staff. Quality costs money—always has—likely always will. Most importantly, if there’s time left to make a buck, the people at the helm must be more like those guys that took the mega money years ago and hit the retirement condos. This is a fast-changing society, so you can’t just go backwards. Think of this current Lake City facility as a microcosm of what’s happening all over small market America. Run it on the cheap and kill off another six months of convincing yourself that you’ve tried, while blaming too much competition and a bad economy The metros aren’t far behind either. No….Less than 100 watt translators won’t save AM, and BORING—no matter what the power, band or market—doesn’t sell enough in the end to break what is now a too long-standing history of underperformance. Look among you for the leaders that possess a true view of what makes today’s people tick. They’ll be capable of formulating workable ideas together with having an appreciation for talent. In all likelihood, they won’t have worked (at least for long) for Clear Channel or any of the other super chains. They still love radio, though. And they’re passionate about it. If you’re out there…and while automakers are still including AM/FM radios, I for one would enjoy being entertained once again.

 

[Kmagrill]

...Think of this current Lake City facility as a microcosm of what’s happening all over small market America. Run it on the cheap and kill off another six months of convincing yourself that you’ve tried, while blaming too much competition and a bad economy...

Without either agreeing or disagreeing, that's not really what happened in this case. I think WQLC did a credible job of serving the community. Not as well as Newman does, but credible. The station was popular and still had a significant pool of advertisers. The problem was that the people trusted to run the station in recent years don't seem to have done a very good job, culminating with the bank accounts being seized. At that point, it's game over no matter how good a job you've done before.

 

[jmtillery]

I agree that somewhere along the way poor decisions were made that has resulted in where the stations are now. I'm not pointing a finger at any one person or persons, but everything today is a direct result of past decisions. Considering WQLC has a decent Lake City - Live Oak signal, 102.1 has been in a unique position to super-serve the market well. And, I believe for the most part it has. Unfortunately when the IRS gets involved, the whole game plan changes. I've seen similar situations here in Florida where the IRS has gotten involved with radio stations and shut them down due to tax obligations, and initiated a forced sale, usually as a means to recover some money to pay off the tax debt. It's now a matter of damage control, resolving the IRS and other financial issues, and rebuilding, effectively, a new radio station brand from the ground up. It will take time to accomplish each of those objectives.

 

[ok walters]

"It's now a matter of damage control, resolving the IRS and other financial issues, and rebuilding, effectively, a new radio station brand from the ground up. It will take time to accomplish each of those objectives."

Exactly Dr. Tillery, but with the stations off the air the clock is ticking fast. The longer they are silent the more time it will take. The other factor is how quickly the other broadcasters seize on this opportunity for new sponsors - if they do well, and the stations stay off for a few months, these stations may never be back to where they were.

 

[Parttimer]

As I said earlier....

Scott Savage will settle the IRS situation, file bankruptcy, and sell the stations. He handled the TAMA bankruptcy that included 105.3.105.5/105.7 in the Jacksonville market.

 

[ok walters]

I am sure he will. However, the amount of time it takes to get the stations back on the air will be a factor in any rebuild effort by anyone. Silence tends to be deadly.

 

[Whiplash]

One week after Power Country, Inc's trio of stations in northern Florida went dark, Newman Media flipped 1340 WDSR/97.1 W246BY Lake City to Country. Now branded as "The Falcon", the former Oldies station is taking advantage of the opening left by the demise of Power Country.