W-DOH!

[SirRoxalot]

From All Access:

JOHN A. BULMER's CHADWICK BAY BROADCASTING is selling Adult Standards WDOE-A/DUNKIRK, NY and AC WBKX/FREDONIA, NY to GEORGE W. KIMBLE and ALAN BISHOP (FINGER LAKES RADIO GROUP) for $850,000. plus a "cash adjustment" based on remaining cash on hand in the stations' accounts at closing.

[EDIT]

How's $850K sound to you? Dunkirk-Fredonia has fallen out of the top 300 markets, which means that it's not rated by Arbitron, and the MSA is (much) less than 60,000 people.


EDIT-post truncated because originating material is copyprotected by All Access. Unauthorized use of copyrighted content is in violation of Radio-Info's TOS.]

 

[Radknowski]

JOHN A. BULMER's CHADWICK BAY BROADCASTING is selling Adult Standards WDOE-A/DUNKIRK, NY and AC WBKX/FREDONIA, NY to GEORGE W. KIMBLE and ALAN BISHOP (FINGER LAKES RADIO GROUP) for $850,000. plus a "cash adjustment" based on remaining cash on hand in the stations' accounts at closing.

The AM is Oldies and the FM is Country (at least the last time I listened.) I'm presuming they got the sale price correct. Then again...

$850k seems like a lot of cake for an AM-FM combo in Dunkirk On Erie... then again, the stations could be cash cows and have low overhead (i.e., voicetracked and automated.) The FM signal covers the west & northwest part of Chatauqua county and some of southern Erie county. The AM is 1kW Day-500W Night, not exactly a flamethrower, but it does some good local programming with high school sports.

Chautaqua county, although picturesque, is one of the most economically challenged counties in NY state. Yes, even more challeneged than Erie county... hard to imagine, eh?

 

[ThePickleReport]

From All Access
How's $850K sound to you? Dunkirk-Fredonia has fallen out of the top 300 markets, which means that it's not rated by Arbitron, and the MSA is (much) less than 60,000 people.

They were sold in 2000 for $725k. Sounds about right I guess. They have pretty nice facilities for a small market station.

 

[SirRoxalot]

Yeah, but the market keeps getting smaller!

 

[Element9]

The FM on 96.5 comes in pretty well in Hamburg. The country format isn't anywhere near as good as WYRK, but at least it's a choice and I have it on the second tier of buttons on my home Onkyo receiver which has thirty pre-sets. Like I need thirty.

About a year ago somebody on this board suggested that WDOE/WBKX were on the block a for more than a million. Must be a buyers' market.

-9-

 

[JakeLongwell]

I wonder how much of WDOE/WBKX' operations will soon be handled at FL Radio Group master control in Geneva.
My guess is they will employ similar programming and strategies they use at their home base. For instance, I could see WBKX taking on the same satellite service used by WFLR-FM, with local sports coverage remaining intact. Like most modern day broadcasters, these guys don't see much of a future for music on AM. So I would guess they would put the same talk lineup on WDOE that is currently heard on all their other AM properties, though I doubt they will use the "Finger Lakes News Radio" branding on a Jamestown area station.

 

[Radknowski]

quote author=ChiefRoxalot ]
From All Access
How's $850K sound to you? Dunkirk-Fredonia has fallen out of the top 300 markets, which means that it's not rated by Arbitron, and the MSA is (much) less than 60,000 people

They were sold in 2000 for $725k. Sounds about right I guess. They have pretty nice facilities for a small market station.

A elementary look at the numbers:

Cash flow, also known as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is an interesting yardstick on which to base a purchase price.

If $850k is the actual 2006 sale price of WDOE-AM and WDKX-FM price and the price is determined by a 10x multiple, the station was cash flowing $85k. Apply a 12x multiple and the station was cash flowing a little more than $70k.

Comparing the same values from 2000, the Cash Flow was $72.5k at 10x and $60+k at 12x.

So, in six years, the EBIDTA increased 17.25%, or 2.875% per year, not adjusted for inflation.

Doing business in a small market is challenging, especially as an owner attempts to grow the buisness and control expenses; it's even more challenging if/when a market is shrinking.

There is an unknown variable in the 2000 purchase price of $750,000. Was the price based on, or was it a gratuity for services rendered, exchanged, provided or traded by the buyer (the current owner)?

If the 2000 sale price was negotiated as an exchange for services, that is, not cash paid by the buyer, then the 2006 sale price is pure gravy and as such, yields a tidy profit, subject to applicable state and federal taxes.

That's it.

I've used everything I can remember from Accounting 101.

And you guys thought I only painted houses and hung drywall for a living! [/Mike]

 

[SirRoxalot]

Mike, thanks for the explanation.

Up to this point I thought "cash flow" was getting the penny to roll right on it's way to the wall when you were pitching them during your lunch hour. Then again, I learned "economics" from the boys on Connecticut Street during my misspent youth (West Side translation: yute).

 

[jefflaurence]

Another "variable" and many times the major deciding factor is physical plant condition, and realestate included. I was eying a station not long ago with a partner, and we made a cash offer based on cash flow and pending inspection of the actual radio station. What we found was a radio station for sale at 375,000..According to your accounding "Rad" that would set cash flow at around 35K..yucch..Then we looked at what was included and found the towers sitting on 19 acres of prime highway real estate..(estimated comercial value 600,000! WOW HUH?) but then we saw two of the three tower's insulators cracked and nearly crumbling, requiring jacking up two towers, and replacing the insulators..and one tower needed complete replacing. The we found 24 OSHA violations complete with potential fines..cost to fix was somewhere near 250,000, plus the possible fines AND rewritten insurance riders another 80K, and as a band-aid a partially replaced ground system at another 70k..Total value of the radio station MINUS 25 THOUSAND dollars..It would be cheaper, and a better investment to buy it, rip it all down and sell the real estate to a developer!! Which..I am afraid is exactly where terrestrial radio is headed. There is not enough yearly return on a local radio station to justify spending all that money on electricity, staff, taxes, fines, law suits, licensning fees, computer equipment, transmitters, tower maintenece, lighting, landscaping, fencing and insurance..especially one that couldn't GIVE AWAY ten 100 dollar bills during morning drive! Seriously my partner asked the morning jock to get on the air and give caller #1 THRU #10 a hundred bucks (he had it in his wallet) Do you know we didn't get ONE call! Not ONE! There are teenagers running streaming stations on Live 365 that have waaaay more listeners than that pitiful station.

The key is going to be how to broker ad time on those thousands of geeky internet streams being run by kids who want to do hobby radio and are doing it better than many many terrestrial broadcasters. Do you think McDonalds or Pepsi, or Budweiser would be interested in a stream co-op where each of those little webcasters runs ONE to THREE :60's an hour in exchange for a small check every month? Let's see..if each sponsor paid only 150,000 a year to get on ALL of those stations every hour for 60 seconds an hour for a YEAR..and the broker paid out 20 bucks to each of the webcasters for each sponsor a month to..say 5000 stations..that leaves 50 thousand a year to the broker PER SPONSOR! So if the stations run only THREE SPOTS AN HOUR..for different national sponsors..there's a quick 150K per year to the broker (me) for making three well placed phone calls!..and that's just three national sponsors..Smaller ad packages and similer types of advertisers could regionalize..This could be the future!

Sorry..I'm rambling..

 

[Bulmer]

I was interested to read some of the speculation on the sale of my Dunkirk stations WDOE and WBKX (96 Kix FM). Everyone seems to have missed one major point here. It was a sale of my STOCK in Chadwick Bay Broadcasting. Generally, a stock sale is very favorable to a seller, as the sale is treated by the IRS as straight
capital gains (15% tax). A seller usually gives a discount for a stock sale, typically 15% to 20%. These stations were profitable and I agree with the post that said that Dunkirk-Fredonia is a shrinking market.
Not only that, you have Buffalo pounding in one one side and Jamestown, NY from the other. The mom and pop, local direct retail base has shrunk dramatically in just the 7 years I owned the stations.

I would have owned these stations forever (they were completely debt free), but finding good people today
who want to work in small market radio has been a real challenge. My general manager will be 65 in a year
or two and even though we have SUNY Fredonia two miles away, it was darn tough finding students that even wanted to work.

From the horse's mouth, I am very happy with the deal for WDOE-WBKX. Truth be told, the deal was changed prior to the closing to seller financing. The price was adjusted UP to One Million dollars on terms.
Again, may I point out, that was for STOCK not assets. Under an asset sale, the owner is hit with depreciation recapture (taxed at ordinary income). Stock sales are the exception, not the rule. Hence, I
couldn't be more pleased with the deal.

The station's plant is one of the finest small market facilities in the country. Truth be told, after 37 years in the radio business (and ownership of some 9 stations over the years), I simply wanted to enjoy life. The
business has changed dramatically since I first entered radio as a part time weekend announcer at WIZR in Johnstown, NY back while a sophmore at Troy High School in 1968. George Kimble and Alan Bishop are fine
broadcasters and I wish them well. My wife and I have been very blessed with three vacation homes, Florida, Maine and Chautauqua Lake, NY. Now I have time to enjoy them. John A. Bulmer (Seller)

 

[JustPastBuffalo]

This has been one of the most enjoyable, informative and entertaining threads on the board, thanks to the contributions of the "usual suspects" who post here. I'm happy to see it was re-vitalized by Jeff Lawrence ("...ten $100 bills.... no callers..." Amazing!) and John Bulmer, who have contributed their perspective and expertise to this discussion.

As a WDOE alumnus (six marvelous weeks as a 19 year old morning guy with a smart mouth, blown out hours after saying "... there's a rancid aroma in the air this morning... must be they're brewing the Holiday Draft at Koch's today...") the station has always intrigued me. Some (much better) talent have passed through those doors, notably Van Miller, Eric Chase, Ben (Randy Michaels, Ben Hummel) Franklin and Dan Neaverth (under different call letters), among others.

While I'm at it, John... I'm mildly envious... $1 million... three vacation homes... nice! Very nice. Well, you worked your "assets" off to get it, so enjoy it. And stay in touch with the board. BTW, I noticed WZOO, which you put on the air, was again sold as part of a cluster. The price never goes down, does it.

Jim Pastrick

 

[ThePickleReport]

I would have owned these stations forever (they were completely debt free), but finding good people today
who want to work in small market radio has been a real challenge. My general manager will be 65 in a year
or two and even though we have SUNY Fredonia two miles away, it was darn tough finding students that even wanted to work.

That's tough to hear. Many moons ago when I was a student we would have killed to work there and no one wanted us!

In my former radio career market size really wasn't a consideration. I just wanted to do "good radio" but I found small markets even more challenging trying to get my foot in the door.

 

[alw]

Some (much better) talent have passed through those doors, notably Van Miller, Eric Chase, Ben (Randy Michaels, Ben Hummel) Franklin and Dan Neaverth (under different call letters), among others.


Jim Pastrick

Speaking for those of us who are graduates of "The Big B-U-Z", I say....ho hum!

 

[JustPastBuffalo]

Some (much better) talent have passed through those doors, notably Van Miller, Eric Chase, Ben (Randy Michaels, Ben Hummel) Franklin and Dan Neaverth (under different call letters), among others.

Speaking for those of us who are graduates of "The Big B-U-Z", I say....ho hum!

Ahhh yes, Doctor Jazz.... the Mighty 15-70! Hey, I wasn't rippin' on WBUZ alumni... this isn't Harvard-Yale, afterall. The Big Buz was a damn fine radio station back in the day... wasn't it above the bank on the corner of Main and Temple? Some fine alumni went through that station as well.

Check out these links: WBUZ@Wikipedia or here.

 

[ThePickleReport]

Hey, I wasn't rippin' on WBUZ alumni... this isn't Harvard-Yale, afterall. The Big Buz was a damn fine radio station back in the day... wasn't it above the bank on the corner of Main and Temple?

That must have been a neat location. Much better than the old trailer where the station died!

 

[raymond_shaw]

Check out these links: WBUZ@Wikipedia or here.

I'd forgotten that their owner had his license revoked....contest winners not getting their prizes, not paying music royalties and alleged racial discrimination. The following I now recall from a article about WBUZ in the Buffalo News way back then: during the Jimmy Carter years there was a federal employment program called CETA that would send people on the program to eligible employers and pay all - or some - of their wages(I'm not sure of the particulars, you'd have to ask Jimmy). Anyway, they sent an african american woman to WBUZ to work as (I think) a receptionist and the owner called the local CETA office back and asked if they didn't have anyone a little whiter - "she's so black, she makes charcoal look like snow." Pretty racist and not a smart thing to say to a Federal employee.

 

[Radknowski]

Mr. Bulmer, thanks for the tutorial and giving us an owner's perspective on taxes and transactions. Very informative!

I would have owned these stations forever (they were completely debt free), but finding good people today who want to work in small market radio has been a real challenge. My general manager will be 65 in a year or two and even though we have SUNY Fredonia two miles away, it was darn tough finding students that even wanted to work.

I copied this from your post because on top of your very detailed explanation, this paragraph speaks volumes about what radio is facing today. Kids aren't hopped-up on working in radio because there's nothing there that lights their fire. They see the glamour of TV... and they figure that if, for example, Erica Von Theil or her male conterparts can be on TV, looking like a Hollywood star while hacking their way through a newscast, why bother with radio. It's not about news, talent or journalism chops, it's all about the look and the act. Go big or go home! Can you blame them? (It's a rhetorical question.) The pay in small market radio for being on air, doing news and/or production is poverty level and in some cases, qualifies for food stamps.

Please understand, this is not an indictment of YOUR operation or stations. It's simply an observation.

When guys come out of Syracuse Newhouse or SUNY Fredonia, they track into TV or newspapers. When and if radio interests them, they do not want to start in a small market. They want to do TALK radio in a medium or large market and they prefer to do Sports radio. They believe they have the talent, smarts and the act to be the next Jim Rome, or the next flavor of the year at ESPN!

Why would they waste time playing tunes, being a jock, news person or production guy, learning their craft from seasoned professionals (like you) with years of experience and so much to offer them? Hell, nobody their age listens to music RADIO, because they get their music fix from iPods and MP3's. It's sad, but true. And if I were 22 today, I might be filled with as much piss and vinegar and feel the same way. It would be wrong, but looking at my back pages, it's likely I'd be just like them.

"Top of the world mom... Top of the world!!!"