WDJO: Anyone paying attention?

[Bizman]

"Debt. High levels of debt is what killed the whole idea of being local. Having promotions people, etcetera.

Easy to get $$$. It caused prices to skyrocket (just like in the housing industry)."

JRY,

I'm interested in buying a station, do I just wait for prices to come down (if ever)? I really can't see another way to make the numbers work. I can't pay cash at current levels.

 

[pioneer71]

Bizman.. I think you come to the right place for answers to yor question. There are still stations priced too high but there are several on the market that are priced under their value. Plus, some LMA agreements are quite attractive too. Your asking for help for a good source but as I have stated before there are a number of ways to make money in addition to the station. I have seen stations do very well with NTR events and revenue from their web site.

Your staff has to be small and be able to do a number of jobs but it can work .One of the best ways to get a good deal is if someone wants out of the business. I know several who have scored this way.

 

[jry]

"Debt. High levels of debt is what killed the whole idea of being local. Having promotions people, etcetera.

Easy to get $$$. It caused prices to skyrocket (just like in the housing industry)."

JRY,

I'm interested in buying a station, do I just wait for prices to come down (if ever)? I really can't see another way to make the numbers work. I can't pay cash at current levels.

Hey Biz,
I am getting the feeling that prices have about reached the new "floor", maybe basement is a better word. I don't see them rising, in the immediate future, either. They will hover at current levels until some more inventory is sucked up and a few more licenses get turned in. There are plenty of owners who would like to check out. The big problem for these guys is that they are cash flowing but, they cannot sell for a decent multiple. Its a good problem to have, in a way. Bottom line is, if there is no immediate need to sell and your making money, you may as well keep it.
Here is an interesting development. My FCC attorney mentioned to me the other day that the new "Stick Value" on an AM is roughly 65 cents per head, 12+, within the stations 2 MV/M. FM's used to go for 3 to 5 bucks per head, within the 60 DBU.
Currently, that figure is down to under 3 bucks. Now, if the station is really profitable OR you're dealing with major properties as in the recent Bonneville pickup, the deal will be much different.
Short story, Biz, is if you can finagle the cash or get a seller to hold the paper, now may be your best chance to buy. PM me if you wish and we can talk. I am a broadcast broker, BTW.

 

[pioneer71]

JRY..What are your thoughts of going into a LMA agreement? Would you do it with a stand alone AM?

 

[jry]

JRY..What are your thoughts of going into a LMA agreement? Would you do it with a stand alone AM?

I have been on both sides of a Time Broker Agreement (the proper term for LMA).
About three TBA's ago, a told my Attorney to come out and shoot me if i ever even think about doing another one, on either side.
If you have a decent business plan and put together a good agreement, you should be fine. They are not for me, at least the long term ones. Something that keeps the station on the air, while waiting for a license transfer is probably okay. These days, you can buy a station for what it may TBA for because you are covering all of the licensee's expenses, a full time man to watch the license, your expenses and a profit for the licensee. If you have some dough and you are sure your format will work, buy it.