Where the hits REALLY came from. Two books that tell the truth.

[davideduardo]

What you describe is typical of "first time owner" situations and is fairly necessary to succeed. At my first station as an owner, I was GM, PD, chief engineer, sales manager, and did board shifts, production, accounting, billing and whatever else came up.

At the beginning, I could not afford additional staff as the station was a start up. Although it was in a market of about 1,000,000, it had a format that had never been done there before, Top 40, and met huge sales resistance and did not bill more than $100 in each of the first 6 months.

Until ratings validated the format, I pretty much had absolutely no life and to save money, used a Vespa instead of a car to get around and lived with the in-laws!

 

[Avid Listener]

Perhaps you are not in the target for new launches, and the stations are, intelligently, using highly targeted media that you don't consume.

Hardly. Despite my age, I watch more than a few television programs aimed at a different age group.

There's also the issue of whether or not a promotion is especially well done. One can spend money like a drunken sailor buying ads, but if the ads themselves don't do an effective job of reaching the consumer, you're throwing away your money. Especially bad are the ones like the billboards they ran in a city where I used to live that simply had the nickname of the station and the frequency. They must have spent a ton of money putting them up, but they didn't give anyone a clue about what the station was airing.

Sadly, this website has no forum for discussing the #1 reason why broadcast radio and television even exists, commercials. But even though there's no appropriate venue to discuss it, there have been some extremely terrible commercials produced and aired on local radio, especially the ones ABOUT local radio.

 

[BostonRandy]

I know I am wrong 94.5 percent of the time! My wife reminds me of that as often as an Eagles song plays.

Are your wife and my ex-wife related?

 

[firepoint525]

What you describe is typical of "first time owner" situations and is fairly necessary to succeed. At my first station as an owner, I was GM, PD, chief engineer, sales manager, and did board shifts, production, accounting, billing and whatever else came up.
At the beginning, I could not afford additional staff as the station was a start up. Although it was in a market of about 1,000,000, it had a format that had never been done there before, Top 40, and met huge sales resistance and did not bill more than $100 in each of the first 6 months.
Until ratings validated the format, I pretty much had absolutely no life and to save money, used a Vespa instead of a car to get around and lived with the in-laws!

I can see how you could reach that conclusion, based on what I posted previously. But he has been GM of that station for over 30 years now, and has been the owner for a little over 20 years. About the time that he became the owner, the station upgraded its sound, format, etc., but I don't know if that was because he became the owner, or if it was more of a situation in which they were forced to do so. I am wondering if the supplier discontinued manufacture of those reel-to-reel tapes that they had probably used on the FM station since it first came on the air.

At any rate, with six high schools in that county, it is almost inevitable that one of them will go to the state tournament every year, and yes, he drives to Nashville himself to cover the teams. Even if they win, he drives back home until the next game in the tourney, when he drives BACK to Nashville.

He is an nth-degree perfectionist, and almost impossible to please. Working for him was nothing short of miserable. Turnover was, and probably still is, very high there.

 

[firepoint525]

I know I am wrong 94.5 percent of the time! My wife reminds me of that as often as an Eagles song plays.

Clever reference to Hippie's frequency! And yes, I notice that they play the live version of "Hotel California"!

 

[davideduardo]

I can see how you could reach that conclusion, based on what I posted previously. But he has been GM of that station for over 30 years now, and has been the owner for a little over 20 years.

From the 50's up to the consolidation events of the 90's, official FCC data as well as NAB surveys showed half of US radio stations did not make a profit.

I suspect the owner you are describing has one of the "unprofitable" stations.

I always suspected that a high percentage of the unprofitable stations were actually "break even" situations where the owner-operator drew a salary, took out lots of trade, and left no profit for the corporation that held the license to be taxed on. That avoided double taxation on income distribution, yet provided the owner with what amounted to guaranteed lifetime employment and an asset that could, at some time, be converted into a condo in Naples or Ft Myers.

 

[firepoint525]

From the 50's up to the consolidation events of the 90's, official FCC data as well as NAB surveys showed half of US radio stations did not make a profit.
I suspect the owner you are describing has one of the "unprofitable" stations.
I always suspected that a high percentage of the unprofitable stations were actually "break even" situations where the owner-operator drew a salary, took out lots of trade, and left no profit for the corporation that held the license to be taxed on. That avoided double taxation on income distribution, yet provided the owner with what amounted to guaranteed lifetime employment and an asset that could, at some time, be converted into a condo in Naples or Ft Myers.

This station bought out another station within the same county a couple of years after I left there. They have since also purchased (and then sold) stations in neighboring counties, some of which they still own. They have also bought up translators, which except for the one repeating their AM station, does nothing to improve the coverage areas of the parent stations.

If you like, I can privately tell you which station this is.

As far as being an employee of said station, this station is located in a college town, and nearly everyone who works there is either a student (part-timers, evening/weekend shifts, etc.) or a recent graduate (full-timers). The GM wants to squeeze as much work out of his staff as he can without paying them for it, so nearly all full-timers are salaried. He even brought his wife in to cut spots for him because (in his own words), "she works for free." This station isn't much better than a student station when it comes to being "paid," so you are really "paid" more in experience than in money.

 

[Avid Listener]

From the 50's up to the consolidation events of the 90's, official FCC data as well as NAB surveys showed half of US radio stations did not make a profit.

I've worked for more than a few businesses that never showed a profit. In some cases, the owner had to go through three different accountants before the profits stopped showing.

 

[TheBigA]

I've worked for more than a few businesses that never showed a profit. In some cases, the owner had to go through three different accountants before the profits stopped showing.

Now that's funny. I identify with that.

 

[davideduardo]

As far as being an employee of said station, this station is located in a college town, and nearly everyone who works there is either a student (part-timers, evening/weekend shifts, etc.) or a recent graduate (full-timers). The GM wants to squeeze as much work out of his staff as he can without paying them for it, so nearly all full-timers are salaried. He even brought his wife in to cut spots for him because (in his own words), "she works for free." This station isn't much better than a student station when it comes to being "paid," so you are really "paid" more in experience than in money.

I wonder how many of us got a start or a step on the way at such a station.

My first station was group owned, Richard Eaton's United Broadcasting. They did not care much about liability issues or minimum wage, so there was a whole crew (or, today, "posse") of go-fers who did all kinds of stuff for free. If you hung in long enough, you got paid shifts. But you had to remember to bring your own pens and toilet paper, as they never ordered enough soon enough. They were self-insured, so if you got really sick, they fired you. I thought I had made it when I got a 16 hour Sunday shift with no overtime... they musta' figured that if I was dumb enough to take the shift, I would not complain.

 

[davideduardo]

I've worked for more than a few businesses that never showed a profit. In some cases, the owner had to go through three different accountants before the profits stopped showing.

Reminds me of a story told to me by the owner of some FM stations in Chile:

An American businessman goes to Chile to set up a factory. He hires a tax lawyer, and meets with him.

"Now, in the first year we will have a loss. In the second year, we will cut the losses, and in the third year we will break even. By the fourth year, we will make a little bit, but in the fifth year we will make a good return. So what I need to know is, in the fifth year, how much will we be paying in taxes?"

The lawyer replied,

"If you plan on paying taxes, why did you hire me?"

 

[Avid Listener]

Reminds me of a story told to me by the owner of some FM stations in Chile:

An American businessman goes to Chile to set up a factory. He hires a tax lawyer, and meets with him.

"Now, in the first year we will have a loss. In the second year, we will cut the losses, and in the third year we will break even. By the fourth year, we will make a little bit, but in the fifth year we will make a good return. So what I need to know is, in the fifth year, how much will we be paying in taxes?"

The lawyer replied,

"If you plan on paying taxes, why did you hire me?"

Clearly, you understand that demonstrations of profit or loss are not true indicators of radio stations' success or failure.

 

[oldies76]

Great idea. Ask the KFEZ people how it's working out for them.

And they are broadcasting last I checked......this morning. People are listening. They are relatively new, give them a chance. Not everything has to be of KRTH caliber A.

http://easy1013.com/

 

[TheBigA]

And they are broadcasting last I checked......this morning. People are listening. They are relatively new, give them a chance. Not everything has to be of KRTH caliber A.

Not saying that it has to. Just wondering if they could survive if all they were doing was this format 24/7.

 

[oldies76]

Actually, I have my own radio station. It broadcasts over 87.9, though it only covers about ten feet. It's the MP3 player in my car. I load a thumb drive with what I want to hear, and that's what I hear. I often have friends and coworkers riding with me in the car, and invariably they ask what station I'm listening to with such a great mix of hits, deep cuts, and new songs and no DJ chatter.

There ya go!

Of course the big shots will keep saying..."Turn that off, I don't recognize 85% of those songs. Those songs are a tune out and find a station that plays "Hotel California" 4 times a day. I have not heard that song since..........um..........yesterday."

 

[oldies76]

Not saying that it has to. Just wondering if they could survive if all they were doing was this format 24/7.

Good question. The only thing I'm disappointed, is that they do not broadcast their easy music during the afternoons, with a 4pm-6pm groove show, then jazz following that, from 6-8pm. But when you do hear the music, it's very interesting.

 

[TheBigA]

Good question.

I know. That's why I say you should ask them.

 

[davideduardo]

People are listening. They are relatively new, give them a chance. Not everything has to be of KRTH caliber A.

They have been on the air since Spring of '09. They have had three different formats in that time. Obviously, nothing works for them.

 

[davideduardo]

Clearly, you understand that demonstrations of profit or loss are not true indicators of radio stations' success or failure.

Since we don't know the profit of individual stations unless we are the owner or in a very small corporation or partnership, we apply metrics such as ratings and billings.

When buying stations, we do due diligence to determine the value of the station. We look at trailing cash flow, ratings trending, billings levels as well as the normal things like litigation, assets, leases, real estate and such. The core of a purchase price is a cash flow multiple. In the absence of profitability, we look at the overall market and estimates from industry sources and determine stick value based on potential cash flow.

No matter what the situation, the value of a station is measured by its profitability or potential for profit. Billings and ratings are the more universally available metrics that indicate whether a station is doing well or not.

 

[Tibbs4]

While I certainly cannot speak specifically about individual radio stations profit or loss filings with the IRS vs. creative write-offs, I can tell you that once you get out of the Top 100 markets, the radio business is full of plenty of rough and tough roller coaster rides and as Firepoint mentioned, the wearing of lots of hats! When I was on vacation last week, I was with some great radio buddies just talking small market radio business. It's an amazingly tough, brutal business in many ways! My guess is the legit losses of stations is overwhelmingly higher than most would expect. Obviously, the reasons for this situation are often self-inflicted. Purchase price, too much competition, debt, unreasonable expectations of when the revenues will arrive, underestimating costs/overhead, playing too much Eagles, etc.

The line of the week - "If the dumb@$$ (owner) had actually listened to his own stations programming and followed the financial advice offered on his station (by Dave Ramsey), the moron probably wouldn't be living in a cardboard box wondering what the heck happened when someone actually expected a loan payment to be paid."