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Whose winning?

J

johnbasalla

Who is weathering the economic storm better?
A) Owners who have 1 or just a few stations in one or a small number of markets
B) Large corporations who own lots of stations in many markets

Any differences between major and large market stations vs. medium and small market stations?
 
C) None of the above.

Nobody's winning in the current environment. Some aren't losing as fast as others.
 
SirRoxalot said:
C) None of the above.

Nobody's winning in the current environment. Some aren't losing as fast as others.
Click to expand...

Art Sutton might disagree with you. Maybe you missed class the day he was teaching:

http://boards.radio-info.com/smf/index.php/topic,114584.msg918078.html#msg918078

Read his last paragraph where he suggests some broadcasters the business magazine might interview.

(I've met Art... been in a couple of his stations. I live in the shadow the Gainesville WDUN he talks about. I know the Calhoun broadcasters. I haven't met the man from Ellijay.... but know his station well.)
 
Winners and Losers

OK, I stand corrected.

ALMOST nobody's winning, and the guys who are losing are losing BIG. Ultimately, we may see the "correction" that brings radio station values back to earth, and gets debt service back down to manageable levels. Then, maybe the broadcast companies who are left will be able to spend money on the programming that differentiates them from iPods, Internet streams, and other jukebox formats.

There are some broadcasters out there - mostly smaller companies - who aren't overleveraged, who didn't pay 15x cash flow for radio stations, and who continue to provide great service to both listeners and advertisers. Unfortunately, that's not what's happening at most of the major groups right now. The cuts are deep and brutal, and listeners are noticing. It will be interesting to see what happens to cume, AQH ratings, and TSL over the next year. Certainly, neither the listeners nor the advertisers are winning. At best, a few companies are "holding their own", which is regarded as "winning" in this environment.

Bankruptcy is coming to some groups, and I'd put Citadel at the top of that list. The ABC acquisition - and Farid's hubris - is likely to take them down.
 
Re: Winners and Losers

Getting back to John's question, I don't think there's a single answer. I read the comments from a guy who owns one medium market AM station, and he is in deep water. All of his income comes from that one station, and he knows his advertising is drying up. He's already laid off some of his best-known talent, and has taken some heat for it. And he has no money to invest in new technologies or new media. His audience is mostly over 60 years old, and the future doesn't look good. I think stations like this will be gone in the next few years.

At least the bigger companies can diversify. That was their mistake in the first place.
 
Bigger companies get more of the buy. They can bundle in more stations for a larger share of the buy. And when cuts are needed, they can syndicate or voicetrack easier.
 
1900radio said:
Bigger companies get more of the buy. They can bundle in more stations for a larger share of the buy. And when cuts are needed, they can syndicate or voicetrack easier.
Click to expand...

That would be true, except that the way most of the "big" companies got big was by incurring massive debt. That debt was financed on the basis that revenue - and profit - would increase because of the savings from consolidation, and increases in revenue from the leverage that they'd have with advertisers by creating monopolistic groups.

As we know, revenues are dropping, and station values are declining. Most groups can't even get out from under by selling stations because they won't get back what they originally paid for them.

The bottom line is that groups - whatever size - with the lowest ratio of debt-to-value are the ones that have the best chance of survival.
 
I come bearing a question. With the congressional hearings these days about bail-outs, we are all getting a glimpse of big corporate finances. In all of this conversation about the ins and outs of "small potatoes station owners" vs. "large corporate ownership"... particulary publicly traded companies... is there an issue that we are not discussing?

It appears that the "big boys" can leverage at much higher multiples than can the "small potatoes". Is that a bigger advantage than such things as offering group buys to agencies?
 
Goat Rodeo Cowboy said:
It appears that the "big boys" can leverage at much higher multiples than can the "small potatoes". Is that a bigger advantage than such things as offering group buys to agencies?
Click to expand...

It depends on the advertiser, no? And who the advertiser wants to reach.

One of the problems with group selling is that some advertisers want to reach specific audiences, not just mass numbers. That is one way that new media is more effective than old media. And why old media is re-aligning itself to go back to providing more focused audiences to advertisers.
 
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