WZUM 1590

[dB]

JKF hit the nail on the head. "Someone with enthusiasum could sell an oldies station."

Look at what WDJO is doing in Cincinatti:
http://www.oldies1160.com/page.php?page_id=9831

If someone was to do this with 540 and be able to find 3 or 4 seasoned sales reps that are passionate about the format go door to door selling mom and pops oldies could work.

Maybe this becomes the model for the AM band (until the FCC throws in the towel and makes it an extension of the 160 meter ham band. )

A handful of relatively high power (say 5kw and up), conventional corporate ownership stations, and then a dozen or two lower-power, niche programmed, lightly staffed stations. Maybe rent tower space to cell companies to cover the electric bill. A mix of "hobby", community, and governmental ownership.

 

[cingram]

Look at what WDJO is doing in Cincinnati.

That's a very good example. Admittedly, it's a fulltime signal, but not a great one (5 kw day, 500 watts night
on 1480...both directional), nor does it get very big ratings (usually around half a point), but not only do they
make money, they made enough to purchase WCIN and move the station from 1160 to 1480.

C.

 

[Whiplash]

WDJO is a perfect example of how it can and will work. WJAS here in Pittsburgh is another. Of course they have some ratings, and a dedicated sales staff who know how to sell the format, and AM radio.

To the other negative posters, how many of you have ever owned or ran radio stations? Please raise your hand, or get to the back of the line.

 

[Talk_Dude]

WDJO is a perfect example of how it can and will work. WJAS here in Pittsburgh is another. Of course they have some ratings, and a dedicated sales staff who know how to sell the format, and AM radio.

To the other negative posters, how many of you have ever owned or ran radio stations? Please raise your hand, or get to the back of the line.

Only when the those positive about an oldies station being profitable raise their hands, and post some actual numbers.

For example, how much would it cost for a staff of professional DJ's actually earning a living on this new, hypothetical radio station? How many minutes of airtime could be devoted to commercials? What would airtime minutes have to sell for to make enough to pay for the DJ's, the utility bills, taxes, licensing fees, and other overheard expenses? Don't forget factoring commissions for that staff of 3 or 4 seasoned sales reps. "Seasoned" sales reps won't work free or even cheap.

When someone actually posts some real numbers, then it's time to call the "negative posters" on not thinking it's a good idea.

Here's a start for anyone who thinks this will work. Just fill in the blanks.

DJ's and other on-air talent, paid competitively enough to get (and keep) good, experienced people. $_________________

Available minutes per day to sell at peak (daytime @ 1,000 watts) rate: ____________________________

Available minutes per day to sell at discounted night (24 watts) rate: _________________________

Peak Airtime rate, per minute $_____________________
Off peak airtime rate, per minute ____________________¢

Total gross revenue from airtime sales @ 95% maximum sales $___________________________

Sales staff Commissions $ _________________________

Total net revenue from airtime (Gross less Commissions) $ ____________________________

Overhead expenses:

Utilities: $_____________________________

Equipment maintenance staff and replacement parts $_____________________________

Office equipment: $______________________________________

Studio production consumables: $___________________________

Licensing fees, including ASCAP, BMI, etc. $_______________________

Taxes: $______________________________________

Debt service on mortgage: $________________________________

Those of you who are challenging the "negative posters", since you obviously have owned or ran radio stations, filling in those blanks should be easy. If you can't, shut up.

 

[Whiplash]

I'll answer it with actual numbers and expenses for a station like WZUM, IF I owned it.

1) 2,000 a month for a dedicated staff of on air talent, using technology and voice tracking. I've done it on six different AM radio stations I've owned. And can do it for less, if needed.

2) Using current daytime AM hours of 7:15 AM until 5 pm. 10 hours with 8 units per hour at a low $25 rate = $2000 a day.

3) Night rate at $5 a unit x 8 units from 6 p to 6 a = $480 a day.

4) $25 peak, $5 off peak (And I am using low numbers)

5) Using just my peak hours, its comes to $60,000, and adding in off peak hours revenue, ($14,560) it comes to a total of $74,560 a month.

6) $18,640 in paid commissions at 25% commission

7) $200 for transmitter power (a fact), no utility cost at studio/office

8) You budget for engineering, so it could be any number here. Being that WZUM plant is almost all new, budget less

9) No cost on office equipment. I own a warehouse of stuff

10) No cost for studio production

11) This is based on your actual revenue, and different percentages for all three. But to start, they will be around $50 to
$100 combined, until revenue really increases.

12) No debt service, as I would pay CASH!

So it appears with simple, rough numbers that the station can be profitable. And from my past experience, owning, what is it now five or six AM's, two of them daytimers, it can be.

So why don't you buy WZUM and show us if it can or can't be done!! Please feel free to visit my stations, two of which are AM's, online at any time.

 

[OhioMediaWatch]

You have different levels of expectations.

A WZUM is never going to reach the same level of success as a KDKA, or really, even a WJAS. But Chris has outlined numbers that seem to work on a modest level. And he's not just guessing at this sort of thing, having purchased two small AM stations recently in OMW land.

 

[Talk_Dude]

You have different levels of expectations.

A WZUM is never going to reach the same level of success as a KDKA, or really, even a WJAS. But Chris has outlined numbers that seem to work on a modest level. And he's not just guessing at this sort of thing, having purchased two small AM stations recently in OMW land.

Who's Chris? Where is OMW land?

I seem to recall observing that a "Charles Foster Kane" with a lot of resources could run a radio station as a hobby. While what 1250WTAE describes doesn't sound like a total vanity project, it does make a lot of assumptions regarding things like equipment and other expenses that should be part of the equation that he is able to simply ignore. I won't dispute that his numbers are correct for him. I won't accept that they are typical for what most potential buyers of a station like WZUM would face in terms of expenses.

I question how effective an AM radio start-up will be if his on-air staff covers 720 hours of airtime a month for less than $2,000. That's around $2.75 an hour. I realize that with voice-tracking it's possible to record an day or more worth of DJ chatter in a few hours. If I'm correct about DJ's being pretty much irrelevant, then what he said is very possible. If the people who keep making fun of me about saying that DJ's really don't matter are correct, then his bargain basement $2.75 an hour for air "talent" isn't going to get the kind of ratings needed for the sales staff to sell all the airtime he claims he can sell.

The sales revenue figures seem extremely optimistic for an AM start-up with no track record in a city with a depressed economy during a recession. With no ratings track record, he can't count on big agency buys. Are there enough businesses within the range of WZUM's signal who have money to spend on advertising above and beyond what they're already spending, who would be willing to take a shot at spots on a station playing oldies to senior citizens? If his sales staff can sell all the spots, then his figures make sense.

And finally, I made a whopper of a mistake in making the list of expenses. I didn't include how much had to be spent on promotion to make oldies fans aware that there was a radio station back on the air on 1590. Frankly, I don't think the best salesman in the world would be able to sell the entire inventory of spots even at $25 a unit for a station that potential advertisers haven't even heard of.

 

[Boss Radio]

Did that budget account for ASCAP/BMI fees?

 

[Parttimer]

Who's Chris?

1250WTAE, the person with whom you've been having this debate.

 

[OhioMediaWatch]

Who's Chris? Where is OMW land?

It took me a while to figure it out, but that's Chris Lash, whose Whiplash Radio just bought two small AM stations here in Northeast Ohio - WRTK/1540 Niles (classic country "The Farm") and WANR/1570 Warren (now classic hits "The Blizzard"). That's "OMW land" as in "Northeast Ohio".

Chris does employ some cost saving measures at his new operation. He is no longer renting the old Beacon Broadcasting space in downtown Warren, at the old WRRO/1440 studips on Courthouse Square. He has moved both stations into the WRTK (ex-WNIO/CD106) renovated site near Niles. That is saving him some money that Beacon was paying.

He does the morning show on 1540, news on 1570, and both feature mainly automated music otherwise. 1540 has limited local personalities after his own show, though Chris just hired K105 vet Burton Lee for afternoons (in what role, I don't know, he may be just laying down some tracks every so often). 1570 uses RKO's Classic Top 40 canned format, aside from local news (by Chris and new hire Marc Means) and local sports.

He or any new owner could easily run a station like the one in Pgh the same way. Whoever ends up buying WZUM may run into some harsh realities that Chris isn't seeing, since Pgh is a larger market than Youngstown...but it's also in better economic shape than Youngstown, even in this ongoing recession.

 

[Whiplash]

I was just answering his questions and my revenue was based on what he posted. I can run the station for even cheaper then what I even posted, and still produce a good product.

 

[Boss Radio]

My personal experience with smaller radio operations is that sales are one issue, collection is another. Joe's Hardware may be on board with buying spots for the big sale. But if money is short when the bill comes due, Joe will pay his rent, utilities, employees, suppliers and taxes before he gets to that invoice from the radio station. In the situation I was familiar with, there was a significant amount of uncollected money.

 

[OhioMediaWatch]

One thing Chris hasn't said...the cost of entry is MUCH lower than it has been in some time, due to the cratering economy and the banking collapse.

He picked up both stations, land, facilities (aside from the rented studios, of course), everything for $50K.

Does this ensure profitability? No, and it probably takes a certain formula for survival, especially in this day and age where AM facilities become even less valuable. But it's interesting to watch...

 

[FreddyE1977]

My personal experience with smaller radio operations is that sales are one issue, collection is another. Joe's Hardware may be on board with buying spots for the big sale. But if money is short when the bill comes due, Joe will pay his rent, utilities, employees, suppliers and taxes before he gets to that invoice from the radio station. In the situation I was familiar with, there was a significant amount of uncollected money.

This is a huge issue all across the business world right now, not just in radio.
Aging receivables are becoming a huge issue in all industries, as they typically do in
times of economic difficulty. Raises some scary thoughts about how much money
on the books out there right now is phantom cash that has not been (and may never
be) collected.

 

[Talk_Dude]

I was just answering his questions and my revenue was based on what he posted. I can run the station for even cheaper then what I even posted, and still produce a good product.

I thank you for doing that. Now, let's look a tiny bit deeper, since you are the expert.

What about the part of the budget that I mistakenly omitted, the cost of promotion for a brand new start-up station? Based on what Ohio Media Watch told us about your stations and their formats, and the fact that he didn't mention you making any format switches, I'm guessing that the stations you bought had some level of heritage. Opening a brand new station on the ashes of the failed WZUM means pretty much starting from scratch. How much does it cost to let listeners know that your station even exists, let alone convincing them to switch from the oldies station on FM to your station on AM. (And, since you're talking about a music format AM, you might have to include educating them on how to switch their radios from FM to AM. :)

Also, what about Boss Radio's question about collecting receivables? Even if you can sell 800 airtime units per day, every day, to the businesses located in the Western two-thirds of Allegheny County plus a little bit more into Washington and Beaver, how optimistic are you about collecting all that you invoice during this recession? If you absorb the losses on the deadbeats and stop selling to them, at what point do you run out of customers?

Finally, since I now know that your experience is in a smaller market, how confident are you that your experience in little towns like Niles and Warren will translate to a semi-rimshot peashooter going head-to-head with at least two established oldies stations on the FM band, 3WS and WJPA? How good would your salespeople need to be to convince a restaurant in Bridgeville to advertise on the new oldies station on 1590 instead of on 3WS or WJPA?

You're a businessman. Looking at this as a businessman, and applying the general principles of good business judgement that apply to all businesses, if you owned a restaurant in Bridgeville that appealed to older customers, what station would you invest your advertising money on, a brand-new AM station no one ever heard of or 3WS or WJPA, and why?

 

[hypwr]

The Bridgeville restaurant would only deal on a barter basis. You could pick up a few meals for your family but, that will not help in paying the operating cost of the station.

Somewhere along the way, we must admit that starting a low-power AM on a rotten frequency from scratch is a LOST CAUSE! It will not work. 800 units a day? Dream on.

 

[Parttimer]

The stations like this generally make no money during the week, and broker out blocks of time on the weekends to polka shows and churches.

Others, like 620, broker out the whole week and do much better.

 

[Talk_Dude]

The stations like this generally make no money during the week, and broker out blocks of time on the weekends to polka shows and churches.

Others, like 620, broker out the whole week and do much better.

What you just said sounds much closer to basic common sense about a brand new station on 1590 than what 1250WTAE posted about his experiences in a very different market against different competition using established stations.

 

[FreddyE1977]

The Bridgeville restaurant would only deal on a barter basis. You could pick up a few meals for your family but, that will not help in paying the operating cost of the station.

Somewhere along the way, we must admit that starting a low-power AM on a rotten frequency from scratch is a LOST CAUSE! It will not work. 800 units a day? Dream on.

There was a station in Ohio at one point about 15 yrs. ago that was accepting barter deals like this from local merchants in exchange for ad time. Then they would run one of those on-air auctions (like Tradio) and sell the stuff to raise revenue
to run the station. A creative idea, but ultimately they didn't make it.

 

[johnsummers]

I was about to post something I thought was 'out of left field', but Clarke beat me to it. There is a growing Hispanic population in Pittsburgh and it's just a matter of time before someone taps that market. here in Dallas/ Ft. Worth, there are, perhaps, 8 or 10 Spanish language stations, a few 100,000 watters. Granted, we're about 28% latino, but, on my many visitations, it always struck me as odd that there is no Spanish language radio in the 'Burgh. I think it would be a great move for 660, even 1590, which throws a solid signal into, say, Beechview, even at night. At any rate, the first to get there would get the ground floor and all the Latino business. It' would probably be several years before an Spanish language FM would appear. During that time, I think there would be $$$ to be made. Too soon?