Why do corporate radio station companies...

[AX10]

have so much debt?

http://biz.yahoo.com/p/724mktd.html

http://finance.yahoo.com/q/ks?s=RGCI
http://finance.yahoo.com/q/ks?s=ETM
http://finance.yahoo.com/q/ks?s=CMLS

How much would it cost us to set up a liberal radio network with stations?

[no_hypocrisy]

1. Cuz they didn't have enough money to buy all those small radio stations

since the Telecommunications Act.

[fenriswolf]

2. kinda funny

they shut down liberal radio stations claiming they dont make any money then set up republican talk shows that dont even get 25% of the listeners that were listening to the liberal show.

[KharmaTrain]

3. Radio As Pork Bellies

Thanks to "Deregulation" radio became real estate...finite number of licenses and the large corporations wanted to lock away as many of the best ones they could. Almost overnight, companies like Clear Channel went from owning a handful of stations to thousands.

The game was to make money off the stock prices, not the companies revenues. This charade spurred companies to borrow to buy more properties (and rub out competition) properties as a means of keeping their stock values high and driving up license values. In essence they cornered a real estate market with artificially high property values that are now starting to come back to earth.

The bottom hasn't fallen out on the broadcast market...yet. In most cases, buying an existing station right now is like pissing money out the window. You'll pay top dollar in a market that is still dominated by big money players who are hanging on to their high "stick values" as their own hedge against their own financial collapses...which, just like we saw with the airlines, is inevitable.

Also...there are new forms of broadcasting coming along...specifically wifi radio that will transform the medium in the near future. As they say where I come from...stay tuned.

[AX10]

5. How much is a station worth?

[KharmaTrain]

6. Depends On The Market

It's a lot like real estate...location, signal strength and location has a lot to do with the station's value. Also, the station's past earnings history. 20 years ago, stations were valued on 3-5 times cash flow...or the amount of revenue averaged over the past and projected into the future...and that the new buyer would be able to recoup their original investment in 3 to 5 years. In the 90's, the property grab was so hot that prices kept skyrocketing and the ratio did as well...recently I heard Clear Channel attempting to sell stations at 15-20 times cash flow. The wink and nod is that increased ad revenues would shorten this time span (because the new owners surely know better) as would increasing property values. That shell game worked in the 90s, but with stagnant license values coupled with a shrunken advertising market, anyone investing now is asking to get their clocks cleaned...and I'm seeing plenty of 'em.

Also, companies now want to sell clusters as opposed to single stations. Clear Channel has been marketing small market properties but you have to buy 4 to 6 signals rather than being able to buy just one. Also, the pricing is based on the overall cluster revenues...thus you're paying top dollar for maybe one or two winner and a bunch of doggies.

More specific...at their peak...an FM station in a major market was topping out at 100 million dollar, a suburban station was in the $20-30 million range. Medium markets were around 50-60 million and even a decent signal in a small market will cost 15-20 million. The big companies are trying, in vain, to keep the property values high...especially with their bigger markets but are slowly being squeezed by the reduced audiences and revenues (many former radio advertisers now use the internet or cable TV) and competition from satellite and internet radio...all that will eventually make their licenses worth a lot less.

Cheers...

[AX10]

7. 100 million for one station is absurd.

A small market station at 15 million is also absurd.
I see how the shell game works. Ed Schultz looked into buying a station in Phoenix, but it was to costly for him. Now I see why he and some investors could not do it.

[KharmaTrain]

8. It's "Broadcast Redlining"

I've been involved with station management/ownership for many years and have seen these games go on...and go on they do. In some cases, those high prices can be warranted. For example, several years ago Westinghouse bought two Chicago stations...WXRT and The Score for 77 million dolalrs (this was '95)...not a bad profit for the original owner whose father put WXRT on the air for $50,000. Within a year, both stations were billing over 20 million a year in revenues...thus Westinghouse, later CBS, came out a winner in that sale. On the other hand, I keep watching the ownership of the local AAR affiliate...that owner overpaid for a bunch of properties and is sure to take a big loss when it comes his time to sell.

The large corporations have attempted to dominate the airwaves...radio and television...and to find "alternative revenue sources"...meaning they make money on things other than their broadcast operations. Many stations are subsidiaries to larger ventures...ESPN Radio is a non-stop advertisement for the TV network and the ESPN Zones and for other Disney ventures. Clear Channel owns many of the big concert venues and their "Kiss" stations push those artists and shows. Still others are "rented out" for informercials or satellite networks that provide cheap programming and easy revenue...adding to the "clearance" and getting revenues from the large ad agencies.

Radio's prices are also a hedge against change. They've fought hard against the digital change-over...trying to lock up licenses, keep prices high that keep real competitors out and fighting satellite and internet broadcasting. The latest RIAA attack on internet radio royalties was the latest attempt to drive out competition. If these mediums succede, the property/license values plummet and the real troubles for the large corporates begin. They soon own swampland.

Never before have their been more opportunities in radio...thanks to advances in technology...but there's a massive disconnect between internet and "conventional" broadcasting that is hurting both. But that's another topic.

I've been involved in broadcast investments and learned from some of the best...none who own any property these days. That says a lot.

Cheers...

[AX10]

9. Is there any room for independent and smaller operators?

[KharmaTrain]

10. There Are And Is...

I don't want it to seem like all doom and gloom. There are some very good independent broadcasters still operating and there are and will be opportunities for more. It's just picking ones spots. It's also fighting a culture that is devouring itself...re-establishing stations as local services, including local news, sports and with it comes the advertising. It's going back to what used to work and not expecting to make huge sums of money. It's being innovative...able to use radio and internet and other mediums to reach listeners and to allow them to interact. Low power radio has been addressing some of these issues and you can find out more about this in the http://prometheusradio.org/ Prometheus Radio project.

What I see that really needs to happen is more networking between the various broadcast entities. Internet radio programers fight against conventional broadcasters fight against podcasters fight against bloggers..it's hurt the advancement of Progressive media...sadly too many chiefs an not enough indians.

Hope this has helped...

[AX10]

12. Thanks!

:hi:

[KharmaTrain]

13. You're Very Welcome

Thank you for a very good discussion. If there's other questions you have or decide to get involved with something of this sort, please PM me and let me know.

Cheers...

:toast:

[Greyhound]

11. Just have to kick this for a later reply. Great topic and observation. n/t

:kick:

[AndyTiedye]

4. Because They Are Subsidizing the Wingnuts

It was never about ratings. It is about the ability to control the "news".

Jack Welch (former CEO of GE/RCA/NBC) even said so.