1 of 1- RadioActive
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Huge Conglomerates Should Get Out Of Radio: Columnist
An industry veteran writes a wise article about what he thinks is one of the things that's wrong with modern radio. True, there are many other listening choices then there used to be, but his argument is that these huge conglomerates - like iHeart, Cumulus, Townsquare, Audacy and the rest - are doing nothing but sucking the creativity and originality out of the medium, see it only as a bank account and couldn't care less about the on-air product, as long as it's cheap.
He thinks the best way to save stations is to sell them to independents, who care about local radio and won't bring the same cookie-cutter formats to every single city.
I second that emotion, but I doubt it will ever happen, given the state of the industry right now. Can a local owner make money in the medium? The recent decision by a local New York State station to go silent would seem to say no. But the right owner who cares about the product might just make a difference, depending on market size.
Unfortunately, it may not happen. I've read that the incoming Trump regime is leaning towards additional radio deregulation to allow these big companies to take over even more stations in a single market. If that happens, we're all doomed.
Is It Time For Large Radio Companies To Cut Losses And Sell?
- darcyh
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Re: Huge Conglomerates Should Get Out Of Radio: Columnist
It will depend on what the stations sell for and cost to run.
Below is a fictional example please feel free to correct me and offer feedback. It may be far too simplistic.
You own a combination AM / FM outlet in a small market with an audience of 25,000. You purchased or started the stations 30 years ago. Including yourself there are 4 employees who do on air work and sales. Together both stations bill 400K / year and you make a modest profit after paying the other 3 employees about 50K / year. Over the years you have paid off the debt on the transmitter site where you own the land and kept the technical side of things in good repair. You also own the modest studio building.
After many years you want to retire. What is the station worth?
For argument let's say a million dollars. Is this realistic? What are the assets worth? Is it viable for a new owner to purchase it with borrowed money? Can they operate it in such a way as to keep up with daily costs and make the loan payment?
The original owner is able to wring a modest profit out of the business because the operating costs and debt is low, a new owner will not be able to do so given the cost of repaying the money used to buy the station. So I would argue that this is not a viable business. What is the transmitter site and studio property worth?
These big conglomerates are not going to give these stations away. They probably paid a premium for them and will not likely sell them at discount prices especially if they have other stations in the same market and would have to compete. I'd be interested in comments from folks here who are much wiser than I.
- RadioAaron
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Re: Huge Conglomerates Should Get Out Of Radio: Columnist
darcyh wrote:
These big conglomerates are not going to give these stations away. They probably paid a premium for them and will not likely sell them at discount prices especially if they have other stations in the same market and would have to compete.
Absolutely. They're all-in or all-out of any given market. (small exception for AM stations where they don't have to worry about someone else making them competitive)
- paterson1
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Re: Huge Conglomerates Should Get Out Of Radio: Columnist
But hasn't Bell so far been selling these stations at super low prices? One of the few that sounded like they got a reasonable market value price was CJOS FM in Owen Sound that went for about $1.3 million. Most of the other stations so far have been sold for well under one million per station.