How Much?


This entire radio business is getting curiouser and curiouser.

Time was, one company could own only 12 stations total.  That’s a dozen.  In the entire country.  No more.  And that one company couldn’t own a TV channel, radio station and newspaper in the same city.  And most of the owners of these stations insisted on turning a profit.

The owners had to reapply for their license to operate every three years.  And the application was a bitch.  Operators had to speak with real people about their perceived concerns in the city of license.  Then the owners had to respond to those problems by promising to schedule programs that dealt with the areas of concern.

If you wanted to sell your radio station…fahgeddaboutit.

A proposed new owner was put under more scrutiny than last year’s campaign contributors to the DNC. Strict regulations required owners and sellers to go through a myriad of paperwork and approval from the Federal Communications Commission.  Normal transactions could take a year to close and, if any problems developed, that time frame could multiply.  And while the station was closing, the new owners could have nothing to do with the station.  No input whatsoever.

Did I also mention that you had to own and operate a station for a minimum of three years before you could sell it?  Did I also mention that the FCC had to approve the purchase and the buyer?

It was easier to sell a nuclear weapon to a Third World country than it was  to get rid of a radio station a few years ago.

Now?  fahgeddaboutit.

Radio station sales and purchases rival the commodities market in trading.  Twelve stations total?  Ha!  Twelve stations in the same market is more common.  Wait three years before selling?  How about three weeks…maybe.  Operate these stations at a profit?  Secondary, my dear Watson.

Radio stations today have an inflated value.  The value is so inflated that the hot air that flies this balloon is going to pop it.


Who knows?

Today, stations can continue to increase in value because there are companies willing to pay more than the stations originally cost.  As long as that pyramid scheme continues, radio stations will continue to soar…and we’ll all wake up in the same bed tomorrow morning.

Soon, however, that scenario is going to change.

Today, several companies are in the market to purchase radio stations.  If I own a radio station, even five or six, there is a buyer out there willing to take them off my hands.  The money I  make depends on how badly another company wants my stations.

There are a few radio companies bidding on controlling the marketplace.  These companies are able to continue their spending spree because banks are willing to finance more stations.  There’s always a buyer out there willing to inflate the actual value.

But buyers dwindle when the numbers increase.  With Capstar and Chancellor threatening to buy up to 1,200 stations and other companies increasing their totals daily,  soon the inflated value of a radio station is going to come crashing down.  There won’t be any available stations for the conglomerates…and those major companies will have to begin running all their stations to make money.

Please don’t get me wrong.  I’m sure there isn’t an operator out there who tries to lose money.  What I’m saying is that operating is sometimes secondary to selling.

So, what happens after stations consolidate manager, traffic systems, bookkeeping and engineering?  The cuts go deeper.

Why wouldn’t a company syndicate many of their air shifts in every market?  Capstar is already considering this proposition.  Depending on the number of stations in a chain, this move could cut back drastically on bodies and salaries, no to mention the additional overhead of insurance and other benefits.

Jacor has taken this idea one step beyond and is considering the feasibility of buying stations on the 102.7 frequency and syndicating KIIS across California…and possibly even further.

Book the fact that in the very near future, morning shows are going to be widely syndicated within broadcast companies.  It is the wave of the future and there’s nothing anyone can do about it.  And don’t be surprised if the syndication goes further.  If mornings can be syndicated, why not other dayparts?

As radio fights for advertising dollars, single-station dominance will take a back seat to market penetration.  If, by sheer numbers, a company can offer an advertiser a great CPM, why worry about one specific talent generating audience in a given city?

In tomorrow’s marketplace, it’s all about numbers…and we’re not talking Arbitron.

Time was, talent was a valuable commodity in our business.  Unfortunately, in the eyes of some broadcasting companies, talent is not even a consideration.  In a Network 40 Hotline column a few weeks ago, we asked four of the biggest radio station brokers what part programming success played in station purchases.  All four said programming success and talent was insignificant.  Stations are bought and sold depending on how each fits within the companies’ overall plans.

So, if you’re talented, where do you fit in radio’s future?  Hope you’re the one chosen to program the chain or the jock who’ll be syndicated.  In the future, it ain’t how good, it’s how much.

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