AMS News

Thursday, September 1, 2005

Local company raises value of radio stations nationwide

Charleston Regional Business Journal
By Dennis Quick

Last year, Mount Pleasant-based American Media Services helped Bridgeton, N.J., radio station WSNJ-FM increase its value by $33.5 million.

AMS convinced WSNJ’s owner to move the station 40 miles to Philadelphia, which has a metropolitan-area population of about 6.1 million, compared with Bridgeton’s population of roughly 22,770. The station became WRNB-FM and switched its programming from a variety format to rhythm and blues.

Although AMS did not get involved with the station’s format change, its moving the station to Philadelphia resulted in the station’s worth soaring from $2 million to more than $35.5 million—the price paid by Lanham, Md.-based Radio One Inc., which owns and operates 68 other radio stations in 22 U.S. cities.

During its seven-year history, AMS has helped 15 radio stations across the nation increase their dollar value by upgrading their power and moving them to larger, nearby metropolitan areas. Combined, those stations have increased their value by nearly $150 million.

“The larger the city, the more valuable the station,” explains Edward Seeger, president of AMS and co-founder of the company in 1998 with Andrew Guest, AMS’ chief operating officer.

WSNJ’s $33.5 million rise in value is the largest among AMS’ portfolio of success stories. Second is KVST-FM, which saw its worth skyrocket $31.5 million—from $1 million to $32.5 million—when AMS moved the station from Willis, Texas, with a population of just over 4,100, to metropolitan Houston, some 46 miles away and with a population of 4.8 million.

WIXK in Richmond, Wis., population 1,835, gained $25 million in value—a leap from $2 million to $27 million—after AMS transferred the station to the Minneapolis-St. Paul, Minn., area with a population of nearly 3 million and upgraded its tower from 6,000 watts to 100,000 watts. That station is now WFMP-FM.

Increasing a radio station’s value involves analyzing the station’s market and larger, nearby markets where that station could reach more potential listeners. It can also involve technological modifications to increase the power of the station’s signal. A strong signal in a populous area enables the station to “cover more people” and attract more advertisers, Seeger explains.

Following Federal Communications Commission regulations requiring radio frequencies to be spaced far enough apart to prevent interference with one another, AMS relocates stations from smaller markets to larger ones. All of AMS’ petitions to the FCC to relocate stations have been granted, Seeger claims.

Relocating and upgrading radio stations is only one service AMS offers. With its 14 staff members, the company is also an engineering consulting firm for radio stations seeking to upgrade their existing facilities. Additionally, the company is a broker for clients seeking to buy or sell radio stations.

AMS gets a commission for increasing a radio station’s value after the station is relocated and sold. Yet Guest says each relocation project is different. For instance, in the WSNJ deal, AMS had the option to buy the station for $20 million but sold that option to Radio One for $35 million.

“Sizeable expenditures” on the project reduced AMS’ take from $15 million to $10 million during the deal, which took three years to complete, says Guest.

Because the company eyes radio stations in large metropolitan areas, AMS has conducted only two station upgrades in South Carolina: WMXT in Florence, the value of which increased from about $3.2 million to $6 million, and WYNA in Myrtle Beach, where that station’s worth rose from $548,000 to $3.5 million.

The company has its sights set on doing business in the nation’s top 25 markets where value increases are more lucrative.

AMS has 29 radio station upgrade projects in the works, and Seeger expects AMS to be a billion-dollar company in two years, he says.

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