AMS Tries to Add Value to Properties

Radio World
By Randy J. Stine

CHARLESTON, S.C. At a time when some outside the broadcast industry are pessimistic about the future of terrestrial radio as new media delivery systems lure listeners, some companies make a living helping broadcasters increase the value of their holdings through coverage upgrades and move-ins to larger markets.

Most broadcasters consider such a move daunting. The planning and execution of a signal upgrade or move-in typically requires the expertise of an experienced engineer, the determination of a Washington attorney familiar with the FCC and lots of patience.

RW spoke to executives at American Media Services, a broker/consultant, to learn about trends in this niche. Thanks to modern technology including its own signal mapping computer software, AMS engineers say they typically uncover several upgrade scenarios across the United States each month. They then analyze radio markets by using the new Arbitron method of determining the total number of radio stations in a market and the total number allowed.

Several companies reportedly pursue similar “engineering approaches” to radio station improvement and development. Two others are Marathon Media and First Broadcasting. Marathon did not return calls for this story; First declined comment.

Upgrade scenarios explored
“We are constantly on the lookout for holes in markets,” said Ed Seeger, president and chief executive officer of AMS. “We have software that gives us a quick thumbnail sketch of the top 100 radio markets. We then research frequencies to help us get an idea of what could be achieved.”

Once a market analysis is complete, AMS engineers review the various scenarios, which could involve move-ins or upgrades and frequency swaps, some requiring the cooperation of other broadcasters in the market.

“We then contact the owners of stations that can be upgraded. We typically form a joint partnership with them, with our staff handling all the technical work, the negotiations with all the other stations that need modification and file the FCC paperwork for rulemaking on the project,” Seeger said.

AMS claims to have pulled off the largest set of modifications in the history of FCC rulemaking involving changes to 19 radio stations to allow for the upgrade of a Dallas FM, which eventually was sold to ABC/Disney for $18 million in 2000.

The company worked with the owners of the former KEMM (FM) to upgrade the station, which was licensed to Commerce, Texas, from Class A to Class C on a 2,000-foot tower north of the Metroplex. The station has since changed its call letters to KESN. Prior to the sale, the station had been valued at $500,000, according to AMS.

“It took a lot of face-to-face negotiations to pull that off. And everything was contingent on our success. Upon the completion of the project we all reap the benefit,” Seeger said.

AMS also completed the move of former WIXK (FM), licensed to New Richmond, Wis., into the Minneapolis-St. Paul market. AMS approached then-owner Bob Smith in 1999 with a development scenario that included a city-of-license change and signal upgrade. The station was an 18kW Class A FM approximately 40 miles northeast of Minneapolis.

“I signed a services agreement with AMS for them to explore the possibility of a move-in. I never thought it would come to pass. (AMS) did all of the legwork and we gained FCC approval for the move in 2000,” Smith said.

Weak signals
The station, now a Class C2 with a tower just north of Minneapolis, was sold to Hubbard Broadcasting for $26 million when the move was completed, Smith said. The stations calls are now KFMP(FM).

“I originally had thought the station was worth maybe $5 million and I had been offered $3 million for it,” Smith said.

AMS has completed signal improvement projects in Philadelphia, Houston, Denver and New Orleans, Seeger said.

Weak signal strength is typically the reason development clients approach AMS.

“Most of the time people ask us to look at a specific market where they have a weak signal and want to sell that one to purchase a better signal. Or they want to look at a possible move-in. The key to any terrestrial signal is the ability to cover people,” Seeger said. “If you do not have the ability for your signal to reach the overall population you will never reach your maximum potential. We offer clients the chance to maximize their operations.”

AMS, which also has full-service brokerage and technical consulting divisions, was founded in 1997. It has headquarters in Charleston, with an engineering office in Chicago and two brokerage offices in Texas. Fourteen employees work in its development and brokerage offices.

Veteran broadcast engineer Frank McCoy, who served in engineering management positions at ABC Radio and AMFM, Inc., is the executive vice president of engineering for AMS.

Seeger said he stumbled upon the concept of “movement and improvement” of radio stations while running his own stations and overseeing several upgrades.

“It just seemed like there would be a lucrative market for this type of venture,” Seeger said.

AMS has 30 to 40 development deals going at a given time, Seeger said. It owns four FM licenses, which it is in the process of selling. He expects AMS’ niche in the “movement and improvement” market to grow as broadcasters stretch to add value to their holdings.

“Actually, we do see many opportunities ahead for terrestrial broadcasters,” Seeger said. “There have been some modifications in the reclassification and spacing on the FM band that have opened up some opportunities for some stations to move even closer into larger markets. We’re uncovering new ones each month."