DO YOU KNOW WHAT YOUR STATION IS WORTH?

A Station "Move-in" Can Make a World of Difference

By Ed Seeger
President & CEO, American Media Services

There are dozens – no, hundreds – of station owners in this country who are sitting on property that is much more valuable than they think it is.

How can I say this? Because since we founded American Media Services in 1997, we have worked with 20 properties, just a small sampling of the thousands of stations in America. In those seven years, we have increased the aggregated value of those properties from $47 million to over $192 million.

The current projects we have in the pipeline will, upon completion of our work, result in additional increases in valuation of another $200 million once the proposed rulemakings are approved by the Federal Communications Commission.

That’s why, after more than three decades in radio, I’m still bullish about the future for our medium. Over the past several years, we have all watched as the new technologies have been developed and have taken their place in the marketplace. First it was Internet streaming. Next came satellite radio, Ipods and podcasting.

What, the skeptics begin by saying, is going to happen to radio? It’s going to disappear, it’s going to be replaced, it is a medium that is becoming irrelevant to the American public. And yet, that doesn’t seem to be happening.

Sales trends and revenues are stable or increasing, albeit not as much as all of us would like to see. Listenership is up. The industry is taking note of the changes it must make in order to retain current listeners and recruit new ones, changes such as emphasizing localism, re-evaluating ROI measurement, encouraging the 30-second commercial and shortening commercial breaks.

As I talk with station owners, I am finding a renewed excitement about what the future holds for us, a growing recognition that there are new opportunities for all of us to engage and interest our public.

If there is any doubt among you that radio is not addressing these important issues, a quick look at the session topics at the NAB Radio Show in September should give some reassurance that we are headed in the right direction. “How to Stop the Body Blows to Radio’s Image,” “Future of Radio,” “Selling Radio in a Digital Age,” and “Profiting from New Technology: Ideas from Around the World” are samplings of the programs held in Philadelphia, and they demonstrate how this industry’s leadership is meeting the technology challenges head-on.

As we met with station owners at the Radio Show, I noticed a new assertiveness and a new forward-looking attitude among many of them. They are interested in the new technologies, they are eager to learn more about them, and they are making sound decisions to ensure their stations remain relevant to their markets. As they grapple with these new opportunities, they are going back to the basics to ensure that their stations are positioned as strongly as they can be in their markets.

Central to this thinking, of course, is whether there are opportunities for any particular station to increase its demographic reach, and that is where the “move-in” oftentime comes into play. Move-ins begin with a developmental engineering consulting company. The engineering part is to figure out how a station can become a bigger player in its market or in a larger nearby market. The development part is making the engineering plan a reality.

These upgrades and move-ins are taking place all across the country, from Asheville, NC to Phoenix. From Boise, Idaho to Philadelphia. Co-founder Andrew Guest and I have been in the radio business for more than 60 collective years. Through the years, we developed a growing awareness that there are an unknown, but potentially a very large, number of opportunities to design successful FM station move scenarios. That’s why we decided to form AMS, because we knew we had found the successful formula to make our clients’ assets more valuable in a stunning way while serving the public interest.

All hype aside about satellite radio, conventional radio stations have a great deal of inherent value – and smart owners can find ways to make their holdings even more valuable.

Take Jack Russell of Texas, for instance. We successfully worked with him on a project that ultimately saw his property increase its power from 6,000 watts to 100,000 watts, and that’s after we moved his city of license 50 miles closer to Dallas.

In order to get that done, we had to convince 15 other station owners stretching from Oklahoma to San Saba, Texas, that various changes were in their own best interest to allow Jack’s station – KEMM – to make the move to Dallas and subsequently increase its power. The KEMM filing, in turn, became part of a larger filing AMS coordinated that involved 42 changes to the FM Table of Allotments and upgraded several other stations. It took almost two years to get all of this done, and by the time we had completed the rulemaking, we learned from the FCC that this was the most complex rearrangement of radio stations that had ever been granted. And it was a win-win for everyone, including the listening public.

Russell purchased the station when it had little revenue. He developed it as best he could, but it was, he told us, essentially a Mom and Pop station until AMS enabled him to broaden his horizon. AMS, on Russell’s behalf, negotiated with potential buyers, and ultimately we reached an agreement with ABC Radio to lease the station at 50,000 watts and eventually to buy it. It became the 100,000-watt KESN in Dallas.

Since 1997, we have concluded 19 other transactions that sound a lot like Jack Russell’s. In some cases, the station’s value increased more or less dramatically than KEMM’s. One station grew from an estimated value of $548,000 to $3.5 million once we had completed the upgrades. Another deal we coordinated took even our breaths away, as we worked with a Northeastern station owner on a very complex upgrade and move. When it was all over after three and a half years, that station, which had been valued at $2 million, was successfully sold for $35.5 million. Imagine if that opportunity to create value had been missed.