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Updated 6.26.2009 Several new properties listed…FM
Translator in Formed in 1996, my firm specializes in the brokerage
and sale of Radio and TV properties. This site is different from most broadcast
broker web sites because I want my clients to understand today’s
broadcast business. Broadcasting is
not what it was even five years ago.
Today we have the internet and all the media innovations it has
spawned….and we are not finished yet….so dive in. Please note my phone number 713-882-2402. If I am out and you leave a voice mail… please repeat your name and number at least
twice. I have had several cases
recently where the number was unintelligible and as a result I could not
return the call. Please also back it
up with an email. I get email on my
cell. To Send Email Member / National Association of Media
Brokers There are deals out there if you are able to
self fund…i.e. you have the CASH to buy or are able to negotiate seller
paper. Please do not call if you need
to obtain financing from a bank.
It’s hard enough to get a car loan today let alone obtain
financing on a broadcast property ( I have advised
that money is freeing up…IF you are credit worthy and the loan makes
sense). Of course if you have the cash
and want to loan it to a bank so they can loan it back to you that will
probably work…the bank might appreciate having the deposit on the
books. My comments on the new administration… Anybody that is now running or wants to start
a business is going to be presented challenges from the new
administration. It is obvious they do
not like folks that are in business…For at least the next two years we
are going to have to live with it the best we can….Remember however it
is only about twelve months until primary season and you can start voting out
as many anti-business so called representatives as possible…and this
goes for members of both parties…in both state and national
elections. (I have had a number of
comments on this statement…all but one agreeing and it was questioning
where I got this notion. I believe the
last several months of government edicts and appointments have proven me
out.) WHERE’S THE MONEY COMING FROM? I recently had a phone call from a
prospective buyer wanting to know if I had any stations available in a
particular market …as a matter of fact I did. The price was going to be in the $10 MM
range. He immediately wanted to know
the call sign of the station and all the particulars….I
responded…Whoa settle down just a little…I need to know something
about you. It was obvious from the
start that the buyer was a rookie…no problem I was once one
myself. When I asked for some
background info on his finances he started to get huffy and said he needed to
know more about the station before he provided me with such
“private” information. I
did my best to explain that a seller did not want to go through the drill of
releasing proprietary materials before ascertaining if the buyer was
qualified. Besides that is part of a
brokers job…to vet a buyer and be a “firewall” between a
seller and those that don’t need to know the seller’s private
business. Both the seller and I need
to know upfront where the money is going to come from….so don’t
get your feelings hurt when I ask. If
you have equity or access to financing… It would also help to be
provided me with some third party verification. I had one client send me a brokerage house
print out…it had about $25 MM in it.
Step right this way! BROADCAST STATION “STICK”
VALUATION OR THE CONUNDRUM OF HOW TO VALUE A STATION THAT HAS NEVER MADE ANY
MONEY…EVER Broadcast station valuation is usually done
by using a multiple of the station’s broadcast cash flow (BCF). Of course this assumes the station is
producing a cash flow. Where there is
no cash flow, it is the perceived value of what the license is worth plus any
hard assets the station may have…commonly referred to as the
“stick” or base value) .
There are several scholarly tomes on broadcast or radio station
valuation (Search: broadcast station valuation). The problem here is that many stations have
gone through a succession of owners and have never shown any positive cash
flow or just enough to keep the power on until the next sale/transfer. What
is a station like this worth? Many new
construction permits (CP) are coming on the market as a result of the recent
FM allocation auctions. What are
these worth? In the case of a station that has never shown
a positive cash flow you need to determine the reason, is it an unfortunate
combination of circumstances that has led a succession of owners who had no
clue as to what to do with the station?
Poor market conditions?
Improper format? Poor
signal? Also, some stations can be an artistic
success and a commercial failure. Such
a station might have a format that appeals to a significant audience but the
station is unable to sell enough advertising to capitalize on the stations
own success. This is frequently
because the station has not developed a proper sales force. As any broadcast owner knows, the hardest
positions to fill at a station are good sales representatives. I talk to would-be broadcasters all the
time that have no clue as to what it takes to put together a sales
staff….but that will have to wait for another commentary. Back to how to evaluate a non-cash flowing
station or a dark station ready to go back on the air. A common industry approach has been to
factor the amount of revenue a particular facility may generate by looking at
the amount of advertising revenue the station may be able to secure out of
the total revenue available for radio in the market if it reaches a
particular audience level…whew…got that. The problem here is there are many pieces
of the puzzle that have to be put together to get an idea of what the numbers
should be. What is the financial
condition of the market? Power of the
station? Is it AM or FM? Is the
ownership/management talented? In
today’s market we have to contend with how much advertising revenue is
going to other competitors on the internet.
This is where the question is asked… “Is the internet
going to be a foe of the station or a tool to be used by it?” To stream or not to stream? Interactive web
site or not? Maybe even podcasts? Another major factor to look at in evaluating
a start up property is the technical condition of the station. Failure to conduct an engineering inspection
can be a costly mistake. What looks like a cheap price for an AM property
could be a pig in a poke with some nasty surprises. Questions that need to be
answered…what is the condition of the AM ground system and tower? Do either need to be painted (tower),
repaired or even replaced? Are the
copper radials in the ground damaged or corroded away? If the AM station is a directional system,
is the pattern still in compliance? Has there been lightning damage to the
phasor system and other transmitter/audio processing components? What is the age of the transmitter? Will it need to be replaced? To get the answers hire a competent broadcast
engineering firm to do an evaluation.
You will need to pay for this but it can save you big money and
headaches later. BUYING AN AM OR FM CONSTRUCTION PERMIT Things you need to look at are: Is there a format hole to fill in the
market? What are the construction
costs? How much up side is there in
the market for a new radio station?
How are the other stations in town doing and why? Can you compete with them if you go on the
air? If there are no other stations
locally, will the market support a radio station? How much is a CP worth? I remember being called in November 2004
while the FCC Allocation Auction was in progress. The caller was bidding on several permits
and wanted to know how much he could flip the construction permits for after
the auction was over….EXCUSE ME?
I had to explain to him that the value of the permits being auctioned
was and probably for some time would be highest at the auction price. If he wanted more money for the CP, he was
going to have to do something to increase it’s value…move it,
upgrade it…or even build it and prove it’s viability as a
broadcast business. All of the above boils down to this. You need
to go on the air with a station rehab or new-build CP with equity built into
the deal from Day Number One. If I
were going to buy a CP, I would want to have about 30 percent equity in the
station from sign on. Here is a numbers
example…round numbers for simplicity…buy a station for $50,000
and put $20,000 into it to get on the air…this leaves you with a margin
of $30,000 to have a station valued at $100,000 when you sign on. If you can’t have equity when you
sign on, walk away. Now this is where
your talent for picking a programming niche and executing it will be the
key…and this is where the real money is made. You will have proven that the facility
really has not been a dump all these years…it just did not have the
benefit of your programming/sales/engineering genius. Then after four or five years of putting
money in the bank you call your favorite station broker (ME) to find a new
buyer who wants a solid CASH FLOW MACHINE in place to buy. And we both put money in the bank. I have some stations for sale now that fit
for rehab projects if you have the cash and the will to work hard. BROADCAST LENDING…AGAIN I know this point is covered in several
places below but it’s worth repeating. Unless you have the cash in the bank, cash
flow to borrow against and a good track record in this business as a
successful operator of broadcast stations… or a lot of rich friends
that have given you an irrevocable letter of credit…or a portfolio of
blue chip stocks, you are not going to get a broadcast loan in this lending
climate. If you have a few thousand
dollars of unused room on a credit card, feel lucky because that is about all
you are going to get. New Radio Listeners…Where are they
going to come from? Ten years from now
will radio as we have known it for 80+ years still exist….yes but with
new hardware. A friend of mine recently told me his kids
don’t listen to over the air broadcast radio….they have
iPod’s to use away from home and internet radio at home off of their
broadband attached computer where they also get music etc for the iPod. (Of course there is the iPhone that also
has iPod capabilities built in...and now the new iPods have email in
them…soon there will be a total merge of devices.) They have not bought a CD in some time by
the way. As we all know habits are
learned as children…To me (at 58) radio has always been a
habit…but I also now own an 80 gig iPod…(Of course with my luck I
got mine about two months before the iPod touch came out.) Am I a traitor to my industry or is my
industry changing. The near future as I see it….those of
us still around will have devices in our cars/pockets/home that will be a
combination cell phone/TV/iPod equivalent/computer/internet radio
receiver. The auction for spectrum
bandwidth for this starts this month.
All broadcasters as we know them today if they want to stay in
business will have everything they put out on the air be fed to the
internet….Smart broadcasters today are already doing it. There are probably now several hundred thousand
if not more broadband card equipped lap tops (I have one) that I can listen
to any internet streamed radio station while I use my lap top while
traveling. Amtrak by the way is
re-equipping their entire passenger fleet to put a 110 outlet at each seat
for passenger use…I rode in such a car last Spring. I recently returned from
vacation…there were several areas where I could not receive broadcast
radio in the car because I was too far out in the toolies…but guess
what, I could get broadband internet.
Go figure…. If you today, are putting together a business
plan for a radio station broadcast company, major market or not…just
plug in the numbers for internet streaming and programming and get with the
program. As the TV commercial says…”life
comes at you hard” If you are
not putting out a digital signal (and I am not talking about HD
Radio…that is another story) parallel with your analogue you are
rapidly falling behind the times. “THEM THAT HAS WILL GET…THEM THAT
DON’T…WON’T” There is a credit crunch in the land if
anyone has noticed. It started when
home loan lenders started making stupid loans. I have been in this business long enough to
have seen this happen two or three times.
Home loan sharks in some cases have constructed loan vehicles where
the monthly payment on a house was not enough to cover both principal and
interest…the deficit each month is tacked on the back end of the loan
principal to generate even more interest….How stupid is this? Now the lenders are whining because the
poor schmucks they conned into taking out such a loan are unable to make the
nut every month. This is now
spilling over into my business. Banks
and other lenders are turning off the loan spigot to potential borrowers for
media transactions. Merger and Acquisition
deals of all types are being scrutinized closely…many are being delayed
or canceled altogether…. Unless, and this is where it gets
good…you have the cash. Cash deals are king. Just think… no monthly payment to
that nasty, ill tempered banker who really does not understand your business
anyway. He/She gave you the loan in
the first place only because you promised him/her the marriage of your first
born Dartmouth/Stanford/Harvard etc. business school educated son/daughter to
their loser offspring. But I
digress….What I am getting at is if you want to get into the Radio/TV
business and can raise the equity… step right this way. In reference to email…I am now
including a “read” receipt to be sent back to me on all email I
now send out. Due to problems with
anti-spam software both on my end and folks I respond to I find this
necessary. I have tried to avoid it
for a long time but have finally seen the need. NOTE TO SMALL MARKET SELLERS It is almost impossible to get a bank loan on
a small market radio station deal…as a result I need small market
stations that the seller can “tote the note” on. I have many experienced rookie buyers that
need help from sellers to be able to buy.
I especially need stations under $500k. Do you have a construction permit for
AM…FM or TV? Let’s talk. TV STATIONS NEEDED I have a cash buyer for SW US ( RADIO STATIONS FOR FM in SM in 3 AM CP’s in I have just received listings for several FM
construction permits in Lubbock, Texas Market FM…Call for
details. Texas Panhandle AM with 2 FM
translators…On track to bill $350k this year…$500k with some
terms to experienced broadcaster. Several Major Market AM’s for sale to
cash buyers…possible terms to buyers with strong financials. Call for
details. (UNDER CONTRACT) AM-FM Combo in North West International Projects If your company is interested in expanding to
Europe and areas out of the Call for information 713-882-2402. Please be financially qualified. BROADCAST
STATION ACQUISITION ADVICE AND IDEAS FOR BUYERS AND SELLERS If you are looking to buy your first property or have one to sell, let's talk. Sellers always
want to talk to "qualified" buyers. If you will, send me
information about yourself and your company.
I do not mind working with new broadcasters… But you are going to have to tell me where you expect to get the money to buy the station you want….and in many cases you are going to have to have the money before you start looking for your station. If you email me and your mail is "bounced" please call and let me know. Some ISP's are using filters to fight "SPAM." These filters are returning legitimate mail in error...please advise me if this happens. Do you have a Construction Permit that is running short on time? Give me a call, I may have some joint venture money available to build the station and get it licensed before the CP dies..... A SHORT PRIMER ON STATION FINANCING The following on station financing has been prompted by a conversation I had once with a "backer" of a first time buyer. I was contacted by a gentleman with several years experience in various phases of the broadcasting industry who said he wanted to buy his first radio station and he knew the type format he wanted to do. I explained I had a station that might fit his criteria....but I would have to have some evidence of financial ability to close a $2.5 Million transaction before releasing any information about the station in question. The client put me in touch with his financial "backer"...I explained what I needed and he immediately became very belligerent...that they did not need to provide any information until they knew what the station was and so forth. I tried to tell him that the owner had requested that I "vet" all potential buyers to determine financial ability before releasing information....the conversation went downhill from there. The lesson here is secure partners and financing before trying to buy. You will gain credibility with sellers and brokers. The following are the "facts of life" in the radio station trading business. 1. If you are doing your first deal...the more the seller is going to want to know about your finances and your ability to raise money before information about a property is forthcoming. 2. Very few stations are going to be sold on a "this transaction is subject to the Buyer being able to secure financing" type contract. A station owner is not going to want to disclose to his staff and competition that a station is being sold on the hope that a buyer can qualify to obtain financing...and then have the deal go south because the money did not materialize. 3. First
time buyers are rarely going to get bank financing. In the present
business climate some experienced buyers are not going to get loans unless
they have "outside" assets to pledge against a loan. Most
bankers (99%) do not understand the broadcasting business...if it does not
have a car or boat title attached they are without a clue. A recent transaction that I was involved in and its failure to close directly relates to the above three “facts of life.” Primarily number three. The buyer did not have financing in place or written assurance that he was qualified before contracting to buy a station. The banker he was dealing with evidently led him down a merry path of confidence that he could place the loan and when the papers went before the loan committee at the bank the answer was “NO.” The buyer is out several tens of thousands of dollars in escrow and other expenses….all down the tubes except as a very expensive learning tool. 4. Startups
always take more money than you think!!!... 5. As
a result of a 2005 case in the 6. I also have advice on how a seller can
protect their interest in doing a sale where they carry paper on the
sale. Please contact me direct on this
and I will put you in contact with an attorney that practices before the FCC
if you are not using one now. I do not want to discourage anyone from realizing your dream of owning that first station. As a former owner I will tell you it is a lot of work. Forget 8 hour work days...they will turn into 12 to 18 hour days very quick. Using a Broker like myself... Some buyers and sellers are of the view that they don't need the services of a broker. There are many "deals" out in the market that are not advertised by the sellers. In fact the fewer people that know a station is for sale the better as far as many owners are concerned. It is a broker’s stock and trade to know what stations are for sale and what owners can be talked into selling if they are not actively marketing their properties. SOME ADVICE FOR SELLERS You are not
going to get 22 times cash flow on a small market station. Yes, I know
that some stations recently and one in particular in SOME MORE
ADVICE FOR SELLERS On Star Trek
the Ferengi have their “Rules of Acquisition.” I think I will start “ Number 1 will be “Sellers always want more than their stations are worth…and Buyer’s want to pay less than a station is worth.” Stay tuned more to follow…. SOME MORE ADVICE FOR BUYERS I was once contacted about a property that I had listed. The potential "buyer" was informed of the price and the terms (CASH) of the transaction. A meeting was set up with the seller, his banker and a partner in the deal, and another broker who I have had a many year (30 +) association. The meeting was to be held in another city and I was unable to attend. The buyer assured me that he had financial backing up to $20 Million...more than ample funds to do this deal and have enough left over for working capital....probably for a couple of years. When the meeting took place the first thing the "buyer" wanted was to structure a terms deal for 25 years. Whoa!!...what happened to his ability to do a cash deal. There goes the buyer's credibility...and maybe some of mine on how to "vet" a buyer. When I was first contacted the buyer had dropped some names that I knew...one of which was a client...but did not want that client told of the "buyers" interest in this property...no problem with that on my part. The gist of this paragraph is if you want to do a 25 year terms deal, let me know up front so I don't have to waste my associates and clients time. Maybe too many people have seen those real estate shows on late night TV that purport to show you how to buy $5 Million worth of real estate with no money down and flip it the next week for $10 Million and think they can put that to work in the radio business. Sorry it does not work like that. |
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TRANSACTIONS CLOSED
KOZA-AM
KNOR-FM
WKYI-FM Stamping Ground/Lexington, KY to Blue Chip Broadcasting $1.265 MM
KYYK-FM
KCUB-FM Stephenville, TX North Texas Radio Group
KGOK-FM Pauls Valley, OK to AM & PM Broadcasting
KICM-FM Healdton/
KYOK-AM
KTLS AM-FM Holdenville/
KTLS AM-FM Holdenville/
KHLT AM/KTXM-FM Hallettsville, TX, KGUL-FM Edna, TX, KYKM-FM Yoakum, TX from Hill country Radio to La Grange Broadcasting for $850k
KVLL AM-FM
KBOC-FM
KFYN/KFYZ AM-FM
KGFJ-FM CP Markham, TX to LDR, Inc $250k
KACO-FM Apache, OK $500k Co-Brokered with
KBOC-FM
K06OK-LP
KZRC-FM
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No Station Transaction Too Small…No Fee Too Large |
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Dave Garland Media Brokerage League City, Texas 77573 Phone: 713-882-2402
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