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"I can make you a broadcaster with nothing but the shirt on your back." No one
person can know everything, knowing who to call, and understanding your own personal limits is true brilliance. My background
in Scouting taught me to...Be Prepared!" As a thirty year boy scout I have learned to not just prepare for the future
but create my future. Not just study the history of media but make history in media. If I never hit your screen I hope
your dream finds you, mine found me...still I am never too busy to hear about your success. Steel sharpens steel, only share
your dreams with someone who will encourage you to achieve your dreams. You are welcome to call me, Mark Nolte at (501) 859-0500 not
advanced Mountian times before midnight. For the superseller, shade tree lawyer, technical guy slash pitch man marketeer hyphen
business consultant Kung Fu hip-hop evangelical family guy...whew! YOU NEED THIS STUFF.
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• Gap Analysis was developed by the Chinese to set
steps to reach impossible goals. Here is the basic premise:
Make a list of every physical thing, talent, and resource
you need to accomplish your goals. Establish an individual plan for each item.
One at a time in any order achieve those
line items.
In the end when you have a station permit,
the stuff to build, and the expertise to build or buy the
deal, your most valued resource will be cash on hand.
• Train yourself in every discipline, Sales, Accounting,
Programming, Traffic, Engineering, and FCC law.
• You can start in any area or in your area of expertise.
We recommend Sales as your most important step, most valuable talent, and the most common reason most Stations fail.
A
stations marketing plan and its ability to develop a sales team. Hiring, training and managing a successful sales team are
key even if you only rent and market a half hour on someone else's station, or the whole deal.
• A relationship
between you and the FCC is very important. So is the trust you have in your FCC lawyer.
• A Consulting Engineer
and a Contract or Station Engineer are different disciplines and you will need to develop relationships with both.
• Many
Stations have been built that just dont, cant, or used to make money. All stations are like an individual fingerprint. Some
stations need a real market, some are under financed, and some just need engineering to put them on back on the map. Figure
out what you are really trying to buy.
• Tax Accounting is tricky if you anticipate selling the station for
a profit, then having to back out complex depreciation you have taken to avoid taxes while operating the station.
• Understand
how getting the seller to enter an Option Agreement can help you get a purchase agreement setup and take the station off the
market so you can finish the deal.
• Lease Marketing Agreements can let you begin to program most of a stations
airtime and receive the revenue from ad sales on a station you are in the process of purchasing.
• Once you
have agreed on a station asset purchase agreement those agreements will go before the commission for approval some of your
money will go into escrow and the FCC process begins.
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Starting with Supersellers here is good advice. If you still want ownership today. You can find owners ready to give
up and let you run it first and buy it with its own money. The Caddy driving Pitch Man in a nice suit makes more sense this
year than last. Have a well rehearsed plan ready to deliver from memory. Just for fun spend a night sleeping in your car.
Sell to a guy just having coffee at a diner.
• Evaluate yourself and maximize your financial potentials,
develop your selling skills and be fully prepared to develop and train your own sales people. Zig Ziglar, Pam Lantos, Irwin
Pollock, and Jason Jennings all produce great audio and video training systems. Start a training library and study.
•
If you are already in radio, but not the sales end, DO NOT expect to hire radio sales experience. I get calls from new owners
all the time about critical staff departures after closing. A stations programming does not create sales, salespeople drive
sales. You can get the best sales experience at small towns where most sales are local direct business If you are not in the
industry at all, radio sales is usually the most available openings at small stations. Markets larger than the top 200 radio
markets sell very little local business. Salespeople with large amounts of local direct business are the most effective relationship
sellers. Every Radio Success story starts with mastering this skill.
• Investor Cat and Mouse, If you think
you have investors, have them commit in writing what they are willing to invest. If possible, have them place seed money in
an escrow account. Because I can’t tell you how many times I’ve seen buyers ready to close, only to have those
investors flake near closing.
• Nothing will throw a red flag faster with any broker if you are really interested
in buying a particular property, but are not prepared to disclose your financial sources. You may be trying to compare markets
or looking for places to live that are compatible with your personal lifestyle. If you don’t have money, tell what you
can about how you plan to pay for the property. If you are in the initial stages of buying, be honest. A good broker will
work with you. A seller will appreciate your efforts more, if you explain what you are looking for, and exactly how you plan
to pay for it.
• Don’t depend on being able to buy on terms. Any owner is going to demand a sizeable
down payment, and owner financing is generally at a higher rate than a bank’s terms. An owner is capitalizing your business
venture. If you have a sizeable down-payment…go to a bank. A bank will work with you if you miss a payment. An owner
has the right to file to get the license back if you miss with him. If that happens, you are out time and money.
•
Many brokers and sellers are not interested in dealing with the many questions that first time buyers have. Dont be offended
if you are asked for proof of ability to pay. Many brokers and sellers will not reveal sensitive information about a property
without your financials.
Buying Tips for AM stations involve complete inspection of all licensed paramiters. Complete
Station Licenses can be as many as one hundred pages. Stations can be completly worthless if the station can not operate in
accordance to the license paramiters. If the Station rents its tower site and loses its lease, reconstruction at another site
may cost $250,000 or more to rebuild. Do not attempt to buy an AM without the proper advice. Soon these stations will have
to convert to IBOC Digital and only non-directional stations with digital ready transmitters will convert easily to digital.
Some multi-tower directional arrays have very tight nulls that may not have bandwidth to operate digital. These are a few
things you want to know before buying. Mark Nolte can help with pre-inspection of a stations legal operation and potential
technical needs. Call Mark Nolte at:(501) 859-0500.
• Market Size - When looking into buying an existing station
is research the market with respect to total revenue sold in past years and how much stations have sold for in times past.
There is a site www.DuncanRadio.com who publishes a guide with this information broken into market size and demographics, lots of great information
critical to determining financial viability of any stations potential values. The market size you have economic access to
will be based on how much money you have to work with. Small Market AMs sell for as little as $50K amd an AM in Chicago, New
York or LA can go for $50 Million plus.
• Signal - Rim shot signals give you marketable coverage to a mobile
audience but unless your tower is an in-town signal your saturated contour (near tower) signal strength will not penetrate
homes and business.
• Programming - Never program for a theoretical demographic wieghted by some isolated
personal research or opinion. Water always finds its own way down hill. If you hold a nice dinner for 30 target demo couples,
business people from your community and at the last minute open your focus group to 100 more of their extended families and
friends. Hire a DJ with the ultimate music collection and your all request party of 150+ may re-discover western
swing or showtunes. Thats why they call it a focus group. The very second you decide to change a format and reimage a station
you loose more money the longer you hang on to failed marketing plan as it continues to underproduce and the clock ticks away.
• Competition - If you watch your competitor, you mimic their mistakes. Know you have the better mousetrap. Log
and target their customers. For every one dollar you sell, they loose seven, tick-tock, tick-tock the clock is your buddy
not your enemy.
• Marketing Team - Your Marketing team is vital and seperate from Sales. A good promotions
person usually comes from programming. Overall station promotion and station image is the only thing that proves your
existence in your community and creates all value, Advertiser confidence, marketing, political and financial revenues.
• Overhead expenses - Dale Carnegie said "make your needs few and supply most of them yourself." trade
anything you can convert to cash and anything that you would spend cash for anyway. Work on shedding every monthy
expense you can that has nothing to do with income. Sell excess stuff over the very medium you promote. Your station
is your store, unless its a big trade, then you call your CPA. Do not load up a station with lease comitments that make
the monthly budget hard to reach.
• Real Estate - Real Estate is an interesting dynamic because
it rarely increases the value of a station but can be the primary way to financing the station. KMPC in LA owned by Paul Allen
sold to P and Y Broadcasting. In the sale, 33+ acres of undeveloped commercial property was the transmitter site
and an obvious part of the deal. Nobody ever bothered to appraise the property. You need it to opperate right. The station
cost 33 million and P and Y had the land appraised...37 million...the Station was basicly FREE! If radio blows up you still
profit.
• Capital Improvements - Harris Corporation, Broadcasters General Store, and Broadcast Supply
Worldwide are some of the largest new equipment dealers found on the net and for no charge they will send you a catalog of
equipment they sell.
Stick Value - You should have engineering studies done to plot the stations signal coverage and
population figures for 3.16mV, 1.0mV, and 0.5mV contours multiply the 1.0mV pop. count by $10, add 25% of appraised value
of Real Estate included in the sale and subtract 25% of capitalized new equipment needed to easily resell the station to an
unknown third party.
• Good Will is laughable in todays cash tight buyers market. Established heritage
stations were unstoppable in the 90s but thats where Clear Channel money was spent now vaporized.
• What
can you do from your desktop? Check out coverage maps at www.radio-locator.com for a coverage map with 5mV, 2mV, and 0.5mV and calculate population figures of all cities that show up in those contours.
The old fashion way, a Rand McNally map from Walmart is easy to find and it has population figures in the city index.
• Download from the FCCs website the available documents. License, applications and past legal actions.
•
Follow the money...research a list of the AM stations inside the coverage area of your market using the AM Query search engine
on the FCCs website start checking out how they make money. Independent operators find it or fail. Brokering some or all available
times, nobody makes money with just cool music.
Mark Nolte Office Cell: (501) 859-0500. |
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Seller Tips you can not live without.
MOST IMPORTANT
ADVICE "GET YOUR LEGAL HOUSE IN ORDER FIRST" Go over every detail in the public files. Public and Broadcasting
a Procedural Manual Read through this guide and look for details you have missed through the years. Current Community Issues
reports, current FCC Rule books, letters and emails from the public, and Ownership reports are common pitfalls. Dont
play hide the public file. The more up front you are about your public files, the more confident and together you will be
perceived.
You have to make time to do a self-inspection of your station. Follow this link to the FCCs website: Station
Self-Inspection Checklist Pick the type of station you have and download these documents. You will need some type of Adobe
PDF reader to open these files, print this, go through your station and list your trouble spots so you can develop a plan
to solve those issues. You surely know how much money you have, how much you have sold, who works and who dosent. Dont assume
legally your a mess. Tackle this and put it behind you now before you get in the middle of a deal and get dinged. Commit to
a price when you put the stations on the market. Dont waste your time, the prospects time, and the brokers time. This isnt
a game you want to play, it is your business. Be ready with a media kit on the stations assets, marketing plan, P&Ls
and equipment lists. Dont insist on calling all potential buyers yourself. A brokerage contract is a legal commitment. Be
ready to live up to and honor that commitment. Do the studies to upgrade or move. Clean up or simplify those P&Ls,
repair or replace broken gear.
I have bought a new control room board and added several hundred thousand dollars to
the deal before presenting a station for sale.
Have a counter top guy look at spiffing up your studios overall eye appeal
with new formica. Put together your equipment list, notice how much consumer gear (radio shack) over actual broadcast gear
you have. Stuff that works like new will win over a big knob antique Gatesway 80. Make that studio and tower site spiffy.
Be ready to close. Play janitor for fun and profits. Hot Prospects huh, you think you have a biggie, a buyer who has
the right financial, or you gotta to sell and sell it quick. But, you have a "couple of small problems." Our problems
are not that big...just a few things that the new guys probably wont figure out until closing.....wrong. Problems need
to be addressed right up front. Dont wait until the due diligence period, and waste everybodys time. Buyers spending time
and money to verify your numbers, then to find out there is a lawsuit, or you dont really have a written lease on that tower
site, or that there is a lien on your equipment, that you meant to pay off when the station is sold. You have a "little"
problem with the IRS. Address these problems as soon as you can. Sometimes its after a buyer has been impressed with the station.
Be upfront, honest, and go on to the positives. Few problems will kill a deal if put on the table immediately you wont have
to apologize later. Remember no one local ever buys you out for real money, Be ready for your competitor
to tell everyone your selling, planning to leave them high and dry. The best plan is to always be for sale, and say, of course
I am for sale for a price. Never act suprised, and mention a price that would be so high its your way of saying I am not really
for sale. Who knows someone may take you seriously...Bud Paxton asked 300 million too high and Clear Channel said YES.
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