Since the Telecommunications act of 1996, groups all over thecountry started staking out dominant market shares. Multiples of 20times cash flow was typical when pricing a station for a potentialbuyer. In 2000, when the buying leveled off and owners startedoperating their new facilities, times were good. The NASDAQ was over4,000, consumer confidence was high and radio groups were experiencinga strong advertising market. Owners and managers were making money andservicing their debt load in a strong economy. What a difference in ayear.
We don't need any more evidence that the economy is in a slowdown.The consumer price index fell 0.3% in the month of October. That is thelargest one-month decline for the consumer price index in more than 15years. Radio groups around the country are cutting paychecks across theboard to eliminate layoffs in the continuing soft ad market. A recentsurvey of top companies found that a quarter of the employers surveyedhad either denied or delayed salary increases, but a few had actuallycut salaries or were considering such a move.
By many accounts, radio groups that will remain successful duringthese times will be judged by how well they adapt to the economy. A newstyle of thinking must be incorporated into the broadcast environment.The new way of thinking says every department must produce. Everyemployee must contribute to the bottom line success of the company.Typically sales, promotions, and marketing were the moneymakers, andprogramming and engineering were the liabilities. As a chief engineerturned GM, it is my first priority to turn the old image of the chiefengineer that always spent money, into the profit center engineeringdepartment that found untraditional revenue under every stone. Thereare many opportunities for the Engineering Department to make money forthe company.
Every employee must work as a team to produce a large bottom linefor the company. The first priority for an increased bottom-lineprofit, is to get every employee on the same page. Have one objective,one goal and one mission. Include every department in the planning atstrategizing. Let's look at some immediate revenue the engineeringdepartment can bring to the table.
The best place to solicit potential SCA customers is in the world ofbrokered time and foreign language radio. Start by contacting localhosts and shows that buy multiple hours on local stations. At WLIR, wetook it to a different level this year. We re-invested in our ownmedium. We advertised the availability of our SCA on a local AMbrokered time radio station. The response was overwhelming.
Other great sources for SCA rental are local high schools andcolleges that do not have an FM frequency. Most schools that offercommunication courses in highly populated areas are shut out when itcomes to educational or commercial FM frequencies. An SCA is awonderful opportunity for schools to have an over-the-air FM signalcapable of being received on and off campus without the RF equipmentcosts that are associated with start up FMs.
Both of these plans can be lucrative for your station. Our SCAincome will be more than $60,000 for 2001.
Rent the roof
Tower space is at a premium. The rental income from a broadcasttower should be lucrative, but if the radio station does not own atower, there is still a way to make money.
Our station owns the small office building in which we are based.Most new PCS, Nextel, and cell services look to install on RF friendlysites with an average AGL of 100 feet to 150 feet. Use strategicallyplaced advertising to sell your facility to them. We placed advertisingin two national trade magazines and got great results. The ads weresimple classified listings, but spoke the engineers' language.
Today's broadcasting environment is full of innovation and constantchange. Every department in the radio station must keep an eye onraising revenue and lowering costs. A chief engineer in today's stationmust have the business skill, the technical experience and the in-depthknowledge of how to win and succeed for the team.
John Caracciolo is vice president and general manager of JaradBroadcasting Company, Garden City, NY.