> I just started subscribing to this daily dispatch, and I think this  
> one is worth passing along.

> Actually, I think Jerry Del Colliano is a very wise man, despite the  
> name-calling (but I certainly understand the frustration that feeds  
> it). Happy reading.

> Hope to see some or more of you at the WBRU reception this weekend.

> Paul

> Paul Payton ‘69
> "Have Voice, Will Travel"
> 973-701-0707 (office)
> 973-879-0414 (cell)
> www.paulpayton.com
> www.presenceproductions.com

> From: noreply+feedpr...@google.com [mailto:noreply+feedpr...@google.com
> ] On Behalf Of Inside Music Media
> Sent: Tuesday, May 19, 2009 6:08 AM
> To: bsan...@verizon.net
> Subject: INSIDE MUSIC MEDIA™

> INSIDE MUSIC MEDIA™

> Radio Station Blowout Underway
> Posted: 19 May 2009 12:02 AM PDT
> By Jerry Del Colliano

> Louis: This is it! This is the sign!

> Janine Melnitz: Yeah, it's a sign, all right - "Going out of  
> business".

> -- From Ghostbusters

> Sooner or later it had to happen.

> Citadel, Clear Channel, Cumulus and the other big consolidators  
> weren't just driving down their share prices. They were alsokilling  
> the value of radio stations.

> Of course, we really haven't been able to know just how low prices  
> were really going to sink because so few stations have been sold in  
> this bad economy.

> We had the CBS Denver sale -- three stations to Wilkes Broadcasting  
> for $19.5 million. The multiple on that deal was about five times  
> cash flow. That was back in December.

> Three or four times cash flow is more reasonable today in an  
> industry stinging from huge declines in advertising revenue.

> A few little deals here and there have occurred since but nothing  
> has happened to raise the multiple.

> Now we've seen what I believe is going to be the start of a radio  
> station blowout -- companies unloading stations for whatever they  
> can get to raise cash.

> Why?

> They are in financial trouble.

> Look at what just happened in Pittsburgh.

> Sheridan Broadcasting which has owned WAMO for 36 years was forced  
> to sell WAMO AM/FM and WPGR-AM for a paltry $8.9 million --  
> combined. Three for less than the price of one in the old days of  
> consolidation.

> In fact, even though WAMO-FM is not a great facility licensed to  
> nearby Beaver Falls, Sheridan probably could have netted $15-18  
> million just two or three years ago when most groups weren't looking  
> to sell anything.

> Sheridan promptly fired 35 full-time employees and put the station  
> on death watch until the new owners could take over.

> And the new owner is Joseph Missions -- you can see where this is  
> headed. The formats will change to religion as apparently the only  
> companies with ample money to buy radio stations are religious groups.

> Sheridan also owns American Urban Radio Networks -- and I wouldn't  
> be signing any long-term leases, buying cars or otherwise living if  
> I worked there either.

> The handy work of the three blind mice -- Hogan, Dickey and Suleman  
> -- is catching up with the radio industry. They got caught moving  
> the cheese! Just like in the Hanna-Barbera cartoon Mr. Jinks --  
> radio people are soon going to be saying "I hate those meeces to  
> pieces!"

> No ... not Pixie and Dixie.

> Trixie and Slixie (Dickey and Hogan).

> Now if I'm reading this right, you'll be seeing troubled radio  
> groups in short pants start peeling off some assets for sale at  
> whatever they can get. You can bank on it.

> They have to because they have made such a mess out of a very good  
> business.

> Unlike consolidators, find an operator with no debt service and  
> they're feeling the down economy but they are still cranking out  
> lots of free cash flow. Remember, that's what radio used to do the  
> best before the industry started charging up its credit cards.

> Hey, Jerry Lee at B-101 in Philly owns his station. He did almost  
> $30 million last year. Let's say he wears Brioni, has a private jet,  
> five homes and a craving for Beluga caviar -- he's still rolling in  
> dough. Recession? Depression? Not at the Lee household.

> No debt.

> And a lot of small market operators who are my readers remind me  
> that they are still making money by operating local radio stations  
> without debt. Sorry I had to use that dirty word -- local. I know  
> Fagreed Suleman, Tricky Lew Dickey and John Slogan Hogan think  
> national radio is going to be the new local radio.

> All of this doesn't help our industry embarrassment which is how  
> poorly we treat the people who have made radio the asset that Wall  
> Street money had to have in the first place. Now, each day -- more  
> radio people are thrown under the bus. Look at the trades -- it's a  
> business story. But it's more -- it's a commentary on the human  
> condition -- sad to say.

> So, here's what's ahead --

> 1. More station sales for multiples of below 5 times cash flow to  
> willing buyers.

> 2. Sellers are going to go to closing faster than that guy on the  
> Imodium commercial has to find a bathroom. Why? Well -- because each  
> day the sale remains in the hands of the desperate seller income is  
> likely to drop and the vital financial statistics upon which the  
> deal was crafted could lower the already low sale price.

> 3. Loyal employees will see their careers end the moment the ink  
> dries on the desperate seller's agreement of sale. Signed, sealed  
> and kicked to the street -- no matter how many years of service.

> 4. The new "radio" industry will slowly begin to take shape. People  
> buying in to use radio stations to espouse causes, sell their own  
> products or gain influence. The price is right -- low and going lower.

> 5. For all you radio freaks out there waiting for prices to drop low  
> enough so you can "put a group together and buy one" -- be careful  
> what you wish for. Your fantasy of the radio industry is like mine  
> -- the glory days of yesteryear. But the radio industry is a  
> perilous place to own stations. Consolidators have killed the  
> sector. Plus new technology and changing sociology has occurred  
> while Fagreed has been jet setting all over the country. Owning a  
> radio station in this type of industry is like owning a GM  
> dealership just about anywhere. The U.S. auto business is done --  
> being part of it makes you done as well. There is no comeback when  
> the industry has been killed by the greedy predators that ran it  
> into the ground.

> 6. Fagreed would sell large chunks of Citadel if anyone would pay  
> him near what he wants or needs. You think John Slogan Hogan  
> wouldn't take less for more? Tricky Lew Dickey would love to find a  
> buyer for his underperforming properties so he could start taking  
> his half day furloughs. That's not how it will happen. Listen to  
> this. You'll see them chip away here and there -- selling off  
> whatever they need to bring in money. It's like a coke addict  
> desperately pawning things of value to continue feeding their habit.

> 7. Then, in another year or two the desperate consolidators will in  
> effect be selling off "sticks" because they won't have a lot of  
> local programming on their so-called local stations. This is going  
> to be like playing Monopoly -- easy to cash in. The only problem is  
> soon there will no longer be a Park Place.

> Look, I know that Sheridan is a minor player -- and not an  
> influential consolidator. And it may be early to call the trend. But  
> there are ominous signs ahead that says larger groups may have to  
> hold distress sales.

> Revenue is critically off -- forget auto advertising, just look to  
> Main Street. And don't confuse collections with billing.

> The economy has not recovered and no one can say when it will. We do  
> know that boom times may not be following this recession.

> Another indicator is that groups have made just about all the cuts  
> they can make.

> I mean, how can you fire more people when you have the minimum  
> number of bodies running your Repeater Radio station?

> If you have no more economies of scale ...

> No more employees to fire ...

> A prolonged recession that shows no sign of letting up ...

> The loss of powerful American advertisers like GM, Chrysler and  
> maybe even Ford ...

> Who do you call?

> Pricebusters!

> Ladies and gentleman, sharpen your pencils -- the radio station  
> blowout we've long feared looks like it may now be underway.

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