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Since the Telecommunications act of 1996, groups all over the country started staking out dominant market shares. Multiples of 20 times cash flow was typical when pricing a station for a potential buyer. In 2000, when the buying leveled off and owners started operating their new facilities, times were good. The NASDAQ was over 4,000, consumer confidence was high and radio groups were experiencing a strong advertising market. Owners and managers were making money and servicing their debt load in a strong economy. What a difference in a year.
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 the largest one-month decline for the consumer price index in more than 15 years. Radio groups around the country are cutting paychecks across the board to eliminate layoffs in the continuing soft ad market. A recent survey of top companies found that a quarter of the employers surveyed had either denied or delayed salary increases, but a few had actually cut salaries or were considering such a move.
By many accounts, radio groups that will remain successful during these times will be judged by how well they adapt to the economy. A new style of thinking must be incorporated into the broadcast environment. The new way of thinking says every department must produce. Every employee must contribute to the bottom line success of the company. Typically sales, promotions, and marketing were the moneymakers, and programming and engineering were the liabilities. As a chief engineer turned GM, it is my first priority to turn the old image of the chief engineer that always spent money, into the profit center engineering department that found untraditional revenue under every stone. There are many opportunities for the Engineering Department to make money for the company.
Every employee must work as a team to produce a large bottom line for the company. The first priority for an increased bottom-line profit, is to get every employee on the same page. Have one objective, one goal and one mission. Include every department in the planning at strategizing. Let's look at some immediate revenue the engineering department can bring to the table.
The best place to solicit potential SCA customers is in the world of brokered time and foreign language radio. Start by contacting local hosts and shows that buy multiple hours on local stations. At WLIR, we took it to a different level this year. We re-invested in our own medium. We advertised the availability of our SCA on a local AM brokered time radio station. The response was overwhelming.
Other great sources for SCA rental are local high schools and colleges that do not have an FM frequency. Most schools that offer communication courses in highly populated areas are shut out when it comes to educational or commercial FM frequencies. An SCA is a wonderful opportunity for schools to have an over-the-air FM signal capable of being received on and off campus without the RF equipment costs that are associated with start up FMs.
Both of these plans can be lucrative for your station. Our SCA income will be more than $60,000 for 2001.
Rent the roof
Tower space is at a premium. The rental income from a broadcast tower should be lucrative, but if the radio station does not own a tower, 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 friendly sites with an average AGL of 100 feet to 150 feet. Use strategically placed advertising to sell your facility to them. We placed advertising in two national trade magazines and got great results. The ads were simple classified listings, but spoke the engineers' language.
Today's broadcasting environment is full of innovation and constant change. Every department in the radio station must keep an eye on raising revenue and lowering costs. A chief engineer in today's station must have the business skill, the technical experience and the in-depth knowledge of how to win and succeed for the team.
John Caracciolo is vice president and general manager of Jarad Broadcasting Company, Garden City, NY.
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