Another sad tale of radio station value lost


Dollar SignWhen Telecom 1996 opened up the radio station trading market and led to the creation of radio juggernaut groups with stations in the hundreds, station prices supply-and-demanded their way up the ladder. Now we’re seeing the ugly underbelly, and the deal for KNOU-FM Empire LA is a case in point.

The station was bought by Bruce Buzil’s JP Broadcasting in a deal we saw in the FCC database, but which was filed far enough in the past that there were no documents attached. But it provides a starting point in our journey.

Steve Hegwood’s ill-fated On Top Communications Group bought the station from JP pursuant to terms of a 7/24/02 contract. The price: $8.5M.

Fast forward to 7/3/08. By now, On Top Communications of Louisiana is a debtor-in-possession under control of Chief Restructuring Officer Bryan C. Rice. Rice transferred to station to Power Broadcasting LLC, basically a trust designed to protect the station’s existence until such time as it could be resold. The deal called for a $250K escrow deposit and cited the value of $6M, deemed a credit bid.

Just to add injury to the insult of a lower value, in 2008 the contract stipulated that the station’s public file was being transferred to Power “to the extent re-created after destruction by Hurricanes Katrina and Rita.”

Now, in a deal just filed with the FCC, the station is going for $350K, sold by the Power Broadcasting Trustee Ricardo Moreno to M.A.C. Broadcasting, which will operate it in tandem with WTIX-FM Galliano LA. WTIX beams up from the south to serve New Orleans; KNOU beams up from the same area but doesn’t quite make it to the city.

Today it seems amazing what people were willing to pay for a rimshot FM with only a peripheral presence in a competitive market.

But we are now seeing prices start to connect with reality, and that’s no doubt a good thing for radio operators going forward.