That’s the way Bear Stearns analyst Victor Miller sees the 12.25 million sale of WTPS-AM Miami (10/19/07 RBR #205). In his view, Radio One dumped a format that was losing money and Salem got a better signal for a format that is making money.
Miller estimates that WTPS, with an African American Talk format, was bringing in about a million bucks in annual ad revenues for Radio One, but costing twice that to operate. But Salem was earning 400-500K in EBITDA from WKAT-AM, whose Religious teaching programs now move to the much stronger signal, which will adopt the Miami heritage calls WMCU, recently given up as a Miami non-commercial Religious station was sold to a public radio entity. Not only should Salem get higher profits from the 50kw signal, but it can now try something else on the 5kw signal. What’s next? "Salem could ultimately launch a Spanish-language teach/talk station with WKAT or sell the asset," suggests Miller.
RBR observation: Let’s put it out there, the format was not the area of specialty of Radio One. 2008 is the beginning of a new two year business cycle and any business operator that is stretched beyond their level of expertise will see their rubber band snap. To bring shareholder value and or profit to any business in our media world today get focused on your strengths and improve on you weaknesses. Miller is correct – Radio One dumped a format that was losing money and Salem got a better signal for a format that is making money. Learn from this.