BUYING A COMMERCIAL FM OR AM LICENSE

Some people have asked about the process for purchasing a commercial radio station. In most instances, buying even a small station is a major investment, but in some locations, purchasing a station might be a viable option.

There are dozens of AM and FM radio stations on the market at any given time, and in many ways, buying one is similar to buying any other type of commercial business or real estate. There are brokers who specialize in broadcast properties, and for anyone interested, we can put you in touch with appropriate legal, technical and fiscal expertise to help you.

Valuations are based on a combination of factors, including frequency and power of the license, transmitter location, existing facilities, operating history, and future earning potential. Commercial radio stations in the largest markets are considered money machines, and they might be valued as high as $50 – $100 million dollars. Even in smaller cities, stations can be valued in the millions, though there are many exceptions. AM stations tend to be cheaper, and often are available for “fire sale” prices because they are not as desirable as FM stations.

But large media corporations are in the process of buying up groups of stations, both AM and FM, in many markets, and often they are willing to pay more than the frequencies are worth in terms of the revenue that they bring in. This drives the cost of stations up, and is beginning to make it difficult for smaller interests to break into the field as owners. When there was a limit on the number of stations any single corporate entity could own, there was a fluid market in licenses that kept the prices relatively low and spread the ownership widely. Now, though, most ownership restrictions have been lifted and a single operator can own hundreds of licenses across the country. Because of this, the era of small-time, ‘mom and pop’ local FM and AM commercial radio stations is virtually over.

In the days of “WKRP in Cincinnati” there might have been some room for a small business to compete, hiring local people and operating a nice little business. Today, most stations are almost fully automated. The owners feed these stations via satellite with generic content, so they pay one dj to record audio files for a hundred stations. They also have cross-marketing advertising schemes, which allow them to sell ads in hundreds of markets across the country. I encourage you to think carefully about your business model before you try to compete with Clear Channel Communications, which owns over 1000 radio stations across the country.