CASE STUDY: HOW TO MAKE MONEY WITH NONCOM RADIO LICENSES

One of the business aspects of noncommercial radio that is not well understood is the sale and transfer of broadcast licenses.  Every year dozens of FM licenses acquire new owners. These transactions seldom make media news headlines like multi-million dollar commercial license sales.

License sales are more permanent than Local Marketing Agreements (“LMA”) because LMA’s can always be changed over time.  Consider KPCC, Pasadena and its very successful LMA with American Public Media (“APM”).  KPCC’s weekly audience has increased five-fold since APM took over. 

However, if Pasadena Community College, owner of the license for KPCC, ever needs cash fast KPCC can probably sell. Though I am certain APM has an iron clad deal, it could happen. So, having licenses means you an owner; an LMA means you are a renter.

Here is today’s case study:

• THE DEAL

NCE station WFLA-FM, Asheville, North Carolina, was sold for $500,000 recently. The terms were $100,000 in cash followed by 40 months of $1,000 payments plus 5% interest.  WFLA operates at 91.3 and blankets the Asheville market (metro population: 400,000).  Sweet deal.

• THE SELLER & BUYER

THE SELLER is Dr. Kenneth Brantley and his wife Janice from Ardmore, Tennessee.  The Brantley’s are Christian fundamentalists.

UPDATE: Thank you to the person who let me know that in an earlier version of this post I mistakenly confused the seller with Dr. Kent Brantley who contracted Ebola while working as a missionary in Africa.

THE BUYER is Radio Training Network, Inc., a player in the Christian Contemporary Music (“CCM”) marketplace. They are based in Greenville, South Carolina.  Radio Training Network owns about a dozen FM licenses and dozens of translators.  All of the stations carry His Radio, a 24/7 music machine that has impressive revenue.

According to Radio Training Network’s IRS 990, the company reported over $16,000,000 in revenue in 2013.  The net assets of this 501c3 as of 2013 exceeded $22,800,000.

2013 expenses were around $13,000,000 leaving a net revenue gain of over $3,000,000.

According to the 990, Radio Training Network reported over $3,000,000 in underwriting revenue and $1,300,000 sponsoring concerts by CCM artists.

Life is easy in Greenville.  The CEO of Radio Training Network, James Campbell made over $300,000 including a $100,000 bonus in 2013.  His wife Ruth, brought in $72,000 working as James' personal secretary.

Interestingly, one of the highest paid people at Radio Training Network doesn’t even work there: Thomas Brown. He was paid over $120,000 in 2013.  It turns out Brown lives in New Hampshire. He hosts The Tom Brown Show, a nightly conservative Christian talk show. The show’s motto is:

We believe that the people of the United States need to know when they are being lied to, especially concerning special interest issues.

• WHAT’S REALLY GOING ON?

This is an “insider deal.”  Radio Training Network has been running WFLA in Asheville vian an LMA for quite a while. They are cashing out the Brantley’s who were probably investors.

One rule-of-thumb to evaluate noncommercial radio sales is to determine the Cost per Potential Listener in the main coverage area.  In this case Radio Training Network paid around $1.25 per person. This is a helluva good deal.  The typical cost per listener is between $3.00 and $5.00.