FOR SALE: FULL POWER NCE FM IN MINNEAPOLIS/ST. PAUL

I am fascinated by the sale of broadcast station licenses. As former commercial radio station owner, I am on email lists for several station brokers.  Today I saw that a full power noncommercial FM station is for sale in the Twin Cities.  The station call letters and price were not provided.

DETERMINING THE VALUE OF A STATION

Here are factors that determine the price for a commercial or noncommercial station:

• THE FCC LICENSE – Often called “stick value,” I’ve seen it calculated as $3 - $5 per person in the primary coverage area for NCE stations.

• ASSETS – Real estate, towers, studios, equipment, etc.

• CASH FLOW – Month-to-month revenue, minus expenses and debt service (mainly used for commercial station sales)

• UNIQUE CIRCUMSTANCES – Sometimes all a seller wants is for someone else to pay the station’s debt.  A buyer agrees to absorb/pay what the seller owes and no cash changes hands.

Other unique circumstances include the motivation of the seller and the buyer, whether the seller will finance the sale and unseen obligations, caveats or other factors.

So, which noncom station in the Twin Cities is for sale? Let’s look at the candidates:

MINNEAPOLIS – ST. PAUL NONCOMMERCIAL FM RADIO DIAL

F	C	P	FORMAT	OWNER	ANNUAL REVENUE*	FOR SALE?
88.5	KBEM	2.5kw	Jazz	Minneapolis Public Schools	$900,000	UNLIKELY
89.3	KCMP	100kw	Triple A	The Current American Public Media	$5,000,000	NO
89.9	KMOJ	1kw	Rap & Soul	Center For Communication & Development	$600,000	NO
90.3	KFAI	.125kw	Various	Fresh Air, Inc. Serves St. Paul on 106.5	$900,000	UNLIKELY
91.1	KNOW	100kw	NPR News	American Public Media	$8,000,000	NO
95.3	KNOF	900 watts	CCM & Teaching	Praise Broadcasting Christian Heritage Broadcasting	$430,000 $625,000	LIKELY
98.5	KTIS	100kw	CCM	Northwestern College	$6,000,000	NO
99.5	KSJN	100kw	Classical	American Public Media	$4,000,000	NO
104.5	KUOM	8 watts	CMJ Rock	Radio K Repeats KUOM-AM University of Minnesota	$450,000	NO

* Annual Revenue is an estimate based on IRS 990 filings

To me, the answer is obvious: 95.3 KNOF is for sale.  Here is their carriage map:

KNOF operates as PRAISE FM [link], a station that airs old-school preaching and teaching programs plus Contemporary Christian Music.  Praise Broadcasting, a 501c3 organization is listed as the owner. I reviewed their most recent (2013) IRS 990 and found some surprises:

Praise Broadcasting’s revenue was $430,000, expenses were around $600,000, leaving a loss of around $170,000 for the year.  The biggest single expense was $314,000 paid to unspecified nonemployee “management.”

But wait, there’s more: Praise Broadcasting owes Christian Heritage Broadcasting $856,000 for unspecified reasons.

Christian Heritage Broadcasting is a separate 501c3 organization. I reviewed their 2013 IRS 990.  Praise Broadcasting and Christian Heritage Broadcasting are both operated by the same people.They both operate from the same location.

Christian Heritage claims it is in “the concert business” and claimed revenue of $625,000.  Strangely, both organizations claimed almost the exact same expenses. I’m not an accountant and am not making any allegations, but this looks like a shell game.

PRAISE THE LORD & PASS THE CONTRIBUTION PLATE

I saw this item on Praise FM’s website [link]. (I highlighted key verbiage in RED.):

KNOF 95.3 Twin Cities Purchase
A Miracle in the Making

Praise FM began back in 1985 and we’ve watched as God has done miracle after miracle to start, build and sustain this ministry.  This letter is to share about another miracle in the making.

Praise FM has been leasing the 95.3 FM signal in the Twin Cities for the past 5 years.  We have never owned the signal and transmission equipment, and a few months ago were informed that we were not able to renew the lease, which meant Praise FM would no longer be available to you. 

However, God provided us the opportunity to purchase the signal and equipment to prevent this from happening.

By October 2014, we needed to cover the $250,000 down payment on the purchase price of 5 million.

As you may know, we set aside the two days in September 2014 to raise the $250,000 that was necessary for the down payment.

How amazing that hundreds of people reached out for a total of $251,000!  In 29 years we have never seen this kind of giving for a special project.

We are celebrating because of the financial outpouring and the amazing stories that poured into our studio. It is so clear: people are encountering the amazing grace of our God!

If you were able to join us in some way, please accept our heartfelt thanks. You are one of the few that will bless the many.

In closing, please take a moment to thank God with us for this first step in securing a permanent home for Praise FM in the Twin Cities. He alone receives the honor and glory!

For those who would still like to give towards the remaining portion of the purchase price of five million, we welcome it as it would allow us to move ahead towards future payments needed. Thank you!

WHAT IS LIKELY GOING ON

PRAISE FM appears to be raising money while telling listeners give us money or we will go away.  Who holds the lease?  I bet it is Christian Heritage Broadcasting. This sale stinks and deserves further investigation.