I think what people who are watching the radio business from the sidelines don't understand, is how the value of broadcast properties changed significantly over a year, not unlike the housing bubble and people who had huge mortgages on what amounted to over-paying for their home. I'll use my situation as an example: Apart from my day job, I've been a major shareholder in a group of small market radio stations, three FM's and an AM. We purchased a Class C FM, Class A FM and Class D AM (thrown in with the Class C) in what amounted to a distress sale. The other FM was built from a Construction Permit. One of the original stations we sold to CC who moved-in the station to a larger market. Before the economy tanked in 2008, the "stick" value of all these properties were around $5M, including cash flow multiples being used at the time, maybe $6.5-7M. What are they worth now? Downhill with a tail wind, about $1.5M. Fortunately for us, there is little debt associated with the stations, as we used the sale of the one FM to pay down debt. But still, even with little debt it's a bitter pill to have the overall value of your business drop that far because your options to grow your business are also stunted in the process.
The same goes for mega groups, but their debt from acquisitions are scaled accordingly. Several of those properties having been AM stations, who's valuation(s) have dropped even more with the dying-off (in some cases, literally) of their listener base. Now add in the division and volatility of spot revenue, plus reduced options for restructuring debt because lenders tightened everything down, and you have a perfect storm of badness. It has little to do with whether the stations are playing whatever music or talk programming. The good news for someone who wants to get into the radio biz, is there are a lot of mom-and-pop stations going at fire sale prices. The bad news is, and always the risk, taking on that debt with an uncertain future. Just playing what you think is the best music or "super-serving" your local community isn't enough anymore. Not by a long shot.