Small Market Am Radio Gradually Going Away?

I have always wanted to own a radio station. I seriously doubt that it will ever happen as I do not have the funds to buy even a small town, AM daytimer, which is what I would like to start off with. But I've been noticing something disturbing. I live in Missouri and in the past few years, about four small town Missouri AM radio stations have gone dark. They are:

KUKU 1330, Willow Springs
KELE 1360, Mountain Grove
KDFN 1500, Doniphan

I realize that stations shut down all the time, but to have this many in the same state in only the past five years or so is alarming (to me, anyway)! As previously stated, if I can ever rake up the money to buy a radio station, I would like to begin with a small town AM, but I also see no reason to pursue something that may not be around in several years.

I'm sorry. I wrote "four small town Missouri AM radio stations." I meant "three."

Running any business is a personal commitment. It doesn't matter if it's a restaurant or a radio station. If you have a commitment to something, you can get the money, you can find the property, and you can make it happen. But if you want someone to give you something for free, it probably won't happen. If you want to make small market radio work, you have to be willing to put the time in. If you can't afford staff, you will have to do all the work yourself. It would help to be active in the business community, and well known among the politicians.

You are not alone. Per RBR, as of January 1st of this year "The number of AMs declined again, moving to 4,619 from 4,626 and from 4,633 at the end of the first half of 2018. This compares to 4,646 on June 30, 2017."

Lots of AMs, especially daytimers and especially in small towns where regional, if not local FMs have established a foothold are having a tough time. AM still works if you put the effort. It seems local is a big factor in bringing in listeners and keeping them. Smart programming and top of mind awareness are equally critical. Obviously a sales department that will visit every business near and far is the way to pay the bills.

I think you'll find many of the AMs going dark are associated with an FM and the buyer was stuck buying an AM to get the FM. Or the AM has been neglected so long that the capital to get the station back to where it should be technically is too steep for the station's current income. Some AMs are in such bad shape it's almost a rebuild from the ground system up. For a few, the land has more value than the station's revenue potential. And some just give up on AM, putting on anything and doing a cheap add-on rate for spots.One operator asks $8 for a spot on the FM and for 60 cents more he'll toss in the AM. You can buy the AM alone for $1 per 30 second spot. Then again the AM is the computer in the closet inserting spots in a satellite delivered format.

KELE isn't officially gone yet. Today they were granted an extension to their STA to remain silent, which now expires on November 1st. Their application states "THE MAIN STUDIO AND STL TRANSMISSION EQUIPMENT WILL BE RELOCATED TO A NEW STUDIO. DUE TO RESOURCE ISSUES, THE TRANSITION HAS NOT YET BEEN ABLE TO BE COMPLETED AND ADDITIONAL TIME WILL BE REQUIRED TO COMPLETE THE RELOCATION."

TheBigA said:

Running any business is a personal commitment. It doesn't matter if it's a restaurant or a radio station.

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Just as many failed LPFM licensees have discovered, one still needs listeners. Your comment above is ironic, because owning a stand-alone restaurant is about the same level of risk in business as a stand-alone radio station.

Kelly A said:

Just as many failed LPFM licensees have discovered, one still needs listeners. Your comment above is ironic, because owning a stand-alone restaurant is about the same level of risk in business as a stand-alone radio station.

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I've noticed that (many) of the long-time AM brokers, who bounced around from AM to AM in a market (wherever the rates are the best), have now ended up on LPFMs -- with much longer blocks/programs than they had on the AM. Since the LPFMs are community and non-profit (mostly owned by churches), those pastors and other religious oriented folks are on the air for free and for longer periods. So why buy airtime?

Ironic that translators, meant to revitalize AMs ... and small, local AMs are killed off by the LPFMs, intended to bring localism and service a community -- which is what the AM was doing in the first place.

So I think that is contributing to these smaller AMs going dark: they're losing those time brokers to LPFMs. And those ex-AM brokers still get their message out -- and it costs nothing, now. Their "shows" were always an ends to the means: it's about getting the word of God out (and yes, get people into their church and money into the plates). And these LPFMs stream on various platforms (on phones), while most strapped AMs, do not. And, have you seen the churched-back LPFMs? The studios are incredible. So, on top of being on the air for free, you're working with top of the line equipment. Some even have vans and remotes. Again, why bother with a small AM with decrepit, dated equipment, no remotes, no image, or no promotion?

Agreed with the restaurant comparison. If you've got the collateral to back a loan and have a business plan, owning a small AM station is doable. Instead of a hair salon or restaurant (or back in the '80s a video store), you buy a station. Just don't make the mistake of most LPFM operators and just play the music you like, or go into conspiracy talk mode. Look at the market in the coverage area. What's the population? Serve the market tastes, not your personal tastes. This is why so many LPFMs fail, as spoken of in this thread. (Not understanding the rules and not understanding what a sponsorship is vs. commerical spots, is another issue that kills them.)

Popularity of AM radio seems to be somewhat regional and likely reflected by number of signals available to the typical listener. I can tell you that people I know in isolated markets (something folks in the northeast except Maine might find difficult to imagine) where the radio dial is limited to five or fewer options, the AM does pretty well. In places where there are 60 radio choices, that AM likely loses money no matter what, even if sold in combination with an FM.

Those AM stations that pay close attention to being ultra local tend to do pretty well financially if they have a good sales department. Naturally they're not rolling in money but do have something to show for the hard work. That is the case even if there are regional FMs serving the area as long as they have an exclusive on their town, especially as a stand alone with or without a translator. It's those stations that tend to hook up to the satellite or run as a music station as a jukebox via a computer in a closet that have the toughest time in small markets.

Even with that said, current AM station prices are very low right now and it might be easier than ever to make it as an AM. When you can scoop up an AM for little more than the property value, you have debt low enough for a dedicated person to make it. And success will not come easily. This assumes due diligence and not uncovering the ground system is toast, for example.

As for LPFMs, I will say there are some true shining examples where such stations are done well and truly serve their communities. These folks understand they are charged as the operators of an entity dedicated to what their service area wants. In essence, in the small towns they are very much like the full service AM that was the sole station serving their town in years gone by.

Too many LPFM operators do not understand serving their communities. They want what they want. Or they say they have to be niche programmed. I tried telling one fellow that 2% of a major metro is easily monetized but the same format that is popular with 2% of the audience of 5,000 is not substantial enough to even generate the cash to operate. Even the religious broadcaster is disenchanted frequently. While LPFM is perfect for a church wanting to evangelize, they need to understand their radio station needs to sound less like sitting in the pews Sunday morning and more like that fun day church event for the community with bounce houses and free hot dogs and cotton candy that brings the unchurched to their place in hopes of gaining a few more members. I suggest such stations adopt more of a community oriented format with short features that introduce the church to the general public. From all the research I've seen, churches that gain members are the ones serving their communities as a big part of their focus. Those studies show the younger demos especially find community service a very important factor.

AM stations certainly have taken a hit from the many options available to programmers and ministries. So many utilize LPFM or Podcasts to reach their audiences and seldom think radio, especially AM.

There are certainly some 'tricks' that can be utilized to bolster interest in an AM. One I like is any service or product everyone needs or uses. I offer giveaways to listeners and thank you gifts to advertisers for things like oil changes and meals. I trade these with at least 50% cash to make believers of advertisers. Obviously the gift certificates make it back to that business and there is tangible proof of results from advertising to secure future buys. Some want to do the 50% trade/50% cash but even 50% versus 0% is a win to me.

b-turner said:

Those AM stations that pay close attention to being ultra local tend to do pretty well financially if they have a good sales department. Naturally they're not rolling in money but do have something to show for the hard work.

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I think @b-turner hit the proverbial nail on the head here. I tend to read Radio World magazine often, and on occasion there's an article or letter to the editor in there from someone explaining that, despite all they're reading about the death of radio broadcasting and the AM band specifically, their station is alive and well and thriving. From what I recall from most of these, they seem to have a number of things in common: 1) They're usually not located in big cities or major markets, 2) They concentrate on being local and getting people from the community on the air and involved. They show up at all the county fairs, the street festivals and parades that the local volunteer fire departments put on each spring and summer, they broadcast as many local high school football, basketball and other sporting events as they can, etc. 3) Their programming sometimes harkens back to the days of "full service radio", where they discuss local events, news items and issues, they maybe host an on-air "swap shop" where listeners call in to advertise their yard sales or sell their items, they may air religious programming on Sunday mornings or even ethnic shows if there's a larger population in their area from a particular region (Polka shows, an hour of Italian music hosted by Italian speaking hosts, etc). Contests and give aways also help drive listenership. 4) They have a good relationship with the business community in their area, they belong to the local chambers of commerce and maybe even organizations like Rotary, United Way and others, and they actually show up to their events and have representation there.

As was mentioned in other previous posts, it takes hard work, creativity, the owner (and sometimes their spouse) generally needs to put in lots of hours and wear many hats, but if your dream is to own a station and make it successful, it is possible. IMO the best way to do this is to be concentrated on the local citizens, local issues, local events and local business community, and be there for them. Switching on a transmitter and running a bunch of satellite programming automated by a computer in a closet somewhere most likely won't work.

Cay Daze said:

Ironic that translators, meant to revitalize AMs - and small, local AMs are killed off by the LPFMs, intended to bring localism and service a community -- which is what the AM was doing in the first place.

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b-turner said:

I can tell you that people I know in isolated markets (something folks in the northeast except Maine might find difficult to imagine) where the radio dial is limited to five or fewer options, the AM does pretty well. In places where there are 60 radio choices, that AM likely loses money no matter what, even if sold in combination with an FM.

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I found both these comments interesting. I recall an article from a few years ago where a guy who'd owned a small market station since the early 1980s was explaining how many of the FCC's decisions that were designed to "help", actually negatively impacted (some would say destroyed) locally-minded, community-focused radio over time and put stations out of business. In his example, after he started his new station in the 80s, there were really only 2 signals serving that market - his FM and an existing AM. Both were competitive, but in a friendly way, both had full-time news departments and were present and visible at a lot of community-based events - and both stations made good money. Once the FCC started changing rules and policies, the number of stations in that area increased, and suddenly those 2 original stations were getting smaller and smaller pieces of the $$ pie. Their ad revenues shrunk and they had to start cutting staff and in some ways, watering down and cheapening their product. Their news departments were cut, they could no longer pay staff to go out and cover community events and happenings, then pre-recorded and satellite programming along with computer automation started creeping into the mix, first during overnights, then during certain other dayparts, then everything was automated except maybe the morning drive shows. He said it was painful, but it's what they had to do to stay in business financially.

While those who came into this business somewhere along that timeline many not have seen the full picture, reading his comments in that article really made an impact and it really showed how much things had changed over time (and not for the better). That smaller town went from 2 well-funded, community-based stations that served their communities well less than 40 years ago, to a market that had about 15 stations broadcasting there by the mid-2000s when he finally decided to sell and get out, with all their local news, local hosts and jocks and and community involvement all but gone. But hey, there were more signals on the air there to supposedly serve the varied interests of the community, right?

Mikey Radio said:

I found both these comments interesting. I recall an article from a few years ago where a guy who'd owned a small market station since the early 1980s was explaining how many of the FCC's decisions that were designed to "help", actually negatively impacted locally-minded, community-focused radio over time.

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The job losses. When the deregulation of the mid-'90s hit, the ownership caps lifted, and Clear Channel (old iHeart) went on a buying spree, it was a career killer. Now you had 8 station clusters under one roof. And, most likely, another one (or two) of the majors had their own clusters. And this coincided with computers. So, the days of walking across the road or down the street to another station, were over.

I can think of a few 1,000 watt AMs that dominated their market. Number one. Today, those stations are barely afloat with ethic brokering or just giving up and riding the bird for their programming.

So, yeah, what the FCC intended with the deregs and cap adjusts, didn't help, it hurt. And I just don't see how FM translators or LPFMs have reversed the course for the better. As I said, I think LPFMs have burdened AMs and hurt them, even more so. (How FM translators carrying a major station's HD sub-channel helps anyone, is also beyond me.)

On my annual trips up to North Dakota 15 to 20 years back, I'd spend the night in McCook, Nebraska. The market had been a couple of stations, not bad for a town of 8,000. McCook is a regional shopping hub where I estimate for every $1 spent locally, another $2 is spent from towns up to 50 miles away. There's 8 stations now. Except for an AM run as a non-profit by the Lutherans, two companies own the remaining 7. There are also translators and a LPFM creating a dozen local signals.

The stations, the 7, are satellite delivered formats or computer driven. There are quite a few format options with no overlap but the truth is these groups can't afford even one fulltime air staff and likely don't have fulltime news directors. They have one office each and one sales staff pitching them all. None of the stations have spot loads beyond about 6 spots an hour. The way it is, if they lost a station both groups would be hurting. If I recall, McCook and the county might have $165 million in retail sales. I'm guessing $30,000 to $40,000 a month per group owner or about $10,000 a station and some of the FMs are full class Cs.

I also wanted to inject something I always tuned in for. An AM/FM simulcast a live Swap Shop and call in for Birthdays and such each weekday morning with live commercials from clients that called in or were called. The listeners knew the jock by name and he knew them by name. I recall many folks only mentioned the last 4 digits of their phone number. Everybody knew the area code and prefix. Calls from other towns where callers only gave the last 4 digits, the jock new the prefix and would give it in repeating the number. Joe might call in looking for a washing machine and the jock might say 'How's your mom doing?". Joe says "Good. She got home last week and is recovering at home. By the way she would want me to thank everyone that has brought by food." You could listen to that and feel like you lived there and part of the community. In my book a great small market station is one where even the listener passing through feels like they live there.

Cay Daze said:

The job losses. When the deregulation of the mid-'90s hit, the ownership caps lifted, and Clear Channel (old iHeart) went on a buying spree, it was a career killer. Now you had 8 station clusters under one roof. And, most likely, another one (or two) of the majors had their own clusters. And this coincided with computers. So, the days of walking across the road or down the street to another station, were over.

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The main reason for the relaxation of the ownership rules was the unfortunate result of Docket 80-90 a half-decade before. NAB's survey showed that over half of all US radio stations were not profitable. Much of that had to do with allowing a doubling or tripling of the station count in many small and medium markets, with no increase in ad revenue.

If this has not been said already: Regarding LPFM and call to action oriented programming, most if not all commercial sponsorship rules/policy applicable to non-commercial full-power stations apply to LPFM as well. I've observed LPFM stations navigating the process of producing revenue, sometimes it is clearly within FCC rules and policy, other times it is open to debate.

Some have mentioned LPFM stations ceasing operation and turning in their licenses. This is part of the evolution, and some were not sustainable, despite their good intentions.

I don't think LPFM stations going dark means something is broken. The FCC did not make mistakes that caused this natural process. U.S. Congress directed FCC to establish LPFM, and the FCC did their job. Congress covered the key points and left details to the FCC. I read much of the FCC materials as this happened and noted the FCC carefully considered their execution of the intention of Congress, and solicited public comment along the way. FCC made every effort to insure LPFM is a fair and equitable service, within the scope of Congress' intent.

I posted elsewhere on this site that Delilah of "Delilah after Dark" fame just bought a station in Reedsport, Oregon - KDUN-AM. It's a 50kW Class B daytimer (flea power at night to protect another signal) at 1030 kHz and the article below says she paid $60k for it. While I haven't looked into the market size, demographics or any details about the actual station, this may align with comments above from @b-turner that there are some affordable signals available out there. That said, @js6592, there are also lots of good comments above about the amount of work and time that would go into it, you'd obviously want to have a qualified engineer go in and assess all the current gear so you go in with a clear understanding of what works, what doesn't, what may fail soon and how much $ you may need to spend just to make it sustainable again from an operations standpoint. It's also interesting that, in the article below, there's an Equipment List and it only mentions the tower, transmission and processing. No mention of studios or related-equipment:

Delilah wouldn't necessarily need a studio in Reedsport now that the main studio rule is gone. Just an audio playout computer with voice tracking software if desired, and am employee to monitor it (and seek ad sales).

I was recently talking with an employee of another broadcaster in town who has a Class D AM license. I asked if he thought I could buy that station for $100,000. He told me I'd probably cause the elderly owner to have a heart attack if I offered him $100,000.

Mikey Radio said:

I posted elsewhere on this site that Delilah of "Delilah after Dark" fame just bought a station in Reedsport, Oregon - KDUN-AM. It's a 50kW Class B daytimer (flea power at night to protect another signal) at 1030 kHz and the article below says she paid $60k for it. While I haven't looked into the market size, demographics or any details about the actual station, this may align with comments above from @b-turner that there are some affordable signals available out there. That said, @js6592, there are also lots of good comments above about the amount of work and time that would go into it, you'd obviously want to have a qualified engineer go in and assess all the current gear so you go in with a clear understanding of what works, what doesn't, what may fail soon and how much $ you may need to spend just to make it sustainable again from an operations standpoint. It's also interesting that, in the article below, there's an Equipment List and it only mentions the tower, transmission and processing. No mention of studios or related-equipment:

Delilah Buys A Radio Station. It’s Where It All Started | Radio & Television Business Report

She rules evening radio — and has for decades — with her unique approach of uplifting the lives of listeners all across the country. Now, she's returning to where it all began ... sort of. Delilah is buying the Oregon radio station where she first took to the airwaves.

www.rbr.com

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Any FM xlator tied to it? 50kw day for 60k? Not a bad price...not sure of the 630watt power at night..I wouldn't call that flea power...which is when her show usually runs...either upgrade or channel change may help if no FX station

ContinuousWave said:

Any FM xlator tied to it?

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Nope.

PTBoardOp94 said:

Delilah wouldn't necessarily need a studio in Reedsport now that the main studio rule is gone. Just an audio playout computer with voice tracking software if desired, and am employee to monitor it (and seek ad sales).

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Don't even need any of that. She could run the whole enchilada from her home using a public Internet connection. Just add transmitter site and antennas. Grandma Smith in Reedsport can make $20 a day by listening to it and calling someone if it isn't there anymore.