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The Fox soon WCMU

Covers all of Northern Lower Michigan (from Ludington to Tawas northward), as well as the Straits Area and Soo Region.
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Re: The Fox soon WCMU

Post by TC Talks » Thu Dec 12, 2019 7:18 am

Who is trying to grow in Northern Mid Michigan? It's a rim shot in any relevant market.

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Re: The Fox soon WCMU

Post by MWmetalhead » Thu Dec 12, 2019 7:33 am

I would anticipate whomever buys FDX will likely be saddled with the tower rental agreement NBI agreed to when they sold the tower.
It wouldn't shock me if NBI - if WFDX is unable to be sold after a period of time because either the buyer is unwilling to assume tower lease payments or the lessor is unwilling to restructure such payments - simply chooses to cease making the payments after all other assets have been divested.

It would be interesting to know the following:
(a) the remaining term of the lease
(b) the remaining amount (cumulatively) of remaining lease payments
(c) the fair market value of WFDX on a free & clear basis (both with and without the Petoskey area translator).

Depending on the results of the above variables, it may or may not be in the lessor's interest to try to cut a deal with NBI.

One scenario is NBI simply stepping away from the lease once all other assets or divested and simply offering to toss the WFDX license to the tower lessor, or, they could simply say "screw you!" and hand in the license to the FCC. In that case, the lessor would be left with nothing.

Aside from stepping out from the burden of the tower lease, any buyer of WFDX would also likely want to reduce the power bill. Simply reducing the ERP from 100,000 watts to 50,000 watts would be a great step.

Want to focus WFDX on Alpena & Rogers City? Both the WCML and WKJZ sites would do that job just fine at a reduced ERP level while maintaining city grade coverage to Atlanta.

Want to focus WFDX more on Petoskey, Charlevoix and the Boynes? Only site that would probably be able to accomplish that feat while maintaining city grade coverage to Atlanta is the WGFM site (west of Vanderbilt), and from that site, you'd probably have to maintain the full 100 kW. Moreover, you'd probably have to go directional to protect WJZQ to the SW. I am not sure that would even be feasible given the FCC's directional pattern restrictions by azimuth.



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Re: The Fox soon WCMU

Post by MWmetalhead » Thu Dec 12, 2019 7:36 am

I would be remiss if I did not mention the fact any & all true leases can be rejected by the debtor (the lessee) outright in a Chapter 11 case.

This would be another method by which NBI could get "out" from under the lease obligation once all other assets have been divested.

Under such a rejection scenario, the lessor's claim would be completely expunged. They would not even receive the benefit of an unsecured claim.



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Re: The Fox soon WCMU

Post by MWmetalhead » Thu Dec 12, 2019 8:06 am

A few other considerations:
- Obviously, I don't know what early termination provisions are in the lease between NBI and the tower owner. If NBI can walk away from the lease (i.e. vacate the tower) for only a small break-up fee, it may very well be in their best financial interest to do so.
- If NBI were to do the above, then they'd have to file a silent STA with the FCC for WFDX. Stations that are off the air are more difficult to sell and generally attract a lower price.
- That said, everyone & their mother knows that the NBI stations have been on the market for a while. That fact became obvious as soon as the LMA/purchase agreement between NBI and Blarney Stone was terminated. If one or more interested parties were ready to scoop up WFDX, NBI would know that by now.

I didn't mention WMJZ earlier. Clearly, the WMJZ site - which is just barely west of the WFDX site - is capable of maintaining city grade service to Atlanta, certainly with a C2 signal and perhaps with as little as a C3 signal (for a non-comm, a C3 would get the job done for sure). However, I'm not sure the 45 North folks need a second station to hypertarget the immediate Gaylord area. If they can sell two stations instead of one with no addition to staff, maybe they squeeze out an extra $50,000 in cash flow per year? Maybe $50,000 to $75,000 in upfront capex, filing fees and legal fees would need to be incurred to relocate WFDX to their existing tower (assuming they even own that tower)?

If 45 North owns the WMJZ tower, and if 45 North can acquire the WFDX license without having to assume the lease obligation that NBI currently bears, it *might* make sense for them to purchase the WFDX license at, say, a $250,000 price point. Would not at all discount the possibility that the true economically feasible price point is less than $200,000.



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Re: The Fox soon WCMU

Post by MWmetalhead » Thu Dec 12, 2019 8:28 am

Here's an illustrative non-comm valuation scenario:

Let's say WFDX reaches 250,000 persons with its grade B contour.

Of those 250,000 persons, maybe 5 percent cume this theoretical station on a regular basis? OK - so, now we're at 12,500 persons.

Of those 12,500 persons, maybe 10 percent donate annually? OK - so, now we're at 1,250 persons.

Maybe the average annual pledge per person is $100? OK, so that gives us $125,000 in annual revenue. That doesn't leave much room for positive cash flow. The operator would almost certainly need to be someone who doesn't need a separate studio or any add'l staff.



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Re: The Fox soon WCMU

Post by CK-722 » Thu Dec 12, 2019 9:42 am

As far as relocation possibilities, I spent a few hours the other day investigating that, mainly on paper. And possibilities of other tower lease problems. Let me say that a few of you are on the right track. But there are also other possibilities you may have overlooked to solve some of your concerns...

Of course, there's the overall decline of radio, which affects all markets and all licensees/owners.


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Re: The Fox soon WCMU

Post by Deleted User 12047 » Thu Dec 12, 2019 10:54 am

Let’s keep in mind that existing contracts only apply to the existing owner. A buyer of a radio station can choose which existing contracts to pick up and which ones to reject. At least that’s my understanding. So a new buyer to WFDX Is not burdened by the existing tower contract. Or am I missing something?



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Re: The Fox soon WCMU

Post by MWmetalhead » Thu Dec 12, 2019 11:41 am

You are correct, but obviously NBI will need to deploy a strategy to minimize its payment liability (and to shield remaining assets from creditor attack). Again, the lease as written might already provide an easy path for early termination. Could be as simple as WFDX simply vacating the tower and making some sort of breakage fee payment. Without knowing the terms of the lease, it is impossible to know which exit path makes the most financial and legal sense.



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Re: The Fox soon WCMU

Post by TC Talks » Thu Dec 12, 2019 11:43 am

50kW if it allows the tower to be moved west might make sense. I can't see anyone jumping to get into the Alpena make.

I would imagine NBI built the sale agreement to be favorable for an exit plan.


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Re: The Fox soon WCMU

Post by BigFreq » Thu Dec 12, 2019 1:35 pm

Most of the speculation in the above is assuming the signal can be downgraded and moved. Try this one for size... it can't. It is what it is. One big signal in the middle of the state, with a lofty power bill and tower rental agreement. The only way it can work is if it rolls under an existing operator -- commercial or non-comm -- who already has the infrastructure in place to absorb the initial expenses. And I think Metalhead is right; even for a non-comm, the donation pool is pretty small, and I think headcount at 250k is a bit lofty, given most of the population is on the fringes to the east and west edges of the signal.

And, by the way, a radio station for sale without a tower lease in place is worth less than one with a tower site with an expensive one.



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Re: The Fox soon WCMU

Post by CK-722 » Thu Dec 12, 2019 3:32 pm

You may be right that they could stay there one way or another.

But when there's a will there's a way.

I myself told a few people that something couldn't be done, and it spurred this one particular consultant to find a way, and he did. And no, it wasn't Dave Schaberg (RIP). It was nowhere near that complicated. One or two others involved fancy footwork. But they went through. It is true also that the powerful radio people would attempt to stop it, no matter how simple. One even tried to argue that RITOIE from a diplex would interfere with his station.


Is THAT where they got the idea for the 486-SX?

Same (x, y, z), different (t)

Your bullet missed my trial balloon.

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Re: The Fox soon WCMU

Post by MWmetalhead » Thu Dec 12, 2019 6:17 pm

Most of the speculation in the above is assuming the signal can be downgraded and moved. Try this one for size... it can't. It is what it is.
Why do you say that? I've identified at least three alternate tower sites capable of delivering a city grade signal to Atlanta with just a C2 signal. Granted, some of those sites might not have space. I don't know; maybe you do. :blink

I will acknowledge any such downgrade would likely place Petoskey outside of the 60 dBu, which would make the Petoskey area translator at 100.5 MHz impermissible if we're talking about a commercial use. However, for a non-comm use, that Petoskey translator would be perfectly fine.
One big signal in the middle of the state, with a lofty power bill and tower rental agreement. The only way it can work is if it rolls under an existing operator -- commercial or non-comm -- who already has the infrastructure in place to absorb the initial expenses. And I think Metalhead is right; even for a non-comm, the donation pool is pretty small, and I think headcount at 250k is a bit lofty, given most of the population is on the fringes to the east and west edges of the signal.
Unless your very first point (about being unable to be downgraded and moved) is valid - then your comment about a buyer needing to assume the tower rental agreement is invalid. Moreover, agreements can always be modified by willing parties.
And, by the way, a radio station for sale without a tower lease in place is worth less than one with a tower site with an expensive one.
Agreed!

Look, with certain risks/burdens removed from any would-be buyer, I think the station is worth $250,000 to at most $300,000 on a really good day.

Would not at all surprise me to see it go for, say, as little as $150,000.



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Re: The Fox soon WCMU

Post by audiophile » Thu Dec 12, 2019 8:06 pm

MWmetalhead wrote:
Thu Dec 12, 2019 8:28 am
Here's an illustrative non-comm valuation scenario:

Let's say WFDX reaches 250,000 persons with its grade B contour.

Of those 250,000 persons, maybe 5 percent cume this theoretical station on a regular basis? OK - so, now we're at 12,500 persons.

Of those 12,500 persons, maybe 10 percent donate annually? OK - so, now we're at 1,250 persons.

Maybe the average annual pledge per person is $100? OK, so that gives us $125,000 in annual revenue. That doesn't leave much room for positive cash flow. The operator would almost certainly need to be someone who doesn't need a separate studio or any add'l staff.
Grade B? The 60 dBu is 175,000 persons and the 60 dBu is garbage in important cities like Petoskey due to terrain. For listener support purposes you would lucky if it reached 150,000 persons. Your math isn't terrible MW, but use 150,000 pop.


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Re: The Fox soon WCMU

Post by BigFreq » Thu Dec 12, 2019 8:27 pm

This is a lot of brainpower trying to ascertain a radio station stuck in the middle of nowhere, that hasn't -- to anyone's recollection -- generated profit from the signal... ever. Non-comm guys these days pay $1 per head when it comes to legit population headcount. That was once an AM's headcount value a decade ago. It used to be $1 for AM and $3 for FM, with the religious guys willing to pay $2 for a FM. Headcount doesn't mean much these days; especially in an over-radioed area such as the western side of Northern Michigan. FXD, best case scenario, might fetch $150k when it sells. But, even then, whomever buys it, has to be prepared to lose money for at least a year or two... and wouldn't dare run it as a stand-alone.



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Re: The Fox soon WCMU

Post by MWmetalhead » Thu Dec 12, 2019 8:35 pm

That 250,000 population figure was not meant to be precise by any stretch of the imagination; I picked a number out of thin air that I thought might be in the ballpark.

The general point I was trying to make is the revenue potential of the station is very limited, regardless of whether or not its next use is that of a commercial station or a non-commercial station.

If we use 150,000 in population and keep my other variables the same, we're talking only $75,000 in annual revenue. YIKES!!!

Certainly looking more & more like this asset is only capable of commanding a $150,000 market value (2x revenue is a commercially reasonable ratio). I agree with BigFreq on that figure in light of the population estimates Audiophile just furnished. I also definitely agree that no one in their right mind should dare to run this thing as a standalone!

My original estimate of $250,000 certainly now seems too generous!

Informative article regarding public broadcasting fundraising:
https://current.org/2018/06/annual-fund ... ant-gains/



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