WASHINGTON From small religious broadcast licensees and rural radio owners to large broadcast groups, stations are being forced to make some difficult financial decisions in tough economic times.
More owners of late appear to be taking a dramatic way out: letting stations go silent to conserve money. In some cases, the decision is permanent.
Broadcasters are searching for ways to cut operating expenses, industry observers say, and letting a station go silent certainly is one way to do that.
At any given time, some stations will be silent. Some shutoffs are for technical reasons; but an increasing number appear to be intended to limit expenditures.
There is evidence that the numbers of both AM and FM stations going dark at least temporarily is growing. Radio World’s review of the FCC’s database, which lists stations that have been silent for more than two months, indicates the pace of filings to power down stations increased last fall through the beginning of this year (see chart).
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AM stations silent more than two monthsIn mid-February, the list showed more than 80 AMs and about 100 FMs off the air, not including translators.
The Federal Communications Commission does not archive past dark stations lists to determine year-to-year trends. Neither does BIA Financial Network; a spokesman said the silent list is unusual and hard to evaluate because STAs are filed for various reasons.
Radio stations must apply to the FCC for Special Temporary Authority if they remain silent for more than 30 days. By law, a broadcaster’s license is cancelled if a station remains off the air for more than 12 months, according to the agency.
“It’s not an evaluation by us at that point. They are simply informed they have forfeited their license and they need to stop broadcasting,” an FCC spokesman said.
The FCC said it does not have data readily available that shows how many licenses were cancelled under such circumstances in 2008 and lacks the software to complete a year-to-year analysis.
Analysts said the number of silent outlets represents a small percentage of licensed stations — the FCC counts approximately 14,000 radio stations in the United States not counting translators, boosters or LPFMs — but it’s difficult to gauge the number going dark since stations presumably are taken off the FCC list once licenses are surrendered after a year.
The spokesman said history has shown that radio stations go silent all the time for a variety of reasons. However, he acknowledged the number of filings “are a bit accelerated” at present based upon financial hardship.
‘Financial hardship’
AM broadcasters seem especially vulnerable right now because of higher fixed operational costs, analysts said.
On the list of inactive stations are outlets owned by both large groups and small independent licensees, according to the FCC database. Clear Channel Communications, Citadel Broadcasting and Cumulus Media all have AM stations listed as silent in the FCC database.
The reasons stations go silent vary, from moving transmission facilities to leases expiring.
“There are a couple of situations like this and all are related to our inability to keep the site we leased for our tower. In some cases, you can’t avoid it,” said Jeff Littlejohn, executive vice president of distribution development for Clear Channel Communications.
Littlejohn mentioned the case of WHJA(AM) in Laurel, Miss., which went silent in August of 2008.
“We lost the lease on the ground that supported the tower. Given the difficulty and expense of moving an AM station and negative economics of running it, it made no sense to rebuild,” Littlejohn said. “In fact, we tried to give the station to a local church and they wouldn’t take it.”
Clear Channel plans simply to turn the license for the station back over to the FCC in September, Littlejohn said.
WRFV(AM) in Valdosta, Ga., has been off the air since March 2008. Licensed to Rama Communications Inc., the station was part of a “travelers’ information” network but was losing money, said Shanti Persaud, account manager for Rama Communications.
“It was a financial decision that we had to make at the time [to turn it off]. It wasn’t profitable. We had no other options,” Persaud said.
Rama Communications, which owns several other radio stations in Florida, expected to turn WRFV back on this March after beginning a new financial partnership. Persaud said she expects the station to broadcast a syndicated news/talk format.
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FM stations silent more than two months“Plus, we take the chance of losing the license if we are not back on the air in March.”
Cutting costs
Some industry analysts said they would not be surprised if the commission becomes more considerate of economic hardships when determining forfeitures.
“I’m not sure how widespread the practice of going dark is, but at least, anecdotally, it appears to be getting worse as the economy worsens,” said Marci Ryvicker, a Wall Street analyst at Wachovia Capital Markets.
“As we embark upon [quarterly] earnings season,” she said in February, “the only thing the radio groups have under their control is the expense side. I would assume that there are significant cost savings from going dark. I would expect to see more of this at unprofitable stations.”
That appears to be the case at WDPT(AM) in Decatur, Ala., and WTKI(AM) in Huntsville, Ala., which went dark in late January. The stations’ owners, Christian Voices of Central Ohio, posted on a Web site (www.protalkradio.com) that “as a result of current economic conditions, we have been forced to cease operations.”
The stations broadcast a hybrid of Christian teaching and conservative talkers like Dr. Laura, according to its Web site.
“We shut the stations down with hopes to sell them or work out an LMA with another broadcaster. We are just praying for a turnaround in this economy,” said Dan Baughman, president and chief executive officer of Christian Voice of Central Ohio. “When last September hit, we soon realized things were going bad very quickly and we were caught up in it. We really scrambled to hold out until this year.”
Sometimes broadcasters are under pressure from lenders to shed stations that are unprofitable, said Larry Patrick, president of Patrick Communications, a broadcast brokerage firm that assists clients in buying and selling radio properties.
“We have clients considering turning off stations. Banks are dictating in some cases that broadcasters can no longer afford to run stations that are losing money. Lenders look at things differently than broadcasters. If it can’t stand on its own you throw it on the junk heap,” Patrick said.
Adding to the difficulty for some licensees is the fact that no one can sell a station right now, he added.
“The market is essentially frozen. There is no market for radio stations. If you can’t sell the losers you might as well turn them off.”
A side effect of turning off a station is that it immediately depresses the value of the broadcast license, he said.
