Colorado Media Newsroom
May 18th, 2022, 10:30 AM
From Radio Insight:
https://radioinsight.com/wp-content/images/2022/04/energy1059-200x200.png (https://radioinsight.com/blogs/226172/how-not-to-buy-a-radio-station/)https://radioinsight.com/wp-content/images/2022/04/energy1059-200x200.pngPaul Izard Communications acquired then Silent 105.9 WGWE Little Valley NY in September 2021 for $25,000. The Seneca Nation had taken the former Classic Hits station off the air (https://radioinsight.com/headlines/206389/wgwe-to-suspend-operations/) at the end of March 2021 citing “financial distress including long-term losses in its operation of the station that have been exacerbated by the ongoing COVID-19 crisis.”
The 7kW/191m Class B1 signal covered much of the southwestern corner of New York including the Jamestown and Olean markets, the latter of which it had a 1.7 share in the Fall 2020 Nielsen Audio ratings. Izard, who had been operating Dance webcaster “Energy Radio Buffalo (https://www.energyradiobuffalo.com)“, would assume operations of WGWE on January 3 and restored the station to operational status on February 28 with the Dance format from the webcaster targeting the city 50+ miles to the north where WGWE’s signal didn’t reach.
By April 14, the station surrendered its license.
That would normally be the end of the story, with Izard going from closing on its acquisition to license surrender in 102 days but FCC filings this week bring much more into focus, including why the license was surrendered so quickly and resurrection of its license.
Izard has requested and already been granted a reversal on the license surrender. In a petition for reconsideration filed on May 13 and granted on May 17, Izard stated that following the license surrender that he was contacted by Family Life Ministries (https://www.familylife.org) CEO Richard Snavely with an offer to purchase the station if the license could be restored. He also details all the issues he faced during his brief tenure owning WGWE and the mistakes he made along the way.
Izard starts, “In the weeks following the acquisition, I learned that serious defects in the WGWE transmitter sold to me rendered it inoperable without costly repairs. I was completely unfamiliar with radio broadcast equipment but eventually retained assistance to repair the transmitter and upgrade wireless technology at the transmitter site.”
“As a first-time broadcast station owner, I became confused and frustrated about the serious equipment issues and repair/maintenance costs. I also later discovered that the tower lease has an escalation clause that causes the rent to almost double.*Without reliable assistance and facing uncertainty, I made a hasty and uninformed decision to just turn in the WGWE license and get out of broadcasting. I did not think at the time that selling the station was viable given the equipment issues and lease expenses. I failed to consider how the public would benefit from having another listening choice with WGWE.”
Izard admits to multiple failings immediately. He failed to perform due diligence ahead of the purchase and finding people to assist with the maintenance on equipment. Had a qualified engineer inspected the station before closing on the purchase, the seller would have either been liable for the necessary repairs, Izard could have renegotiated the terms of the deal, or walked away.
In the days following my voluntary cancellation of the WGWE license, Richard Snavely, Jr. contacted me about the station, indicating that his non-profit organization Family Life Ministries, Inc., was interested in acquiring WGWE from me if the license could be reinstated, the station was authorized to return to on-air operations, the license renewal application was granted, and the FCC consented to assigning the license to Family Life after we filed an assignment application. Around that time, I became aware that the WGWE transmitter site lease (which had not formally been transferred to my company at the closing but will be) has 28 months remaining on it and therefore the obligations on the lease did not end with the cancellation of the WGWE license. I agreed to explore the possibility of a sale to Family Life, signing a letter of intent on April 29, 2022. After brief negotiation and agreement on a purchase price of $1.00 plus the expenses to get the WGWE license reinstated and renewed, I signed an asset purchase agreement with Family Life on May 13, 2022.”
Izard now admits to not knowing the contracts he was assuming falsely believing that the license surrender would remove his liability for the remaining 28 months on the existing tower lease. While he will be losing the money spent in the original acquisition and all costs of operations and maintenance during his brief tenure as owner, Family Life’s pending $1 purchase of the license has provided an escape hatch from the two plus years remaining on the lease.
“My company has or will have continued lease rights at the transmitter site, and it therefore remains possible, subject to FCC authority, to return the station to on-air operations at that site, at temporary reduced power if necessary due to the transmitter issues. I am prepared to do so as soon as the FCC authorizes a resumption of operations. I am also prepared to respond to any inquiries related to renewal of the WGWE license.*Had I been better informed and less overwhelmed as a first-time broadcaster, I would not have voluntarily cancelled the license but would have found a way to sell the station or continue operating it for the benefit of the public. My decision to sell WGWE to an experienced broadcaster like Family Life for nearly nothing is intended to correct my mistaken decision and restore an aural programming option in the station’s market so that the public has additional listening options.”Izard is keenly aware of the mistakes he made on the operational side. It’s also not fair to judge on placing his previously existing webstream on a station far away from its target as that may have been filler while dealing with the technical challenges he faced. Izard is far from the only new owner to come into a station completely unaware of how many unknowns will be faced on a regular basis.
If we as an industry want to grow the pool of station operators, more must be done to make owning a radio station easier. Former FCC Chairman Ajit Pai had proposed an incubator program to encourage greater diversity in and new entry into the media business giving existing owners the ability to exceed the ownership caps once the new operator was through the process. But that still would not give potential buyers the information they need or make it easier to find a property they want in the area they seek to operate.
Most stations for sale are never publicly listed with brokers and other owners merely sharing the information with one another or if listed are done so in the vaguest of generalities. This is a listing I came across this week, “This long- established station is quite profitable and has excellent growth potential. Seller Financing is NOW available. Priced at current market multiples. This opportunity is definitely worth looking at.” The listing doesn’t even give a location or starting price to let anyone know if its something viable. Compare that to how real estate is listed on commercial sites like LoopNet (https://www.loopnet.com/Listing/524-E-Lake-Mead-Pky-Henderson-NV/25724343/) or generic businesses on a platform like BizBuySell (https://www.bizbuysell.com/Business-Opportunity/successful-full-service-and-digital-ad-agency-primed-for-new-ownership/1860908/?d=L25ldy1qZXJzZXkvb3RoZXItY29tbXVuaWNhdGlvbi1hbmQ tbWVkaWEtYnVzaW5lc3Nlcy1mb3Itc2FsZS8=). The purpose of a listing is to get a potential buyer interested in a property and giving as much information as possible. Radio brokers mostly treat their listings as if they are going in the classifieds of Radio & Records in 1992.
Engineers and other technical consultants need to do a better job of making their services known. A Google search for the keywords “radio station technical advisor” or “radio station engineering consultant” brings up no accurate first page results. Instead we get some paid results for podcasting ad tech companies, programming consultants, and a twelve year old news story about a new LPFM. This is money being left on the table by engineers and firms that have been in business for decades and have let the digital world move past them.
Perhaps most damning is this result:
https://radioinsight.com/wp-content/images/2022/05/www.jpg
Now we see why Paul Izard ran into so many difficulties as owner of WGWE. Even if he did find one possible consultant to help him in his process, he still would have had lots of obstacles. But how was he even going to find one person to assist?
more (https://radioinsight.com/blogs/226172/how-not-to-buy-a-radio-station/)
https://radioinsight.com/wp-content/images/2022/04/energy1059-200x200.png (https://radioinsight.com/blogs/226172/how-not-to-buy-a-radio-station/)https://radioinsight.com/wp-content/images/2022/04/energy1059-200x200.pngPaul Izard Communications acquired then Silent 105.9 WGWE Little Valley NY in September 2021 for $25,000. The Seneca Nation had taken the former Classic Hits station off the air (https://radioinsight.com/headlines/206389/wgwe-to-suspend-operations/) at the end of March 2021 citing “financial distress including long-term losses in its operation of the station that have been exacerbated by the ongoing COVID-19 crisis.”
The 7kW/191m Class B1 signal covered much of the southwestern corner of New York including the Jamestown and Olean markets, the latter of which it had a 1.7 share in the Fall 2020 Nielsen Audio ratings. Izard, who had been operating Dance webcaster “Energy Radio Buffalo (https://www.energyradiobuffalo.com)“, would assume operations of WGWE on January 3 and restored the station to operational status on February 28 with the Dance format from the webcaster targeting the city 50+ miles to the north where WGWE’s signal didn’t reach.
By April 14, the station surrendered its license.
That would normally be the end of the story, with Izard going from closing on its acquisition to license surrender in 102 days but FCC filings this week bring much more into focus, including why the license was surrendered so quickly and resurrection of its license.
Izard has requested and already been granted a reversal on the license surrender. In a petition for reconsideration filed on May 13 and granted on May 17, Izard stated that following the license surrender that he was contacted by Family Life Ministries (https://www.familylife.org) CEO Richard Snavely with an offer to purchase the station if the license could be restored. He also details all the issues he faced during his brief tenure owning WGWE and the mistakes he made along the way.
Izard starts, “In the weeks following the acquisition, I learned that serious defects in the WGWE transmitter sold to me rendered it inoperable without costly repairs. I was completely unfamiliar with radio broadcast equipment but eventually retained assistance to repair the transmitter and upgrade wireless technology at the transmitter site.”
“As a first-time broadcast station owner, I became confused and frustrated about the serious equipment issues and repair/maintenance costs. I also later discovered that the tower lease has an escalation clause that causes the rent to almost double.*Without reliable assistance and facing uncertainty, I made a hasty and uninformed decision to just turn in the WGWE license and get out of broadcasting. I did not think at the time that selling the station was viable given the equipment issues and lease expenses. I failed to consider how the public would benefit from having another listening choice with WGWE.”
Izard admits to multiple failings immediately. He failed to perform due diligence ahead of the purchase and finding people to assist with the maintenance on equipment. Had a qualified engineer inspected the station before closing on the purchase, the seller would have either been liable for the necessary repairs, Izard could have renegotiated the terms of the deal, or walked away.
In the days following my voluntary cancellation of the WGWE license, Richard Snavely, Jr. contacted me about the station, indicating that his non-profit organization Family Life Ministries, Inc., was interested in acquiring WGWE from me if the license could be reinstated, the station was authorized to return to on-air operations, the license renewal application was granted, and the FCC consented to assigning the license to Family Life after we filed an assignment application. Around that time, I became aware that the WGWE transmitter site lease (which had not formally been transferred to my company at the closing but will be) has 28 months remaining on it and therefore the obligations on the lease did not end with the cancellation of the WGWE license. I agreed to explore the possibility of a sale to Family Life, signing a letter of intent on April 29, 2022. After brief negotiation and agreement on a purchase price of $1.00 plus the expenses to get the WGWE license reinstated and renewed, I signed an asset purchase agreement with Family Life on May 13, 2022.”
Izard now admits to not knowing the contracts he was assuming falsely believing that the license surrender would remove his liability for the remaining 28 months on the existing tower lease. While he will be losing the money spent in the original acquisition and all costs of operations and maintenance during his brief tenure as owner, Family Life’s pending $1 purchase of the license has provided an escape hatch from the two plus years remaining on the lease.
“My company has or will have continued lease rights at the transmitter site, and it therefore remains possible, subject to FCC authority, to return the station to on-air operations at that site, at temporary reduced power if necessary due to the transmitter issues. I am prepared to do so as soon as the FCC authorizes a resumption of operations. I am also prepared to respond to any inquiries related to renewal of the WGWE license.*Had I been better informed and less overwhelmed as a first-time broadcaster, I would not have voluntarily cancelled the license but would have found a way to sell the station or continue operating it for the benefit of the public. My decision to sell WGWE to an experienced broadcaster like Family Life for nearly nothing is intended to correct my mistaken decision and restore an aural programming option in the station’s market so that the public has additional listening options.”Izard is keenly aware of the mistakes he made on the operational side. It’s also not fair to judge on placing his previously existing webstream on a station far away from its target as that may have been filler while dealing with the technical challenges he faced. Izard is far from the only new owner to come into a station completely unaware of how many unknowns will be faced on a regular basis.
If we as an industry want to grow the pool of station operators, more must be done to make owning a radio station easier. Former FCC Chairman Ajit Pai had proposed an incubator program to encourage greater diversity in and new entry into the media business giving existing owners the ability to exceed the ownership caps once the new operator was through the process. But that still would not give potential buyers the information they need or make it easier to find a property they want in the area they seek to operate.
Most stations for sale are never publicly listed with brokers and other owners merely sharing the information with one another or if listed are done so in the vaguest of generalities. This is a listing I came across this week, “This long- established station is quite profitable and has excellent growth potential. Seller Financing is NOW available. Priced at current market multiples. This opportunity is definitely worth looking at.” The listing doesn’t even give a location or starting price to let anyone know if its something viable. Compare that to how real estate is listed on commercial sites like LoopNet (https://www.loopnet.com/Listing/524-E-Lake-Mead-Pky-Henderson-NV/25724343/) or generic businesses on a platform like BizBuySell (https://www.bizbuysell.com/Business-Opportunity/successful-full-service-and-digital-ad-agency-primed-for-new-ownership/1860908/?d=L25ldy1qZXJzZXkvb3RoZXItY29tbXVuaWNhdGlvbi1hbmQ tbWVkaWEtYnVzaW5lc3Nlcy1mb3Itc2FsZS8=). The purpose of a listing is to get a potential buyer interested in a property and giving as much information as possible. Radio brokers mostly treat their listings as if they are going in the classifieds of Radio & Records in 1992.
Engineers and other technical consultants need to do a better job of making their services known. A Google search for the keywords “radio station technical advisor” or “radio station engineering consultant” brings up no accurate first page results. Instead we get some paid results for podcasting ad tech companies, programming consultants, and a twelve year old news story about a new LPFM. This is money being left on the table by engineers and firms that have been in business for decades and have let the digital world move past them.
Perhaps most damning is this result:
https://radioinsight.com/wp-content/images/2022/05/www.jpg
Now we see why Paul Izard ran into so many difficulties as owner of WGWE. Even if he did find one possible consultant to help him in his process, he still would have had lots of obstacles. But how was he even going to find one person to assist?
more (https://radioinsight.com/blogs/226172/how-not-to-buy-a-radio-station/)