Would you like to own a radio station? While it is easy to get permission to build a new station in a rural area, buying an existing one is the only way to be able to broadcast in a more developed urban area. If you can afford it, here is the process to follow.
Steps
Step 1. Contact one or more radio intermediaries
An intermediary knows which stations are for sale. It is usually best to avoid calling stations directly saying they are interested in buying, because the owners probably don't want to let people know that the radio is for sale.
Step 2. Prepare to pay in cash
In today's economy, banks are not inclined to make very large loans. On the other hand, the stations that until a few years ago were worth around € 500,000 today have dropped to around € 120,000.
Step 3. Make sure you can afford it
In addition to electricity bills for equipment and office rent, if the station plays music you have to pay royalties to SIAE and SCF. And even if you wanted to broadcast a lean format, with music automatically transmitted by software, the law requires a human presence inside the studio during normal working hours. This means hiring a full-time person to act as a manager and another to replace him in his absence. For commercial radio to be successful, it should also have at least three full-time sales people available.
Step 4. Check the station's financial reports
You need to know if the revenue is worth the asking price. If a station is not operational there is no entry, so the station will be worth the equipment and any real connected property, such as the broadcasting site and the cost of the license. Stations can also be rated based on the amount of population capable of receiving the signal. Estimate the number of retailers in the area and above all the percentage of them willing to invest in advertising space on the radio. When you buy an inoperative station, think about how to cover the expenses of the first year, assuming that you do not sell any space (this concerns commercial radios in particular).
Step 5. Make an offer
As with the real estate market, no one starts by offering the selling price. Stay a little lower, keeping around 90%, or even less if you know the station has been on sale for a long time. If a radio has not been in operation for more than six months, stay very low, as the license expires after one year of being out of business.
Step 6. Once the price is agreed, you will need to sign a contract
Have your attorney review the contract. You should have at your side an expert in radio communications legislation, or you should work alongside a professional of this type with a lawyer who deals exclusively with commercial aspects.
Step 7. If you are unfamiliar with the technical aspects of a radio, contact a professional to check the technical condition of the station
An AM station for sale at a good price may have an old transmission system that is corroded by time and needs repair or replacement.
Step 8. After signing, you will need to obtain authorization from the Ministry of Economic Development
It is a process that usually takes months.
Step 9. Once the sale has been approved, the final step is to actually use the station
If you don't want to wait too long before starting programming, you can include a clause in the contract that authorizes you to start broadcasting before ministerial approval.
Advice
It is advisable to include another clause in the contract specifying that the buyer will pay for an "alternative check" out of his own pocket, and that the seller will be required to fix any deficits found during the inspection
Warnings
- If you decide to buy an inoperative station, make sure there is enough time to get it up and running again before the one-year license expires, otherwise you will own a lot of equipment that you cannot legally broadcast with.
- Beware of last minute contractual changes. Unscrupulous sellers are known to have committed acts such as converting the outright purchase of a property into expensive rent.
