CAVE-FM IS FOR SALE. Here are
AN INTERVIEW WITH PAUL LOTSOF, Manager and stock holder of CAVE FM.
Question: Why do you want to sell CAVE FM?
Answer: Iíve been in radio over fifty years and Iím tired of the long hours and would like to pursue other interests while I still have some time left.
Q: When the station is sold how much do you expect to get from the sale?
A: $400,000 plus any commission that I may have to pay.
Q: How was that figure arrived at?
A: Iíve discussed this with three brokers who specialize in buying and selling radio stations. Iíve also examined sales statistics for small market FM radio stations. Iíve read that the average American house is worth about $200,000. Most businesses are worth more than most houses are worth.
Q: What if nobody is willing to offer $400,000?
A: I'll consider any offer that isn't ridiculously low.
Q: Will you carry the note?
A: Almost certainly not. Radio stations are nearly impossible to repossess. Youíll have to get your own financing if you donít already have enough cash.
Q: Is the land and equipment worth $400,000? If not, what am I getting for all that cash?
A: The tangible assets are a fraction of what you are buying. You are acquiring an exclusive franchise from the Federal Communications Commission to use an FM frequency. In addition you are buying one of the top rated stations in Cochise County with thousands of loyal listeners.
Q. Can I make big changes in the programming?
A: Yes. You can program Hungarian rhapsodies or rap or Mexican religion but youíll quickly lose the listeners that weíve taken so long to build up. Youíll probably also lose all our established advertising accounts.
Q: How do radio stations make money?
A: In most cases they sell advertising but some educational stations or religious stations solicit donations from the public.
Q: Does CAVE FM operate at a profit?
Q: Why not?
A: In small market radio the name of the game is sales. Radio advertising does not sell itself. When people are thinking about advertising radio is the last thing on their minds. We must hire professional sales people to go out and market our service. We have never been able to find and retain such people.
Q: Why not?
A: Iíll take responsibility for this. My background is in programming. Iíve developed a unique format that delivers a very large audience. Sales is my weak area. The people who buy the station should either have a strong sales background or be good at recruiting such individuals. A couple good sales professionals could quickly convert CAVE FM from a loss to a profit. It could happen almost overnight if the right people come on board.
Q: Do you have any suggestions for the new owners?
A: Get the studio out of Benson. Benson is a tiny town where there is very little money to be made. Plus there is a city government that doesnít believe in property rights and they see businesses as tax collectors. Move the studio and offices to the Sierra Vista area. The FCC recently repealed all rules about studio locations so you can move to anyplace of your choosing. Sierra Vista is ten times the size of Benson and we have a large audience in Sierra Vista. But the Sierra Vista business community perceives us as an out of town operation. Move to Sierra Vista and start raking in some cash.
Q: Why donít you move the station to Sierra Vista?
A: I live in Tucson and it is too far to commute. Another good reason to sell.
Q: What if I have more questions?
A: Send me an email and youíll hear from me within a day or so. I welcome all serious inquiries.