Stephan Sloan: "There are now more streams than listeners online."

For the last three years, Jim Hooker has invited a group of broadcasters, brokers, researchers and consultants to Hilton Head Island for a discussion on the future of radio. I am pleased to have worked with Jim in putting together the group. Each year has yielded a lot of forward thinking about the radio industry.

One of my partners at Media Services Group, Stephan Sloan, has been a participant in the meetings, and this year made a presentation about streaming. He told the group that in 2007, half of all Internet listening was being done to 81 of 10,000 streams. In 2011, the data shows that half of all listening will be done to 161 streams, but there are now more streams than there are people listening to the Internet.

Stephan also addressed the relationship of retail sales to radio revenue, which he’s been tracking since 1980. In 2000, at the peak of the business, radio was doing over .6% of retail sales in revenue. In 2010 it was only .34%, and the forecast is almost flat going out to 2013.

For additional information about the conference and Stephan's remarks, click PRESS RELEASE. For a look at Stephan's presentation on video, click VIDEO.

George
Media Services Group

Two more transactions announced

Media Services Group has announced a couple of transactions. Though small deals, they provide evidence that the deal market is slowly but surely coming back to life.

1) Fort Wayne, IN Area FM Station Is Sold

Godwin-Starkes Property Management, LLC, an Indiana limited liability company has agreed to purchase the assets of WNUY-FM licensed to Bluffton, IN from Independence Media of Indiana, LLC, a Delaware limited liability company and IM IN Licenses, LLC, an Delaware limited liability company. Godwin-Starkes Property Management, LLC through an affiliated company, owns WQSW-LP Fort Wayne, IN.

The purchase price is $350,000.

Bob Heymann of the Chicago office of Media Services Group and Stephan Sloan of
Media Services Group’s Providence office served as the exclusive brokers representing the seller in this transaction.

2) Tennessee Temple University has agreed to purchase the assets of Radio Station WUUS (AM), licensed to Rossville, GA (serving Chattanooga, Tennessee), from 3 Daughters Media, Inc. for $175,000.

Eddie Esserman of Media Services Group’s St. Simons Island, GA, office represented Tennessee Temple University in this transaction.

Both transactions are subject to FCC approval.

Congratulations to Bob, Stephan and Eddie on getting deals done in a tough financing environment!

George
Media Services Group

Meet the Media Services Group partners: Providence office

Our Providence office is staffed by veterans Bob Maccini, Stephan Sloan, and Ted Clark (with Diana Todd really running things). In addition to an active station brokerage practice, our Providence office anchors our broadcast valuation practice, which in my humble opinion, is the best in the industry.

Bob Maccini commenced his broadcasting involvement at Old Stone Bank, Providence, RI where he managed the bank's Communications Lending Group for five years. Subsequently, he founded and managed Chapman Financial Services, a subsidiary of Chapman Associates which provided investment banking services to the broadcasting industry.

Bob was one of our co-founders when Media Services Group was launched twenty years ago. Since, he has worked with numerous financial institutions in broadcasting related workout transactions and has been appointed as a receiver and examiner by various courts to oversee and sell radio and cable television companies.

Bob serves on the Boards of Saga Communications and GAP Broadcasting, and is President/CEO of Ando Media. He holds a B.A. degree in Economics from Holy Cross College and an M.B.A. degree in Finance from Babson College.

Stephan Sloan assists clients in a variety of investment banking, brokerage, appraisal, portfolio management, and expert testimony tasks. Stephan has helped clients obtain more than $40 million in senior debt and helped broker radio stations with an aggregate value of more than $200 million. He has appraised or assisted in the appraisal of radio, television, and cable television systems valued in excess of $500 million for clients that include the Federal Deposit Insurance Corporation (FDIC) and the Resolution Trust Corporation (RTC).

Working closely with Bob in Media Services' Broadcast Portfolio Group, Stephan has helped financial institutions with problems in their broadcast and cable loan portfolios and in court-appointed receivership assignments. He has also been accepted in state court as an expert witness on radio station valuation, finance, and receivership matters. Steph attended Salve Regina University.

Ted Clark is an analyst in Providence. He joined the firm in 1997 and since that time has performed valuations of radio, television and cable television systems totaling in excess of $560 million. Prior to joining Media Services Group, Ted (or as we call him, "Dr. Clark") worked as a research scientist and software developer in the biotechnology industry. He received his B.S. degree from the University of Rhode Island and performed his graduate studies at Dartmouth College.

George
Media Services Group

Will our listeners go GaGa for LaLa?

Apple's recently announced acquisition of LaLa didn't seem to prompt much radio industry discussion (though Mark Ramsey and Jerry Del Colliano both wrote about it). And frankly, I didn't think much about it until our Media Services Group online/new media guru Stephan Sloan explained to me the potential fallout on the radio operators. Turns out, it is a REALLY big deal to broadcasters. As Mark Ramsey put it, "And what do you call your favorite songs that you don't own but you have permanent access to? You call it 'radio,' folks. Except in radio's case it's the advertiser paying the 10 cents."

LaLa is a "pay" service where customers pay a dime to be able to permanently stream a song wherever and whenever they want. The company's growth was held back a a little known startup. Who wants their music library investment tied to a little known, probably under-funded start-up? But Apple is a different story. I'd trust them with my music and you probably would too.

Apple's iTunes arguably already controls the music business. They have the content. And with their myriad of cool appliances (iPhones, Nanos, iPods, Macs, etc.), they have the distribution platform. Plus, the technology provides a cache of the tunes . . . you can still listen when you're away from the Internet.

There is an appealing "anytime/anywhere" component to Apple/LaLa (sound familiar?). And this puts Apple into the streaming business, big time. Short term, that might bode well for our streaming businesses. Long term, different story.

Apple innovates. Consumers know it. And we (the broadcasters) have been a little short on innovation lately. It will be tough to "out music" Apple. They have a coolness cachet that we can't match, especially with their appliances. By the way, have you bought a radio lately? Drop by Target or WalMart and see what you think of your choices. But, I digress.

LaLa is developing an iPhone app. A subscription service is probably just around the corner. Pandora and XM/Sirius are likely the most immediate casualties, but we might be next.

So why didn't a broadcaster buy LaLa? Maybe because none of us have any cash at the moment. But even if we did, would we, as (mostly) a bunch of 50+ (mostly) guys, have had the vision?

How do we compete? We can't beat them with just music offerings on our interactive platforms. We have to provide more. We have to "go where they ain't." And I suspect that talented local personalities are part of that solution. Think "entertainment."

Those are my thoughts. What are yours? Your comments are encouraged (click "Comments" below).

George
Media Services Group