RE: A Challenge

[Dan Strassberg <dan.strassberg@worldnet.att.net>]

At 01:57 AM 7/25/97 +0000, you wrote:
>
>    1510 is listed right now for about 7 mil, with avg operating costs
>around 20k, PLUS personnel costs.

According the the president of Communicom (I forget the gentleman's name),
the lease on the TX site alone runs $15k/month. In New England, the power
bill for a 50 kW 24-hour-a-day AM must greatly exceed $5k/month. Because of
modulation, the average transmitted power of a 50 kW AM is nearly 100 kW. I
don't know what the efficiencies of modern solid-state AM TX's run, but if
you assume around 75% (as I did), you come up with about 100,000 kWH/month*.
To get 100,000 kWH for $5000 in New England seems impossible. The rates for
large consumers may be a lot less than residential rates, but residential
rates are close to $.25/kWH. "A lot less" is still probably a lot more than
20% of the residential rate.

If Communicom gets anything close to their $7 million asking price, they
will have gotten over six times the $1.1 million they reportedly paid only
four or so years ago. I should think this would make them very happy. Years
ago, the rule was a station was worth 2.5 times cash flow (where cash flow =
pre-tax profit plus depreciation). To be worth $7 million by this rule, the
station would have to have a cash flow of almost $3 million/year or almost
$250k/month. What is the likelihood that a station that you can light up for
$35k/month (not including employee salaries) can generate a cash flow of
$250k/month? I'm out of my element here, but it doesn't sound very likely.  

Lets say you can get $300/hour and lets say that you can sell 2/3 of the
available hours. Revenues would be 2/3*4-1/3 weeks/month*168
hours/week*$300/hour. Thats almost $150k/month. You'd have to more than
double the revenue to make the numbers work. Or did I make some gross error
somewhere?

* (100 kW/.75)*168 hours/week*4.33 weeks/month

- -------------------------------
Dan Strassberg (Note: Address is CASE SENSITIVE!)
ALL _LOWER_ CASE!!!--> dan.strassberg@worldnet.att.net
(617) 558-4205; Fax (617) 928-4205

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