Sandi Bergman, whom Michael Harrison describes as being “a dynamic rising star among today’s crop of media brokers,” is president/CEO of RadioTVDeals.com – an innovative website dedicated to bringing media outlet buyers and sellers together – and MyMediaBroker.com, a leading edge New Mexico-based national media brokerage firm. An experienced radio station owner/operator in her own right, Bergman served as president/CEO of Bergman Broadcasting Company, Inc, licensee of KSEL-AM and KSEL-FM, Portales, NM and RICKochet Communications, Inc., licensee of KSMX FM, Clovis, NM, from 1994-2002. In 1997, Bergman was recognized by the Small Business Administration as a finalist for “Small Business Person of the Year.” She is actively involved in the National Association of Media Brokers (NAMB). The following Talkers Interview was conducted by Michael Harrison.
SANDI BERGMAN: “You can sell a sports package for $200 with 40 spots ROS or a $300 package with 60, and give them two spots in all the games.” That was the sum total of education I received on the topic of “how to sell radio advertising” when I was handed the keys to KSEL AM & FM in Portales, NM. Fortunately, I am a quick learner!
Barring a small panic attack the night before we closed (I realized I didn’t even know how to operate the Marti unit), I was able to make it to the closing table, all for the love of radio.
However, getting into the business to begin with was “tricky”, to say the least.
There was no “sugar daddy” involved to help us get started. With seller financing, my dad did agree to allow us to mortgage his home in order to come up with the down payment. No capital was available to pay the first month’s expenses so I approached many of the existing advertisers to ask them to pre-pay the first month. Surprisingly, no one turned me down. That meant we had to practically double up on sales the following month to stay ahead in the game. Not an easy feat. We did it, and we lived to tell the story! Within a year we were able to secure an SBA loan to purchase a dark 100kW stick and put it on the air (KSMX-FM). It turned into a winner for us.
We owned/operated our small group quite successfully for nine years. During our tenure, we doubled the number of full- and part-time employees, and increased revenues significantly. After seven years or so, we came to a crossroads. Did we want to expand or perhaps exit the business? We had a great opportunity to grow into two more markets. I did some big-time praying and realized that I would rather focus on my small family. I had two sons, and Ty was my “surprise” baby born three years into station ownership.
We hired Doyle Hadden of Hadden and Associates in Orlando to sell our group for us. During this process, I was intrigued with the notion of brokering, and I felt like becoming a media broker would allow me to keep my thumb in the business. Also, I would be able to work out of my home and maintain a more flexible schedule. Upon reflection, I realized that I enjoyed negotiating the deal to purchase the stations more so than owning/operating them. We purchased KSEL AM/FM from Jim Boles. Jim said later that he knew we would be successful in the business based on the way I negotiated the deal.
TALKERS: What is the nature of the media brokerage business? Especially as it applies to being a woman.
SB: An “eye-opener” is how I can best describe the first meeting I attended of the National Association of Media Brokers in 2004. The room was full of 50 or so men with only two more females present. Inside my head, I knew this was okay, I can deal with it. After all, this scenario is nothing new. No, I’m not a feminist, just a realist.
I would characterize the response to my entry on the media broker scene as being “favorable.” Hard work does pay off as does tough skin and tenacity. Last year was one of my biggest yet, in the midst of a poor economy and working on behalf of folks in an industry facing increased digital competition for ears and ad dollars.
TALKERS: Do most of the brokers know each other? Is it a tight knit segment of the industry? Is there an element of camaraderie?
SB: Yes, most media brokers do know each other. Some have formed affiliations and choose to work together to help a client sell their assets or work on behalf of a buyer. And, I have noticed more of this type of thing happening — brokers in contact with each other — with the advent of www.RadioTVDeals.com. Certainly, I have enjoyed a closer working relationship with the brokers who participate on the site. We need to continue to foster this notion of working together when needed to better serve our clients.
TALKERS: Tell us about this website – its history, goals and mission – and how does it operate?
SB: After brokering for only a short while, I realized that broadcasters interested in expanding their portfolios had the distinct burden of locating/contacting multiple media brokers who may or may not have listings that meet their specific criteria. The need for a site like RadioTVDeals.com was a “given” to me. However, selling the concept to media brokers would be a challenge in itself.
Most media brokers are hard-wired to be very protective of their listings/territories, a mindset that worked okay in the years immediately following passage of the 1996 Telecommunications Act, when deals were abundant and multiples were “through the roof.” Now that deals are fewer and farther between, media brokers need to be more creative in our marketing approach, hence the creation of www.RadioTVDeals.com.
I launched the site in March of 2010 with participation from multiple media brokers and direct sellers who collectively listed more than 200 properties for sale. Today, the site has 371 total listings, and has had as many as 475. There have been well over 5,600 buyer inquiries made since the site’s inception. When potential buyers identify a station of interest, they click to send an email. This takes them to an inquiry form, when submitted, goes directly to the media broker or seller who posted the listing.
Direct seller members pay $39.99 per month and Media Brokers pay $29.95 monthly. Members sign up and pay online, and they are able to cancel at any time. Both memberships include unlimited listings, which is an incredible bargain for all concerned. Members are in total control of information related to the listings they post, and they can easily log in to add or to make edits.
Media brokers have found the site to be highly effective. For the most part, those brokers who have posted listings (to fully “test” the site’s effectiveness) have chosen to continue their memberships, simply due to the good response they have received. We offer a few extras for media broker members including being highlighted in the RadioTVDeals’ Media Broker Spotlight and in the Media Broker Directory. As a side note, I also receive many calls where I direct the inquirers to an appropriate participating member broker, generally based on geography. Aren’t I nice? I believe our participating brokers will tell you they get “kid glove” treatment from yours truly.
The big secret behind the success of RadioTVDeals.com is the weekly email newsletter, DealMAKER!. The newsletter features newly added stations to the site, and highlights various members’ listings each week. Emailed to approximately 10,000 broadcast station owners/operators, executives, and upper level managers in markets of all sizes, DealMAKER! has turned into a “must see” electronic rag. And, I understand why. As a former radio group owner, I was always interested in knowing what media properties may be for sale.
TALKERS: Station owners must constantly do their homework and keep up with happenings in the marketplace…
SB: Yes! Broadcasters like to keep up with stations that are on the market for a variety of reasons: 1) They may be in an acquisition mode, 2) they may be preparing to divest, and they want to see what others are asking for their comparable station or group, and, 3) They want to know if their competitor’s stations may be for sale.
There are quite a large number of entrepreneurs who continue to sign up to receive DealMAKER!. This is due in large part of the fact that RadioTVDeals.com shows up first (under the paid ads) in the Google search under “radio stations for sale.” The site also shows up at the top under a variety of popular search key words for anything having to do with radio or television stations for sale or lease.
The site has steadily grown these past 2 ½ years both in membership and site traffic. In my glass ball, I see continued improvement/expansion in future for RadioTVDeals.com.
TALKERS: Tell us specific information about your media brokerage company.
SB: MyMediaBroker.com, specializing in radio and television station acquisitions, divestitures and consulting, was established in 2003. I associated with the broker who sold our group for us, Doyle Hadden. Doyle has served as a steady mentor through these years, and our agreement is winding down. I will clip my wings upon the closing of two more deals. However, Doyle and I will continue to work together whenever there are opportunities to best serve a given client, as I would agree to do with most any broker. After all, the client is number one.
The timing was good when we sold our group. There was certainly more activity then as opposed to current levels, and more importantly, multiples were higher. On the very big down-side, however, I chose to become a media broker when deals were beginning to slow, so I didn’t get in on the big windfalls of the mid- to late-90s and early 2000s. Also, I know and realize I was such a “greenhorn” at first. Looking back, had I been more experienced in the first few years after beginning the business, I could have closed more deals simply because there were more available buyers who could actually secure financing. Without trying to sound like “Debbie Downer,” that is certainly not the picture now. Attainable financing is the single biggest detriment to our industry today.
Unlike a number of media brokerage companies who have gone by the wayside in the last several years, MyMediaBroker.com continues to display the “open” placard on the door. We have actually posted some good years during this time of great economic uncertainty. As a matter of fact, 2011 was one of our record years, thanks to…RadioTVDeals.com! The buyer of two of those properties contacted us through a listing I had posted on the site.
Business has been particularly quiet in the last few months, and I attribute that to the pending presidential election. Broadcasters are business people first, or so they should be. There are many economic issues that directly affect small business that are at stake in this election, and business people are anxious to know what the playing field will be come January, 2013.
TALKERS: What should buyers look for in selecting a media broker?
SB: Buyers should find out how well the broker understands their particular market and region, and the type of station that is being sold. Some brokers specialize in radio only while others deal in full power television. And, there are brokers who primarily sell low power television stations. The obvious traits a buyer should seek in a media broker include trust, reputation, experience and past successes.
TALKERS: Reading the trades and going to conferences such as the NAB, one would get the impression that radio station ownership is a game that can only be played by mega-corporations and the small guy is increasingly being shut out. Is that entirely true?
SB: There are many incredible opportunities for first-time buyers. In the large markets, AMs can be purchased for a fraction of the price they sold for five years ago. I have listings for AMs in top 10 markets that are priced very reasonably, and, one of those sellers will carry some paper. There are some great groups in medium and small markets that can be purchased at a six-to-seven-time cash flow multiple, and many of those sellers may offer some portion of seller financing.
In my opinion, a first-time buyer should consider looking into small markets where the station or group is the only show in town. Local businesses will support a local owner first and foremost, especially if the station group is enmeshing itself into the community and schools. It is a good situation where the operator does not have to deal with the competing stations going for the same local dollar.
TALKERS: What are the qualities in a potential buyer that brokers assess in determining whether or not to take the buyer seriously?
SB: One of the red flags for those of us attempting to make the determination of whether or not we have a serious buyer inquiry is the level of knowledge and expertise the inquirer exhibits in that initial conversation. This is not to say that the novice making the call is automatically a “dud.” More times than not, I have found those types to be the dreamers who love radio but do not have the business acumen to attain financing and the ability to subsequently follow through with a business plan.
We like to hear that a buyer is already in the broadcasting business and preferably an owner/operator. Or, we like to hear that he/she has experience in upper management in the industry. Most importantly, we want to know if the buyer has financing in place. If so, at the appropriate time, we need for the buyer to present a letter from his or her banker or investment group that states that funding is in place.
TALKERS: With financing being so difficult to achieve these days, what creative options exist for the small to medium buyer to pursue?
SB: Many sellers understand the dynamics of today’s economic marketplace. They realize that financing is very difficult to achieve, and they are prepared to carry at least a partial seller note.
It was difficult for buyers to attain financing for a broadcast operation before the economy hit the skids because most banks do not fully understand the business and the value of the license. I think most buyers will describe the task as being akin to “pulling teeth” or severing your right arm or something to that effect.
There are a handful of banks that feature departments that specialize in broadcast lending, but, the bar is set quite high. There are investment firms that many of us have seen, heard of and dealt with who will only look at the biggest of deals, which doesn’t help the small/medium market broadcaster.
SBA loans are always an option. I have first-hand experience with SBA, and we were able to apply and complete the approval process within two months. The caveat is this, you must work diligently to put the paperwork together and go through the process of writing the business plan. Our experience with SBA can be best-described as “very positive.”
TALKERS: Where do you see AM radio going over the next few years?
SB: This is a very good question. Certainly, the fact that the FCC has allowed AM radio station operators to rebroadcast their signals over FM translators (that they can also own) is a very good option for owners.
There are several proposals in conversation now that would allow AM stations to move to the FM band. One in particular is that AM stations would move to LPTV channels 5 and 6, which is located next to the FM band. This would definitely help with the long-term outlook for AM radio. However, like anything else that involves the FCC, I know this process would be years in coming, if it ever gets approved in the first place.
Nowadays, a number of AM stations are being sold or leased to minority broadcasters. For this reason, I find continued strong interest in AM station ownership, especially in the large markets.
TALKERS: What are the pitfalls facing the inexperienced buyer? Of what should they be aware?
SB: Most of us who step into ownership of our first station or group tend to think about on-air first and foremost. We spend a lot of time and money working on the format and worrying about DJs. Yes, these factors are important because they consist of the product that we have to sell. But, I hate to “burst the bubble” for all of the first-time owners/operators who are reading this…
The very most important factor in operating a station or group is sales. Without adequate sales, the owner can very easily miss the loan payment. Miss the loan payment, you lose the station. This must be kept in perspective at the very onset of ownership!
In our case, if we missed the loan payment we would lose the station and a home, my dad’s home. So, the heat is on. A new owner/operator needs to keep operating costs in check and make the loan payment. It is also important to keep all bills current. It is not an ideal situation in any marketplace to have a reputation for being behind on bills. Not good for business.
First-time owners/operators should become entirely involved in the communities they serve, and give on-air time to local clubs/organizations. Many operators sell sponsorships for public service announcements which is good business. Broadcasting local high school/university sports is most always a “ticket” to advertising and overall business success in radio. Combine these items with superb local news coverage, and you’ll have the local advertisers in your pocket.
TALKERS: What is your forecast for the radio industry?
SB: I spend quite a bit of time thinking about the future of radio. Obviously, stations must develop online and mobile presence if they haven’t done so already.
I happen to think there are some incredible opportunities for entrepreneurs who are willing to put on their creative “thinking caps” and consider the future possibilities for radio.
Lew Dickey recently stated that radio needs to “find its iPhone.” I believe radio’s iPhone is right in front of our face.
Anytime radio can help the local, regional or national business to achieve its specific marketing goals, radio wins. In order to continue to effectively sell time, radio has to look at ways to improve the result. How can radio combine with online, mobile and social marketing to become the “go-to” media at all levels? How can radio effectively put away local newspaper? What about local cable? I believe there is a way to make this happen. After all, radio is the underestimated, yet powerful megaphone. Combine it with new media and you wind up with the mother of all warheads.
Sandi Bergman can be emailed at sbergman@RadioTVDeals.com or phoned at 575-356-3644.