suf-dpr-report-8-30-2012
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2012 consultant's report by Public Radio Capital for Delmarva Public RadioTRANSCRIPT
Salisbury University Foundation Consulting Report August 30, 2012
Dennis Hamilton, Director of Consulting
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EXECUTIVE SUMMARY
The Salisbury University Foundation (“SUF”) hired Public Radio Capital (“PRC”) in May of 2012 to assist in due diligence analysis of the performance of WSCL‐FM and WDSL‐FM (the “Stations”) operated under Delmarva Public Radio (“DPR”) and to make recommendations concerning future radio operations. PRC has created a business model that demonstrates the present public service and financial profile of the Stations along with projections of various strategic scenarios. In addition, PRC Director of Consulting, Dennis Hamilton visited the Stations, SUF and Salisbury University (“SU”) where he presented initial findings and elicited ideas and comments concerning the future of the Stations. As part of its consulting work, PRC analyzed the following strategic options:
Status Quo Scenario: This scenario provides a long‐term outlook for the Stations without any major change in ownership, programming or organizational structure. PRC does not recommend the Status Quo scenario as the operation of DPR is not sustainable.
Scenario 1: This scenario assumes that WSCL‐FM will remain a classical music format and SUF will sell WSDL‐FM. Given the limited market for WSDL‐FM and limited revenue and listening potential for WSCL‐FM, improving that station’s performance is very unlikely. Therefore, PRC does not recommend Scenario 1.
Scenario 2: This scenario assumes that WSDL‐FM will become a repeater service for WSCL‐FM. Our analysis demonstrates that this model is not viable given the overlap between the signals; therefore PRC cannot recommend Scenario 2.
Scenario 3 (the “PSOA Scenario”): This scenario assesses the financial feasibility of entering into a Public Service Operating Agreement (“PSOA”) for the operation of one or both stations. This scenario includes changing WSDL’s format from news/talk to AAA (Adult Album Alternative), while keeping WSCL‐FM’s classical music format the same.
‐ The PSOA Scenario A: This scenario assumes DPR continues to air its current full time classical format on WSCL‐FM, but enters into a PSOA with a public broadcaster for the operation of WSDL‐FM as a full time AAA service starting in FY2014.As DPR will incur a growing deficit due to the limited revenue potential versus the consistent expense growth, PRC cannot recommend PSOA Scenario A.
‐ The PSOA Scenario B: DPR enters into a PSOA with a public broadcaster for the operation of WSDL‐FM as a full time AAA service and WSCL‐FM as a full time Classical service starting in FY2014. PSOA Scenario B is a viable option to maintain the public service of both stations while eliminating the need for future SUF or SU funding.
The primary benefits of the PSOA B Scenario are two‐fold:
Eliminating the need for future SUF and SU support to DPR
Operation of the Stations under a public broadcaster will allow for the continued public service of the Stations. Further, the new AAA service on WSDL‐FM will attract new listeners and increase Salisbury University branding.
Scenario 4 (the “License Transfer Scenario”): This scenario assesses the financial feasibility of the transfer of the Stations’ licenses and operations to a new nonprofit. Given that the status quo is not viable there is little or no probability of success under a new owner. PRC cannot recommend the License Transfer Scenario.
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BACKGROUND The Salisbury University Foundation (“SUF”) is licensee of WSCL‐FM and WDSL‐FM (the “Stations”), public radio stations that are operated under Delmarva Public Radio (“DPR”) and located on the Delmarva Peninsula. SUF hired Public Radio Capital (PRC) in May of 2012 to assist in due diligence analysis of the Stations’ performance and to make recommendations concerning future radio operations. PRC has created a business model that demonstrates the present public service and financial profile of the Stations along with projections of various strategic scenarios. In addition, PRC Director of Consulting, Dennis Hamilton visited the Stations, SUF and Salisbury University (“SU”) on July 23‐24, 2012 where he presented initial findings and elicited ideas and comments concerning the future of WSCL‐FM and WSDL‐FM. The agenda for that visit can be found in Appendix D.
SUMMARY OF ANALYSIS This report is a culmination of an analysis concerning strategic initiatives outlined in the PRC/SUF agreement and further developed in cooperation with SUF and SU. The following is the outcome of the analysis: Note: Charts, graphs, and other data drawn from the Excel model, which accompanies this report, can be found in Appendix B. The data and charts only pertain to the scenario’s that were modeled.
Status Quo Scenario: This scenario provides a long‐term outlook for the Stations without any major change in ownership, programming or organizational structure. The Status Quo scenario is included in the Excel business model that accompanies this report. It is the first analysis resulting from data gathering and discussions with the licensee and others concerned with the future operations of the stations including SUF and SU Administration. The Status Quo model was completed prior to the July site visit. The results are summarized as follows:
There is little potential to grow the audience and revenue base for both WSDL‐FM and WSCL‐FM due to competition, aging audience, and market conditions.
o The WSDL‐FM news audience continues to decline due to local competition for news audience created when WAMU FM, Washington DC entered the market via repeater WRAU FM.
o The WSCL‐FM audience is projected to decline in line with steady classical music audience erosion nationwide.
o As a result of stagnant audience size, listener sensitive income (membership and underwriting) is projected to remain essentially flat over the next ten years. In line with listener sensitive income, total revenue for DPR will remain flat with SU support capped at $250,000 annually.
While revenues stagnate, expenses are projected to rise as a result of inflation and cost of living
Capital costs necessary to relocate the station from Caruthers Hall and replace the aging WSCL‐FM transmitter facilities that amount to approximately $180,000
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As a result of rising expenses and stagnate revenue, the model projects a growing deficit under the status quo scenario. DPR is projected to generate a deficit of approximately $240,000 annually by FY2022.
PRC does not recommend the Status Quo scenario as the operation of DPR is not sustainable. Given the projected flat revenue, DPR will require an ever larger amount of support from SUF and SU if no changes are made to the operation.
Scenario 1: This scenario assumes that WSCL will improve its listening and financial performance in line with the better performing CPB‐supported classical music stations in similarly sized markets. SUF will sell WSDL. This scenario was modeled early in the business model template design phase prior to the July site visit. Following review, it was determined that this scenario was not viable in part due to the financial results of the status quo scenario and the following factors:
WSDL‐FM and WSCL‐FM already perform well against peer stations. While not leading in revenue metrics, the stations do not have significant headroom to generate additional revenue in the amount necessary to deal with anticipated capital costs.
In addition, while revenue might increase, so will a number of operating cost centers, primarily program acquisition. The increase in expenses will likely outweigh the potential to grow revenue.
Finally, the low population growth in the region does not support a long term positive trend line for the stations.
Given the lack of revenue and listening potential, improving station performance is very unlikely. Therefore, PRC does not recommend Scenario 1.
Scenario 2: This scenario assumes that WSDL will become a repeater service for WSCL. The Stations will improve their listening and financial performances in line with the better performing CPB‐supported classical music stations in similarly sized markets. This scenario has significant downfalls that eliminate it as a viable option:
While expenses will be substantially reduced in this scenario, DPR will lose an important source of revenue generated by WSDL‐FM. Currently WSDL‐FM and its news programming account for the vast majority of underwriting revenue and a large proportion of membership revenue. Losing this revenue source will significantly impact DPR’s bottom line.
As WSCL‐FM already covers most of the WSDL‐FM signal area, there would be very little additional audience increase. As a result, DPR will lose a large proportion of its listeners, members, and underwriters.
This station configuration does not maximize the channel assets owned by SUF. Given the overlap between the two signals, a differentiated (dual) format approach will result in the greatest benefit and financial performance.
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The model does not generate sufficient savings to cover the capital needs of moving the station studios and offices and replacing the WSCL‐FM transmitter that amount to approximately $180,000.
Given the many pitfalls of switching WSDL‐FM to a full time Classical format, PRC cannot recommend Scenario 2.
Scenario 3 (the “PSOA Scenario”): This scenario assesses the financial feasibility of entering into a Public Service Operating Agreement for the operation of one or both stations. This scenario includes changing WSDL’s format from news/talk to AAA, while keeping WSCL’s classical music format the same. The model assumes two separate Public Service Operating Agreement (PSOA) scenarios; the first assumes that DPR continues to operate WSCL‐FM as a classical service and the second assumes both stations are operated through the PSOA. Each scenario offers the potential to reduce the burden on SUF and SU. Each delivers a one new format (AAA) to the Delmarva region and increases revenue and public service metrics. While both will result in loss of revenue in the first few years, both will also decrease costs substantially. PRC has modeled these scenarios using the assumption that SUF will opt to exercise a PSOA with another public broadcaster (to be determined). A PSOA has the following attributes: From an owner’s perspective:
A PSOA allows the licensee of a radio station to retain the ownership of its capital asset, while being reimbursed for the costs and administrative time associated with managing the station. The station owner will continue to manage relationships with the Corporation for Public Broadcasting (CPB) and the Federal Communications Commission (FCC), and must commit that this be part of an employee’s position description. However, being sure that the owner is kept abreast of filings, reports, et al is almost always a contracted obligation of the designated operator.
By entering into a PSOA, the owner retains a primary connection with the station from a public relations perspective and therefore benefits from the positive community service of the station.
A PSOA gives the owner the flexibility of selling the station at the conclusion of the PSOA term, or extending the term of the PSOA.
Operating a public radio station may not be central to the educational mission of the licensee. Sometimes procedures and practices of the licensee (most frequently in the area of personnel and fund raising) can be restrictive to the operation of a public radio station. With a PSOA, the station operator, when positioned more independently, is relatively unfettered to provide public service and to attract community leadership and support.
The operator may be obligated to reimburse the direct and administrative costs incurred by the owner to maintain the license and any other matters related to ownership, including filings or reports to the CPB.
PSOAs might include promotional contracts with the licensee. These contracts could provide non‐cash benefits such as underwriting spots, internships, and training opportunities for students to the licensee.
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From an operator’s perspective:
Acquiring a radio frequency might exceed the financial scope of an organization. In such cases, a PSOA eliminates the high costs associated with buying or financing the acquisition of a station.
PSOAs may give the operator the flexibility of terminating the agreement or acquiring the station at a future date.
By executing an option agreement, which can be attached to a PSOA, the operator could acquire the station at a predetermined price.
PSOAs might include promotional contracts with the licensee. These contracts could be offered as an incentive to avoid the sale of the asset.
By operating a radio station, the operator gains access to a medium that connects people and communities. Public radio has grown in significance and “brand” awareness over the past decade. Now, one in nine Americans listens to public radio weekly. That is a testament to public radio’s mission of public service and quality radio broadcasting. The stations that are growing the fastest and therefore offering the most public service in their communities are, in large part, those stations that are community based and governed.
Within the hands of an operator that utilizes its operational expertise, a public radio station could be run more effectively and efficiently.
The business model includes separate projections for each of the two scenarios. The PSOA Scenario A: This scenario assumes DPR continues to air its current full time classical format on WSCL‐FM, but enters into a PSOA with a public broadcaster for the operation of WSDL‐FM as a full time AAA service starting in FY2014.
As the operator takes over broadcasting on WSDL‐FM, DPR will reduce expenses through elimination of news program acquisition, cuts in local programming, and reductions in various other expenses. DPR’s total operating expenses decrease from approximately $1.1 million in FY2013 to $540,000 in FY2014.
o Operating expenses incurred by DPR for the operation of WSDL‐FM from FY2014 on are covered by the PSOA operator, reaching approximately $60,000 by FY2022. The operator also contributes $50,000 in FY2014 as a one‐time capital contribution for DPR associated with the transmitter and equipment upgrades.
o Once DPR has moved, the organization will incur approximately $40,000 per year in expenses related to new studio and office space. The space needs under a PSOA:
Cost accounted for in the model is at market rate
Paid by the operator
Occupy a substantially reduced footprint on or off campus
Projected to meet the May, 2013 Caruthers Hall demolition deadline o Staffing needs are reduced due to the elimination of new programming and reduction in
local programming. The chart below includes a suggested list of staff included in the scenario. The list is subject to change during any negotiations with a potential operator:
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o DPR incurs $180,000 in capital expenses for transmitter and equipment upgrades in FY2013 before the PSOA takes effect. DPR will need to raise $130,000 through capital campaign, financing, or SUF Investment in FY2013 to cover these expenses.
o DPR will continue making principle and interest payments on the outstanding debt from SUF through FY2020. DPR also currently has an outstanding debt with NPR which is scheduled to be repaid in FY2013.
DPR will also no longer receive any revenue generated by WSDL‐FM, including membership and underwriting revenue. WSCL‐FM will become the main source of revenue for DPR.
o In line with the status quo scenario, there is little potential to increase the listening and revenue potential of the classical service. Total operating revenue for DPR (excluding the PSOA reimbursement) decreases from approximately $1 million in FY2013 to $500,000 by FY2016. Revenue slowly increases with inflation thereafter, reaching $620,000 by FY2022.
o SU support (direct and in‐kind) is phased out in FY2014 as the PSOA takes effect.
Despite the reduction in expenses, DPR will incur growing deficits unless additional financial support is raised through either major gifts, foundations or other fundraising sources.
o Once direct and in‐kind SU support is zeroed out in FY2017, DPR will incur growing deficits. DPR is projected to generate a deficit of approximately $63,000 in FY2014, which grows to $280,000 by FY2022.
o The continuing deficits are due in part to the lack of listening and revenue growth potential for the classical service. Membership revenue for WSCL‐FM stabilizes at approximately $190,000, while underwriting revenue stabilizes at $50,000. CPB support is also projected to decrease significantly with the loss of revenue from WSDL‐FM, from $116,000 in FY2013 to approximately $35,000 by the end of the projected period. Another factor is the continued modest growth in expenses, which keep pace with inflation.
o The organization will incur a continuing operating deficit unless SU support can be replaced by outside funding.
Note: PRC recommends and has modeled use of Classical 24 for the primary content vehicle for WSCL. Classical 24 is a live 24 hour classical music service distributed by Public Radio International. It is a very high quality service and easily customizable to include local content. PSOA scenario A includes local content staff to create programming to integrate into nationally acquired programming. http://classical24.publicradio.org/ The PSOA Scenario B: DPR enters into a PSOA with a public broadcaster for the operation of WSDL‐FM as a full time AAA service and WSCL‐FM as a full time Classical service starting in FY2014.
Position Salary ($)
Station Manager 40,000
Local Operations/Traffic 30,000
Classical Announcer 28,080
Local Broadcast and Online Content Producer 30,000
Underwriting Sales Position 12,000
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As the operator takes over broadcasting on WSDL‐FM and WSCL‐FM, DPR will reduce expenses through elimination of program acquisition, cuts in station staff, downsizing the need for studio and office space, and reductions/eliminations of various other expenses. DPR’s total operating expenses decrease from approximately $1.1 million in FY2013 to $104,000 in FY2014.
o All operating expenses projected in the model are covered by the PSOA operator. Operating expenses and licensee reimbursement range from approximately $100,000 in FY2014 to $120,000 in FY2022. The operator also pays $50,000 in FY2014 as a one‐time capital contribution for DPR associated with the transmitter and equipment upgrades.
o The operator will also take on all costs associated with running the stations, including the cost of studio and office space that amounts to $40,000/year.
o The only staffing needs projected in the model is a licensee staff person with the specifically assigned responsibility to oversee the stations, FCC licenses, and PSOA compliance.
o As with scenario A, DPR incurs $180,000 in capital expenses for transmitter and equipment upgrades in FY2013 before the PSOA takes effect. DPR will need to raise $130,000 of these costs through capital campaign, financing, or SUF Investment in FY2013 to cover these expenses. The remaining $50,000 will come from the operator.
o DPR will continue making principle and interest payments on the outstanding debt from the Foundation through FY2020.
DPR will also no longer receive any revenue generated by WSDL‐FM or WSCL‐FM, including membership and underwriting revenue. The expense reimbursement from the operator will become the main source of revenue for DPR as University support is eliminated.
SU support (in‐kind and direct) is eliminated in FY2014 as the operator takes over broadcasting.
One issue will be the status of DPR’s large amount of outstanding debt owed to SUF. This issue may be resolved if the existing debt owed to SUF is forgiven either partially or fully. Further discussion between the parties involved needs to occur to resolve this issue.
Under a PSOA, an established public broadcaster can successfully operate WSDL‐FM and WSCL‐FM by taking advantage of economies of scale and an existing framework for programming. The expenses incurred by DPR to maintain the stations will be covered the operator, resulting in the elimination of the need for additional support from either SUF or SU.
This scenario will result in a shift and decrease in listening for a period of a two to three years. WSDL‐FM’s switch from a news format to a AAA service will result in a decrease in listeners as the new service works to attract an audience. As the Delmarva region is served by another high quality NPR station, there will not be a significant lose in public news service to the region. At the same time DPR will deliver a new format to the region with proven public media appeal. Given the merits of both PSOA scenario’s discussed above, Scenario B is the superior option to maintain the public service of both stations while eliminating the need for SUF or SU funding for the Stations’ operations. While Scenario A has its merits with continued operation of WSCL‐FM, DPR will incur growing deficits if SU support is not replaced by additional outside funding. Given the level of deficits, it will be difficult for DPR raise funds to achieve a balanced budget and sustainable operations. Under
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Scenario B, with all of DPR’s operating expenses being covered through the PSOA, the need for continued SUF and SU support for station operations, other than the capital requirements, is eliminated.
Scenario 4 (the “License Transfer Scenario”): This scenario assesses the financial feasibility of the transfer of the Stations’ licenses and operations to a new nonprofit. In addition, the scenario incorporates a financing model to provide a comprehensive picture of DPR’s capacity to fund the cost of acquisition. This is a highly unlikely scenario and it is not included in the scenario modeling. PRC has discovered no local evidence that this scenario is either desirable or feasible. The current annual operating deficit of the station coupled with the pending capital costs work against this alternative. The cost of start‐up is not realistic inside the constraints of the known financial, competition, and public service metrics. Barring a donor or donors coming forward with substantial capital and operating capital, the scenario has no short term application or potential. In addition the stations ability to borrow to reach this end is limited by the asset value. The licensee might guarantee financing or provide it, but the station’s current operating metrics make repayment highly unlikely. Given the low probability of success, PRC cannot recommend the License Transfer Scenario. The valuation of WSDL‐FM and WSCL‐FM can be found in Appendix A. Broadcast stations are often sold based on the value of the license without consideration of the audience, revenues or even the value of the hard assets (equipment, real property, etc.). In broadcasting terms, this is often called a “stick valuation.” In this type of comparable valuation, the key variables are the station prices and population coverage in comparable sales. A stick value multiple (also known as “price per person”) is calculated for the comparable station sales by dividing the sales price by the population coverage of the station. Based upon the comparable sales data, a reasonable stick value multiple (or a range of multiples) is then applied to the subject station’s coverage area population to derive a market value estimate. The valuation included in Appendix A includes an analysis of recent single station, noncommercial FM sales in comparable sized markets. The analysis included 15 comparable sales that occurred between January 2009 and June 2012. Because both WSDL‐FM and WSCL‐FM are in close proximity, the same stick value multiple range can be used to value each license. Based on these sales a reasonable price per person for WSDL‐FM and WSCL‐FM was estimated in the range of $2.75 to $3.09. Based on these recent sales and the estimated price per person, we estimate the following fair market value ranges for WSDL‐FM and WSCL‐FM:
Station: Low ‐ High
WSDL‐FM $400,000 ‐ $450,000
WSCL‐FM $890,000 ‐ $1,000,000
Estimated Fair Market Value
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RECOMMENDATION PRC’s primary recommendation is that SUF negotiate and execute a Public Service Operating Agreement (PSOA) with another public broadcaster(s) to operate WSDL‐FM as a AAA service and WSCL‐FM as a full time Classical service. Such an agreement will substantially reduce operating costs to the licensee (SUF) and, as WSDL‐FM will be reformatted as a AAA public radio station, this scenario will deliver a new audience and therefore increase Salisbury University branding. Participation in the station’s capital needs should also be a component of negotiations with any PSOA prospective operator. PSOA details are discussed later in this report as are action steps to implement this recommendation (see Appendix C).A proposal for PRC to manage a phase II for SUF will be provided separately from this report. Finally, a PSOA does not come at the expense of local programming. While there may be less, what will remain or be created will fit best practices for public radio. One of the paradoxes of broadcast radio is that more local is not immediately translated into more audience. Well produced and appropriate local content designed to fit formats is an important part of the radio craft. More is not always better when better is dependent on creative and effective local programming that is well produced and included in a stream of high quality content. The result is high appeal to listeners who will become loyal and contribute to sustaining and growing public media services.
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APPENDIX A: STATION VALUATION
Market NameMarket
Rank
Call
LettersFreq. Buyer Seller Current Format
Power
(W)Class
Acquisition
Proposed
Date
Acquisition
Price
Coverage
Area
Population1
Price Paid
Per
Person
Salisbury‐Ocean City, MD 140 WSCL 89.5 Classical 33,000 B 322,937
Salisbury‐Ocean City, MD 140 WSDL 90.7 News/Talk 18,500 B1 144,384
Valley View, TX 252 KQFZ 89.1 Templo De Dios Inc 1Hispanic Christian Community
Network IncVariety 1,000 A Jun‐12 $45,000 7,481 6.02$
Joplin, MO 231 KITG 89.5Lake Area Educational
Broadcasting FoundationCalvary Chapel Of Joplin Christian 34,000 C2 Mar‐12 $133,000 74,188 1.79$
Ft. Collins‐Greeley, CO 120 KUSZ 88.7 3G Learning Solutions WREN Communications Inc DARK 5 A Sep‐11 $10,000 420 23.81$
Lebanon‐Ruthland‐White River
Junction, VT‐NH187 WFTF 90.5 Christian Ministries Christian Fellowship Religion 720 A Jun‐11 $80,000 29,342 2.73$
Kalamazoo, MI 185 WMJC 91.9 Calvary Radio Network IncHorizon Christian Fellowship (San
Diego)Religion 6,000 A Apr‐11 $75,000 123,901 0.61$
Billings, MT 255 KYWH 88.9 Fresh Life Church Inc Calvary Chapel of Costa Mesa Religion 1,900 A Mar‐11 $100,000 87,302 1.15$
Odessa‐Midland, TX 182 KOCV 91.3 Marfa Public Radio Corporation Odessa Junior College District News/Cls/Ecl 5,000 A Feb‐11 $300,000 145,278 2.07$
Ft. Collins‐Greeley, CO 120 KXGR 89.7 Calvary Chapel Aurora WAY‐FM Media Group Inc Chrst/Rock 80,000 C0 Sep‐10 $3,050,000 1,336,742 2.28$
Chattanooga, TN 106 WDYN 89.7 Bible Broadcasting Network Tennessee Temple University Chrst/Talk 100,000 C1 Aug‐10 $2,500,000 788,726 3.17$
San Angelo, TX 289 KNCH 90.1 Texas Tech University University of Texas Variety 6,000 C2 Apr‐10 $350,000 112,745 3.10$
Hamptons‐Riverhead, NY (Station also
covers the Nassau‐Suffolk, NY market ‐
19‐)
260 WLIU 88.3 Peconic Public BroadcastingLong Island University Public
RadioNPR/Nws/Jaz 16,000 B Mar‐10 $850,000 290,891 2.92$
Atlantic City‐Cape May, NJ 141 WEHA 88.7 Spread the Gospel Inc WXXY Broadcasting Inc Gospel 760 A Oct‐09 $375,000 34,291 10.94$
Santa Maria‐Lompoc, CA 212 KGDP 90.5 Family Life Communications Inc People of Action DARK 17,500 B Sep‐09 $180,000 251,644 0.72$
Ft. Wayne, IN 107 WLAB 88.3Star Educational Media Network
Inc
Indiana District‐Lutheran Church
MSChrsContemp 3,200 B1 May‐09 $1,000,000 361,919 2.76$
Oxnard‐Ventura, CA 118 KLFH 89.5 Logos Broadcasting Corporation Shepherd Communications Inc ChrsContemp 97 A Jan‐09 $1,350,000 392,363 3.44$
Source: BIA/Kelsey, 2012 287,839
$739,500
$4.39
$3.09
$2.95
$2.75
WSCL WSDL$1,418,088 $634,022
$997,398 $445,933
$951,668 $425,487
Note: $887,748 $396,909
1) Population based on a Longley‐Rice propagation model with 2010 US Census Figures for sales from 2010 (Q2) on and 2007 US Census Estimates for sales before 2010. Population figures in 60dBu Contour at 1.8m receiver height above
Average Price per Covered Person ‐ 2011 and 2012 (Q2) Sales
(Excluding Highest & Lowest Values)
Estimated Value Based on:Average Price per Covered Person ‐All Sales
Average Price per Covered Person ‐All Sales (Excluding Highest
and Lowest Values)
Average Price per Covered Person ‐2009 and 2010 Sales
(Excluding Highest & Lowest Values)
Average Price per Covered Person ‐ 2011 and 2012 (Q2) Sales
(Excluding Highest & Lowest Values)
Average Price per Covered Person ‐2009 and 2010 Sales
(Excluding Highest & Lowest Values)
Single Station Noncommercial FM Sales in Comparable Markets
Average Population
Average Sales Price ‐All Stations
Average Price per Covered Person ‐All Sales
Average Price per Covered Person ‐All Sales (Excluding Highest and Lowest Values)
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APPENDIX B: MODEL RESULTS
Delmarva Public Radio
Summary FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
Total Operating Revenues
Status Quo 1,099,860 1,017,536 1,054,268 1,059,162 1,058,573 1,057,330 1,056,016 1,054,704 1,053,394 1,052,085 1,050,778
PSOA A 1,099,860 1,017,536 497,378 391,134 388,260 390,702 393,156 395,666 398,233 400,859 403,546
PSOA B 1,099,860 1,017,536 151,728 103,253 105,060 107,162 109,305 111,491 113,721 115,995 118,315
Total Operating Expenses
Status Quo 1,157,100 1,059,000 1,078,929 1,099,475 1,123,028 1,149,650 1,176,935 1,204,901 1,233,564 1,262,941 1,293,052
PSOA A 1,157,100 1,095,649 542,609 556,361 571,454 587,678 604,736 622,456 640,980 660,555 680,912
PSOA B 1,157,100 1,095,649 104,407 105,530 106,926 108,400 110,108 111,850 113,740 115,995 118,315
Net Income from Operations
Status Quo (57,240) (41,464) (24,662) (40,313) (64,456) (92,320) (120,919) (150,196) (180,170) (210,856) (242,274)
PSOA A (57,240) (78,113) (45,231) (165,228) (183,195) (196,976) (211,580) (226,790) (242,746) (259,696) (277,366)
PSOA B (57,240) (78,113) 47,321 (2,277) (1,866) (1,238) (803) (359) (19) ‐ ‐
Net Operating Income before Depreciation,
Amortization and Interest (EBIDA)
Status Quo (53,784) (38,392) (21,983) (38,036) (62,590) (91,082) (120,116) (149,837) (180,151) (210,856) (242,274)
PSOA A (53,784) (75,041) (42,552) (162,951) (181,329) (195,738) (210,777) (226,431) (242,727) (259,696) (277,366)
PSOA B (53,784) (75,041) 50,000 ‐ 0 0 0 ‐ 0 ‐ ‐
Total Non‐operating Revenues/Expenses
Status Quo (20,352) (20,352) (20,352) (20,352) (20,352) (20,358) (20,357) (20,358) (5,086) ‐ ‐
PSOA A (20,352) (70,352) (20,352) (20,352) (20,352) (20,358) (20,357) (20,358) (5,086) ‐ ‐
PSOA B (20,352) (70,352) (20,352) (20,352) (20,352) (20,358) (20,357) (20,358) (5,086) ‐ ‐
Change in Cash
Status Quo (74,136) (58,744) (42,335) (58,388) (82,942) (111,440) (140,473) (170,195) (185,237) (210,856) (242,274)
PSOA A (74,136) (145,393) (62,904) (183,303) (201,681) (216,096) (231,134) (246,789) (247,813) (259,696) (277,366)
PSOA B (74,136) (145,393) 29,648 (20,352) (20,352) (20,358) (20,357) (20,358) (5,086) ‐ ‐
Due From (To) Salisbury University
Foundation Inc., End of Year
Status Quo (76,948) (135,692) (178,027) (236,415) (319,357) (430,797) (571,270) (741,465) (926,702) (1,137,558) (1,379,832)
PSOA A (76,948) (222,341) (285,245) (468,548) (670,228) (886,325) (1,117,459) (1,364,247) (1,612,061) (1,871,756) (2,149,123)
PSOA B (76,948) (222,341) (192,693) (213,045) (233,397) (253,755) (274,112) (294,470) (299,556) (299,556) (299,556)
Cash Flow Projections for Delmarva Public Radio
‐Summary‐
ProjectionsBudget
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$‐
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
DPR Total Operating Revenue Status Quo
PSOA A
PSOA BHistorical
$‐
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
DPR Total Operating Expenses Status Quo
PSOA A
PSOA B
Historical
13
$(300,000)
$(250,000)
$(200,000)
$(150,000)
$(100,000)
$(50,000)
$‐
$50,000
$100,000
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
DPR Net Income from Operations Status Quo
PSOA A
PSOA BHistorical
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APPENDIX C: Public Service Operating Agreement Process Outline PRC recommends the use of a third party to negotiate with a potential operator. We stress the need to use someone familiar with the steps, which seeks a win for both parties, is familiar with the legal terrain and understands broadcast business and operations well enough to help establish and/or analyze costs and benefits. PRC would be pleased to assist the SUF in any negotiations. To that end, we will submit a confidential proposal to the SUF in a separate communication from this report. Should the SUF determine that the PSOA option is one to pursue, we recommend the following steps over the next three months:
a. Hire a third party to manage the process, negotiations and execution of agreements. b. Hire FCC counsel. PRC recommends Garvey Schubert Barer (attorney John Crigler). This
firm and John in particular have extensive experience in framing PSOA agreements and managing the legal issues surrounding their execution.
c. Define the SUF and SU interests in entering into the PSOA including but not limited to: i. Reduced or elimination of costs to SUF for of operation ii. Increased audience iii. Brand extension iv. Viable solution to the capital needs (relocation and transmitter) v. Student training vi. Etc.
d. Prepare an Offering Memorandum describing the opportunity to the prospective operator, including: the stations' transmission facility; any studio equipment associated with stations that are available to the operator; maps depicting the stations' contours; demographic information about the market; advertising revenue and retail sales levels in the market; the institutions' expectations with regard to programming, internships, underwriting, and any other details that the SUF and SU desire to be included.
e. Negotiation with one or more prospective operators in an effort to put a deal structure together that works for both parties.
f. Draft a non‐binding letter of intent which will detail the fundamental terms associated with the PSOA.
g. Engage in due diligence process, and will work with the respective FCC counsels to be sure that the deal terms are being accurately documented in the ultimate agreement.
h. Establish a communications strategy to promote the many attributes of the PSOA to the institutions many constituents, including: faculty, local press, listeners/members, board of trustees/regents, etc.
i. Handoff to the new operator and final details resolved and managed.
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APPENDIX D: SITE VISIT AGENDA
July 23‐24 Dennis Hamilton Flight Arrival US Air 4585 Hotel Stay at Country Inn & Suites July 23rd: 9am – Presentation to Work Group, President’s Conference Room Janet Dudley Eshbach, President of SU
Charlie Capute, Chair of the SU Foundation Board Diane Allen, Provost
Amy Hasson, Chief of Staff Betty Crockett, Vice President for Administration & Finance Dane Foust, Vice President for Student Affairs Lee Trice, Vice Chair, Foundation Board Bob Moore, Treasurer, Foundation Board Jeff Badger, Attorney, Foundation Mike Guerrieri, Secretary, Foundation Board Rick Holloway, Chair, Delmarva Public Radio Committee 11am – Meeting with President Janet Dudley‐Eshbach & Charlie Capute 12pm – Lunch w/ Jason Curtin 2pm – Meeting with Mike Dunn, Interim GM & Delmarva Public Radio Staff, Caruthers Hall 5pm ‐ Dinner with Dr. Allen and Maarteen Pereboom, Dean of the Fulton School of Liberal Arts July 24th: 8am – Meeting with Jason Curtin and Richard Culver, Director of Media Relations 9am ‐ Presentation to Delmarva Public Radio Committee, Dean’s Conference Room, Perdue
Hall, Room 370 Rick Holloway, Chair Peter Jackson Rick Givens, Past Chair, SU Foundation Board David Moore Joanna Abercrombie Kathy Washburn Niskanen Charles Emery
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11am – Meeting with Facilities Planning & IT, Dean’s Conference Room, Perdue Hall, Room 370
Terrance McCann Eric Berkheimer
Jeff Downes Ken Kundell Ray Fantini
12pm – Lunch w/ Jason Curtin & Diane Allen 1:30pm – Open Meeting with Faculty & Staff, Perdue Hall, Room 362 2:30pm – Open Meeting with Students, Perdue Hall, Room 362 3:30pm – Open Meeting with Community Advisory Board, Perdue Hall, Room 362 5pm – Dinner with Jason Curtin