On 24 Jul 2003 16:19:32 GMT, "Cooperstown.Net"
wrote:

I'm archiving this message and will trot it out whenever you good =
radio folks argue from the Bakersfield Theory...the theory that radio is =
spread too thin because the government allows too much competition for a =
limited audience. Here is a station that has neither a service to offer =
nor a profit until it meets the monthly nut on $250 million.
station is correctly priced on its perceived potential, irrespective of =
its actual billing...and yet Bakersfielders would have us believe that =
listener service would be enhanced if only the FCC would engineer =
greater scarcity for the benefit of the owners.

Jerome


As the author of what you term the Bakersfield argument, I contend
your argument fails because you (a) assume the station is priced
correctly and the buyer did not over-pay -- which is a common
phenomenon in broadcasting -- and (b) fail to take market size into
account. Los Angeles is so big that a station with a tiny percentage
of the audience is still reaching so many people that it can be
profitable.

In smaller markets that just isn't so. Divide up the pie in
Bakersfield thinly enough, and nobody makes any money. Without
consolidation, only the top-ranked handful of Bakersfield's 30+
signals could be operated profitably today. Only three or four of
Bakersfield stations can be considered full-service operations under
the loosest definition of that term, and they're all in clusters of
three or more signals. A stand-alone, fully-staffed all-news station
with a 2 share in L.A. can be hugely profitable. A station with a 2
share in Bakersfield pretty much needs to be automated, and the rent
had better be cheap.

The Los Angeles metro is listed by Arbitron with a population of
10.407.400, approximately 21 times the size of the Bakersfield metro.
So a station that is really nothing but a "stick" selling for
$250,000,000 in Los Angeles, is roughly analogous to such a
Bakersfield station selling at between $11 and 12 million, which would
be high (my employer sold a full power TV station a few years back for
about that much), but I suppose it's possible. Of course, having paid
out that money, you'd have no guarantee of ever making it back. And
if you did, it would mean you really did invent a better moustrap and
put somebody else out of contention.

Mark Howell