Brett Miller has been a media dealer since forming Miller & Associates in 1988, which right this moment is MCH Enterprises.
On this column, he discusses what he refers to as “The Premium Dilemma” — why sellers with cash‑dropping stations shouldn’t be asking prime greenback in the event that they actually desire a appropriate suitor to buy their properties.
In case your station on the market loses cash each month, a potential Purchaser shouldn’t be being requested to pay for efficiency, they’re being requested to pay in your issues.
And Patrons understand it. So, when a Vendor insists on prime greenback, the Purchaser’s inside monologue is brutally easy: “Why am I paying you further for the privilege of fixing what you can not?”
That’s the true query. And it deserves an actual reply–not the trade’s favourite fairy story about “upside potential“.
In each negotiation, there comes a second when the Purchaser leans again, folds his arms, and asks the query no Vendor needs to listen to:
“Why ought to I pay a prime greenback for a station that loses cash each month?”
It’s a good query. It’s additionally the one which exposes the widening hole between how Sellers see their stations and the way Patrons consider them.
For years, the trade has relied on a cushty fable — that “upside potential” is a type of worth. However let’s be trustworthy: upside potential shouldn’t be worth. Upside potential is work. And work is one thing the Purchaser, not the Vendor, should do.
When a station is dropping cash, the Purchaser isn’t paying for efficiency. They’re paying for the privilege of inheriting another person’s unfinished enterprise. That’s not a premium; that’s a challenge.
And but, Sellers proceed to behave as if the station’s previous glory or theoretical future ought to command prime greenback. They need yesterday’s valuation for right this moment’s efficiency. They need to be paid for the station they meant to run, not the one they really have.
However right here’s the nuance — and it’s vital:
A cash‑dropping station isn’t nugatory. It’s simply not premium‑priced until one thing else justifies it.
Patrons don’t pay premiums for hope.
They pay premiums for leverage.
A station can lose cash and nonetheless be strategically priceless if it gives a number of of the next:
- a uncommon or protected sign
- a market place that may’t be replicated
- a format franchise with model fairness
- adjacency worth to an present cluster
- regulatory or contour benefits
- a geographic foothold opponents can’t simply purchase
In different phrases, Patrons can pay prime greenback — however solely when justified by the property, not the aspirations.
The true disconnect isn’t about revenue and loss. It’s about narrative. Sellers typically body their station as a turnaround alternative. Patrons see it as a turnaround obligation. One is a pitch; the opposite is a value.
So, the query isn’t “Why gained’t Patrons pay prime greenback?”
The query needs to be: “What, particularly, about your station is so uncommon, so strategic, or so irreplaceable that it deserves one?”
If the reply is compelling, Patrons will hear.
If the reply is imprecise, nostalgic, or rooted in potential quite than proof, they gained’t.
The trade is altering. Margins are thinner. Competitors is broader. Patrons are smarter. And the times of pricing based mostly on sentiment, legacy, or upside potential are over.
However right here’s the chance for Sellers who perceive the second:
A station doesn’t must be worthwhile to be priceless — it simply must be defensibly distinctive.
In case you can articulate that, you’re not simply promoting a station.
You’re promoting a place available in the market.
And positions — actual, strategic positions — will get you nearer to prime greenback, even in a world the place the P&L is upside‑down.
Brett E. Miller may be reached by voice or textual content at 805-680-2265 and through e-mail at [email protected]. MCH Enterprises’ web site could also be visited at https://mchenterprises.com.
