Tower owners and AM radio station owners may have more options than it first appears for a joint Return on Investment.
Some owners of heritage AMs are receiving real estate offers from developers that are so lucrative they must seriously consider them. In some cases, they’ve decided to sell because the land surrounding the tower sites and directly under the structures and even the value of the AM station itself, is worth much more than the station’s revenue. Two big land deals Inside Towers recently covered are Cumulus-owned KABC/KLOS, Los Angeles and WMAL in Bethesda, Maryland.
Lease, rather than sale, opportunities exist for AM owners and carriers, though they’re not as common as arrangements between FM owners and telecoms because of the difficult engineering involved in preventing AM signal interference. Fletcher Heald & Hildreth Managing Partner, Frank Montero, tells Inside Towers “AM stations have been trying to use their towers for supplemental income by diplexing with other AMs or leasing to wireless carriers like Verizon or T-Mobile.”
“Frequently, the real estate is the AMs most valuable asset,” according to Montero. “If it’s a multi-tower array, that’s a lot of vertical real estate.”
Sometimes a carrier will “drop and swap;” buy the land, take down the tower and erect their own if a tower is grandfathered at that location. There’s also the opportunity for carriers or tower companies to find an AM structure that’s deactivated, and add new telecom antennas if the structure is tall enough and can handle the extra load.
Montero says even in this situation, AM owners should insist on indemnification for any claims by third parties for interference. Also, they should assure and indemnify for tower lighting and painting where necessary.
AM owners have also looked to the FCC to help them mitigate the changes that have occurred over many years to the senior band. While the Commission last year completed work on the items, the industry readily agreed to mostly technical changes to agency rules. Another slate of proposals to help ease the regulatory burden on AM owners awaits a vote.
Commissioner Michael O’Rielly recently told attendees of the Association of Federal Communications Consulting Engineers he’d like to see the agency separate the requirement to maintain a main studio from the other items so it can be voted on by year-end.
The junior Republican commissioner is also considering the agency proposal to reduce the protected daytime primary service contour for some AM stations and notes industry comments explaining the differences between areas of contour overlap and additional levels of interference have been instructive. Ultimately, listener demand will determine AM’s future in the market, he said.
“No amount of Commission action or government involvement is going to save the medium from irrelevancy if listeners and advertisers abandon stations, although I don’t see that happening in the immediate term. From my conversations with AM radio license holders, that’s exactly how they see it too: they just want the Commission to eliminate some of the barriers to competition so they have the tools to win the hearts and minds of listeners and then let the chips fall where they may.”