The Business A stand-alone, 24-year-old, 5,000-watt AM radio station sited in the state's cotton capital (population 7,000), but broadcasting into greater metropolitan Phoenix and Tucson (50 and 60 miles away, respectively; combined population, 2.8 million). Currently offers national sports, news, and talk from 6 a.m. to 11 p.m. daily. On the market because of owner's death.

Financial Summary 1989 1990 1991*
Gross revenues $320,000 $308,000 $338,000

Net profit before taxes $87,000 $62,000 $84,000

and owner compensation *projected

Price $650,000

Outlook The halcyon days of AM radio have passed (FM currently gets three listeners to AM's one; 20 years ago it was the other way around), but businesses like this one can still represent an opportunity. After a decade in which buying radio stations was increasingly fashionable and increasingly expensive, the credit-tight, ad-poor '90s have cut the average price of an AM outlet almost in half -- to $600,000. Translation: it's now a buyer's market. This station's 1991 projections outpace industry trends, and its profit margins are better than average, as well.

Price Rationale In addition to the revenue stream, you're buying a broadcast tower and a 3,000-square-foot building on eight acres of land. Most AMs fetch six times earnings (FMs are closer to eight), but analysts say that any multiple above five might make it tough for the new owner of this operation -- a stand-alone in a mostly rural market -- to service the debt.

Pros A chance to be creative in a business where revenue gains go almost straight to the bottom line; unlike in print media, a bigger audience doesn't mean bigger production costs -- just bigger ad prices. Fairly flexible format would make spontaneous, unusual advertising deals possible.

Cons Ratings. Specifically, their complete absence. This station is so small it doesn't even register in surveys by national listenership-ratings associations. No ratings: no national sales rep. No rep: no national advertisers. Just how creative are you ready to be? -- Alessandra Bianchi

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Tucson Business Investments, 602-750-1764. n