Paul Engle and Barbara Ciric have run WPSJ, their low-power television station near Philadelphia, since 1986. Low-power television, or LPTV, stations tend not to be carried on cable or satellite networks but are available to viewers who choose to hook their TVs up to antennas or rabbit ears. These stations' livelihood is local fare, such as high school sports and city politics. At its height in 2005, WPSJ took in $400,000 in ad revenue and a percentage of sales on the Shop At Home Network, which it aired overnight.
Then, in 2006, revenue fell more than half after the FCC moved WPSJ from Channel 8 to the less powerful signal of Channel 24, reducing its potential viewership from 3.5 million to just 150,000. With the business suddenly losing money, Engle and Ciric considered shutting it down.
But they held on, convinced of the potential of digital TV. In 2007, the bet paid off when the FCC granted WPSJ the right to move back to Channel 8 with a digital signal, part of a government push to convert the broadcast systems to digital. Ciric and Engle made an investment of $150,000 to convert to digital transmission, and the station's potential audience is now almost six million viewers. Though the owners think the station is on the verge of a new chapter, they are ready to cash out. "We have poured our lifeblood into this for many years," says Engle.
Price Rationale: LPTV stations have recently sold for around 60 cents to 75 cents per potential viewer -- which makes the $2.5 million price tag a bargain.
The Pros: Digital transmission vastly increases the station's range. It also offers new business possibilities, such as broadcasting pay-per-view movies, transmitting content to digital billboards, sending TV signals to mobile phones, and slicing up its spectrum to sell capacity to other TV stations.
The Cons: The FCC does not mandate that cable companies carry programming provided by LPTV stations. To view broadcasts, consumers need to buy new antennas for their TVs.
The Bottom Line: WPSJ, relegated to a broadcast backwater in recent years, is now poised for solid growth. That may be a good buying opportunity for a media company or another operator willing to invest in developing new businesses.
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