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I was fortunate enough to own a small market radio station
in my early twenties; however, it was unfortunate that I did
not have a budget that allowed me to hire quality
announcers. Also, in small markets there was little record
promotional service…that is there was no service to send new
record releases to radio stations (I bought new releases at
a local record shop weeks after they first appeared on the
national music charts). I was hopeful that someday there
would be some sort of “live” technology that could satisfy
these two major programming problems for small markets. I
thought to myself “there might be a business of providing
“live” programming services to small market stations (major
market announcers and up to date music and rotation of it}.”
I did not forget the “live” small market programming problem
as I advanced to manage in the major markets. Hey, I wasn’t
the only person who thought there was a business there. John
Tyler had also thought the same way. So John and I, along
with my wife Pat, had dinner in Atlanta to discuss
alternatives. We concluded that satellite programming was
the new and correct technology for us to transmit our
programming to local stations. Music formats 24-7 (a phrase
not yet thought of) was what we decided would work. We flew
to D.C. to talk to a satellite provider about space. But, in
those days the price of entry was much too high. We could
not produce a profit. So we reluctantly tabled the idea.
A few years later John Tyler called and said he had
partnership backing from United Video and the group that
owned the very successful WCCO stations in the Twin Cities.
As a partner United Video would provide the satellite time,
and WCCO would provide the operating money/funding. John
asked if I was still interested in this concept? I would be
the programming partner and sit on the board. Sounded
fabulous to me. I flew to Dallas to meet with John and the
representatives from those firms. We finalized a deal to
begin with two formats…AC and country. With a third…big band
in the wings.
We leased space in a strip shopping center 20 miles south of
Chicago near our United Video partner’s uplink. We assembled
an air staff, purchased the records necessary, set up an
electronic cue system to control the affiliate programming
(that allowed local station inserts for commercials, news,
PSA’s and promotion time), and began broadcasting.
We sent an overnight telegram to every station in America
announcing our concept. As I recall the telegram produced
900 inquiries about our new service (which at that time was
10 per cent of the commercial stations in the US). We were
overjoyed!! A ten per cent return rate was very high.. But
we still had to convince the industry the concept would
work. It wasn’t easy!!! We tried every sales concept
imaginable!!!
We were laughed at by thousands of broadcasters who thought
we were crazy. At our consulting office in Atlanta I got a
lot of personal heat from our major and secondary market
clients (I assured them this type of programming was
designed for small markets which is what we originally
thought).
I believe we went “on the air” with less than 10 stations.
We called this service Satellite Music Network (SMN).
Progress was slow the first year. At the end of the second
year we had enough stations (maybe 150) to see success at
the end of the tunnel. BUT, we were running out of operating
money. AND, our money partner, WCCO, said “no mas”….no more
funding of SMN!! . We knew we had a big winner, but without
operating money…..well, it could have been bad news.
Meanwhile, all of those at SMN (who knew our financial
position) were pretending “all is well” to the industry (it
was tough to smile).
With a payroll due shortly, John unbelievably arranged for a
loan from a local bank in Dallas…the number that comes to
mind is 500 thousand. John, a superb sales person, made the
sale of his life… because it was at this very moment SMN
started adding affiliates by the hundreds!!! Wow, that was a
close call!!! We were almost under, and John had performed a
miracle…and bingo, we had a success!!
To give us more capital for format expansion John hired a
Dallas firm to take us public. It wasn’t the most desirable
time to go public, and the terms weren’t the best, but we
decided to go with it. I remember, because as a board member
I voted for it …yep, I WAS THERE!!
Years later, ABC acquired SMN. I believe SMN had an
operating profit of 3 million or so at the time of the sale.
ABC paid north of 50 million..
Talk about an idea whose time had come…SMN was it!!!!
Next week: WATERLOO, NEW YORK CITY,
and MORE. .
e-mail Kent
kent@kentburkhart.com
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