With so many mobile apps focused on streaming music, curated playlists, and podcasts, it may seem like radio is a dying industry in the U.S. This actually couldn’t be further from the truth.
According to Pew Research, around 83% of Americans age 12 or older listen to terrestrial radio in any given week. By contrast, less than half that number (41%) listen to podcasts.
The more ears, the greater the ad money, and it’s not limited to terrestrial or satellite radio broadcasting. Today, the internet has made launching a radio station easier than ever.
As it stands, internet broadcast stations (or terrestrial and satellite radio stations with streaming options) have watched their revenue soar thanks to the web. You don’t even have to be one of the major players to cash in. For instance, in 2022, local radio stations saw their ad revenue grow to $1.8 billion, up a whopping 80% from 2019.
How do you start a radio station? It depends on the kind of radio station you want to create. All terrestrial stations are highly regulated by the FCC and require specific licensing. This guide can help you get started.
Like stand-alone podcasts, radio stations make most of their money from advertisers. In other words, they’re notably more lucrative in times when ad spending is soaring, but they’re often met with financial struggles during recessions and other economic downturns. Digital radio is currently having a moment, and digital radio advertising is a market that’s only expected to grow.
Even without considering the ad money, radio is important for both leisure and information purposes. The types of podcasters and broadcasters who choose radio as a career do so because it’s personally fulfilling. It’s their passion, but content largely determines revenue.
Before you get started launching your own radio station, you need to decide on a type of radio station. There are three main kinds:
Beyond that, launching a radio station isn’t particularly expensive in the grand scheme of startups, but it does take some specialized licenses, equipment, and know-how. This checklist can help you tick those boxes prior to your launch.
The first step of starting any business, including a radio station, is crafting a solid business plan. Business plans don’t just attract investors or help you secure loans, they can help put entrepreneurs on a path to financial stability. When you create your radio station business plan, you may want to:
If you want more in-depth guidance about building a winning business plan, consult our complete business plan guide.
All businesses need to have a business structure, both for operating and tax purposes. It’s the main way the IRS decides how to handle your tax returns, and it’s often a prerequisite to obtaining the necessary licenses.
Many small or startup radio stations opt for LLCs or sole proprietorships, while larger radio stations like iHeartMedia and other Fortune 500 companies often choose to incorporate. For these purposes, we’ll give you a rundown of the two former structures. In most states, it’s relatively simple to convert your LLC to a corporation if you decide to do so as your business grows.
LLCs are one of the most popular small business structures in the U.S. because they allow business owners to avoid the so-called “double taxation” of corporations by passing through income to their personal return. Instead of taxing the same money twice (first on the corporate return, then on each owner’s personal return), LLCs only pay taxes on the members’ personal returns.
LLCs also offer a limited amount of liability protection, are relatively quick to form online, and have minimal fees and paperwork compared to other structures with the same protection. While they’re not as easy to form as sole proprietorships, the help of a business formation service can make forming an LLC a breeze.
Sole proprietorships are taxed similarly to the default method for LLCs, but they don’t have the same liability protection, which means business owners can run into trouble in the event of a bankruptcy or lawsuit — your creditors could come after your personal bank accounts, house, and car if you’re a sole proprietor. That’s not typically the case for LLCs. Whatever you choose, you may want to consult an accountant or lawyer for advice before you file.
The name of your radio station is how people will know your business, so it should encompass your brand. The right business name does wonders for brand recognition and word of mouth. The wrong name can get in the way of success.
Think of a radio station name that can easily be recognized on social media and is available for domain registration. Before you choose, make sure your name isn’t taken by another business or you may face legal repercussions. You can check with your Secretary of State’s office or use a business registration service just to be sure. Want a simple name for your business and a flashy name for the actual station? Look into setting up a DBA name.
Name your station
Enter your desired business name to get started
After you’ve raised the funds and have your idea completely nailed down, you’re going to have to do the paperwork. This includes:
In addition to a business license, which you can get through your local municipality, you may need some specialized licenses from the FCC, which can be highly competitive. At the time of this writing, they’re only taking applications during a licensing window. You can keep checking back on the FCC’s website to find out when the window is open, but it varies year-to-year. During the window, you can file an application online.
Internet radio stations don’t need an FCC license, but all stations that play copyrighted music do need to obtain a license from a performance rights organization (PRO) such as BMI, ASCAP, and SESAC. Many PROs offer specific licenses based on the type of station (i.e. internet radio vs. terrestrial), but many stations opt for a blanket license that isn’t limited to one PRO.
The cost of launching a radio station largely depends on the type of station. The biggest startup expenses come from engineering fees (which can range from $500 to $3,000 to get on air), studio equipment (from $5,000 to more than $100,000), and transmitting equipment. This can include an Emergency Alert System (EAS) and an FCC-accepted LPFM transmitter. These generally cost around $3,000 and $3,500, respectively.
Overall, internet radio stations often have the lowest cost, whereas you can launch a low-power FM (LPFM) radio station for under $15,000 upfront. Month-to-month, you may be able to get by with just under $1,000 of expenses. It all depends on the type of station you choose.
Commercial radio stations are the costliest, but most radio stations have the same recurring fees as any industry: rent, utilities, and wages. To determine your business costs, add up your one-time expenses and your recurring costs. Don’t forget to factor in things like taxes and license fees, though an LPFM license application is free.
Depending on the business model, launching a radio station may be cheap enough that business owners can forgo a loan. In this case, a low- or no-APR business credit card is an option. If your costs exceed a few thousand dollars, you may also want to look into a small business loan, which you can obtain through a bank or the Small Business Administration (SBA). Remember that these carry interest.
You can also search for a grant. The SBA can help you find qualifying grants, which can provide a helpful injection of cash. If all else fails, you can reach out to friends and family for financial backing, but that can put tension in your relationships if you fail to repay the money in a timely manner.
Need more information about figuring out startup costs? This helpful guide will walk you through business cost calculation and more.
Starting an online radio station requires little more than basic recording and editing equipment, including broadcasting software and condenser microphones, but broadcast radio requires some extra tools. This includes a fully compliant EAS and radio transmitter that’s approved by the FCC. Depending on the scale of your operation, you may also need to construct a tower.
Marketing is a crucial step for any business, particularly a radio business. You may want to develop a comprehensive social media plan that includes your radio show hosts and guests for extra reach.
If you’re running an online radio station that requires members to subscribe, you may want to offer a trial membership. Some radio stations choose to enact a solid SEO campaign that includes publishing blogs about breaking political or celebrity news if they’re covering current events.
All radio stations have to choose the method that their broadcasts are delivered — whether it’s through terrestrial airwaves, satellite radio, or the internet — but the content has an unlimited number of options. Many stations cover local news and politics, while others play different genres of music, like rock, pop, classical, or jazz. Some radio stations even offer educational content. The sky’s the limit.
The radio business can be a relatively low-risk endeavor because of the potentially low startup costs. You may want to first test the waters with your own podcast or radio show, but expanding to create a full-on radio station isn’t just a pipe dream. It takes a modest budget, some paperwork, and a bit of ad sales know-how.
If you want to keep your startup costs low, remember that we can form your LLC for free (+ state fee).
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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