CEO Steven Ludwig

Nashville-based Debut Broadcasting Corporation now operates a batch of small-market radio stations and says it has exclusive rights to negotiate purchases of 16 additional properties.

In the current environment, however, the not-yet profitable company – which went public via a reverse merger less than a year ago – is having trouble attracting capital to pay for its roll-up strategy.

Debut's under-funded gameplan is straightforward enough:  Borrow automation, syndication and consolidation techniques from such giants as Clear Channel (which has 1,200 stations), and apply them in out-of-favor small and medium markets in the South.

However, during an interview Friday with VNC, Debut CEO Steve Ludwig acknowledged the obvious -- his rollup strategy "relies on pretty consistent access to capital."  As he recently told his shareholders, "the company at this point has developed the infrastructure to be able to absorb very rapid growth...," but the nation's credit crunch has "slowed our efforts in that regard."

Ludwig would like some help from the company's stock, but he told VNC, "I don't think there's enough of a float."  Debut's reverse merger left the company with 19.8 million shares outstanding. The stock is about 48 percent held by insiders.

At this morning's opening, the OTC Bulletin Board indicated little if any activity around DBTB, with a share pegged at 50 cents. Just three weeks ago, DBTB hit its 52-week low of 27 cents.

How will 37-year-old Ludwig fund operations and buy 16 more stations?  Thus far, Ludwig said, acquisitions have been supported by a combination of commercial loans, equity for former owners and "sellers' paper."

Meanwhile, Debut's first-quarter net revenue was down 46 percent from the holiday-rich fourth quarter; and, Debut posted a $212,000 operating loss in the same period.

On the bright side, first-quarter net revenue of $451,000 was up 41 percent over the same period year-earlier. Ludwig attributes the increase mainly to closer supervision of Debut's field sales force. He projects $6 million annual revenue.

Particularly given the economic backdrop, saving Ludwig's "Super-Regional Cluster" strategy will continue to depend on cutting costs and improving efficiency.

With costs in mind, Ludwig recently chopped a contract with a financial consultant and elevated former Debut controller Sariah Hopkins to chief financial officer. Debut is also automating content distribution through the its new "Hands-Free Digital Delivery" technology platform, which is run by a former Clear Channel engineer, Mike Michonski. In addition, big savings have recently come from reducing supervisory costs an average 80 percent at each of its stations in Vicksburg and Greenville, Miss.

Beyond cutting people costs, Ludwig insists that "the 'secret sauce' in the whole company here is the synergy we get."

Ludwig sees Debut's leverage in its four interwoven divisions. First, there's Debut Broadcasting, the acquisitions-minded parent company that is finalizing acquisitions of the latst of a total seven Mississippi stations. Second: Debut's Impact Radio Network division syndicates nearly 20 programs for 1,400 U.S. and Canadian radio stations.

A third unit, Impact Media Studios, produces audio, video and Internet, texting and other new-media content for use throughout the network. And, a fourth Debut component -- The Marketing Group -- is the broadcast marketing and promotion company that Ludwig co-founded nine years ago.

Debut's investor-relations consultant, Utah-based David Politis said during a Friday interview that Debut is "still trying to find its legs as far as attracting new investors." 

He explained that Debut's challenge is heightened by the fact that Debut became public via a reverse merger, a transaction he said leaves the surviving company with no "story" of its own.

Such mergers also leave a muddled identity trail: Debut's merger partner was California News Tech, originally founded as NewSurfer.com Corporation. CNT also had a subsidiary that held all the company's assets, Media Sentiment Inc., which Debut sold after the merger.

Politis expressed confidence Debut's story is coming into focus, centered around Debut's strategy for becoming a "media and entertainment company," and not "just a radio company."