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Motor Racing Network
Wednesday, February 12, 2014 Volume 3   |   Issue 30
 
All in the (Emmis) family
Patrick
All in the (Emmis) Family“Hot 97” New York owner Emmis buys urban AC WBLS.

These two FMs were already closer than cousins—WBLS (107.5) and gospel WLIB (1190) manager Deon Levingston manager used to work for Emmis, and since the Fall-2012 urban shakeout, WBLS and WLIB have been sharing space at 395 Hudson Street with Emmis’ urban “Hot 97” WQHT. As Emmis points out, “more than 40% of the employees at WBLS/WLIB are Emmis alumni”—and that’s partly due to the events of Fall 2012, when Emmis shut down urban AC “Kiss 98.7” WRKS, sold its intellectual property to 'BLS owner YMF Media, and left WBLS with a far more imposing position. Since then, ’BLS has inexorably risen to the #2 position in the monthly Nielsen PPMs for age 6+ shares, and is challenging Clear Channel’s AC “Lite” WLTW (106.7) for the lead. That never would’ve happened if “Kiss” were still around. Now Emmis can combo-sell WBLS, “Hot 97” and WLIB. It’s got a lock on the urban position in the #1 metro—and Emmis feels it’s worth $131 million.

$131 million for WBLS/WLIB, payable in two bites, plus an LMA (if the feds agree).

The LMA fee may be the largest we’ve seen a long time - $1.25 million per month for the LMA that Emmis hopes to begin on March 1. That would drop to $740,000 a month once Emmis makes its first payment to YMF Media, on the FCC’s “initial grant” of the station transfer. The first big purchase payment due is $55 million. Emmis hopes that will be sometime this Summer—though this all depends on gaining “early termination” of the Hart-Scott-Rodino anti-trust review required in deals of this size. (An interesting sidelight—will there be challenges from New Yorkers about the stations that were once owned by the African-American Sutton family going to publicly-held and Indy-based Emmis? It happened when YMF took over.) Back to the terms—Assuming the LMA is in place and Emmis has made the $55 million payment, the second payment is due a year from now, in February 2015. That’s for $76 million. Emmis offers a glimpse into the operating numbers. Last year WBLS/WLIB did about $31.9 million in net revenues, generating $15.4 million in SOI (Station Operating Income). Being able to collapse WRKS into WBLS made ’BLS far stronger - Emmis’ former WRKS billed just $11.3 million in the Emmis fiscal year that ended February 2012. While WBLS did $25.2 million in BIA/Kelsey-estimated revenue for calendar 2011. So two years later, it and sister WLIB elevated their game to $31.9 million—and Emmis is in a position to harvest even more. What did Emmis just buy? Full Class B signal WBLS, and WLIB, running 10,000 watts daytime and 30,000 watts nighttime, both directional. Read the Emmis release here.

EmmisHere’s how Emmis plans to pay the $131 million tab.

First, CEO Jeff Smulyan tells his staffers that by adding WBLS/WLIB, “we are nearly doubling the cash flow that Emmis will generate on an annual basis,” for the entire company. The selling price represents a buyer’s multiple of 7.1-times last year’s SOI, station operating income. Not cheap, but this is truly beachfront property. Emmis has worked to swing from one of the more perilous-looking balance sheets to one of the cleanest, though the effort cost it one of its two Los Angeles FMs (93.9, now KXOS) and New York’s 98.7 (now in a long-term LMA with Disney, which runs it as “ESPN 98.7” WEPN-FM). Emmis figures there are $3 million worth of cost savings in the deal for WBLS/WLIB, and it’s welcoming manager Deon Levingston back to Emmis as the manager of all three stations. (Deon managed a former Emmis property in Indianapolis. He’ll absorb the job of Hot 97 manager Alex Cameron.) Emmis needs to create a new senior credit facility to pull this off. Even so, it predicts the debt-to-EBITDA ratio (debt against a measure of cash flow) will stay below 5-times. Moelis & Company advised YMF Media and Greenberg Traurig was its legal counsel. Edinger Associates was counsel to Emmis. Remember who YMF Media is—the successor to Inner City Broadcasting, when the creditors were finally able to wrest it away from the Suttons, after YMF's deal with Goldman Sachs. YMF Media bought the Inner City debt, then made a credit bid for the company two years ago worth $180 million. They quickly spun off San Francisco urban AC KBLX (102.9) to Entercom for $25 million, then dealt Columbia, SC and Jackson, Mississippi to Larry Wilson-led L&L. That left New York. YMF’s owners include a couple of funds associated with Ron Burkle’s Yucaipa Companies, plus two Fortress funds, and former NBA superstar Magic Johnson.

SparkNet
Emmis adds “WBLS” to its list of online brands.

Stuff to watch out for—Emmis has been aggressively leveraging the international brands of New York’s hip-hop Hot 97/WQHT and L.A.’s urban “Power 106” KPWR, making them stars online. Expect Emmis to add WBLS to the shelf-full of brands it expect to make digital and online money from. More to come from Emmis, no doubt, about WBLS and its plans to make the $131 million deal pay off. As Jeff Smulyan says in his internal memo, “This is the first major acquisition Emmis has made in a decade”—a reminder of recent pain and re-structuring. Jeff says it they’ve “righted our financial ship and once again are a major player in the radio industry.” The deal’s that important—and so will WBLS be, in years to come, both on the New York radio dial and beyond.

L&L BroadcastingThe NOW Rumor Mill – Main Line group sold to Larry Wilson-led L&L Broadcasting.

The whole shebang—Richmond, Louisville, Dayton, Hagerstown and Waynesboro-Chambersburg. NOW hears the multiple is just north of six times cash flow. That’s right in the pocket of where the market is, and we know that Wilson is a price-sensitive buyer. He came back to the deal market when he felt the prices were right, and he’s strolled away from a few things when he wasn’t comfortable. The November 20 NOW told you that Main Line was on the block, two years after founder Dan Savadove suddenly exited the building in suburban-Philly Conshohocken. The January 30 NOW advanced the story, saying that bids on the stations were due that day. We hear that Savadove was one of the bidders. And that there were some first-time radio buyers. But ultimately, Larry Wilson’s apparently the victor, paying a bit more than 6-times cash flow.

Point To Point
Entercom’s “ex-political” Q4 revenues were up 2%.

That’s the phrase—“excluding political”—you’ll be hearing a lot in this earnings cycle. Entercom stations did $4.7 million in political revenue in the fourth quarter of the 2012 election year—money you wouldn’t expect to repeat in the off-year of 2013. But as President/CEO David Field says at the top of yesterday’s call, “there’s a fair amount of good news to cover” despite “a tough political comp.” Overall, fourth-quarter revenues dipped 2%, to $99.6 million. Station expenses were down 1% to $61.3 million. Free cash flow rose 2% to $22.5 million, thanks to Entercom’s ability to lower its interest costs. Topline, Field admits that “2013 was not a year we were particularly proud of, from a revenue standpoint.” Though he’s proud of what the stations achieved, and after a couple of quarterly calls where he sounded like a strict high school math teacher disappointed with recent test scores, he now says “We believe we have turned the corner” in areas like sales. That’s partly due to a sales-department re-org at some clusters.

Local up low single digits, national down low single digits (and so far, Obamacare’s not helping).

Expect Entercom’s pattern to be repeated across other radio companies, as they report their fourth quarters. (CBS checks in this afternoon and Univision is tomorrow.) Generally speaking, local is looking stronger than national biz. For Entercom, the strongest categories were insurance, professional services, home furnishings, health & medical and retail. Though David Field says the Affordable Care Act “has not emerged yet as a big factor…it’s not material right now.” So it’s other kinds of insurance that’s bolstering ad-spend in that category. Field says his stations generally pulled out their Q4 better than earlier expected. Back in November, the company talked about Q4 pacing down 5%, but it actually finished off about 2%. (After the call, analyst Marci Ryvicker’s followup note for Wells Fargo says “revenue and EBITDA [a metric of cash flow] beat our expectations” and called it “a strong Q4.”) Field is a CEO who’s happy to talk about programming and brands, and he brags that “the Wolf in Kansas City [WDAF] has surged to become the #1 country station, and third 25-54.” (Of course Wilks-owned country KFKF was doing all-Christmas in the two most recent books.) While Entercom's newish AC “99.7 the Point” KZPT “now ranks #2 with women 25-54.

How about Entercom’s bigger markets?

CEO David Field mentions Kansas City, San Francisco and Memphis as the best-performing markets. Interestingly, he doesn’t comment on Seattle. And re: the question raised here yesterday, Field answers questions submitted by a number of analysts about those two markets. He says San Francisco “is doing great...[AC] KOIT is a dominant brand” and urban AC KBLX “has really emerged,” after being acquired from Inner City. As for the slow-starting “95.7 the Game” KGMZ, Field says revenues at the all-sports station “have dramatically accelerated.” Field doesn’t mention the classic rock “Fox” simulcast of KUFX (98.5) and KUZX (102.1). In Boston, he acknowledges that “we have work to do” but cites new leadership (Phil Zachary), and says “we’re starting to turn the corner there.” All-sports WEEI-FM (93.7), under assault from the CBS “Sports Hub” WBZ-FM/98.5, “remains one of the top-rated sports stations in the U.S.” And with pitchers and catchers reporting to Spring training, WEEI-FM is “about to enter baseball season with the World Champion Red Sox.” Then Field turns to digital—another reason he’s optimistic about sports in Boston. He says WEEI.com has flourished into “a major digital platform with a team of writers” that logs 1.5 million unique visitors each month. Generally, digital gets a lot of backing from Entercom. Field calls it “a really important part of our business.”

No “must-have” markets for Entercom to grow bigger.

But the improving balance sheet gives CEO David Field and CFO Steve Fisher more flexibility, for sure. With a bit of quiet pride, Fisher tells analysts they’re “now below $500 million in net debt.” Since the start of the Great Recession, Entercom’s re-paid $450 million worth of debt, using radio’s strong cash flow generation. Leverage ratios are well under bank covenants. When it comes to M&A (mergers & acquisitions), Field says “our platform is really strong in the markets we are in…there are no must-have” markets for acquisitions. Though he dutifully offers the standard CEO answer—“if there are opportunities to add additional markets and create shareholder value, that is something we could take a look at.” His “mindset on M&A is opportunistic.” One thing that helps Entercom here in 2014 is what CFO Fisher calls the “chopping on the Term B side and re-pricing” of some debt, last year. Though Entercom’s got a stepdown in its covenant levels coming at the end of this year. This NOW Newsletter’s been raising the issue of radio’s cap-ex, or capital expenditures, and whether some groups may be under-investing, shortchanging their long-term prospects. At Entercom, Steve Fisher says they spent $800,000 on cap-ex in last year’s Q4 and about $4.3 million for the full year. He also lets analysts know that for this year, they’ll be exceeding the usual $3 million to $5 million range, and that cap-ex may rise to $7 million or $8 million, to address some one-time situations. Fisher expects cap-ex to return to normal levels in 2015.

Benztown
How about 2014? Old Man Winter isn’t helping, and neither is the western drought.

Entercom’s David Field no doubt speaks for many operators in markets like Boston, when he says first quarter is being “somewhat affected by the harsh Winter weather.” So far, Q1 pacings are down about 1%, but Field expects that to improve, as the snow and ice go away. He says “whatever impact the weather is having, it will be short-term.” But the California drought is a lingering problem. Field says it’s impacting the ski business and its advertising plans, in markets like Sacramento. (If you’re a skier or follow that sport, check Powder Magazine’s Porter Fox, in a New York Times Sunday op-ed piece titled “The end of snow?”) For Entercom specifically, another sport is affecting 2014—NBA basketball. CFO Steve Fisher cautions that in the comparable first quarter of 2013, Entercom had the Celtics, and this year it doesn’t. The previous-year revenue from the Celts would’ve been about 1% of total revenue, so ex-Celtics, “apples to apples,” Entercom is pacing flat for this quarter. One more thing to factor in about 2014—Entercom expects additional investments in its brands, along with the unusual level of cap-ex. Check the Q4 and full-year 2013 results from Entercom here. Wall Street appreciated Field’s 2013 numbers and his 2014 outlook—Entercom stock (“ETM”) was the star of the radio sector yesterday. Entercom gained 8%, up 75 cents to $10.19 a share.

An ID on the Wichita staffer who was murdered at the station.

KAKE Television news says the body’s been identified as 25-year old Daniel J. Flores, who worked at “Sports Radio 1410” KGSO. He was doing the Sunday night shift and normally would’ve left about 9pm or 10pm. He’d have been the last person at the facility that evening, but his body was found Monday morning. Wichita police detected no signs of forced entry, and there aren’t any security cameras there. KAKE says so far, “no leads and no arrests have been made.” An autopsy was scheduled for yesterday.

Doing business –

• Personal-tech guru David Pogue to speak at the NAB Show Radio Luncheon in Las Vegas. Pogue’s Thursday column was a long-time highlight of the New York Times, and Pogue has recently taken his act to Yahoo as tech columnist. He’s also host of Nova ScienceNow on PBS television and a correspondent for “CBS Sunday Morning” on TV. Pogue was a popular keynoter at the NAB’s 2008 Radio Show in Austin, setting up a portable keyboard and performing a special song for the radio industry. (Among his many talents—being a Broadway music director.) Pogue’s just been booked to address this year’s NAB Show Radio Luncheon on Tuesday, April 8—and we’ll see if he packs his keyboard. NAB Radio EVP John David says “Pogue has used his fresh, original style to become one of the leading voices in consumer technology.” As for the 2014 NAB Show in Vegas, the association suggests that you don’t wait to book a hotel room, to benefit from the discounted rates, and that “many hotels are sold out.” More about the April 5-10 Show here.

• 44 more Low Power FMs granted yesterday, including a new 106.7 in Mesa, Arizona (to San Tan Educational Media), a new 101.7 in Greensboro, NC (to CUMU Radio LLC), and a new 101.9 in Tallahassee (to Delta Star Radio of Florida). In Sulphur, Louisiana, Parkview Baptist Church gets 105.5. In Gatlinburg, Tennessee, Grace Redemption Church gets 107.3. Up in Skowhegan, Maine, the Wesserunsett Arts Council gets 98.1. And around St. Louis, the Regeneration Christian Church and Outreach Center gets 97.7 in Florissant, Missouri. Read the latest additions to the ranks of 100-watt Low Power FM transits from the FCC here.

Media Services Group
Formats & Branding

“Orlando has gotten lucky and no longer has to listen to 106.7” to hear “All the hits.” So says WJHM on its CBSLocal page - “All the hits are on the new 101.9 Amp Radio.” Yesterday morning CBS activated its newest CHR “Amp,” in a facelift of rhythmic “102 Jamz” WJHM Daytona Beach. It’s employing the branding and logo style that CBS uses in L.A. (“Amp 97.1” KAMP) and elsewhere. WJHM PD Bobby Smith says “with our new branding, we’ve positioned ourselves to more closely reflect” the traits of “exciting energy and the pulse of today’s pop music.” So it’s more pop, and less rhythmic. The ratings for Jamz have mostly lived just below the 3.0-share (age 6+ AQH) that it achieved in Nielsen’s Holiday book. Over the last six months, it’s moved 2.9-2.8-2.4-2.6-2.8-3.0. It ranks #14 in the total-week standings. While Clear Channel CHR “XL106.7” WXXL ranks #6 and went 5.2-5.9-5.4 in the last quarter. One of the tricky things for Smith and market manager/former programmer Dave Robbins is keeping the new Amp and hot AC “Mix 105.1” WOMX sufficiently separated. Mix suffered a bad holiday book (5.4-5.6-4.0) but typically ranks in the top five.

KEGIIn Jonesboro, Arkansas, 100.5 is still “The Eagle,” but the format has transformed from classic hits to rock, says Radio Insight. Saga owns Trumann-licensed KEGI, a Class C2 whose ratings we don’t know, since Saga doesn’t subscribe to the Nielsen ratings. Bob & Tom remain in mornings. Eagle's local staff stays in place - PD/middayer Rick Christian, afternoon personality Phil Jamison and "Big Ben" in nights.

“Leading Britain’s Conversation” is the new branding for the UK station LBC 97.3, which “becomes Britain’s first and only commercial news/talk station,” says MediaWeek UK. The station itself, LBC 97.3, dates back 40 years and was named for owner London Broadcasting Company. In 2007 the slogan became “London’s Biggest Conversation”—and now, as the station goes on the national DAB radio platform, the scope broadens to “Leading Britain’s Conversation.” It’s owned by Global Radio, and it replaces Jazz FM on the national DAB radio platform. As a reminder, the UK’s DAB system is out-of-band (out of the standard FM band, that is) and isn’t compatible with the U.S.-developed HD Radio standard. LBC personalities (“presenters”) include Nick Ferrari, Boris Johnson, Nick Clegg and Ken Livingstone.

LDR Interactive
Worth Reading

“The industry has a talent problem…voicetracked jukeboxes that have no meaningful content are recipes for disaster and obsolescence.” That’s concerned consultant Fred Jacobs on the Jacobs Media blog entry titled “Missing persons.” Last week’s vaporization of Scott Shannon at Cumulus-owned WPLJ New York (95.5) obviously set Fred’s mind thinking about a problem that needs to be acknowledged—the loss of recognizable personalities and talent from many stations. Fred says “there is nothing more vital to radio’s survival than ensuring that its content is worthy in offices (which means computers) and cars (rapidly becoming ‘connected’)—where the options have become exponential.” He suggests remedies like “Radio Idol,” to identify “talented people under the radar.” Read “Missing Persons” here.

“Keep your stories straight,” when corresponding with the FCC, says attorney Jon Markman of Fletcher, Heald & Hildreth. He’s riffing on the FCC’s reaffirmed $44,000 sponsor-ID fine against Chicago’s WLS (890). Markman says initially, the licensee told the Commission that all the announcements aired on behalf of Workers Independent News carried the required sponsor ID. But later, responding to the Notice of Apparent Liability, it said 11 of the 90-second spots didn’t have ID. Then it dug itself in deeper, saying that the then-GSM emailed the GM that the spots weren’t compliant. As Markman says “Hold on there…if the licensee knew that the announcements didn’t pass sponsorship ID muster before the Bureau first came calling, how could it have claimed that there hadn’t been any violations at all?” Read Markman’s take on the notable fine at CommLawBlog here.

Transitions

Sean HannitySean Hannity has undergone plenty of recent transitions, bidding farewell to radio stations long identified with his afternoon show. Now he may be close to making a geographical transition. The Washington Times says Hannity “has seemingly moved closer to making good on his threat to exit New York, in the face of insulting comments from Governor Andrew Cuomo, and he’s put his home up for sale for $3.6 million.” Sean’s still got a 15-year-old son in school out on Long Island, and had walked back his original announcement about leaving New York state. But now his 4,824 square foot house is listed for sale, with its “observation deck and stairs to the beach.” If you’re interested, the taxes run $57,000 a year.

Jillian Barberie joins incumbent John Phillips for a new local “Mid-Day L.A.” show on Cumulus’s talk KABC Los Angeles (790). This is another TV hire for major-market radio, given Jillian’s 18 years of screentime at Fox 11/KTTV at “Good Day L.A.” She’s also a veteran of the Fox NFL Pre-Game Show, so she can chat about sports with John Phillips, a newspaper columnist who appears on Fox 11 as a political analyst. KABC’s re-working the lineup in the wake of the departure of Premiere’s Sean Hannity. (Also, it appears that Cumulus is focusing on live-and-local talk for the noon-3pm slot in markets like New York, L.A., San Francisco and Atlanta.) John Phillips and Jillian Barberie launch their noon-3pm partnership on Monday. Coincidentally, they’ll be opposite the new live-and-local 1-3pm team of TV pros Mark Thompson and Elizabeth Espinosa on Clear Channel’s talk KFI (640).

Jay Philpott migrated east from St. Louis variety hits “106.5 the Arch” WARH last September, and now he’s earned a promotion at Times-Shamrock’s “100.7 the Bay” in Baltimore. That’s classic rock WZBA, where Jay’s doing afternoons. Now Philpott, who’s been so active in his spare time with the Conclave, adds the duties of Assistant Program Director for PD Dan Michaels and general manager Jefferson Ward. Jay previously worked in Milwaukee, Dallas, Minneapolis, Norfolk and Seattle.

Elvis DuranElvis Duran is off Clear Channel-owned CHR “Power 96.1” WWPW Atlanta, says Rodney Ho at AJC.com. The Z100, New York-based Duran once worked in local Atlanta radio, and his syndicated show later debuted there on Clear Channel’s then-Groove 105.7 in 2010, says Rodney. The syndicated program was promoted to the revamped (and bigger-signalled) Power 96.1 in September 2012. As of last night, Elvis was still featured on the Power website—but there are rumors of a different syndicated morning show to follow. If those come to pass, Power may be airing a different New York-based morning show—the urban-leaning Breakfast Club, with DJ Envy, Angela Yee and Charlamagne Tha God.

Max Krasny long ago segued from programming to sales, and he just wrapped up 20 years at WestwoodOne, as Executive VP/GM of Strategic Partnerships and Western Sales. That put him in proximity to Westwood’s work with the Grammys, the ACMs and the country’s biggest live event promoter, Live Nation. Now Max connects with CBS Radio at its Altitude Group, “representing the division’s local engagement expertise to Fortune 500 clients, working to create distinctive marketing campaigns and promotions” with CBS radio, TV, digital and outdoor. Krasny reports to Altitude Group EVP/Chief Marketing Office Rich Lobel and to Senior VP/Sales McNamara. His new title is VP/Sales and Strategic Alliances, and he’ll be based in L.A.

Jason Graham and Andre Fernandez shuffle corporate duties at Milwaukee-based Journal Communications. Andre had been juggling the CFO position (his original job) with the operational job of President. Now he becomes COO, overseeing both broadcast and newspaper. Among his direct reports will be new EVP of radio Steve Wexler and EVP/television Debbie Turner. Fernandez will also supervise corporate H.R. Taking up his monitoring duties at the spreadsheets will be Jason Graham. He joined Journal as VP/Controller in June 2012, and now rises to Senior VP of Finance and Controller, and also Chief Financial Officer. Jason reports to Journal Communications Chairman/CEO Steve Smith.

Gun Talk
You Can't Make This Up

Like Star Wars, but not.At a radio station far, far away - Yesterday's "Locked in" story tickles a memory for Barry Fox, now PD at Capitol Broadcasting's "Mix 101.5" WRAL-FM Raleigh. He says "While the program director of a station in the days before cell phones, I received a late-night call from the guy on-air telling me he had locked himself out of the building and was calling from a nearby house. Our studio was at the transmitter site and about 30 minutes away. When I arrived and unlocked the door, I could tell the DJ did not want me to come inside, which made me even more suspicious. I followed him into the control room - and was shocked to see the studio lined with Star Wars action figures. They were everywhere, including the control board, the counter and the studio window. I was speechless. I told him to have a good night, headed for the car, and laughed the entire way home." Got your own true radio story, from this or any other galaxy? Email “You Can’t Make This Up”—Tom@RTK-Media.com.

Tracking Emmis, Larry Wilson and the other newsmakers—this daily Tom Taylor NOW newsletter. Not just what they’re doing, but why—and perhaps telling you before the news hits the wire. Thanks for spending some of your busy day with this newsletter, and thanks for telling a friend about it. That’s how we keep growing (and we do). Got a product or service to promote? Or a job to fill? Our Kristy Scott can come up with solutions. She's at Kristy@RTK-media.com or phone 818-591-6815. See you back tomorrow with the latest from the CBS conference call. Tom

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