Originally created 09/06/97

Station buying a trend



When Milwaukee-based Cumulus Broadcasting purchased the licenses of seven Augusta-area radio stations Wednesday, it followed a trend sweeping the industry.

Buyers are grabbing stations like the early rounds of the game Monopoly, during which players buy properties without regard, just to be in position to trade later, according to Bob Harper, a San Diego radio consultant.

"What they are all trying to do it get as many as they can before they all run out," he said. "No one, not even the people doing it, has a clue what the end game will be."

No one from Cumulus returned telephone messages Friday.

Cumulus shelled out $14 million to buy WBBQ-AM/FM and WZNY-FM from the Medical College of Georgia Foundation on the same day it paid Wilks Broadcasting $15.5 million - according to seller Jeff Wilks - for WEKL-FM, WUUS-FM, WGUS-AM and WRXR-FM. It already owns 25 stations in other markets, according to Radio & Records magazine.

The Federal Communications Commission must give final approval for the MCG deal to go through. It finalized the Wilks deal Wednesday.

In 1996, the number of owners with multiple stations increased 46 percent and the average value of stations purchased doubled, according to BIA, an Alexandria, Va., broadcasting research and merger firm.

Cumulus will control 27 percent of the Augusta radio audience, according to one rating service. Individually, none of the stations come close to the ratings of market leaders WFXA/WAEJ's 13 percent or WKXC-FM's 10 percent.

Cumulus also controls 38 percent of the radio advertising dollars, according to an estimate by Peter Bowman, vice president of BIA.

Beasley Broadcasting Group of Naples, Fla., owns four stations in the Augusta market.

Such control gives Cumulus the leverage to raise advertising rates, lower its overhead costs, spread its risks across many stations and enjoy a strategic advantage in programming flexibility, he said.

Having more than one station allows owners to use some strategies to build ratings, which determine advertising revenue.

One approach is to broadcast the same programming on two stations to increase market coverage, such as is done with WFXA and WAEJ. The second approach involves buying stations with the same format and changing one so they no longer compete for the same audience.

None of the stations Cumulus bought this week have the same format.

Some owners buy the stations to sell them later at a higher price, according to Mark Allison, owner of Allison & Associates, an Augusta advertising and marketing agency.

"What these guys typically do is they'll load these stations up with spots (commercials). I don't think you'll see a tremendous impact on the market in terms of cost of operations or cost of spots, because they want to load them up with spots so they can turn around and sell one or two of them," he said. "They don't run them for fun, they run them for profit."

Some predict advertising rates will increase while others say owners will have a hard time convincing advertisers to go along.

Alan Caruba, author of Power Media Selects, speculated that the owners of conglomerates will look to syndicated programs to replace local on-air personalities.

Traditionally, the FCC license-renewal procedures required owners to offer a variety of local news and public-service programming. The Telecommunications Act of 1996 removed that requirement when it relaxed restrictions against owning multiple stations, Mr. Harper said.

"Now, most of these people just have an interest in driving up values. They could be selling carloads of soybeans for all that matters," he said.