Radio Waves Podcast #368

 Radio: January 27, 2023

            I have always had a pipe dream of buying a radio station or two … primarily AM — because I want to prove you can get listeners when you program and promote a station correctly — or maybe an AM-FM combo in a major market. I’d probably run top-40 or progressive rock on the AM and something to complement it on the FM … such as Big Band.

            But as I write this, something dramatic is happening in radio: mega-owner Audacy — owner of six stations in Los Angeles, a handful more in the Inland Empire, and a total of 235 nationwide — has seen its stock decline by almost 90 percent over the past year, closing January 19th at just over 26 cents per share. With about 141 million shares outstanding, that puts its total market value at about $37 million.

            I think it’s time to buy the whole company. Anyone want to invest?

            Here’s my plan: offer a premium to buy the entire company at, say, $50 million. Then sell off most of the stations to others. You truly don’t have to get much for them … the selling price would only need to average a little under $213,000 to break even, and even stations in smaller markets would be worth more than that.

            Considering that KBLA (1580 AM) sold for $7 million in 2020, KLOS for $43 million in 2019 and KFWB fetched over $11 million in 2012, as but three examples, I figure I could sell just four of the six LA properties (KROQ 106.7 FM, KNX-FM 97.1, KTWV 94.7 FM, KRTH 101.1 FM, KCBS-FM 93.1, and  KNX 1070 AM) and pay off the debt; the rest of the stations nationwide would give me a lot of operating income. Keep about 10 stations total and I’m set.

            Why ten? That’s about as many as any one company should be allowed to own. More than that and you have what you have today — failing companies creating a declining industry.

            Of course in purchasing the company you’d have to deal with staggering debt, for which there may be no way out short of bankruptcy . Something that some observers say is inevitable. A search revealed that as of last September, Audacy had over $2 billion in total debt, with liabilities totaling $2.73 billion. That would bring the average station selling price quite a bit higher to break even: almost $12 million. But … and this is a big but - it seems do-able, given the right management. The trick is, the company cannot remain in its current form: it must sell assets in order to get down to the handful of successful stations and remain debt-free.

            Any financial wizards reading this want to tell me why the plan doesn’t work? Seems a no brainer … I haven’t seen a bargain like this since Cumulus stock was selling for under $1 a few years ago.

            Stale?

            I received a few letters regarding my recent column on KFI’s (640 AM) programming changes, one particularly good one from reader Alan Wolfe. 

            “I disagree that KABC (790 AM) programing is stale. 

            “Armstrong and Getty: I give this show a thumbs down. I don't know what the show is about the constant laughing of one of the hosts is totally annoying. New hosts. 

            “Dan Bongino: Two thumps up for this excellent show. Great show

            “John Phillips: One of the best interviewers on either the radio or TV. Great show

            “Ben Shapiro: Also a good show if Ben  did not talk so fast. Ben, slow down

            “Leo 2.0: During  the 60 minutes Leo covers more information than some of the other stations cover in four hours. Great show

            “Frank Motek: One of the best financial shows on the air and he is not selling anything.

            “Susan Shelley with John  Coupal: In one hour you know so much about what the city, county and the state are doing to rip you off.”

            That is an excellent analysis.

            Which made me realize I was unclear. I didn’t mean that KABC was stale; what I meant was that KFI changed this month because it didn’t want to become what KABC HAD become back in 1984. KABC being old and stale is what KFI — with a young, popular Rush Limbaugh and a few others such as Tom Leykis  — used to surpass them in the ratings.

            What KABC has now is an image problem that they refuse to do anything about. And their technical sound is occasionally abysmal: the audio often sounds like high school quality … Leo Terrell could not even be heard talking the other night coming out of a commercial because the music level was so high. There are also too many syndicated programs, and they refuse to promote ANY of them. 

            Which is too bad - Shapiro is considered by some as genius and even fun, and Phillips is a definitely a wasted talent waiting for someone to notice how good he really is. I like Bongino, but you can only say something sucks so many times before it gets dull. He needs to listen to early Limbaugh shows to see how it’s done. And why is Dr. Kelly Victory still not on the air here? She was a highlight of the day on The Doctor Hour of Phillips’ program.

            KABC should be a competitor … they invented the format! But they just won’t go the extra mile to make it work. There is no reason for a major market station, even on AM, to be rated as low as is KABC, shares running between 0.6 and 0.9 for the past six months. 

            KABC is probably a station that purists wouldn’t want me to own: I’d take it to top-40.

Radio Waves: January 20, 2023

Benny Martinez, the young kid and relative newcomer to Los Angeles when he was picked in 1981 for the early evening shift on program director Chuck Martin’s top-40 K-WEST 106 (now KPWR, 105.9 FM) has passed away on January 3rd from complications related to diabetes. He was 66.

I remember listening to Martinez on K-WEST, the little station that should have dominated radio in Los Angeles, a true version of KHJ (930 AM) on FM, launched about six months after KHJ went country. Unfortunately, upper  management didn’t give it enough time and dropped the format just as KIIS-FM was moving in; KIIS would eventually become the top-rated station in America due in part to K-WEST leaving the format to them.

I asked Martin to talk about Martinez. “I first heard of Benny while I was programming KHJ. We would receive a lot of air checks from DJs around the country … so many people wanted to work at KHJ. One day my assistant, “Hurricane” Heron, came to me and said ‘you want to listen to this one.’ It was Benny Martinez, which was working at a little station in El Centro called KXO.”

“Benny had a decent voice, but there was something more to it. He had a vibe, something in his attitude, that stuck out. He had excellent delivery, with a great pace and momentum. He was not ready for KHJ yet, but he was close to the type of personality I wanted for the station: someone with an ethnic feel  … who can talk with Southern California in a general sense, but relate to listeners in the inner city as well.

“One day, he showed up in my office. My secretary said he was in the lobby, had sent me a tape and was hoping we could go over it together. So I brought him to my office, we sat down and listened; I gave him suggestions, such as to start speaking both Spanish and English on the air, moving between the two as effortlessly as he could. He was quite talented in this. After the meeting, we agreed to stay in touch while I continued to offer suggestions… which we did for many months”

It was the Spanish-English announcing that made Martinez fun to listen to for me, even though I am still most definitely not a Spanish speaker. Long before it was trendy at some stations, Martinez would through in a few Spanish words as he spoke, often culminating with “on K-WEST, uno cero seis.” But I am getting ahead of the story.

Fast forward a bit … KHJ has gone country, Martin is up in San Francisco consulting with KHJ sister station KFRC, when he gets the opportunity to program K-WEST. “We had most of the staff set … Bobby Ocean, Pat Garrett, London and Engelman, and the one holdover from the old format, China Smith. But I still needed an evening jock. Hurricane brought up Benny.”

After thinking about it for a while, “he was at the top of my list” for potential candidates, he explained. But Martin had lost track of Martinez when the young DJ left KXO. “I had no clue where he was,” said Martin. “I finally found him … working at a bank! He had given up radio because he needed a more stable job as he started a family.”

Would he be interested in working the evening shift on K-WEST? “Yes,” came the immediate reply from Martinez. And he didn’t let Martinez down. “He was exactly what I wanted for the format, for that time slot especially. He did really well for me,” he said.

Unfortunately, as I said, it didn’t last. Just as the format was building momentum, and immediately prior to KIIS-FM starting its ascension, Martin realized the station was not being supported correctly, and promises were being broken. So he reluctantly left the station, the last station he ever programmed. Martinez went on to work at other stations in town, including the KIIS-AM (now KEIB, 1150 AM) “shadow cast” of KIIS-FM, B-100 (KIBB, now KKLQ, 100.3 FM), and KRTH (101.1 FM).

Martinez also worked on Westwood One’s syndicated 70s format but ultimately realized what he already knew: radio is not the most stable of industries. So he left and sold cars at Ed Butts Ford in La Puente.

I realize this is a long tribute for Martinez, who certainly would not be considered a “legend” in the vein of Charlie Tuna, Robert W. Morgan, or “the Real” Don Steele. But he represents the last gasps of personality-oriented top-40 radio, and for that matter made his mark in an increasingly tough industry. I remember him so well because my radio was glued to K-WEST in that era, whether I was driving to Long Beach State or working at the Sears Surplus Store warehouse. It was fun; Martinez will be missed.