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Connoisseur Media acquires Bonneville’s San Francisco Cluster

TheBigA said:
It will also impact radio advertising. Not a good gamble.
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That is an interesting view. There was a book written by a legendary liberal Chicago talk show host (Studs Terkel, if my memory serves) back in the late 1960s where he interviewed Americans from all walks of life who lived through the Great Depression. One of the people he interviewed was the Benton of Benton and Bolles Advertising, one of the leading advertising agencies of that time. Mr. Benton commented that while much of the rest of the country suffered during the Great Depression, the Benton and Bolles advertising agency did very well during that timeperiod.

Mr. Benton's point also reminded me of what I was taught in advertising and marketing classes at both Loyola Marymount and Arizona State Universities: when your business prospects are down and you are losing money is when you need to advertise the most.
 
ted chittenden said:
Mr. Benton commented that while much of the rest of the country suffered during the Great Depression, the Benton and Bolles advertising agency did very well during that timeperiod.
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He's right. At that time, radio had a very unique position in communication. That's not the case now. Radio is struggling now. I see a lot of advertising being done in other media from companies that don't use radio. The struggle would be greater under bad economic conditions because advertisers would be even more selective in the media they used.

The music industry at that time sued radio stations because people listened to radio where they could hear music for free. Today there are many other options for people to hear music for free.
 
TheBigA said:
It will also impact radio advertising. Not a good gamble.
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The last couple recessions have been brutal to radio (and advertiser supported media in general). I tend to think the next one, whenever it comes, will be like the last two.

TheBigA said:
Radio is struggling now. I see a lot of advertising being done in other media from companies that don't use radio. The struggle would be greater under bad economic conditions because advertisers would be even more selective in the media they used.
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The one saving grace for Warshaw might be that he got Alpha got, more or less, cheap. Then again, the amount of debt he took on to get Alpha was more than what the previous owners felt comfortable with.
 
The world of finance can be opaque but it's certain the Alpha debt that was bought by Connoisseur's financial partners was acquired at a significant discount.

The potential risk for the new company is more likely to be the original mistake by L&L (which became Alpha).

The L&L/Alpha initial deal was a great one, they bought out Triad Broadcasting at a really good price. it was further helped by selling off one market to a highly motivated buyer who paid a premium. This move further reduced L&L's purchase price by about half.

Then as L&L/Alpha worked to roll up other markets they had to pay higher multiples. They REALLY wanted West Palm Beach but they had to take a lot of meh markets to make that happen.

Before you know it, Alpha effectively bought more house than their paycheck could cover. The first round of Alpha leadership got pushed out over this, they sold off markets when they could and ultimately got forced into bankruptcy.

Jeff Warshaw is experienced enough an operator that he's quite aware of this risk. But the rush to bulk up fast is going to be a temptation especially with the pending ownership rules changes. On the other hand, finding the capital to do any deals in radio is difficult today no matter who is behind the deal.
 
garfradio said:
The world of finance can be opaque but it's certain the Alpha debt that was bought by Connoisseur's financial partners was acquired at a significant discount.

The potential risk for the new company is more likely to be the original mistake by L&L (which became Alpha).

The L&L/Alpha initial deal was a great one, they bought out Triad Broadcasting at a really good price. it was further helped by selling off one market to a highly motivated buyer who paid a premium. This move further reduced L&L's purchase price by about half.

Then as L&L/Alpha worked to roll up other markets they had to pay higher multiples. They REALLY wanted West Palm Beach but they had to take a lot of meh markets to make that happen.

Before you know it, Alpha effectively bought more house than their paycheck could cover. The first round of Alpha leadership got pushed out over this, they sold off markets when they could and ultimately got forced into bankruptcy.

Jeff Warshaw is experienced enough an operator that he's quite aware of this risk. But the rush to bulk up fast is going to be a temptation especially with the pending ownership rules changes. On the other hand, finding the capital to do any deals in radio is difficult today no matter who is behind the deal.
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A lot will depend on if Conniseur is a private or publicly-held company. If it is privately held, then Mr. Warshaw can decide whether and when to stop growing with little fuss. However, if it is a public company, then stockholders, whether they know the radio business or not, will force him to make purchases he doesn't want or need. As former Fortune magazine writer/reporter Joe Nocera told Scott Simon on NPR's Weekend Edition program during the early 1990s (and I'm paraphrasing here): public stockholders will not allow your company to stay in one place. You have to either keep growing the company or cut the company's costs to satisfy their desires for ever-rising stock prices and/or payouts.
 
ted chittenden said:
A lot will depend on if Conniseur is a private or publicly-held company. If it is privately held, then Mr. Warshaw can decide whether and when to stop growing with little fuss. However, if it is a public company, then stockholders, whether they know the radio business or not, will force him to make purchases he doesn't want or need. As former Fortune magazine writer/reporter Joe Nocera told Scott Simon on NPR's Weekend Edition program during the early 1990s (and I'm paraphrasing here): public stockholders will not allow your company to stay in one place. You have to either keep growing the company or cut the company's costs to satisfy their desires for ever-rising stock prices and/or payouts.
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I hate that dynamic, because it has destroyed many an otherwise viable company by forcing them to do risky things they can't afford.

c
 
ted chittenden said:
A lot will depend on if Conniseur is a private or publicly-held company.
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It took me less than 30 seconds to discover that Connoisseur is privately held.

BTW, for those who worry about how the Alpha Media deal was financed, all one has to do is go back to when it was announced; in the FCC filing outlining their Stock Purchase and Exchange Agreement, it is outlined as a multi-step transaction including full repayment and retirement of Alpha’s outstanding obligations, including debt carried forward from its Chapter 11.

Warshaw & Co. arranged new lines of credit to cover same.
 
Weiserguy said:
You know where he could be right? IF the country sinks into a severe recession, or even a full-on depression, then the money to pay for streaming, or even cable TV premium-tier programming, is likely to be severely impacted. IF that happens -- and I won't even try to take odds on the likelihood -- so many people will be focused on the basic necessities, food, rent, clothing for the kids, etc. The occasional splurge will become happy meals at McDonalds, not $15/mo for HBO, Spotify or S/XM. If that comes to pass, the only media many will be able to afford will be free OTA broadcasting, and the way to reach viewers/listeners will once again be OTA spot ads. Some people already live like this, but I'm thinking a scenario akin to 1930's-style soup lines. Hopefully I'm wrong and it never comes to pass, but my respect and admiration for the Orange Genius is so high that it's at least a possibility.
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You make a great point. I've seen one local supermarket make changes to its inventory that look like it's anticipating such changes. The General Manager told me that (generally speaking), some customers who regularly purchased higher priced items like steak and gourmet coffee are now loading up on ground chuck and ramen products.
 
San Francisco was the only Bonneville cluster without a talk or sports station. Of their remaining markets, they have news and sports stations in Phoenix, Seattle, and Salt Lake City, and their Denver and Sacramento clusters include sports. I think that had a lot to do with it too.
 
Sammi Brie said:
San Francisco was the only Bonneville cluster without a talk or sports station. Of their remaining markets, they have news and sports stations in Phoenix, Seattle, and Salt Lake City, and their Denver and Sacramento clusters include sports. I think that had a lot to do with it too.
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That was brought up earlier. Bonneville has operated a few clusters with no spoken word stations, and quite successfully. Chicago and Cincinnati come to mind. They sold those clusters, and a few others, to Hubbard to concentrate on western states.

They do tend to favor sports over political talk formats (which they really only do if they're already there), but I don't think spoken word stations are a priority to them. Otherwise, they could have easily run or acquired one in the Bay Area. Cumulus is currently sitting on a silent station (560) with a really good signal.
 
KilowattKat said:
It's funny how everyone still calls them by the old EMF name, instead of K-Love. Old habits die hard.
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I think there is confusion where the corporate name is the same as that of just one of their several formats. So many of us use "EMF" when we want to discuss the corporation, not the format.
 


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