Estrella Media deal with MediaCo announced

[Mediafrog+]

MediaCo Acquires Estrella Media’s Content Operations; To Program Radio Licenses

MediaCo Holding, owners of Hip Hop "Hot 97" WQHT and Adult R&B 107.5 WBLS New York, have announced the acquisition

radioinsight.com

This confirms the recent acquisition rumors. Any changes possible in Houston or just business as usual?

 

[Mediafrog+]

Further thought: We know that Estrella is already selling what’s left of KEYH. MediaCo might want to dump KNTE and its irrelevant exurban signal.

 

[Kent]

MediaCo Acquires Estrella Media’s Content Operations; To Program Radio Licenses

MediaCo Holding, owners of Hip Hop "Hot 97" WQHT and Adult R&B 107.5 WBLS New York, have announced the acquisition

radioinsight.com

This confirms the recent acquisition rumors. Any changes possible in Houston or just business as usual?

In the short-term, I wouldn't expect many changes. With Estrella's executive team joining the board at MediaCo, it almost gives Reverse Morris Trust vibes, where the target actually buys the acquirer but appoints its management team. If MediaCo wanted massive changes, it probably wouldn't be doing that.

A bigger question might be what does MediaCo want to do next? Despite its stock price tanking, it's been rumored to be bullish on radio for at least the last year or so. This deal would seem to indicate that rumor was true. Unless it either makes a run at KRBE or 92.1 (whether as a backup buyer or buying it from SBS), seems like it won't have many expansion opportunities in Houston, but one has to wonder what it could be thinking elsewhere.

 

[Mediafrog+]

In the short-term, I wouldn't expect many changes. With Estrella's executive team joining the board at MediaCo, it almost gives Reverse Morris Trust vibes, where the target actually buys the acquirer but appoints its management team. If MediaCo wanted massive changes, it probably wouldn't be doing that.

I could see a refresh of La Raza and El Norte, but I don’t think they will abandon the current formats, which have been on an uptrend lately.

Eagerly awaiting David Eduardo’s take on all this.

A bigger question might be what does MediaCo want to do next? Despite its stock price tanking, it's been rumored to be bullish on radio for at least the last year or so. This deal would seem to indicate that rumor was true. Unless it either makes a run at KRBE or 92.1 (whether as a backup buyer or buying it from SBS), seems like it won't have many expansion opportunities in Houston, but one has to wonder what it could be thinking elsewhere.

The thought did cross my mind that MediaCo could eventually wind up with 92.1 if SBS gets cold feet. It has been pointed out that SBS avoids rimshot signals, but MediaCo might be of a different mindset, and a combination of 92.1 along with 98.5 and 107.9 would be a decent Houston group for targeting Hispanics.

 

[Theater of My Mind]

A bigger question might be what does MediaCo want to do next? Despite its stock price tanking, it's been rumored to be bullish on radio for at least the last year or so.

Radio on its own is going in the wrong direction. A multimedia company would seem to hold more diverse opportunities than just a radio company, especially considering how fragmented media consumption is now. They're putting their eggs into a few different baskets. It will be interesting to see how -- or if -- the new company combines all those pieces into a cohesive business.

 

[davideduardo]

Radio on its own is going in the wrong direction. A multimedia company would seem to hold more diverse opportunities than just a radio company, especially considering how fragmented media consumption is now. They're putting their eggs into a few different baskets. It will be interesting to see how -- or if -- the new company combines all those pieces into a cohesive business.

Interesting observation. And in very "major" markets.

 

[TheBigA]

Radio on its own is going in the wrong direction. A multimedia company would seem to hold more diverse opportunities than just a radio company,

The problem is that multimedia companies are selling, not buying, radio. They're also close to selling traditional TV too.

 

[DarrenVision]

idk what will happen to the TV stations also

 

[Mediafrog+]

idk what will happen to the TV stations also

Perhaps not much will change. Estrella TV is laser focused on Hispanics of Mexican heritage, which sets them apart from the other major Spanish language U.S. Networks.

 

[Astros2023]

The problem is that multimedia companies are selling, not buying, radio. They're also close to selling traditional TV too.

For the last three decades, radio station owners have consistently expressed dissatisfaction with their lack of profitability, yet notable radio stations "full power signals" are never observed being divested. Clear Channel/iHeartMedia sought bankruptcy protection under Chapter 11 following the accumulation of debts exceeding $20 billion. In the 1960s and 1970s, bankruptcy was a situation that companies strived to prevent. Declaring bankruptcy was seen as an acknowledgment of defeat, a symbol of dishonor. However, in the past few decades, bankruptcy has increasingly been embraced by companies and individuals seeking financial gain.

 

[TheBigA]

For the last three decades, radio station owners have consistently expressed dissatisfaction with their lack of profitability, yet notable radio stations "full power signals" are never observed being divested.

Because those stations are profitable. And the stations are the only source of revenue. So divesting the signals would be cutting off their only source of revenue.

The Cumulus bankruptcy sold off several of the former ABC stations because they weren't seen as profitable. But that's not the case with Audacy.

Declaring bankruptcy was seen as an acknowledgment of defeat, a symbol of dishonor.

It depends on the type of bankruptcy. Chapter 7 is liquidation. That's not good. Chapter 11 is simply a reorganization.

 

[Astros2023]

Because those stations are profitable. And the stations are the only source of revenue. So divesting the signals would be cutting off their only source of revenue.

The Cumulus bankruptcy sold off several of the former ABC stations because they weren't seen as profitable. But that's not the case with Audacy.



It depends on the type of bankruptcy. Chapter 7 is liquidation. That's not good. Chapter 11 is simply a reorganization.

I agree. I do not believe that Audacy intends to sell any stations, particularly those located in Houston. Look at Gow Media. Despite the lack of profitability, lack of ratings the company is still seeking a total of 7+ million dollars for the stations. I believe that a figure closer to 4 million is more appropriate given the current state of the economy. If you were to contact Educational Media Foundation and propose a purchase price of 6 million for KTHT-FM, it is unlikely that they would agree to sell. Well they do have all the money in the world lol.

 

[Mediafrog+]

Look at Gow Media. Despite the lack of profitability, lack of ratings the company is still seeking a total of 7+ million dollars for the stations. I believe that a figure closer to 4 million is more appropriate given the current state of the economy.

KGOW is probably worth ~$750k given the signal issues and the state of the transmitter facilities. Viet Media, which currently leases the station, paid $1.1M for a better 1480 signal in DFW. Maybe $900k tops for 1560 here.

KFNC is likely worth a maximum of $2.5M given its signal issues, and I would start bidding much lower than that. The two 92.5 translators, assuming Gow finally gets ownership of them, might get the total price to $3.5M. As the broker listing says “Open to all reasonable offers.”

If you were to contact Educational Media Foundation and propose a purchase price of 6 million for KTHT-FM, it is unlikely that they would agree to sell. Well they do have all the money in the world lol.

Of course KTHT is now KLVH and has been since November 1.

Only way EMF would give up 97.1 is if KRBE comes on the market and EMF is able to grab it for K-Love.

 

[Kent]

For the last three decades, radio station owners have consistently expressed dissatisfaction with their lack of profitability, yet notable radio stations "full power signals" are never observed being divested.

It's actually been longer than that. Even in the 1960's, half, or close to half, of commercial radio stations were losing money. That might've been more palatable at the time because radio tended to be one segment of a broader business that helped it make money elsewhere. Insurance companies owned radio stations because alerting people to weather problems and other natural disasters meant they'd likely have to pay less out in claims. Record labels owned stations to promote their records. Modern day iHeart started as two businesses, one of which was INSILCO, the International Silver Company. Mining silver tends to also mine a lot of copper. Its radio stations used the copper as antenna grounding systems, and showing potential other radio stations how the stations sounded on its grounding systems helped sell some of that copper, which was practically worthless at the time. Despite the industry's current set of challenges, I tend to think it was in worse shape 30-35 years ago. Those of us who've worked on the programming side might not like to hear or believe that, but large clusters of stations in Top-50 markets aren't what's dragging the owners down today.

However, in the past few decades, bankruptcy has increasingly been embraced by companies and individuals seeking financial gain.

I wouldn't agree with that statement. Do you really think the Field family is happy that it has lost the company the family started and that its investment has been wiped out? David Field is going to get paid, but it's not going to be what he'd be making if he could still run the company another 8-10 years. Plus, he's unlikely to ever have another job in the executive suite again. I know you and I would probably like to be in his shoes right now with that big payout, but it's going to be an adjustment for him. If you want to laugh and say, "Cry me a river," I can't blame you. Knock yourself out. He, however, is going to have to think and worry about things he's never had to think about before. They may be spoiled rich kid problems we'd love to have, but he never even imagined them five years ago. With the possible exception of Cumulus, which filed bankruptcy largely to remove an unhappy shareholder, even the private equity firms that have made money off the businesses they've bankrupted are essentially giving away their companies for nothing in exchange for not being chased by their creditors. It's not a good deal.

 

[TheBigA]

Record labels owned stations to promote their records.

Well not exactly. The labels themselves didn't own the stations. In the 30s RCA Records sued several radio stations for playing their records. By the 50s, they had to be careful because of payola laws. In all cases, the record labels were run by separate divisions from the radio stations.

All three companies sold their record label interests in the 1980s.