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Good Karma Buying WEPN AM & FM

B

Barry

GK already owns several ESPN radio stations. They will be purchasing WEPN 1050 AM, along with the WEPN FM LMA on 98.7 from Disney.
There is apparently a commitment to continue carrying national ESPN sports programming on both stations.
What seems unclear is whether the new owner can or should make changes to the local shows. Both stations have low overall ratings, but possibly desirable demos.
From RadioInsight
 
Barry said:
GK already owns several ESPN radio stations. They will be purchasing WEPN 1050 AM, along with the WEPN FM LMA on 98.7 from Disney.
There is apparently a commitment to continue carrying national ESPN sports programming on both stations.
What seems unclear is whether the new owner can or should make changes to the local shows. Both stations have low overall ratings, but possibly desirable demos.
From RadioInsight
Click to expand...
I thought WEPN FM was owned by Emmis radio?? But the other ESPN AM stations...Disney wanted to get rid of them.
 
BJSteigner said:
I thought WEPN FM was owned by Emmis radio?? But the other ESPN AM stations...Disney wanted to get rid of them.
Click to expand...
The FM is owned by Emmis and LMAed to ESPN.
 
I just looked up the purchase price that ABC, Inc. paid to the Forward Association for what is now WEPN. Put your coffee down, everyone: 78 million. Will be very interesting to see how values for an AM in NYC have declined.
 
Don CT said:
So what is Disney's plan for ESPN Radio, not own stations just license content?
Click to expand...

Correct. ABC News has done the same thing, syndicating content through SkyView.

Disney sold its radio division 15 years ago to Citadel. It's now owned by Cumulus.

They retained Radio Disney and ESPN Radio. Last year they shut down Radio Disney.
 
TheBigA said:
Correct. ABC News has done the same thing, syndicating content through SkyView.

Disney sold its radio division 15 years ago to Citadel. It's now owned by Cumulus.

They retained Radio Disney and ESPN Radio. Last year they shut down Radio Disney.
Click to expand...
It helps that Craig Karmazin has been involved in a long-standing relationship with ESPN that includes ad sales for ESPN’s digital division. In almost every aspect, they’re remaining “in the family” under Good Karma.

It’s a win-win for both parties. Disney almost gets out of station ownership (KESN being the white elephant that will likely be donated to a non-profit with the ESPN affiliation being sold to KTCK), they sell the stations to an owner they’re very comfortable with, and it bolsters Good Karma’s existing portfolio, too. Now WKNR Cleveland and WKTI Milwaukee can be in the same group as WEPN-FM and KSPN (and obviously an LMA of KRDC).
 
Nathan Obral said:
It helps that Craig Karmazin has been involved in a long-standing relationship with ESPN that includes ad sales for ESPN’s digital division. In almost every aspect, they’re remaining “in the family” under Good Karma.
Click to expand...

I haven't seen the specifics, but I bet there were very generous financing arrangements made in the purchase of those stations.
 
TheBigA said:
I haven't seen the specifics, but I bet there were very generous financing arrangements made in the purchase of those stations.
Click to expand...
Wouldn’t surprise me. Craig K. had Morgan Murphy as a silent partner to help finance his purchase of WTMJ/WKTI from Scripps.

Geez, it’s been 15 years now since he purchased WKNR Cleveland from Salem, and at the time it was his highest-profile acquisition.
 
TheBigA said:
I haven't seen the specifics, but I bet there were very generous financing arrangements made in the purchase of those stations.
Click to expand...

I just saw the specifics in the RadioInsight story, and it conforms my suspicions:

Good Karma will pay $1 million at closing, with the remaining $14 million paid in quarterly installments of $500,000.
Click to expand...

That's a good deal. Here's the rest of the story:

radioinsight.com

More Details On Good Karma’s ESPN New York, Los Angeles & Chicago Purchase - RadioInsight

Craig Karmazin's Good Karma Brands will acquire ESPN's local radio properties in New York, Los Angeles and Chicago. Update 12/20: The deal has been filed with the FCC showing that Good Karma Brands will pay $15 million for 1050 WEPN New York, 710 KSPN Los Angeles, and 1000 WMVP Chicago. Good...
radioinsight.com radioinsight.com
 
Nathan Obral said:
I. Disney almost gets out of station ownership (KESN being the white elephant that will likely be donated to a non-profit with the ESPN affiliation being sold to KTCK), they sell the stations to an owner they’re very comfortable with, and it bolsters Good Karma’s existing portfolio, too.
Click to expand...
I wonder why Good Karma did not take 1110, which is fairly decent signal, instead of the absolutely horrible downgraded 710.
 
This is one heck of a story and sell. Three signals in major markets, $2M a year in payments (plus any interest.) Seems like a great deal, yet can these stations bill $166,666.66 a month combined. They have to each have sales nearing $100,000 a month to cover all the expenses, unless they just cut local/live air talent. Is that possible on these stations and signals and can that be sustained for a few years until the debt is paid? May be a actual gold mine under this plan. Big question is how does this potentially affect station prices as we move forward? Interested.
 
Tibbs4 said:
This is one heck of a story and sell. Three signals in major markets, $2M a year in payments (plus any interest.) Seems like a great deal, yet can these stations bill $166,666.66 a month combined.
Click to expand...
But they will be paying Emmis to rent the NYC FM frequency.

They will also pay rent for the LA transmitter, as they are on another station's land.
Tibbs4 said:
They have to each have sales nearing $100,000 a month to cover all the expenses, unless they just cut local/live air talent. Is that possible on these stations and signals and can that be sustained for a few years until the debt is paid? May be a actual gold mine under this plan. Big question is how does this potentially affect station prices as we move forward? Interested.
Click to expand...
Two of the stations have coverage issues. LA will have a very degraded signal, and Chicago has to move the transmitter which will cost at least $1 million more.

LA was billing over $18 million annually before the pandemic. Chicago and New York were at $10 million for the same period. They were all off by 30% for 2020. So, next year they might assume they could do at least $25 to $30 million. Now, some of that revenue under Disney may be network revenue allocated to each station, so it is now time to start guessing.
 
Admittedly, I did not see or study the rents due and new costs for the signal changes. That sure adds on some up front costs, David. You know the frequency issues. Can these guys pull this off with what they have acquired. Buyers remorse may well start soon. I can’t say. I need to do my homework on this, so forgive me for asking vs knowing. BigA said elsewhere that this is possibly a great time for small owners.
 
Nathan Obral said:
It’s a win-win for both parties. Disney almost gets out of station ownership (KESN being the white elephant that will likely be donated to a non-profit with the ESPN affiliation being sold to KTCK), they sell the stations to an owner they’re very comfortable with, and it bolsters Good Karma’s existing portfolio, too.
Click to expand...

KESN is certainly the odd elephant in the room. Obviously, GKB would probably love to add another top 5 market to their sports portfolio, but why wasn't it included with the others?

Is there is another deal in process? Or GKB didn't want to overextend themselves before the other deal is realized?

Regardless KESN is probably worth 4-6 million in stick value, as I do not believe there is substantial local sales to calculate a cash flow multiple a . I very much doubt it will be donated.

Also, The Ticket is nearly all live and local weekdays. They do carry some Fox Sports network programming overnight and during the weekend, but I am skeptical they would pay for an ESPN affiliation and I doubt ESPN would want that affiliation to tie up the market if it didn't clear any of their weekday programming.
 
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