Magic Sells KDAY & KDEY to SoCal935 for $35 Million

[davideduardo]

Help me understand why Magic wanted out if it was a positive cash-flow. Especially since its not an upfront deal.
Only 5 million up front.

Seller financing in the current environment is about the best way to get a zero cash flow (or low cash flow) deal done.

And nobody said the stations were profitable... just that most station sales are for profitable facilities and are based on a multiple of cash flow. Stations that are not profitable will get a lower price.

There can be lots of reasons why a seller with profitable stations might "want out" and one of them is due to retirement of a partner or owner (very profitable KTNQ and KLVE to Heftel in 1985 is an example) or the exit from radio (NBC radio stations or the Susquehanna stations are examples) or legal reasons (KHJ and the RKO station).

 

[justpassingthough]

Have you ever known a station sale to happen when the station is making money?

But hell, if they are then maybe it's a good deal all the way around.

I just figured they wouldn't want to compete with themselves in the IE.

They aren't really in competition with themselves. KDAI primarily plays music from 1985-2003- and is targeted to 25 to 54 more so than the 18 to 34 that is targeted by KQIE. Sure, there is some overlap, but saying they are competition is like saying KROQ and KCBS are in direct competition.

 

[musicman3355]

There is a void for Urban Contemporary in LA.

No there isn't; KJLH 102.3 fills that void... even though they're a rimshotter.

The smart thing for Hot 92.3 is to go urban AC and dump all the so-called "oldies" on their playlist.

 

[davideduardo]

The smart thing for Hot 92.3 is to go urban AC and dump all the so-called "oldies" on their playlist.

A "rimshot" signal is by definition a facility on or outside the edge of a metro "shooting" in to that metro.

KJLH is licensed to Compton, which is pretty much part of the center of the LA metro.

 

[Buckethead]

The deal is starting to become clear to me - 5 million a year is probably more than the positive cash-flow of the stations (after overhead).

They are assured 5 million a year for 7 years (I believe that's the deal from what I read). That's decent in the short term but in the long run a major loss for Magic. So tell me if you think they were running in the black? Do you think they were no longer able to service their debt?

Even though the format is getting a 1.5 overall, I'm certain that the sales demo wasn't lucrative for them.

 

[davideduardo]

Even though the format is getting a 1.5 overall, I'm certain that the sales demo wasn't lucrative for them.

Remembering that this is a limited signal, I see it tied 25-54 with KNX and in the last weekly, tied with KHHT in 18-49 and doing very well for the coverage it has.

 

[justpassingthough]

I think this format could actually have legs on a decent signal. The story of late has been the flip of many stations to the Gen-X format. I think rhythmic oldies in the form of 'classic hip hop' ( I cringe when I hear that term because it makes me feel old and I'm only 29) has a better shot at holding an audience than a poorly executed Gen-X format or in markets that favor rhythmic anyway like LA.

Power 106 turns 25 this year- so we are going on a quarter century of the rhythmic format, in its current incarnation.

 

[Buckethead]

David,
You would have access to billing information. The bottom line here is billing and not ratings.

 

[kilamanjero]

There is a void for Urban Contemporary in LA.

No there isn't; KJLH 102.3 fills that void... even though they're a rimshotter.

The smart thing for Hot 92.3 is to go urban AC and dump all the so-called "oldies" on their playlist.

I wouldn't call playing a only handful of songs that charts on BDS Urban (Hip/R&B panel) while spinning mostly urban gold or BDS Adult R&B tracks the majority of the time being an urban contemporary. KJLH does a pseudo-attempt at being an urban contemporary, but its still an UAC. If they were to shift to a solid block daily where they played songs that are typically played found on the Mediabase & BDS Hip-Hop/R&B panel stations (for example from M-F 2-10PM) then it would be a true urban contemporary. As of now LA is without an urban contemporary that targets 18-34 year olds. It would be nice if KJLH or KDAY were to switch back to this format with a current musical composition, but the signals of either stations are too weak to cume beyond 1.5-share or bring in enough revenue to be profitable. It's a shame that the old 100.3 signal was sold to Bonneville because it might have been that format's only hope for a comeback.

 

[BJordan]

KDAY needs to stay true to it's old school hip hop format and KJLH should switch to a full blown Urban Contemporary but playing 90's and early 2000's Hip Hop & R&B. KJLH is so unfocused right now they play a rap song and then turn around and play a classic soul hit. KDAY is the station for classic hip hop fans. KDAY's reminds me of 92.3 The Beat & Power 106 during their competitive days in the 90's.

 

[RadioMaverick]

I worked for 93.5 back in the early 80's (KFOX) when it was on the Redondo Beach Pier. The way it was programmed back then (what we know today as a Hot AC) was for the South Bay. Not trying to compete against KNX, KZLA, KIIS FM, etc... Almost like MIX 106.5 in San Jose.
Yes, times have changed, but they need to stay focus on the South Bay. Someone said it before, revenue not ratings.

 

[kilamanjero]

KDAY needs to stay true to it's old school hip hop format and KJLH should switch to a full blown Urban Contemporary but playing 90's and early 2000's Hip Hop & R&B. KJLH is so unfocused right now they play a rap song and then turn around and play a classic soul hit. KDAY is the station for classic hip hop fans. KDAY's reminds me of 92.3 The Beat & Power 106 during their competitive days in the 90's.

What about current hip-hop and R&B on an urban contemporary formatted KJLH? Would such a station play that as well as the aforementioned 90's and early 2000's urban music?

 

[wdb2003]

Thanks to Radio One we dont have one but very happy they are gone from LA. Hip Hop is not as popular as it was before. Power is the next thing to Hip Hop despite being Rhythmic.

 

[BJordan]

Power 106 doesn't play the throwbacks in their regular rotation like they used to. They need to phase out their rhythmic pop product and be lean heavy on Hip Hop & R&B.

 

[davideduardo]

Power 106 doesn't play the throwbacks in their regular rotation like they used to. They need to phase out their rhythmic pop product and be lean heavy on Hip Hop & R&B.

Remember that Power's core is Hispanic. In fact, it is nearly 60% Hispanic and about 20% African American. So you can pretty easily conclude that the station is not going to go more in an r&b direction.

As a whole, the market is under 8% African American but in 18-34, it is nearly 55% Hispanic.

 

[davideduardo]

Yes, times have changed, but they need to stay focus on the South Bay. Someone said it before, revenue not ratings.

Times have changed, and so has the 93.5 transmitter site. From Baldwin Hills, the station has a good deal of blockage in much of the South Bay area, just like KRCD and KJLH. It can't serve that specific area well now.

Another different issue is that "back then" there was a lot more local business of significace in every area of LA. Now it is big box stores and WalMarts and Targets, advertisers than generally do not use stations that have lower numbers. And the remaining local business is more likely to use even more targeted media, such as local cable and direct mail and phone directories... and more and more, the internet.

 

[Buckethead]

David, are you able to say what the billing has been?

 

[wdb2003]

Times have changed, and so has the 93.5 transmitter site. From Baldwin Hills, the station has a good deal of blockage in much of the South Bay area, just like KRCD and KJLH. It can't serve that specific area well now.

Another different issue is that "back then" there was a lot more local business of significace in every area of LA. Now it is big box stores and WalMarts and Targets, advertisers than generally do not use stations that have lower numbers. And the remaining local business is more likely to use even more targeted media, such as local cable and direct mail and phone directories... and more and more, the internet.

Reply

Yes you can hear it clear in the car and if you live in the southbay area. If you live in San Gaberial Valley or San Fernando Valley or parts of the OC not so much. KJLH's Andre Russell mention that in a newspaper interview a while back that a few major companies stop selling advertisment on the station due to lack of signal. Most of the time during the commerical breaks youll hear sponsers from around LA like New Image Dental in Culver City or Simpson Family funeral home in Ingelwood

 

[mandella]

KDAY can survive because unlike KJLH, their ratings are almost double KJLH, (1.4 to .8) plus they cume over 200, 000 in the Riverside metro in addition to the 1.2 million in LA. Could that be the reason major advertisers don't buy the station? The spring will be crucial to both stations. At this point KDAY is the more efficient agency buy as KJLH has a very low cume (400, 000), with very little audience diversity, in addition to limited reach. If KDAY sold both stations for 35 million, how much do you think KJLH would fetch?

 

[wdb2003]

Nothing because KJLH music only appeals to african americans which keeps them low. Despite their liner Radio Free. If KJLH played music like KHHT then maybe they will get some numbers. They would probally benefit if KHHT does flip one day. People will always know KDAY because of its history. Just glad Magic no longer owns the station. Maybe the new owners will finally bring some life into the station. Add some jocks