Regent Regrets
The Cincinnati Post said:
The article begins... "A little more than two years ago, Terry Jacobs stepped down as CEO of the radio company he founded, Regent Communications, because of what he then called "philosophical differences."
Truncated, the story continues,
"Over his objections, the company opted to continue growing as a public company and invested $125 million a year ago to buy five stations in Buffalo from CBS.
'Buying the Buffalo stations severely limited the company's ability to buy back its own stock, a tactic that would have allowed the company to move toward going private and given it more control over stock prices,' Jacobs said."
This story is quite telling and it would behoove readers and poster on this illustrious board to read it at least once, because it's relevant to what's going on in this business called broadcasting.
Business ain't as good as it should be. Here's a quote form the very self-serving and quite wealthy Mel Karmazin. He's talking about comparing the finances of Sirius to that of terrestrial radio groups.
Radio & Records said:
Karmazin said Sirius was the fifth fastest-growing radio company during the first half of 2007 with $431 million in revenue, with “pro forma” growth of 55.5%.
- [size=10pt]Clear Channel topped winners with $1.7 billion in revenues, with pro forma growth at 2%
- CBS had $861 million in revenues with a growth loss of 4.5%
- XM had $541 million with 24.2% growth
- Citadel, $465 million, minus 2.4%; Sirius
- Entercom with $225 million and flat growth
- Cox Radio, $219 million, 1.9% growth
- Univision Radio, $204 million, 15.4% growth
- Radio One, $163 million, -3% growth
- Cumulus, $160 million, 0.3% growth
- Emmis Radio, $122 million, with growth off 5.8%.
It's hard to feel sorry for Jacobs and guys like him at other companies. He, like many other radio execs, had hoped to buy back the company, much like what Clear Channel is attempting to do.
What a neat little ploy. Essentially, these companies get the public to buy stock based on certain growth projections and return. The shareholders "carry the weight." After a set number of years, the companies then attempt to transfer the value back to the top brass by buying back the stock.
If you've followed the Clear Channel process over the last few months, you know that a number of very large shareholders such as investment houses and mutual fund companies that own sizeable shares of stock, really made sure they'd get a premium price for the shares when the Mays family announced plans to buy back the stock and take the company private.
Getting back to the Regent issues, reading between the lines of the story in the CP, you can deduce how divergent the principals of the company were when Regent bought the CBS Buffalo cluster, now its largest market. It may be that Regent is learning that they cannot conduct business in Buffalo the way they do in Utica-Rome. This said, a recent quarterly report indicated that earnings at the Buffalo properties were quite good.
Now, word has it that Regent is going to sell off WECK. It's been suggested on this board that a local owner may buy the station or it could be purchased by the owner of Catholic Radio, WLOF-FM. Whoever purchases WECK, there's no question that the money will be used to pay down Regent's debt load from the WJYE, WYRK, WBLK, WBUF purchase.
Already, there are tales of discontent from the Rand Building. No big surprise there. The Buffalo market is shrinking ("shrinking.... shrinking...") and sadly, doing business here often involves downsizing and minimizing in order to stay alive.
My peeve is that it's rarely the executives who get downsized, but almost always the guys behind the microphones, the traffic department or the news department. Of course, Regent won't have to worry about downsizing a news department because there ISN'T any at its Buffalo cluster.
Too bad Mr. Jacobs saw his share price tumble from the $4+ range to the $2.60 range. If it's any consolation to him, it's not that severe a haircut and he can write off those losses. Radio it seems, is a like the housing industry, where sub-prime mortgages are wreaking havoc.
Just don't look for Regent to sell its Buffalo cluster any time soon. The buyers, especially the qualified buyers, aren't there... and them what's there aint necessarily jumping at the opportunity to buy into the Buffalo market, even with cheaper money now that the Fed has cut rates by half a basis point.
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