Sinclair - Beasley

Monday was a big day for radio deal making as Emmis agreed to sell more of its radio assets, Urban One signaled plans to exit one of its biggest markets and Beasley showed it remains in squarely in acquisition mode.

Ending what CEO Jeff Smulyan called “a fabulous run in Austin,” Emmis is exiting another market after earlier selling entire clusters or stations in St. Louis, Los Angeles and Terre Haute. Emmis and Sinclair Telecable have been partners in a group of Austin stations since Emmis purchased its controlling interest in July 2003 from Luci Baines Johnson, the daughter of U.S. President Lyndon B. Johnson and his wife, former First Lady Bird Johnson, who owned the stations since 1943. Under their agreement, Sinclair had an option to buy out the Emmis stake and partners Bob and David Sinclair did exactly that yesterday, agreeing to pay $39.3 million for the six stations and two translators.

Once the deal closes, Emmis will operate radio stations only in New York and its home market of Indianapolis, raising questions about the company’s next chapter. “Our focus at Emmis now will be on transitioning to new areas of growth,” Smulyan said in Monday’s announcement, echoing similar remarks he’s made on earnings calls. Emmis has been using proceeds from station sales to pay off $1.3 billion of debt. On its most recent results call in May, Smulyan declared the company’s balance sheet “fixed” and said it “made a conscious decision a while ago that we would move in new areas.” Smulyan promised during its current fiscal year to “reveal a new Emmis” and that “this will be a year that should redefine what this company is all about.” But the CEO has been tight-lipped about specifics and the company declined to comment beyond yesterday’s press release about what’s next. Investors greeted the sale by sending Emmis stock up 9% to close at $3.91 in Monday trading.

According to a regulatory filing, the Austin cluster billed $31.1 million in revenues and $9.9 million in income for the partnership for the Emmis fiscal year ended Feb. 28, 2019, down from $31.7 million and $10.7 million, respectively the year before. The deal gives Sinclair Telecable full ownership of talk KLBJ (590), rock KLBJ-FM (93.7), adult hits “Bob FM 103.5” KBPA-FM, regional Mexican “107.1 La Zeta” KLZT-FM, alternative “101X” KROX, adult alternative “Austin City Limits Radio” KGSR-FM (93.3), along with “Star 93.3” and “Latino 102.7,” which both air on HD Radio-fed FM translators. The Austin cluster will be rebranded as Waterloo Media.

Sinclair Telecable, which is not affiliated with KEYE-TV Austin licensee Sinclair Broadcast Group, has owned radio stations in Austin since 1995. The company also owns seven FMs, two AMs and two FM translators in Norfolk, VA and in California’s Sonoma County wine country.

Urban One Exits Detroit

Emmis wasn’t the only radio seller on Monday. Urban One signaled plans to fully exit Detroit with a $13.5 million cash deal to divest urban AC “105.9 Kiss FM” WDMK and three translators to Beasley Broadcast Group. Urban One began to wind down its operations in Motown in May 2018, when it signed a $12.7 million deal to sell gospel “Praise 102.7” WPZR to Educational Media Foundation. The company’s latest sale leaves Urban One only with urban “Hot 107.5” WGPR in the Motor City, which it says it will continue to operate under its current LMA with the International Free & Accepted Modern Masons, which owns the FM, until the end of the year. That’s when it is expected to leave Detroit after having a presence there since 1998.

While the African American media specialist is exiting its sixth largest market, Beasley will continue to air many of the company’s Reach Media syndicated shows on WDMK and the trio of translators that form the gospel “Detroit Praise Network” relayed off WDMK’s HD2 sub-channel.

Beasley entered the Detroit market in late 2016 via its purchase of Greater Media. The deal with Urban One gives it a fourth FM and the translator network in the Motor City. WDMK will be a solid fit with the classic hip-hop format on Beasley’s “105.1 The Bounce” WMGC-FM and increase Beasley’s African American audience in Detroit, where the market is 22% Black. WDMK rose 2.9-3.2 in Nielsen’s April survey to rank 16th, trailing iHeartMedia urban AC WMXD, which was in a three-way tie for second place with a 6.1 share. Beasley also owns top-rated classic rock WCSX (94.7) and active rock WRIF (101.1) in Detroit.

CEO Caroline Beasley said the addition will get the company closer to its goal of capturing 30% revenue share in each of its markets while also “delivering valuable synergies and the potential for station operating income margin improvement.” The deal will immediately produce cash flow, she added, without “materially” affecting the company’s debt leverage.

While the deal pushed Beasley’s stock down 4% to close at $3.19, shares of Urban One jumped 5% to close at $1.98.