By Rodney Ho/rho@ajc.com, filed on December 8, 2014
Lincoln Financial, owner of adult pop station Star 94, has sold its 15 radio properties nationwide to Entercom Communications for $105 million plus working capital.
This will be the first time Star has ever been owned by a national media company.
For more than 30 years, WSTR-FM (which was 94Q in its earlier days) was run by insurance company Jefferson-Pilot. In 2006, another insurance company Lincoln Financial purchased Jefferson-Pilot.
Star 94, in its heyday in the 1990s into the 2000s, was a cash-flow machine, said Mark Kanov, former Star general manager who worked there for 40 years until he retired in 2008. For many years, Jefferson-Pilot and then Lincoln leased the 790 AM signal (WQXI-AM) to Big League Broadcasting, which ran sports talk station the Zone, until 2010.
"Insurance companies like free cash flow," Kanov said. "Back in those days, until the recession in 2008, the stations combined produced a lot of money. There was a time when [Atlanta-based media company] Cumulus wanted to buy us. Negotiations didn't come to terms on price."
He said Lincoln's valuation of its radio stations at one time in the mid-2000s was about $1 billion. But shifting media consumption habits and the nasty economic downturn decimated radio station valuations. Entercom ultimately purchased the stations 90 percent off the peak, he said. Stations during peak times were selling at 18 to 20 times cash flow. Now, it's closer to five or six times.
Kanov said Entercom has a good reputation. They have never owned radio stations in Atlanta before. "They're pretty well managed," he said. "I think it's a great acquisition for them."
Entercom, based in Bala Cynwyd, Pa, is a medium-sized radio company with 100 stations in 23 markets, including San Francisco, Boston, Seattle, Denver, Portland, Sacramento and Kansas City.
Lincoln also sold 790/The Zone (WQXI-AM), which is now a syndicated ESPN sports talk station with no local content except for the Atlanta Falcons, a deal it likely will relinquish at season's end. It dropped local jocks in the spring as AM listening in Atlanta has plummeted. (Lincoln was never willing or able to invest in an FM signal to bolster the Zone's reach, especially at night.)
At one time, in the mid-2000s, the Zone generated $12 million in annual revenues under Andrew Saltzman and Steven "Steak" Shapiro. The station now generates a small fraction of that.
Star's revenues are far off its peak as well but that is the case with almost every station in Atlanta.
In terms of ratings, Star still generates passable numbers, but has lagged behind the other three pop stations for much of the past two years in most demographics. In the most recent Nielsen Audio monthly ratings B98.5 (5.6 share) is tops, followed by Q100 (4.2) and Power 96.1 (3.8). Star pulled in a 3.4. Among 25-54 year olds, Star tied with Power for third behind B98.5 and Q. Among 18-34 year olds, Star did beat B98.5 (4.2 to 4.0 share) and came in third, though B98.5 had beaten Star nine out of the first 10 months of the year.
Saltzman, who echoed Kanov in saying Entercom is a great company, said they face a challenge by having only a single FM signal in a market where IHeartMedia, Cox, CBS and Cumulus all own multiple FM stations.
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