Could Cox Radio come to Seattle?

With the pending CBS/Entercom deal, and the tax benefits of swapping stations versus buying, could Cox Radio be coming to Seattle?

Cox is big on market synergies and would like to expand in markets where they already have a presence with TV, newspaper or Cox Reps. Currently they have 5 markets with both TV and radio; Atlanta, Orlando, Jacksonville, Dayton and Tulsa. They currently have 5 markets with only TV stations; Seattle, Boston, Charlotte, Pittsburgh and Memphis. Finally, they have 6 markets with radio only; Miami, Tampa, Nassau/Suffolk, Houston and San Antonio.

Right off the bat you can see some mutual needs between Cox and Entercom. Entercom needs to get rid of 2 FM’s in both Boston and Seattle which Cox could pair with WFXT-TV and KIRO-TV respectively. Entercom’s big selling item to investors about the merger is that they will be in 23 out of the top 25 markets. The two top 25 markets they currently don’t have a presence in are Tampa (market 19) and Nassau/Suffolk (market 20), two markets Cox only has a radio presence in and might be willing to deal. For Entercom being able to say they’re in every single top 25 market would be a big deal to national buyers and investors alike.

If they wanted to make the deal even larger, Entercom might be willing to deal the current CBS cluster in Pittsburgh for Cox to pair with WPXI-TV in exchange for Cox’s San Antonio (market 26) cluster which would give Entercom an even bigger presence in Texas.

Cox could easily find room in the KIRO building for two FM’s. I think they make the most sense to pick up these Seattle FM’s in a trade deal more than any other group. We’ll see what happens!

No frickin' way. Cox has been shrinking its radio group, not expanding it. Plus ETM wants to do swaps, not sales (more tax friendly). Bonneville and Hubbard are the likely players for the ETM/CBS access, with Alpha *possibly* being in the mix.

I think it would be premature to rule anything out.

CarAgencyGuy said:

I think it would be premature to rule anything out.

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True, but since 2012, Cox has indeed shrunk its radio portfolio. Their main focus right now is cable and ISP.

I would tend to agree...in VA, Cox sold off a very highly-performing Richmond radio cluster to Summit Media. They then moved out of their traditional cable stronghold of Hampton Roads and are offering ISP and cable services in Northern VA, Fredericksburg, and Richmond.

My place out in Northern VA was in a Comcast stronghold. Come back in 2016, I get Cox...

Granted, Richmond is market #58-60, Seattle is in the low teens, but the general consensus is that they're divesting radio stations and putting money in ISP/cable franchises.

A more likely candidate would be either Hubbard buying up a couple FMs from the new Entercom group or station-hungry Alpha Media, if they can keep the financiers happy...

...because secretly every Portlander wants a piece of Seattle, just like every Seattleite wants a piece of Portland

Radio-X

Rob Piotrowski said:

No frickin' way. Cox has been shrinking its radio group, not expanding it. Plus ETM wants to do swaps, not sales (more tax friendly). Bonneville and Hubbard are the likely players for the ETM/CBS access, with Alpha *possibly* being in the mix.

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These would be swaps. Cox also said "that it was planning to sell its stations in smaller markets, to focus on larger markets and cities where it also has television and newspaper assets."

If they were able to trade to get rid of stations where they don't have any other assets, and then maximize their assets in markets like Seattle and Boston where they have standalone TV properties, I think they would take a look at that.

David, you're right I misspoke on Nassau/Suffolk.

AQH said:

True, but since 2012, Cox has indeed shrunk its radio portfolio. Their main focus right now is cable and ISP.

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The cable division (Cox Communications) is a separate division with separate management from the radio/TV/print/digital division (Cox Media Group).

Their main focus is being a diversified media and automotive company that doesn't rely too much upon one particular business. It's still family held - they took radio private on their own without selling their soul to venture capital. If they do a deal it's because they want to do it and they think it will make them more than they're making now, not because they're trying to impress Wall Street.

I could see Cox entering Boston, and possibly exiting Tampa, but not Seattle. Seattle has too many owners that can absorb the excess.

johndavis said:

The cable division (Cox Communications) is a separate division with separate management from the radio/TV/print/digital division (Cox Media Group).

Their main focus is being a diversified media and automotive company that doesn't rely too much upon one particular business. It's still family held - they took radio private on their own without selling their soul to venture capital. If they do a deal it's because they want to do it and they think it will make them more than they're making now, not because they're trying to impress Wall Street.

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All good points.

It would be a very uphill battle for Cox to enter Seattle. Stand alone FMs today are tough to operate (just ask Sinclair). Cox would either have to battle the stand alone disadvantage from the start or buy additional stations to compliment. And just to have some synergy with television? Not sure it's worth it. Or if it's even attainable at a reasonable price, given Bonneville owns the KIRO radio brand.

If Cox were to really open up the wallet, buy Bonneville's Seattle properties and a couple of other FMs from the shakeout of the CBS/Entercom deal, then it might make some sense for them. But even as a private company that diversifies its interests, that's a lot to take on. And CBS and Entercom are focused on tax-friendly swapping, making it even more unlikely for Cox to buy. At least at a reasonable price.

Last but not least, selling broadband bundles is much more profitable than operating radio stations, and that's hard for any company, public or private, to ignore.

DavidEduardo said:

What does Alpha have to trade that Entercom wants? They already said that for tax reasons they were looking for like-kind trades.

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Alpha went on that buying binge in 2012-15...there are several larger to mid-sized clusters. Not like-kind but the opportunity to enter a couple solid markets that they have no presence in. Not to say that they would, but...if the idea of Cox getting the stations is floating around, I'd say Alpha getting involved is just as likely.

My money is still on Hubbard. They can absorb two FMs that Entercom would need to divest. I do know Hubbard is pretty choosy as to what stations they pick up in a market...so depending on what gets jettisoned and/or what they could do with them may have a lot to do with their expanding in Seattle/Tacoma.

Radio-X

AQH said:

It would be a very uphill battle for Cox to enter Seattle. Stand alone FMs today are tough to operate (just ask Sinclair). Cox would either have to battle the stand alone disadvantage from the start or buy additional stations to compliment. And just to have some synergy with television? Not sure it's worth it.

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I agree...Not worth it!

Remember Bonneville's failed KIRO News 'Network' of KIRO AM/FM/TV...plus KJZZ was in the mix too. That is an example of failed media "synergy"...

I think that few years of time would be hanging over as a dark cloud much as the Cimarron hangs over Cadillac to this day.

Radio-X

But this WOULD be a straight trade with Cox...their Tampa radio properties plus maybe their San Antonio radio properties in exchange for Entercom's 2 spinoffs in Boston and 2 spinoffs in Seattle. It would give Cox 2 FM stations in both Boston and Seattle where they have TV properties, it would help Entercom clear the cap in these 2 markets, it would give Entercom radio properties in a top 25 market they don't already have (Tampa), and it would be preferential tax wise. Yeah Hubbard could buy the 2 Seattle stations, but they won't pay more than they're worth. A deal like this with Cox is easier and more beneficial financially.

iamarussianpirate said:

But this WOULD be a straight trade with Cox...their Tampa radio properties plus maybe their San Antonio radio properties in exchange for Entercom's 2 spinoffs in Boston and 2 spinoffs in Seattle. It would give Cox 2 FM stations in both Boston and Seattle where they have TV properties, it would help Entercom clear the cap in these 2 markets, it would give Entercom radio properties in a top 25 market they don't already have (Tampa), and it would be preferential tax wise. Yeah Hubbard could buy the 2 Seattle stations, but they won't pay more than they're worth. A deal like this with Cox is easier and more beneficial financially.

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Good point. Entercom kinda prepared to split up Boston by cutting WAAF's in-city simulcast to a new format last month.

Now, as for what will be spun off from the new Entercom/CBS Radio

I'd imagine that the rimshot 107.3/Worcester will be one of the Boston stations cut out along with 93.7. I'd reckon 96.5 and 103.7 will be on the chopping block here in Seattle. Still probably too early to tell, though...even though I'd imagine Seattle's stations get snapped up quick regardless of which ones get cut.

Radio-X

Radio-X said:

...even though I'd imagine Seattle's stations get snapped up quick regardless of which ones get cut.

Radio-X

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Nah, why would ANYONE want to buy/trade for a station in Seattle?

Rob Piotrowski said:

Nah, why would ANYONE want to buy/trade for a station in Seattle?

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Booming economy...pretty high population growth, high incomes, and stations which are not plagued by signal problems.

Boston metro and Seattle are similar in size (Boston is a bit larger). I tend to bet whatever gets sold in Baaaahston is going to take longer to sell than Puget Sound.

Either that, or my sarcasm detector is broken...quite possible. Had to borrow some parts to enhance my B.S. detector.

Radio-X

Rob Piotrowski said:

Nah, why would ANYONE want to buy/trade for a station in Seattle?

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You make a good point, actually. Its a huge investment to move in to an already saturated market with unknown upside.

DavidEduardo said:

Nassau Suffolk is an embedded market in the NYC metro. Stations there would count against the NYC cap. And revenue in the market is ranked 44th, so there is no reason to go there.

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The embedded market rule is under review. If the FCC decides to abolish that rule, Entercom can certainly acquire stations in the Nassau-Suffolk/Long Island market and possibly open the floodgates for other broadcasters to acquire stations in embedded markets without exceeding the ownership limits of the parent market.