Alpha and Matrix Sell stations in the Chicago area

https://radioinsight.com/headlines/174442/alpha-matrix-sell-pair-in-suburban-chicago/

Alpha Media will acquire both Classic Rock “103.9 The Fox” WFXF Dundee and AC “Star 105.5” WZSR Woodstock for $4,669,011.

To remain under the ownership caps, WFXF will be spun-off to Educational Media Foundation for $900,000. WFXF will join a growing EMF operation that includes “K-Love” on 97.9 WCKL Chicago, 89.1 WOKL Round Lake Beach and 92.5 WCLR Dekalb plus “Air 1” on WJKL Glendale Heights and 88.1 WAIW Wheaton as well as a number of smaller signals in the region.

Alpha Media will retain WZSR and instead divest Classic Rock “Q-Rock 100.7” WRXQ Coal City/Joliet to Steven Seline’s Walnut Radio Illinois for $300,000. Walnut Radio does not own any other properties in Illinois but owns six stations in and around Omaha NE. Walnut Radio will enter into a Shared Services Agreement with Alpha.

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Ownership caps are being mentioned here and also Matrix was under Chapter 11 in 2018 in the report.

Sad, they keep taking our Rock stations for this Christian crap. First The Loop, now this...

The Fox was sounding great too. Although, I do admit I occassionally turn off Capone in the afternoon because I tire of his constant blathering about the corporate rock radio bastards, but with this, he is going all out. Guitar Friday is everyday. Metal Monday is everyday...

They should've spun off the Star instead. Tina Bree drives me nuts. She sounds like an old crow.

I continue to believe the real questions may be why some owners see such little future in rock programming that they choose to sell. That and perhaps why the only buyers choosing to pay the sellers price are parachurch organizations like EMF? Is there that little money left to be made? And if they'd chosen to spin Star instead, does anyone believe that it too would have gone to EMF?

The thing I read from this though is that Alpha almost gifted them these two stations. You can't tell me the fair market value of them combined is $900k. Or maybe you can, I don't know. It just seems almost like Alpha wanted to write them off, so who comes along and will gladly take the discounted price... EMF.

DavidEduardo said:

Have you considered that, to Contemporary Christian listeners, a rock format may be "crap"?

In these cases, it's your opinion but not necessarily a consensus view by everyone in the market. In many cases, the EMF or other Christian music formats have done better than what they replaced.

Not everyone likes rock formats. Or Contemporary Christian ones. That is why the FCC has given each city multiple licenses to broadcast.



The Fox had an average share of 0.0 in the last three non-holiday books of 2018, and 105.5 had a 0.3 in 25-54. Not enough to get much sales traction.

Obviously, selling a station is a multi-faceted decision. In the first big EMF purchase, Cumulus was in bankruptcy, that affected a whole chain of decisions. And neither station was billing well. The same is likely the scenario now.

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DavidEduardo said:

The question is whether these stations, bought in 2013 for $5.5 million, were billing at a level worth anything more than $4.7 Alpha is paying.

The station they are selling is not showing in ratings, and is a very low biller. Likely not worth any more than they are letting it go for.

WZSR is, on the other hand, billing nearly $3 million a year. That makes it likely that the price paid for it was reasonable, and that is what Alpha wanted. They traded up, spinning a near-valueless station and then selling their smallest Chicago MSA station to stay under the ownership limits.

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1) I understand it's my opinion. But much like everyone else, I'm entitled to it.
2) I don't see the need to have 17 stations (ok, I'm being facetious), with the same programming. I'm not talking several different players doing the same general format, I'm talking one owner with multiple sticks, playing the same exact format.
3) I never expect either of these stations to rank high or bill very highly. This isn't a downtown Chicago, major station. These are stations out on the rim, with somewhat more limited signal that sell to a ton of local businesses. Both of which being sister stations, are the same businesses (for the most part), being advertised between the two stations. The same car dealerships (Gary Lang, Bull Valley, Crystal Lake CDJ), the same brewing companies (Crystal Lake Brewing), the same restaurants (BWW, and a myriad of locals), the same HVAC and other home companies (Black Diamond Plumbing, Heumann Water Conditioning, Incredible Builders, etc...), etc, etc. So there may be some funny billing practices going on in that Star is taking the hit for both stations and showing all the billing while the Fox is not. I know, they're not supposed to do that, but...

Yes, I listen to both throughout the day. Mostly the Fox, but later in the day, when Capone is driving me bonkers, I switch to Star 105.5.

And Capone just came on and was complaining that he was told by Management NOT to play all vinyl for his entire show.

An additional point is locally owned businesses are typically spending less because larger companies and online is decreasing their customer count and profitability. From what I have seen in recent years is a 3% to 5% decrease in local business advertising budgets. In many respects the big national chains and online venues are doing what better transportation did to the small town merchant after World War II. It's not that radio isn't working but rather that larger competitors are more effective in gabbing the smaller retailer's customer.

CMNTMXR57 said:

Sad, they keep taking our Rock stations for this Christian crap. First The Loop, now this...

The Fox was sounding great too. Although, I do admit I occassionally turn off Capone in the afternoon because I tire of his constant blathering about the corporate rock radio bastards, but with this, he is going all out. Guitar Friday is everyday. Metal Monday is everyday...

They should've spun off the Star instead. Tina Bree drives me nuts. She sounds like an old crow.

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Exit fun radio, enter brainwash radio....

103.9...more info

Let me add one other thing here...

The transmitter site is in dire need of a makeover. An easy $100K+ investment. The present owner doesn't have the resources to effect that type of change. Never mind the fact the present owner was supposed to be a selling trust when Next Media's grandfathered station count exceeded the maximum for the market. It was never expected of them (or for that matter any selling trust) to engage in a major capital project unless that's agreed upon at the time of the trust's creation.

When the stations entered debtor in possession status last year, the FOX was shopped heavily and agressively. All the local players big and small turned down the offer as they knew what was needed in terms of investments needed for the TX site and additional studio space. It would have been a natural fit for WRMN. But their operation isn't suited to add a music station. Too much for the return in investment.

Let me add one other thing...the station is making money now and has for some time. As others have pointed out, scales of economy are a necessity today in all forms of business. And while the scale of Star's format and overall business operation blended to the FOX to some degree, the station is floating itself cash wise. The sale of the station was really necessitated by the "bankruptcy" and Alpha's over-riding desire to return STAR back into the group as a fully owned and integrated station as opposed to a shared services arrangement..which was a complete disaster from both sides perspective and drove the bankruptcy in the end.

EMF as a buyer is now the buyer of last resort. That's what happened with WCPT-FM. No takers there either. Same reasons. Studios and staff needed.

Make no mistake, EMF is now a 600lb gorilla in radio. Only Iheart(less) Media is bigger in terms of reach. Bigger than Entercom, Cumulus, Alpha, Townsquare, et al. And they have the cash flow to make it stick along with a business model which neither requires or demands a local studio or staff. Never mind fill a gap in their coverage map between Chicago, Rockford and Milwaukee. The question is what they will do with their local translators in that area and how they will address the rather dire need for a TX makeover.

RG

Rex Radio said:

EMF as a buyer is now the buyer of last resort. That's what happened with WCPT-FM. No takers there either. Same reasons. Studios and staff needed.

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This was pointed out on another board, but the metric EMF offers is based on the number of people living in the coverage area. That ends up becoming a very competitive metric. In many cases that number is higher than any multiple of cash flow. They certainly don't care much about the studios. So that gives them a leg up in ways traditional owners can't follow.

Rex Radio said:

The question is what they will do with their local translators in that area and how they will address the rather dire need for a TX makeover.

RG

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From what I've heard, EMF runs a clean technical plant, so if the transmitter site needs work, they'll do what needs to be done.

As for translators that overlap, they can be used as properties to swap or sell, or they can put a different service on it.

Monday it's all over. They even moved their adult Easter egg hunt to this Saturday.

BJSteigner said:

Exit fun radio, enter brainwash radio....

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As much as I rail on Capone and his tired "Corporate Rock Radio Bastard..." mantra, I gotta say, the last few weeks have been awesome.