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Home , Alpha Media, KCMT, KCRO, KFFN, KJOT, KQXR

Inside Radio Weekly August 6-10, 2018

Inside Story: Why Larry Wilson Stepped Down As Chairman. After founding Alpha Media with six of west-central Missouri. Alpha Media for a change and didn’t elaborate further. stations in 1999 and growing it into one president/CEO Bob Proffitt told Inside “As with every company, there comes of the largest privately held radio groups, Radio in a recent interview that some a time for transitions in the leadership stepping down as chairman is likely portfolio trimming is possible. “It depends positions,” VP of marketing Randi P’Pool bittersweet for Larry Wilson. While neither on how our board and investors feel, but told Inside Radio. “Bob and his team Wilson nor the company has offered a right now we’d like to de-lever a little bit,” have worked closely with Larry for many public explanation for the abrupt change he said. years, and there comes a time when announced last week, sources say it has many factors come into play when the to do with differences of opinion between But as an independent-minded, lifelong founder changes roles.” Wilson and Alpha’s board of directors broadcaster who built the company over the future direction of the company. from scratch, those who know Wilson P’Pool noted that Wilson remains a well say it’s not hard to imagine him board member, adding, “We value his being a reluctant seller and not wanting past contributions and look forward to to let go of some of the radio empire he his continued contributions in the future.” weaved together, especially with the As for selling – or buying – the company potential for the FCC to loosen its radio is keeping its options open. “We will ownership rules. continue to look for good strategic opportunities in the sale and acquisition Another option for Alpha to strengthen its of assets,” she said. balance sheet would be to bring in equity partners and refinance some debt. “The The latest FCC ownership data shows debt clearly needs to be restructured,” a Little Rock-based Stephens Radio is source close to Alpha Media said. “The Alpha’s biggest owner with 27.6% of the company is servicing its debt and isn’t in company’s equity, followed by Endeavour any danger of missing payments, even Capital (19.9%). Wilson owns 4.9% of though the debt is overpriced. When the company. you’re paying too much for something, you want to change that.” Key to Alpha’s future will be who the board elects as chairman at its next meeting Alpha owns 229 stations in 50 markets Said another source, “When the founder and what they agree is the prudent path and is said to be performing well is strong-willed and can be stubborn as a moving forward. operationally. But the Portland, OR- mule and he’s butting heads with some of based broadcaster needs to improve his board members – which include other “To Larry’s great credit, he laid a its balance sheet, according to sources investors – and everyone’s not seeing eye- sustainable foundation for the company close to the company. Specifically Alpha to-eye, there’s going to be some friction.” from the start, which has been enhanced is carrying some “expensive debt” from There had been speculation in recent over the years. We have a sound strategy, its $264 million purchase of Digity Media years that Alpha might consider an a strong bench and are well positioned to in February 2016. S&P Global Ratings IPO, but Wilson closed the door on that carry out his vision for years to come,” lowered the company’s corporate credit possibility in 2016. P’Pool said. rating in May, saying it expected the radio broadcaster’s interest expenses Wilson did not respond to will increase, further limiting its ability to Inside Radio’s requests for generate sufficient cash flow to reduce comment and it’s not known leverage. “We believe the company’s exactly where he stands on capital structure is unsustainable and spinning-off stations. What’s that it will face significant refinancing next for Wilson, 73, is also not risk over the remaining life of its senior clear. He’s been splitting his secured term loan due in early 2022,” time between his homes in S&P said in the May report. Montana and Hawaii in recent years. While Wilson and the board apparently agree that Alpha needs to deleverage, ‘Not Much Will Change’ there is a difference of opinion as to how For its part, Alpha says “not that should be accomplished, according much will change” with Proffitt to sources. One option is to sell off some continuing to run the day-to-day of the company’s markets to pay down operations of the company. As debt. In fact Alpha has already cut a deal to why Wilson stepped down, to sell a trio of stations in an unrated part the company said it was time

Page 1 Inside Radio Weekly August 6-10, 2018 With Uptick in Revenue, Townsquare Outlines Clear Strategy. With a crystal clear strategy as it moves forward, Townsquare Media is positioning itself for long-term growth via a four-point plan. Co-CEO Dhruv Prasad outlined the company’s blueprint during its Q2 earnings call. First, he said it is focused on “local first, investing in content and sales execution within our local market footprint in order to drive stable results from our foundational broadcast product offerings.” This includes Townsquare’s acquisition of three radio stations in New Jersey for $17 million from Connoisseur Media at the beginning of third quarter. Prasad said the second objective is to “reduce complexity and the volatility in our business,” which it has accomplished by reviewing and reorganizing live events and its national digital businesses. This was highlighted by the Field: With Q2 Behind It, Entercom Is ‘Turning The Corner.’ divestiture in May of North American Midway Entertainment With a second straight quarter of negative growth now behind (NAME) after three years. Finally, Townsquare sees what is it, Entercom CEO David Field’s message to investors is the perhaps its greatest growth coming from its digital products and company is “turning the corner” and is “well positioned for solutions platforms Townsquare Interactive and Townsquare sustainable revenue growth” in the second half of the year. Ignite. In Q2, digital marketing solutions business Interactive While Entercom still has an uphill climb to grow topline increased revenue to $11.7 million, representing revenue revenue, the brunt of the hard work of integrating the former growth of 17% compared to 2017. Wilson said that it added CBS Radio stations is now in the rearview mirror and Field is 850 net subscribers for its digital services, markedly increasing forecasting “significant” revenue growth during the back half from the previous four quarters where it averaged 400 net adds. of 2018. “Much of the heavy lifting in terms of integration from The total number of subscribers is now 13,650. Net revenue for the merger is behind us, and our pacings are accelerating as Townsquare in Q2 increased $2.3 million, or 1.9%, compared we begin to gain traction locally and across several of our key to 2017. Excluding political revenue, the figure increased to growth drivers,” Field said during the company’s second quarter $118.3 million. earnings call Wednesday. Wall Street apparently liked what it heard. Investors rallied behind Entercom, bidding its stock iHeartRadio Surpasses 120 Million Registered Users. price up 20% on nearly double than normal volume to close iHeartRadio has surpassed 120 million registered users, with the at $8.35 on Wednesday. The company reported progress in addition of some 10 million listeners over the past few months. turning around the legacy CBS Radio stations, which Field said Now available on 250 platforms—from gaming devices to in- pacing roughly in line with the legacy Entercom stations. Half of home and auto—iHeartRadio is also the No. 1 commercial radio six major format changes are showing positive revenue growth, podcaster in the U.S, with 20,000 podcasts across 20 different led by classic hip-hop “104.3 Jams” WBMX Chicago, which unique categories, including 750 iHeartRadio original podcasts. has doubled its billings from one year ago.While third quarter The iHeartRadio blog points to audience podcast favorites is pacing down 2% (excluding expected losses from the United “The Ben and Ashley I. Almost Famous Podcast,” “Not for Lazy States Traffic Network debacle), that’s a big step-up from Q2’s Moms” and “Business Unusual with Barbara Corcoran”; while 8% slide. And fourth quarter is pacing up 3% on an unadjusted the company also announced this month new feature, “Your basis. Field identified several factors driving the second half Weekly Mixtape,” a custom-made playlist based on the listening turnaround. Local business, which dragged Entercom down in habits of registered users. It offers users 30 to 70 songs and is the first half, is “absolutely improving,” including some of the updated each Monday. According to the blog, iHeartRadio has large legacy CBS markets that were laggards in the first half. also added new music streaming features, offering listeners The company is also making early progress from “scale-based integrations with Amazon’s Echo Dot Kids Edition, Southwest initiatives” such as the new Entercom Audio Network and the Airlines inflight entertainment portal and more. relaunched Radio.com streaming app. Scripps Sells Boise and Tucson Clusters To Lotus After Q2 Drop, Urban One Expects Strong End Of Year. For $8 Million. Urban One saw net revenue drop 3.5% in its radio segment The E.W. Scripps Company’s radio sell-off picked up steam following declines in Atlanta – which was down 11.3% – Tuesday with a two-market $8 million sale. The Cincinnati- Philadelphia, Raleigh and St. Louis. Growth markets included based broadcaster says it has cut a deal to sell a total of eight Cleveland, Dallas and Washington, DC. Total broadcast and radio stations in Boise and Tucson to digital operating income was $44.3 million, up 6.1%. Second for $8 million. The deal marks the third cluster sale for Scripps quarter results saw an overall decrease of 2.1% in net revenue with five more markets to go. The Tucson stations included year-over-year with $115.2 million reported. The down tick did in the deal are AC “94.9 Mix FM” KMXZ-FM, sports “ESPN not come as a surprise to president/CEO Alfred Liggins, who Tucson” KFFN (1490), news/talk KQTH (104.1), rhythmic AC said the results were “in line with the expectations we had.” “106.3 The Groove” KTGV and the Tucson-licensed translator Liggins said Q3 looks flat for the company’s radio segment but K285DL at 104.9, which rebroadcasts KFFN. In Boise, Lotus he expects a strong fourth quarter, which will “be a big quarter is picking up “J105” KJOT (105.1), rock “The X” for political,” he said. Government, the public sector, service KQXR (100.3), adult alternative “94.9 The River” KRVB (94.9) industries and automotive ad categories showed growth, and classic hits “107.1 K-Hits” KTHI. To conform with the FCC’s however retail, entertainment, food and beverage were down local ownership caps, Lotus says it will immediately sell KQTH in Q2. Net revenue for the company’s Reach Media syndicated and KTGV in Tucson. network was down 6%.

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Page 3 10 Groups Voice Support For NAB Dereg Proposal. Inside Radio Weekly A group of 10 radio groups has written an open letter voicing August 6-10 2018 its support for the NAB’s June 15 proposal to dramatically roll back some of the current ownership limits. The missive – signed by top executives at Alpha Media, Connoisseur Media, Saga Tees Up A Pair Of Deals, Q2 Revenue Holds Steady. Emmis Communications, , Mid-West After unloading its TV division last September and scooping up Family Stations, Neuhoff Communications, NRG Media, Perry eight South Carolina radio stations and four translators, Saga is Publishing and , Townsquare Media and Zimmer actively pursuing two more acquisitions. CEO Ed Christian says Radio – says the emergence of digital platforms and devices he and CFO Sam Bush spent the last quarter kicking the tires has “fundamentally disrupted” today’s media landscape, giving on four potential deals and two remain “ongoing discussions and radio powerful – and unregulated competitors – like Facebook, interesting opportunities.” Christian is known for waxing philo- Google, Spotify, Pandora, YouTube and sophic on radio issues during the company’s earnings calls and others that didn’t exist when the current on Tuesday he offered a brief state of the radio industry. “It’s good, rules were enacted 22 years ago. The letter actually it’s very good,” he said. “We’re not a declining media.” makes three principal arguments. First, But all is not rosy in the Saga CEO’s view. Commercial loads are relaxing or eliminating ownership rules would “approaching unlistenable levels,” he said, as broadcasters add “bolster the industry’s financial position at a inventory to compensate for falling ad rates, which he called a time of unprecedented competition” by allowing companies to poor way to do business. “There has to be quality control. The take advantage of the economies of scale. Second the groups industry has to address this.” On a pro-forma basis, Saga’s Q2 claim that common ownership will drive more format diversity, net revenue decreased 0.6% to $30.1 million, while operating in- as companies “use their additional stations to experiment and come was up 1.5% to $6.0 million and station operating expenses develop new and micro-targeted formats, rather than compete dipped 1.0% to $21.2 million. with their existing stations.” Third, the groups call “counter- intuitive” the FCC’s elimination last November of the newspaper- Study: Tier Two Auto Ads Drive Purchase Intent. broadcast and radio-television cross-ownership rules without There is a perception that automotive ads running on radio also allowing radio groups to expand within their own industry. that require a disclaimer are perceived as “uninspiring” and But critics of allowing more consolidation say it would make “hard to listen to.” As a result, many domestic dealer groups radio’s big players bigger and hurt smaller operators, resulting in have steered clear of the airwaves for their campaigns. And yet fewer broadcasters serving local communities. Opponents also , partnering with audio creative testing specialist worry that allowing a company to buy more FMs would devalue Veritonic, found that tier two automotive ads were some of the AM radio as groups sell off AMs or show little interest in buying best testing radio ads in America. Out of Veritonic’s audio test stations on the struggling band. And they dispute the notion that database of 2,330 ads, the tier two automotive ads tested in owning more FMs in a market would give a cluster more clout the top 20%. The 20 tier two auto ads had an average total with advertisers and allow radio to better compete with digital score of 76, actually outperforming the tier one auto average of giants. 66 by 15%. The study also found that consumers do not mind when disclaimers are sped up. Perhaps most important: “Good Salem’s Broadcast Revenue Grew 3% In Q2. creative sells,” the study found. The better the ads tested, the Salem reported total company revenue increased 0.2% to $66.3 greater the purchase intent lift. million in Q2. Operating expenses grew 2.4% to $55.1 million, resulting in a 9.4% decline to $11.2 million in adjusted EBITDA, Radio Included In New Local Media Planning Tool. a measure of cash flow. Broadcast revenue grew 2.7% to $50.6 Nielsen has launched a new local media planning tool for agen- million while broadcast expenses were up 3.7%, leading to cies and advertisers that streamlines the buying of radio and flat station operating income of $13.3 million. But for a second TV advertising. Dubbed Local Media Impact, it marks the first consecutive quarter, same station operating income increased, time local radio is included in a multi-channel media planning this time inching up 1.3% to $13.7 million. Political dollars made tool of this type. Similar to national planning tools, the prod- up about half of the broadcast revenue increase, or about $1.4 uct is intended to help advertisers decide where and when to million. National Christian ministry block programming billings, a place buys on the local level. The new offering pulls in local key revenue driver for Salem, grew 3.2%. “We also had another qualitative audience data from Nielsen Scarborough to help strong quarter of network and spot revenue growth,” CEO Ed advertisers and agencies get a Atsinger told investors during the company’s Q2 earnings call handle on cross-media reach, Wednesday. Network revenue was up 16.3% and national frequency and duplication on spot revenue at Salem’s local radio stations shot up 23.3%. a local scale using advanced “However we did experience weakness in local spot revenue audience segments. It is ini- and local program revenue,” Atsinger said, which were down a tially available in the 25 Des- combined 3.1%. ignated Market Areas (DMAs) where TV viewing is measured by Nielsen’s Local People Meter (LPM).The overall goal is to Jersey, Philly Open Floodgates For Radio, TV. drive greater ROI for media buys and simplify the planning Less than three months after the U.S. Supreme Court ruled process. Local Nielsen Media Impact brings what’s known as that states were within their rights to allow sports betting, audience buying – that is, buying specific consumer segments broadcasters are already beginning to book advertising from like auto intenders or soccer moms – to the local level across what could be a lucrative new category. Beasley Broadcast TV and radio. Explaining how it works to Inside Radio in a Group is seeing revenue from sports betting in New Jersey, recent interview, Brad Kelly, managing director, Nielsen Audio, which was one of the first states to legalize the practice, while said, “So if I’m running a TV campaign and a radio campaign, also receiving ad inquires in Philadelphia because of its close what is the incremental additional reach lift that I can expect proximity to New Jersey. “We expect that this will do nothing as a result of shifting my dollars between media? This is an but bode well for , Philly and New Jersey,” CEO Caroline important planning tool that the big brands use to answer the Beasley said. Of course radio isn’t the only ad channel hoping question, ‘What did I get for the dollars I’m spending? If I’m to cash in. CEO Les Moonves said CBS Corp. has already speculatively shifting money into radio, how much did I move begun to book betting-related ad dollars on channel 3 KYW-TV the needle in terms of reach?’ On a market-by-market level, in Philadelphia and he expects a similar infusion in New York. you’ll be able to see the incremental additional reach coming “We’re extremely excited,” Moonves said. “It’s a category that from radio.” has an unbelievable upside.”

Page 4 SALES – STATIONS CLOSINGS: , San Jose & Sacramento – Bonneville strikes a $141 million deal to buy eight stations from Omaha-Council Bluffs, NE – closes a Entercom. In San Francisco it buys AC KOIT (96.5), CHR $3.15 million deal to sell one of its three stations in market “99.7 Now” KMVQ-FM, urban AC “R&B 102.9 Soul of the No. 74 with a deal to sell contemporary Christian “100.7 The Bay” KBLX-FM. In the adjacent Fish” KGBI to the University of Northwestern-St. Paul. The San Jose market Bonneville picks University already owns 17 noncommercial religious stations, up classic rock “98.5 K-Fox” KUFX mostly in the Midwest. KGBI will become its first in . for Entercom. And in Sacramento Salem has a pending deal to sell its two other stations in the Bonneville buys “New Country market including religious “660 The Word” KCRO and talk 105.1” KNCI, AC “Mix 96” KYMX “1420 AM The Answer” KOTK to Walnut Radio (see above). and hot AC “Now 100.5” KZZO Broker: Patrick Communications and “CBS 1140” KHTK. The deal includes two Traverse City-Petoskey-Cadillac, MI – Bryan Hollenbaugh’s KBLX-FM boosters in Berkeley and Pleasanton. Also, a 45 North Media closes a $750,000 deal to buy classic hits KMVQ-FM booster in Walnut Creek. And two boosters for “Eagle 101.5” WMJZ-FM from Kent Smith’s Darby Advertising. KUFX in Morgan Hill and Pleasanton. The three markets are The deal includes a $700,000 promissory note. Hollenbaugh each new for Bonneville which already operates clusters in most recently was general manager of Pamal Broadcasting’s , Phoenix, Denver and Seattle. Bonneville has stations in Albany, NY. He earlier oversaw Adelante Media been operating the stations since Nov. 2017 under a local Group’s markets in eastern Washington and . Darby marketing agreement with the divestiture trust created by Advertising still owns classic hits “Eagle 95.1” WUPN in Sault Entercom as part of its agreement with the Dept. of Justice Ste. Marie, MI market securing its approval to merge with CBS Radio. It had given Entercom one year to find a buyer and close the deal on the – Immaculate Heart Media closes a $750,000 deal to spin-off of the stations. Because of the size of the deal, the buy five Maine stations from The Presence Radio Network. transaction will also need to go through the DOJ’s antitrust They include WTBP (89.7) and WXTP (106.7) in the Portland, review process. Entercom still owns seven stations in San ME market. Plus WXBP (90.3) in the Bangor, ME market Francisco and six stations in Sacramento. Broker: Kalil Cola Wars Hit Full Force With and WWTP (89.5) in the Augusta-Waterville, ME market. Pepsi, Coke Vying On Radio. And WEGP (1390) in Presque Isle. Each has been airing Tucson & Boise, ID – Jim Kalmenson’s Lotus Communications the religious “The Presence Radio” network. The deal gives has struck an $8 million deal to buy eight station sin two Immaculate Heart Media its first stations in Maine. markets from the E.W. Scripps Company. In the Tucson, AZ market it buys AC “94.9 Mix FM” KMXZ-FM, sports “ESPN New York – Amanda Dagley and William Dickerson close a Tucson” KFFN (1490), news/talk KQTH (104.1), rhythmic AC $300,000 deal to buy classic hits WNBZ-FM, Saranac Lake, “106.3 The Groove” KTGV and the Tucson-licensed translator NY (106.3) from Ted Morgan’s Saranac Lake Radio. The sale K285DL at 104.9 FM which rebroadcasts KFFN. Lotus already leaves Morgan with one final deal to close in the Adirondack owns four stations in the Tucson market including classic rock region: the pending sale of the currently-silent KLPX (96.1), alternative “Rock 102” KFMA, regional Mexican WRGR, Tupper Lake, NY (102.1) to Border “La Caliente” KCMT (92.1), and Spanish “La Buena Media. Because that company is owned by 94.3” KTKT. In order to comply with FCC ownership limits two foreign nationals the deal is going through Lotus has announced plans to spin-off KQTH and KTGV. In the federal government’s review process. the Boise, ID market Lotus buys classic rock “J105” KJOT Border Media will also need to clear the FCC’s (105.1), rock “The X” KQXR (100.3), adult alternative “94.9 red-lighted status on WRGR which was put The River” KRVB (94.9) and classic hits “107.1 K-Hits” on the station since Morgan has failed to pay its regulatory KTHI. The deal marks the third cluster that Scripps has sold fees. Morgan earlier sold an AM/FM combo to North Country following earlier deals in and Tulsa. Scripps is Radio for a combined $38,500. Broker: Jason James, Patrick looking for buyers for five additional markets. Broker: Kalil Communications

Omaha-Council Bluffs, NE – Steve Seline’s Walnut Radio Texas – JAM Broadcasting closes a $250,000 deal to buy files a $1.375 million deal to buy talk “1420 AM The Answer” classic rock “Rev FM 94.3” KRVL, Kerrville, TX from the Foster KOTK and religious “660 The Word” KRCO from Salem Media Charitable Foundation. JAM Broadcasting already owns three Group. Walnut Radio already owns “Country 97.3” KBLR-FM other stations in the area including country “103.7 The Buck” and oldies “Boomer 1490” KOMJ in the market. No format KAXA, talk/classic country KERV (1230) and the construction changes are expected as KOTK and KCRO since Salem is permit KZAH (99.1). licensing the use of the brand names “The Word” and “The Answer” to Walnut Radio. The sale will leave Salem with – Ted and Jana Tucker’s Cochise Broadcasting contemporary Christian “100.7 The Fish” KGBI-FM in the closes a deal to donate the currently-silent KXMK, Oatman, Omaha-Council Bluffs market. Broker: Jorgenson Broadcast AZ (101.3) to Doug Martin’s Good News . Brokerage The donation is part of a May 2017 consent decree between Cochise Broadcasting and the FCC. Sarasota-Bradenton, FL – An The Lake Erie College of Osteopathic Medicine files a $520,000 deal to buy oldies WSRQ (1220) from Jim Lampl’s Florida . The deal includes two FM translators: the Sarasota, FL-licensed W295BH at 106.9 FM and the construction permit for the Venice, FL-licensed W240DP at 95.9 FM. The station dropped its longtime talk format at the end of June and currently brands as “Hitland 106.9.” That may’ve been setting it up for the new buyer since Lake Erie College already owns one station in the Erie, PA market: oldies “LECOM Radio 88.5” WMCE-FM. Page 5