Control of Radio Medford, which operates four FM and two AM stations in the Rogue Valley, has changed.
Debt-laden Mapleton Communications, based in Los Angeles, has turned over a 90 percent stake in the company to New York-based Corporate Partners II, an equity fund related to Lazard Alternative Investments (note: This name was altered for clarification).
Three years ago, Mapleton Communications President and Chief Executive Officer Adam Nathanson issued a statement saying he was "thrilled" to collaborate with Lazard Alternative Investments.
Those were boom times and investment dollars were readily available for expansion in an industry that had seen revenue growth in all but two years over a four-decade period.
Since then, the global economy has tanked, radio is in the midst of its third-straight year of declining revenue and the value of stations, which commanded premium prices a short while ago, is tumbling.
Lazard Alternative Investments financed Mapleton Communications' acquisition of 10 stations in Chico, Calif., and Redding, Calif., from Regent Communications for $17.5 million. Although it was an equity investor, subordinate to a major bank, Lazard Alternative Investments (note: This name was altered for clarification) was positioned to assume control of the second-largest radio operator in California in terms of stations.
"It's pretty much simple math," said George Reed of Media Services Group in Jacksonville, Fla. "When the economy softened, it affected the top lines in the radio business. Coupled with the credit markets completely drying up, there was no credit available and no way to refinance debt. Obviously, the big prices paid for stations have come down and then you find yourself in a difficult situation with your lender."
Nathanson's assistant said he was out of the office on vacation this week. Ron Hren, senior vice president for Mapleton Communications, declined comment, referring media queries to Nathanson.
Mapleton Communications operates 41 radio stations in California, Oregon and Washington, including Radio Medford, acquired from Marathon Media in August 2001. Stations in the local cluster are KTMT-FM (93.7), KBOY-FM (95.7), KCMX-FM (101.9), KAKT-FM (105.1), KGAY-AM (580) and KCMX-AM (880). The change of ownership, which included six Southern Oregon translators, was posted on the Federal Communications Commission Web site this week.
"As a rule, anything not in acquired the past three or four years is probably carrying too much debt," said Tom Taylor, a veteran radio industry observer in New Jersey. "Almost all the deals look expensive in hindsight. I'm not saying they are going to crash, but there is too much debt."
While relatively few broadcast groups have gone into bankruptcy, Taylor said, "It's going to be a ritual you are going to see repeated in radio and many other sectors."
One industry analyst, speaking at this spring's National Association of Broadcasters, predicted 80 to 90 percent of radio groups were in default or would be by the end of the year.
"I haven't seen anything in my experience to suggest that's not correct," Reed said.
More often than not, ownership changes lead to executive changes. However, Lazard will reportedly keep Mapleton's top management and no immediate changes at the stations were announced.
"In some situations like this, management gets booted out when there is an ownership change," Reed said. "Mapleton worked out a deal to restructure the balance sheet and continue in business — not all broadcasters are that fortunate."
Reach reporter Greg Stiles at 776-4463 or e-mail firstname.lastname@example.org.