We are a radio broadcasting company focused on acquiring, developing and operating radio stations in mid-sized markets. We currently own 51 FM and 17 AM radio stations in 14 markets in Colorado, Illinois, Indiana, Kentucky, Louisiana, Michigan, Minnesota, New York, and Texas. Our assembled clusters of radio stations rank first or second in terms of revenue share in all of our markets that are ranked by BIA Publications, Inc. in their Investing in Radio 2006 Market Report, except Albany, New York and Grand Rapids, Michigan, where our clusters rank third.
Our primary strategy is to secure and maintain a leadership position in the markets we serve and to expand into additional mid-sized markets where we can achieve a leadership position. After we enter a market, we seek to acquire stations that, when integrated with our existing operations, will allow us to reach a wider range of demographic groups that appeal to advertisers, increase revenue and achieve substantial cost savings. Additionally, our advertising pricing on a supply and demand basis, when combined with the added reach of our radio station clusters, allows us to compete successfully for advertising revenue against non-radio competitors such as print media, television, cable and outdoor advertising.
Relative to the largest radio markets in the United States, we believe that the mid-sized markets represent attractive operating environments because they are generally characterized by the following:
| — | a greater use of radio advertising compared to the national average; | ||
| — | lower overall susceptibility to fluctuations in general economic conditions due to a lower percentage of national versus local advertising revenues; | ||
| — | greater growth potential for advertising revenues as national and regional retailers expand into mid-sized markets; and | ||
| — | less direct format competition due to a smaller number of owners in any given market. |
We believe that these operating characteristics, coupled with the opportunity to establish or expand radio station clusters within a specific market as well as the expansions of our interactive initiative, create the potential for revenue growth and cost efficiencies.
Our portfolio of radio stations is diversified in terms of geographic location, target demographics and format. We believe that this diversity helps insulate us from downturns in specific markets and changes in format preferences.
Completed Acquisitions and Dispositions
We completed the following acquisitions and dispositions of radio stations during 2006. The purchase prices set forth below were paid in cash, except where otherwise indicated, but do not include transaction-related costs.
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2006 Acquisitions
| Purchase | ||||||||||||||
| No. of | Price (in | Date | ||||||||||||
| Seller | Market | Stations | Call Letters | millions) | Completed | |||||||||
AAA Entertainment, LLC |
Peoria, IL | 2 | WZPW-FM |
$ | 11.8 | (1) | 09/19/06 | |||||||
and B&G Broadcasting, Inc. |
WXMP-FM(2) | |||||||||||||
CBS Radio Stations Inc. |
Buffalo, NY | 5 | WYRK-FM | $ | 125.0 | 12/15/06 | ||||||||
| WBLK-FM | ||||||||||||||
| WJYE-FM | ||||||||||||||
| WBUF-FM | ||||||||||||||
| WECK-AM |
2006 Dispositions
| Sale Price | ||||||||||||||
| No. of | (in | Date | ||||||||||||
| Purchaser | Market | Stations | Call Letters | millions) | Completed | |||||||||
Independence Media of |
Peoria, IL | 3 | WIXO-FM(2) | $ | 2.8 | (3) | 09/19/06 | |||||||
Illinois, LLC and |
WPIA-FM | |||||||||||||
related entities |
WVEL-FM | |||||||||||||
Mapleton |
Chico, CA | 4 | KFMF-FM | $ | 17.5 | (4) | 11/30/06 | |||||||
Communications, LLC |
KALF-FM | |||||||||||||
| KQPT-FM | ||||||||||||||
| KZAP-FM | ||||||||||||||
| Redding, CA | 6 | KSHA-FM | ||||||||||||
| KNNN-FM | ||||||||||||||
| KRDG-FM | ||||||||||||||
| KRRX-FM | ||||||||||||||
| KNRO-AM | ||||||||||||||
| KQMS-AM | ||||||||||||||
W. Russell Withers, Jr. |
Evansville, IN | 1 | WYNG-FM | $ | 1.5 | (5) | 12/22/06 |
| (1) | We acquired substantially all the assets of WXMP-FM and the common stock of B&G Broadcasting, Inc., owner of WZPW-FM. | |
| (2) | Regent retained the right to the call letters and format of WIXO-FM, which it transferred to the broadcasting signal of its newly acquired station, WXMP-FM. The rights to the WXMP-FM call letters and format were transferred to Independence Media of Illinois, LLC and related entities. | |
| (3) | The $2.8 million sale price was paid approximately $1.9 million in cash and a $925,000 note receivable. We recognized a pre-tax loss on the transaction of approximately $1.9 million. | |
| (4) | We recognized a pre-tax loss on the disposition of approximately $0.2 million. | |
| (5) | We recognized a pre-tax gain on the disposition of approximately $0.3 million. |
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Subsequent Acquisition
On January 4, 2007, we completed the acquisition of WBZZ-FM (formerly WNYQ-FM) in Albany, New York from Vox New York, LLC for $4.9 million in cash, plus reimbursement of transmitter construction costs of approximately $212,000.
Acquisition Strategy
Our acquisition strategy is to expand within our existing markets and into new mid-sized markets where we believe we can effectively use our operating strategies. Although significant competition exists among potential purchasers for suitable radio station acquisitions throughout the United States, we believe that there is currently less competition in mid-sized markets, particularly since there is evidence that the two other public mid-market consolidators have changed their focus to major markets. After entering a market, we seek to acquire additional stations that will allow us to reach a wider range of demographic groups to appeal to advertisers and increase revenue. We also integrate these stations into our existing operations in an effort to achieve operational cost savings. We have sold or will sell stations in different markets that did not or do not fit within our existing acquisition strategy.
We believe that the creation of strong station clusters in our local markets is essential to our operating success. In evaluating an acquisition opportunity in a new market, we assess our potential to build a leading radio station cluster in that market over time. We will not consider entering a new market unless we can acquire multiple stations in that market. We also analyze a number of additional factors we believe are important to success, including the number and quality of commercial radio signals broadcasting in the market, the nature of the competition in the market, our ability to improve the operating performance of the radio station or stations under consideration and the general economic conditions of the market.
We believe that our acquisition strategy, properly implemented, affords a number of benefits, including:
| — | greater revenue and station operating income diversity; | ||
| — | improved station operating income through the consolidation of facilities and the elimination of redundant expenses; | ||
| — | enhanced revenue by offering advertisers a broader range of advertising packages; | ||
| — | improved negotiating leverage with various key vendors; | ||
| — | enhanced appeal to top industry management talent; and | ||
| — | increased overall scale, which should facilitate our capital raising activities. |
We have developed a process for integrating newly acquired properties into our overall culture and operating philosophy, which involves the following key elements:
| — | assess format quality and effectiveness so that we can refine or change station formats in order to increase audience and revenue share; | ||
| — | upgrade transmission, audio processing and studio facilities; |
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| — | expand and strengthen sales staff through active recruiting and in-depth training; | ||
| — | convert acquired stations to our communications network and centralized networked accounting system; and | ||
| — | establish revenue and expense budgets consistent with the programming and sales strategy and corresponding cost adjustments. |
From time to time, in compliance with applicable law, we enter into time brokerage agreements or local marketing agreements (under which separately owned and licensed stations agree to function cooperatively in terms of programming, advertising, sales and other matters), or similar arrangements, with a target property prior to final Federal Communications Commission (“FCC”) approval and the consummation of the acquisition, in order to gain a head start on the integration process. The most recent example of such an agreement was our local marketing agreement for the Buffalo, New York stations, where we began operating the stations more than two months prior to the completion of the acquisition.
Operating Strategy
Our operating strategy focuses on maximizing our radio stations’ appeal to listeners and advertisers and, consequently, increasing our revenue and station operating income. To achieve these goals, we have implemented the following strategies:
Ownership of Strong Radio Station Clusters . We seek to secure and maintain a leadership position in the markets we serve by owning multiple stations in those markets. By coordinating programming, promotional and sales strategies within each local station cluster, we attempt to capture a wider range of demographic listeners to appeal to advertisers. We believe that the diversification of our programming formats and inventory of available advertising time strengthens relationships with advertisers, increasing our ability to maximize the value of our inventory. Operating multiple stations in a market enhances our ability to market the advantages of advertising on radio versus other media, such as newspapers and television.
Our ability to utilize the existing programming and sales resources of our radio station clusters enhances the growth potential of both new and underperforming stations while reducing the risks associated with the implementation of station performance improvements, such as new format launches. We believe that operating leading station clusters allows us to attract and retain talented local personnel, who are essential to our operating success. Furthermore, we seek to achieve cost savings within a market through the consolidation of facilities, sales and administrative personnel, management and operating resources, such as on-air talent, programming and music research, and the reduction of other redundant expenses.
Aggressive Sales and Marketing . We seek to maximize our share of local advertising revenue in each of our markets through aggressive sales and marketing initiatives. We provide extensive training through in-house sales and time management programs and independent consultants who hold frequent seminars and are available for consultation with our sales personnel. We emphasize regular, informal exchanges of ideas among our management and sales personnel across our various markets. We seek to maximize our revenue by utilizing sophisticated inventory management and pricing techniques to provide our sales personnel with frequent price adjustments based on regional and local market conditions. We further strengthen our relationship with some advertisers by offering the ability to create customer traffic through an on-site event staged at, and broadcast from, the advertiser’s business location. Prior to their acquisition, many of our newly acquired stations had underperformed in sales, due primarily to undersized
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sales staffs, inadequate training and lack of management oversight. Accordingly, we have significantly expanded the sales forces of many of our acquired stations and instituted processes to increase awareness of and accountability for the achievement of established goals.
Targeted Programming and Promotion . To maintain or improve our position in each market, we combine extensive market research with an assessment of our competitors’ vulnerabilities in order to identify significant and sustainable target audiences. We then tailor the programming, marketing and promotion of each radio station to maximize its appeal to the targeted audience. We attempt to build strong markets by:
| — | creating distinct content and highly visible profiles for our on-air personalities; | ||
| — | utilizing market research to formulate recognizable brand names for select stations; and | ||
| — | supporting localism through active participation in community events and charities. |
Decentralized Operations . We believe that radio is primarily a local business and that much of our success will be the result of the efforts of regional and local management and staff. Accordingly, we decentralize much of our operations at these levels. Each of our station clusters is managed by a team of experienced broadcasters who understand the musical tastes, demographics and competitive opportunities of their particular market. Local managers are responsible for preparing annual operating budgets and a portion of their compensation is linked to meeting or surpassing their operating targets. Corporate management approves each station cluster’s annual operating budget and imposes strict financial reporting requirements to track station performance. Corporate management is responsible for long range planning, establishing corporate policies and serving as a resource to local management.
Station Portfolio
We currently own or operate 51 FM and 17 AM radio stations in 14 mid-sized markets. The following table sets forth information about the stations that we owned or operated at December 31, 2006.
As you review the information in the table below, you should note the following:
| — | The abbreviation “MSA” in the table means the market’s rank among the largest metropolitan statistical areas in the United States. | ||
| — | The abbreviation “REV” in the table means the ranking of the market by BIAfn’s estimate of 2006 market gross radio advertising revenues in the United States. | ||
| — | In the Primary Demographic Target column, the letter “A” designates adults, the letter “W” designates women and the letter “M” designates men. The numbers following each letter designate the range of ages included within the demographic group. | ||
| — | Station Cluster Rank by Market Revenue Share in the table is the ranking, by radio cluster market revenue, of each of our radio clusters in its market among all other radio clusters in that market. | ||
| — | We obtained all metropolitan statistical area rank information, market revenue information and station cluster market rank information for all of our markets from Investing in Radio |
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| 2006 Market Report, published by BIA Publications, Inc. The information was obtained from that database on March 5, 2007. | |||
| — | We obtained all audience share information from the Fall 2006 Radio Market Report published by The Arbitron Company, the radio broadcast industry’s principal ratings service. We derived station cluster audience share based on persons ages 12 and over, listening Monday through Sunday, 6:00 a.m. to 12:00 midnight. | ||
| — | N/A indicates the market has no MSA rank and is not rated by Arbitron. |
| Station | ||||||||||||||
| Cluster | Station | |||||||||||||
| Rank by | Cluster | |||||||||||||
| Station | Primary | Market | 12+ | |||||||||||
| Radio Market/ | MSA | REV | Programming | Demographic | Revenue | Audience | ||||||||
| Station Call Letters | Rank | Rank | Format | Target | Share | Share | ||||||||
Albany, NY |
63 | 58 | 3 | 15.7 | ||||||||||
WQBJ-FM |
Rock | M 18-49 | ||||||||||||
WQBK-FM |
Rock | M 18-49 | ||||||||||||
WBZZ-FM* |
Hot Adult Contemporary | A 25-54 | ||||||||||||
WGNA-FM |
Country | A 25-54 | ||||||||||||
WTMM-FM |
Sports | M 35+ | ||||||||||||
WEEV-AM |
Women’s Talk | W 25-54 | ||||||||||||
Bloomington, IL |
241 | 181 | 1 | 37.1 | ||||||||||
WJBC-AM |
News/Talk | A 35-54 | ||||||||||||
WBNQ-FM |
Hot Adult Contemporary | W 25-54 | ||||||||||||
WBWN-FM |
Country | A 25-54 | ||||||||||||
WTRX-FM |
Oldies | A 35+ | ||||||||||||
WJEZ-FM |
Adult Contemporary | A 25-54 | ||||||||||||
Buffalo, NY |
52 | 41 | 2 | 26.1 | ||||||||||
WYRK-FM |
Country | A 25-54 | ||||||||||||
WJYE-FM |
Adult Contemporary | W 25-54 | ||||||||||||
WBUF-FM |
JACK Adult Hits | A 18-34 | ||||||||||||
WBLK-FM |
Urban | A 25-54 | ||||||||||||
WECK-AM |
Classic Country | A 35+ | ||||||||||||
El Paso, TX |
76 | 77 | 2 | 12.4 | ||||||||||
KSII-FM |
Hot Adult Contemporary | W 25-54 | ||||||||||||
KLAQ-FM |
Rock | M 18-49 | ||||||||||||
KROD-AM |
News/Talk | A 35+ | ||||||||||||
Evansville, IN |
162 | 120 | 2 | 32.7 | ||||||||||
WKDQ-FM |
Country | A 25-54 | ||||||||||||
WJLT-FM |
Oldies | A 35+ | ||||||||||||
WDKS-FM |
CHR | A 18-34 | ||||||||||||
WGBF-FM |
Rock | A 18-34 | ||||||||||||
WGBF-AM |
News/Talk | A 35+ |
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| Station | ||||||||||||||
| Cluster | Station | |||||||||||||
| Rank by | Cluster | |||||||||||||
| Station | Primary | Market | 12+ | |||||||||||
| Radio Market/ | MSA | REV | Programming | Demographic | Revenue | Audience | ||||||||
| Station Call Letters | Rank | Rank | Format | Target | Share | Share | ||||||||
Flint, MI |
127 | 121 | 1 | 22.2 | ||||||||||
WCRZ-FM |
Adult Contemporary | W 25-54 | ||||||||||||
WWBN-FM |
Rock | M 18-34 | ||||||||||||
WFNT-AM |
Adult Standards | A 35+ | ||||||||||||
WRCL-FM |
Rhythmic CHR | A 18-34 | ||||||||||||
WQUS-FM |
Classic Hits | A 25-54 | ||||||||||||
WLCO-AM |
Classic Country | A 35+ | ||||||||||||
Ft. Collins-Greeley,
CO |
125 | 163 | 1 | 16.6 | ||||||||||
KUAD-FM |
Country | A 25-54 | ||||||||||||
KTRR-FM |
Adult Contemporary | W 25-54 | ||||||||||||
KKQZ-FM |
80s Rock | M 25-54 | ||||||||||||
KKPL-FM |
Alternative | A 18-34 | ||||||||||||
KARS-FM |
Oldies | A 35+ | ||||||||||||
Grand Rapids,
MI |
67 | 57 | 3 | 15.7 | ||||||||||
WLHT-FM |
Adult Contemporary | W 25-54 | ||||||||||||
WGRD-FM |
New Rock | M 18-49 | ||||||||||||
WTRV-FM |
Soft Adult Contemporary | W 35+ | ||||||||||||
WNWZ-AM |
Spanish | A 25-54 | ||||||||||||
WFGR-FM |
Oldies | A 35+ | ||||||||||||
Lafayette, LA |
102 | 112 | 1 | 31.4 | ||||||||||
KPEL-FM |
News/Talk | A 35+ | ||||||||||||
KTDY-FM |
Adult Contemporary | W 25-54 | ||||||||||||
KRKA-FM |
Rhythmic CHR | A 18-34 | ||||||||||||
KFTE-FM |
Alternative | A 18-34 | ||||||||||||
KMDL-FM |
Country | A 25-54 | ||||||||||||
KPEL-AM |
Sports | A 35+ | ||||||||||||
KROF-AM |
Cajun | A 35+ | ||||||||||||
Owensboro, KY |
N/A | N/A | 1 | N/A | ||||||||||
WOMI-AM |
News/Talk | A 35+ | ||||||||||||
WBKR-FM |
Country | A 25-54 | ||||||||||||
Peoria, IL |
149 | 121 | 2 | 25.9 | ||||||||||
WVEL-AM |
Gospel | A 35+ | ||||||||||||
WGLO-FM |
Classic Rock | M 25-54 | ||||||||||||
WIXO-FM # |
Alternative | A 18-34 | ||||||||||||
WZPW-FM |
Rhythmic CHR | A 18-34 | ||||||||||||
WFYR-FM |
Country | A 25-54 | ||||||||||||
St. Cloud, MN |
218 | 164 | 1 | 26.0 | ||||||||||
KMXK-FM |
Adult Contemporary | W 25-54 | ||||||||||||
WWJO-FM |
Country | A 25-54 | ||||||||||||
WJON-AM |
News/Talk | A 35+ | ||||||||||||
KLZZ-FM |
Classic Rock | M 25-54 | ||||||||||||
KKSR-FM |
Dance CHR | A 18-34 | ||||||||||||
KXSS-AM |
Sports | M 35+ |
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| Station | ||||||||||||||
| Cluster | Station | |||||||||||||
| Rank by | Cluster | |||||||||||||
| Station | Primary | Market | 12+ | |||||||||||
| Radio Market/ | MSA | REV | Programming | Demographic | Revenue | Audience | ||||||||
| Station Call Letters | Rank | Rank | Format | Target | Share | Share | ||||||||
Utica-Rome, NY |
160 | 182 | 1 | 37.6 | ||||||||||
WODZ-FM |
Oldies | A 35+ | ||||||||||||
WLZW-FM |
Adult Contemporary | W 25-54 | ||||||||||||
WFRG-FM |
Country | A 25-54 | ||||||||||||
WIBX-AM |
News/Talk | A 35+ | ||||||||||||
Watertown, NY |
279 | 277 | 1 | 39.9 | ||||||||||
WCIZ-FM |
Classic Hits | A 25-54 | ||||||||||||
WFRY-FM |
Country | A 25-54 | ||||||||||||
WTNY-AM |
Talk | A 35+ | ||||||||||||
WNER-AM |
Sports | M 35+ |
| * | Denotes a station that was operating under an LMA at December 31, 2006. | |
| # | Regent retained the call letters and format of station WIXO-FM, which was sold to Independence Media of Illinois, LLC. These call letters and format were transferred to WXMP-FM, which we purchased from AAA Entertainment, LLC. |
Advertising Sales
Virtually all of our revenue is generated from the sale of local, regional and national advertising for broadcast on our radio stations. In 2006, approximately 85% of our net broadcast revenue was generated from the sale of locally driven advertising. Additional broadcast revenue is generated from the sale of national advertising, network compensation payments and other miscellaneous transactions. The major categories of our advertisers include automotive, retail, telecommunications and entertainment.
Each station’s local sales staff solicits advertising either directly from the local advertiser or indirectly through an advertising agency. We pay a higher commission rate to our sales staff for direct advertising sales. Through direct advertiser relationships, we can better understand the advertiser’s business needs and more effectively design advertising campaigns to sell the advertiser’s products. We employ personnel in each of our markets to produce commercials for the advertiser. In-house production combined with effectively designed advertising establishes a stronger relationship between the advertiser and the station cluster. National sales are made by a firm specializing in radio advertising sales on the national level in exchange for a commission based on net revenue. Regional sales, which we define as sales in regions surrounding our markets to companies that advertise in our markets, are generally made by our local sales staff.
Depending on the programming format of a particular station, we estimate the optimum number of advertising spots available. The number of advertisements that can be broadcast without jeopardizing listening levels is limited in part by the format of a particular station and by the volume of advertisements being run on competing stations in the local market. Our stations strive to maximize revenue by managing advertising inventory. Our stations adjust pricing based on local market conditions and the ability to provide advertisers with an effective means of reaching a targeted demographic group. Each of our stations has a general target level of on-air inventory. This target level of inventory may be different at different times of
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the day but tends to remain stable over time. Much of our selling activity is based on demand for our radio stations’ on-air inventory and, in general, we respond to this demand by varying prices rather than our target inventory level for a particular station. Therefore, most changes in revenue can be explained by demand-driven pricing changes.
A station’s listenership is reflected in ratings surveys that estimate the number of listeners tuned to the station and the time they spend listening. Each station’s ratings are used by its advertisers and advertising representatives to consider advertising with the station and are used by us to chart audience levels, set advertising rates and adjust programming. The radio broadcast industry’s principal ratings service is The Arbitron Company, which publishes periodic ratings surveys for significant domestic radio markets. These surveys are our primary source of audience ratings data.
We believe that radio is one of the most efficient and cost-effective means for advertisers to reach specific demographic groups. Advertising rates charged by radio stations are based primarily on the following:
| — | the supply of, and demand for, radio advertising time; | |
| — | a station’s share of audiences in the demographic groups targeted by advertisers, as measured by ratings surveys estimating the number of listeners tuned to the station at various times; and | |
| — | the number of stations in the market competing for the same demographic groups. |
Rates are generally highest during morning and afternoon commuting hours.
Competition
The radio broadcasting industry is highly competitive. The success of each station depends largely upon audience ratings and its share of the overall advertising revenue within its market. Stations compete for listeners and advertising revenue directly with other radio stations within their respective markets. Radio stations compete for listeners primarily on the basis of program content that appeals to a particular demographic group. Building a strong listener base consisting of a specific demographic group in a market enables an operator to attract advertisers seeking to reach those listeners. Companies that operate radio stations must be alert to the possibility of another station changing format to compete directly for listeners and advertisers. A station’s decision to convert to a format similar to that of another radio station in the same geographic area may result in lower ratings and advertising revenue, increased promotion and other expenses and, consequently, lower station operating income.
Factors that are material to a radio station’s competitive position include management experience, the station’s local audience rank in its market, transmitter power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other radio stations in the market area. Management believes that radio stations that elect to take advantage of joint arrangements such as local marketing agreements, time brokerage agreements, or joint sales agreements, may in certain circumstances have lower operating costs and may be able to offer advertisers more attractive rates and services.
Although the radio broadcasting industry is highly competitive, some barriers to entry exist. The operation of a radio broadcast station requires a license from the FCC, and the number of radio stations that
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can operate in a given market is limited by the availability of FM and AM radio frequencies allotted by the FCC to communities in that market, as well as by the FCC’s rules and policies regulating the number of stations that may be owned or controlled by a single entity. A summary of certain of those rules and policies can be found under the heading Federal Regulation of Radio Broadcasting below.
Our stations compete for advertising revenue with other stations and with other media, including newspapers, broadcast television, cable television, magazines, direct mail, coupons and outdoor advertising. The radio broadcasting industry also is subject to competition from newer media technologies, such as the delivery of audio programming by cable or direct broadcast satellite television systems, by satellite-delivered digital audio radio service and by in-band digital audio broadcasting. Two providers of satellite-delivered digital audio broadcasting deliver to nationwide and regional audiences, multi-channel, multi-format, digital radio services with sound quality equivalent to compact discs. Furthermore, terrestrial in-band digital audio broadcasting delivers multi-channel, multi-format programming in the same bands used by AM and FM broadcasters. The delivery of information through the Internet also could become a significant form of competition, as could the development of non-commercial low-power FM radio stations that serve small, localized areas.
We cannot predict what additional new services or other regulatory matters might be considered in the future by the FCC, nor assess in advance what impact those proposals or changes might have on our business. The radio broadcasting industry historically has grown despite the introduction of new technologies for the delivery of entertainment and information. A growing population and greater availability of radios, particularly car and portable radios, have contributed to this growth. There can be no assurances, however, that this historical growth will continue.
Employees
At February 28, 2007, we employed approximately 890 persons. Twelve of our employees in Watertown, New York are covered by a collective bargaining agreement. None of our other employees are covered by collective bargaining agreements. We consider our relations with our employees generally to be good.
Federal Regulation of Radio Broadcasting
Introduction. The radio broadcasting industry is subject to extensive and changing regulation of, among other things, program content, advertising content, technical operations and business and employment practices. Our ownership, operation, purchase and sale of radio stations is regulated by the FCC, which acts under authority derived from the Communications Act of 1934, as amended. Among other things, the FCC:
| — | assigns frequency bands for broadcasting; | ||
| — | determines the particular frequencies, locations, operating powers and other technical parameters of stations; | ||
| — | issues, renews, revokes, conditions and modifies station licenses; | ||
| — | determines whether to approve changes in ownership or control of station licenses; | ||
| — | regulates equipment used by stations; and |
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— adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of stations.
The following is a brief summary of certain provisions of the Communications Act and of specific FCC regulations and policies. Failure to observe these or other rules and policies can result in the imposition of various sanctions, including fines, the grant of abbreviated license renewal terms or, for particularly egregious violations, the denial of a license renewal application, the revocation of a license or the denial of FCC consent to acquire additional radio stations. The summary is not a comprehensive listing of all of the regulations and policies affecting radio stations. For further information concerning the nature and extent of federal regulation of radio stations, you should refer to the Communications Act, FCC rules and FCC public notices and rulings.
License Grant and Renewal . Radio stations operate under renewable broadcasting licenses that are ordinarily granted by the FCC for maximum terms of eight years. A station may continue to operate beyond the expiration date of its license if a timely filed license renewal application is pending. During the periods when renewal applications are pending, petitions to deny license renewals can be filed by interested parties, including members of the public. The FCC is required to hold hearings on a station’s renewal application if a substantial or material question of fact exists as to whether the station has served the public interest, convenience and necessity. If, as a result of an evidentiary hearing, the FCC determines that the licensee has failed to meet certain requirements and that no mitigating factors justify the imposition of a lesser sanction, then the FCC may deny a license renewal application. Historically, FCC licenses have generally been renewed. On March 2, 2005, a petition to deny our application to renew the license of our station KKSR-FM in Sartell, Minnesota (St. Cloud) was filed with the FCC. We are contesting that petition at the FCC. Based on our preliminary review of the claims asserted in such petition, we do not believe that the petition will result in the non-renewal of KKSR-FM’s license, or any of our other FCC authorizations. We are not currently aware of any facts that would prevent the timely renewal of any of our other licenses to operate our radio stations, although we cannot assure you that all of our licenses will be renewed.
The FCC classifies each AM and FM station. An AM station operates on either a clear channel, regional channel or local channel. A clear channel is one on which AM stations are assigned to serve wide areas. Clear channel AM stations are classified as either: Class A stations, which operate on an unlimited time basis and are designed to render primary and secondary service over an extended area; Class B stations, which operate on an unlimited time basis and are designed to render service only over a primary service area; or Class D stations, which operate either during daytime hours only, during limited times only or on an unlimited time basis with low nighttime power. A regional channel is one on which Class B and Class D AM stations may operate and serve primarily a principal center of population and the rural areas contiguous to it. A local channel is one on which AM stations operate on an unlimited time basis and serve primarily a community and the suburban and rural areas immediately contiguous thereto. Class C AM stations operate on a local channel and are designed to render service only over a primary service area that may be reduced as a consequence of interference.
The minimum and maximum facilities requirements for an FM station – and therefore the size of the area its signal will serve – are determined by its class. FM class designations depend upon the geographic zone in which the transmitter of the FM station is located. In general, commercial FM stations are classified as follows, in order of increasing power and antenna height: Class A, B1, C3, B, C2, C1, C0 and C. In addition, the FCC under certain circumstances subjects Class C FM stations that do not satisfy a certain antenna height requirement to an involuntary downgrade in class to Class C0.
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The following table sets forth the market, call letters, FCC license classification, antenna height above average terrain (HAAT), power and frequency of each of the stations that are owned and operated by us or that are the subject of a pending acquisition or subsequent sale, and the date on which each station’s FCC license expires. Pursuant to FCC rules and regulations, many AM radio stations are licensed to operate at a reduced power during the nighttime broadcasting hours, which can result in reducing the radio station’s coverage during the nighttime hours of operation. Both daytime and nighttime power ratings are shown, where applicable. For FM stations, the maximum effective radiated power in the main lobe is given.
| Expiration | ||||||||||||||||
| Date of | ||||||||||||||||
| Station Call | FCC | HAAT in | Power in | FCC | ||||||||||||
| Market | Letters | Class | Meters | Kilowatts | Frequency | License | ||||||||||
Albany, NY
|
WQBJ-FM | B | 150 | 50.0 | 103.5 MHz | 06/01/14 | ||||||||||
| WQBK-FM | A | 92 | 6.0 | 103.9 MHz | Pending | |||||||||||
| WBZZ-FM * | B1 | 187 | 7.1 | 105.7 MHz | 06/01/14 | |||||||||||
| WGNA-FM | B | 300 | 12.5 | 107.7 MHz | 06/01/14 | |||||||||||
| WTMM-FM | A | 107 | 5.0 | 104.5 MHz | 06/01/14 | |||||||||||
| WEEV-AM | B | N/A | 5.0 | 1300 kHz | 06/01/14 | |||||||||||
Bloomington, IL
|
WJBC-AM | C | N/A | 1.0 | 1230 kHz | 12/01/12 | ||||||||||
| WBNQ-FM | B | 142 | 50.0 | 101.5 MHz | 12/01/12 | |||||||||||
| WBWN-FM | B1 | 100 | 25.0 | 104.1 MHz | 12/01/12 | |||||||||||
| WTRX-FM | B1 | 144 | 12.0 | 93.7 MHz | 12/01/12 | |||||||||||
| WJEZ-FM | A | 149 | 1.3 | 98.9 MHz | 12/01/12 | |||||||||||
Buffalo, NY
|
WYRK-FM | B | 142 | 50.0 | 106.5 MHz | 06/01/14 | ||||||||||
| WJYE-FM | B | 154 | 47.0 | 96.1 MHz | 06/01/14 | |||||||||||
| WBUF-FM | B | 195 | 76.0 | 92.9 MHz | 06/01/14 | |||||||||||
| WBLK-FM WECK-AM |
B C |
154 N/A |
47.0 1.0 |
93.7 MHz 1230 kHz | 06/01/14 06/01/14 |
|||||||||||
El Paso, TX
|
KSII-FM | C | 433 | 100.0 | 93.1 MHz | 08/01/13 | ||||||||||
| KLAQ-FM | C | 424 | 100.0 | 95.5 MHz | 08/01/13 | |||||||||||
| KROD-AM | B | N/A | 5.0 | 600 kHz | 08/01/13 | |||||||||||
Evansville, IN
|
WKDQ-FM | C | 300 | 100.0 | 99.5 MHz | 08/01/12 | ||||||||||
| WDKS-FM | A | 100 | 6.0 | 106.1 MHz | 08/01/12 | |||||||||||
| WJLT-FM | B | 150 | 50.0 | 105.3 MHz | 08/01/12 | |||||||||||
| WGBF-FM | A | 138 | 3.2 | 103.1 MHz | 08/01/12 | |||||||||||
| WGBF-AM | B | N/A | 5.0 daytime | 1280 kHz | 08/01/12 | |||||||||||
| 1.0 night | ||||||||||||||||
Flint, MI
|
WCRZ-FM | B | 101 | 50.0 | 107.9 MHz | 10/01/12 | ||||||||||
| WWBN-FM | A | 149 | 1.8 | 101.5 MHz | 10/01/12 | |||||||||||
| WFNT-AM | B | N/A | 5.0 daytime | 1470 kHz | 10/01/12 | |||||||||||
| 1.0 night | ||||||||||||||||
| WRCL-FM | A | 133 | 3.5 | 93.7 MHz | 10/01/12 | |||||||||||
| WQUS-FM | A | 91 | 3.0 | 103.1 MHz | 10/01/12 | |||||||||||
| WLOC-AM | B | N/A | 5.0 daytime | 1530 kHz | 10/01/12 | |||||||||||
| 1.0 night |
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| Expiration | ||||||||||||||||
| Date of | ||||||||||||||||
| Station Call | FCC | HAAT in | Power in | FCC | ||||||||||||
| Market | Letters | Class | Meters | Kilowatts | Frequency | License | ||||||||||
Ft.
Collins-Greeley, CO
|
KUAD-FM | C1 | 212 | 100.0 | 99.1 MHz | 04/01/13 | ||||||||||
| KTRR-FM | C2 | 125 | 50.0 | 102.5 MHz | 04/01/13 | |||||||||||
| KKQZ-FM | C3 | 168 | 8.7 | 94.3 MHz | 04/01/13 | |||||||||||
| KKPL-FM | C2 | 150 | 50.0 | 99.9 MHz | 10/01/13 | |||||||||||
| KARS-FM | C | 372 | 100.0 | 102.9 MHz | 10/01/13 | |||||||||||
Grand Rapids, MI
|
WLHT-FM | B | 168 | 40.0 | 95.7 MHz | 10/01/12 | ||||||||||
| WGRD-FM | B | 180 | 13.0 | 97.9 MHz | 10/01/12 | |||||||||||
| WTRV-FM | A | 92 | 3.5 | 100.5 MHz | 10/01/12 | |||||||||||
| WNWZ-AM | D | N/A | 1.0 daytime | 1410 kHz | 10/01/12 | |||||||||||
| .048 night | ||||||||||||||||
| WFGR-FM | A | 150 | 2.75 | 98.7 MHz | 10/01/12 | |||||||||||
Lafayette, LA
|
KMDL-FM | C2 | 171 | 38.0 | 97.3 MHz | 06/01/12 | ||||||||||
| KRKA-FM | C1 | 263 | 100.0 | 107.9 MHz | 06/01/12 | |||||||||||
| KFTE-FM | C2 | 163 | 42.0 | 96.5 MHz | 06/01/12 | |||||||||||
| KTDY-FM | C | 300 | 100.0 | 99.9 MHz | 06/01/12 | |||||||||||
| KPEL-FM | C3 | 89 | 25.0 | 105.1 MHz | 06/01/12 | |||||||||||
| KPEL-AM | B | N/A | 1.0 daytime | 1420 kHz | 06/01/12 | |||||||||||
| 0.75 night | ||||||||||||||||
| KROF-AM | D | N/A | 1.0 daytime | 960 kHz | 06/01/12 | |||||||||||
| .095 night | ||||||||||||||||
Owensboro, KY
|
WOMI-AM | C | N/A | 0.83 | 1490 kHz | 08/01/12 | ||||||||||
| WBKR-FM | C | 320 | 91.0 | 92.5 MHz | 08/01/12 | |||||||||||
Peoria, IL
|
WGLO-FM | B1 | 189 | 7.0 | 95.5 MHz | 12/01/12 | ||||||||||
| WZPW-FM | B1 | 114 | 19.0 | 92.3 MHz | 12/01/12 | |||||||||||
| WVEL-AM | D | N/A | 5.0 daytime | 1140 kHz | 12/01/12 | |||||||||||
| WFYR-FM | B1 | 103 | 23.5 | 97.3 MHz | 12/01/12 | |||||||||||
| WIXO-FM | B | 169 | 32.0 | 105.7 MHz | 12/01/12 | |||||||||||
St. Cloud, MN
|
KMXK-FM | C2 | 150 | 50.0 | 94.9 MHz | 04/01/13 | ||||||||||
| WJON-AM | C | N/A | 1.0 | 1240 kHz | 04/01/13 | |||||||||||
| WWJO-FM | C | 305 | 100.0 | 98.1 MHz | 04/01/13 | |||||||||||
| KKSR-FM | C2 | 138 | 50.0 | 96.7 MHz | Pending | |||||||||||
| KLZZ-FM | C3 | 126 | 9.0 | 103.7 MHz | 04/01/13 | |||||||||||
| KXSS-AM | B | N/A | 2.5 daytime | 1390 kHz | 04/01/13 | |||||||||||
| 1.0 night |
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| Expiration | ||||||||||||||||
| Date of | ||||||||||||||||
| Station Call | FCC | HAAT in | Power in | FCC | ||||||||||||
| Market | Letters | Class | Meters | Kilowatts | Frequency | License | ||||||||||
Utica-Rome, NY
|
WODZ-FM | B1 | 184 | 7.4 | 96.1 MHz | 06/01/14 | ||||||||||
| WLZW-FM | B | 201 | 25.0 | 98.7 MHz | 06/01/14 | |||||||||||
| WFRG-FM | B | 151 | 100.0 | 104.3 MHz | 06/01/14 | |||||||||||
| WIBX-AM | B | N/A | 5.0 | 950 kHz | 06/01/14 | |||||||||||
Watertown, NY
|
WCIZ-FM | A | 100 | 6.0 | 93.3 MHz | 06/01/14 | ||||||||||
| WFRY-FM | C1 | 145 | 100.0 | 97.5 MHz | 06/01/14 | |||||||||||
| WTNY-AM | B | N/A | 1.0 | 790 kHz | 06/01/14 | |||||||||||
| WNER-AM | D | N/A | 3.5 daytime | 1410 kHz | 06/01/14 | |||||||||||