Tackling Local Radio

A decimated radio business has triggered the fire sale of three radio stations to a former NFL linebacker who an insider says might take one of those stations out of music and into sports. John Lynch, who once played for the Pittsburgh Steelers, just finalized a deal for his company, Broadcast Company of the Americas, to take over 91X, Magic 92.5, and Z-90 from locally based Finest City Broadcasting. Finest City took over those stations four years ago for $110 million. Lynch/BCA got those stations by assuming $18 million in debt, meaning the three stations lost more than 83 percent of their value in four years.

All three are Mexican-licensed stations, which means Lynch/BCA will operate the three stations but won’t own them outright. Lynch already operates XX Sports Radio (1090 AM) and oldies station the Walrus (105.7 FM), which are Mexican-based stations owned by Mexican citizens.

Lynch played a role in local radio in the ’80s. As general manager/co-owner, Lynch switched 91X to a “cutting edge” alternative format in 1983 and a few years later made AM 690 one of the first all-sports stations in the country. Both moves proved to be successful. His group sold those stations in 1996.

Currently, Z-90 is the only local station focusing on the urban/hip-hop genre, and Magic 92.5 is unique with its R&B oldies. 91X competes with Rock 105.3 and 94/9 for the modern-rock fan.

At press time, Lynch had yet to announce officially the acquisition of these three stations. He did not return a request for comment.

What could temper Lynch’s decision on any potential format change is the sudden availability of Mikey Esparza, anchor of the long-running Mikey Show on Clear Channel–owned Rock 105.3. That station announced December 17 that Esparza was leaving to go to another station in town, suggesting that he was leaving for more money. Rock 105.3 then announced that, essentially, The Mikey Show would go on without Mikey and that his four sidekicks would continue to do the morning show without its former namesake. Insiders say Esparza was earning in the $500,000 range but that he was looking for a significant pay increase.

Several insiders say the days of bloated morning-show salaries are over. Jeff and Jer, local radio fixtures for 20 years, were rumored to be getting $3 million annually. When their contract with Clear Channel–owned Star 94.1 was up in August, Clear Channel offered them a significantly less lucrative contract to stay. They opted to walk, telling their listeners that they would be back on the air “in a month or two.” They are still off the air.

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After deadline had passed it was announced that the three stations would be auctioned off in a rushed "fire sale" auction on January 7, 2010 by the lender, Local Media of America Holdings. It is however assumed that Lynch and his backers would actively participate in any bidding process for the stations, should any other suitors step up. Insiders presume that in this current economy there may not be any other entities who would commit to throw out cash to operate these three radio properties. Insiders say that Lynch and company clearly had some kind of understanding with Evergreen Pacific Partners who oversaw Finest City Broadcasting and who put together the deal to buy the operation rights for the stations in 2005.

Calls to Seattle-based venture capital company Evergreen Pacific Partners who arranged the purchase of the three stations in 2005 were not returned, and Lynch did not respond either when the article was written.

The Notification of Public Sale, stated that the stations would be auctioned "due to the occurrence of of certain Events of Default." One insider said Finest City had not made any loan payments in a year.

The public auction will be 10 a.m. on January 7 at the offices of K&L Gates LLP, 3580 Carmel Mountain Road, Suite 200, San Diego, CA, 92130.

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Mike Esparza on his website mikeyshow.com noted that he is currently unemployed and that he has no contract with anyone at this time. We hear his negotiations to move his show to a new station fell apart when his longtime colleagues told Mikey they were not interested in working with him anymore. It should be noted that the Mikey Show has in fact done very well in ratings in the last year at KIOZ (#1 18-34). Knowing this, Mikey negotiated with a different station to bring his whole five-person show over to the new station (for a new salary said to be about $1.3-million). That station agreed to this new deal according to insiders. The only problem is that the other four members of Mikey's crew WHO HE HAND PICKED said they would just as soon stay at ROCK 105 without him. This killed the $1.3-million deal. This left Esparza and his "new station" twisting in the wind, since Mikey could not deliver the Mikey Show as promised. The new station didn't want The Mikey Show without the Show, and now there is no $1.3-million deal. So why would all four of these longtime Mikey Show colleagues walk away from more money and a secure job with a number one team? The Mikey Show has been MONEY for a couple years now. Why would ROCK 105 risk losing its hugely successful morning ratings? What do the four Mikey Show teammates and ROCK 105 know that we don't? In this day and age when radio is floundering you absolutely don't mess with a winning formula, so how could this happen? Is it about ego? Is it about mean, abusive behavior? Or is it about something completely different? I am sure we all find out in the next few weeks.

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