Capital Cities and ABC Sell 3 Radio Stations

The biggest broadcast sell-off in recent history began Monday as merging Capital Cities Communications and American Broadcasting Cos. announced a record price of $75.5 million for three of their radio stations to Cleveland-based Malrite Communications Group.

By the time ABC and Capital Cities become a single company next year, divestiture sales of their various media properties could easily top $1 billion, according to several industry sources.

Malrite Chairman Milton Maltz said Monday that his company will pay $43 million for Los Angeles country music stations KZLA-FM and KLAC-AM and $32.5 million for ABC’s highly rated Houston station, KSRR-FM.

“We’re just pleased that (ABC Chairman) Leonard Goldenson and (Capital Cities Chairman) Tom Murphy let us pay them that much for their radio stations,” Maltz quipped.

The $75.5-million purchase is subject to Federal Communications Commission approval, pending the proposed January merger of ABC and Capital Cities.

Record High Set

Both the price for the 100,000-watt Houston station and for the AM-FM combination in Los Angeles are records, according to industry sources.

The previous top price for an AM-FM combination was $40 million, offered earlier this year by Rep. Cecil Heftel (D-Hawaii) for the Los Angeles Spanish-language stations KTNQ-AM and KLVE-FM.

The previous top price for a single FM station was $18.5 million, paid by San Diego-based Noble Broadcasting one year ago for “beautiful music” station KJOI-FM in Los Angeles.

The three stations sold Monday are the first of 19 broadcast properties that ABC and Capital Cities announced last spring that they would sell in order to satisfy FCC ownership requirements as a result of their merger.

FCC cross-ownership rules forbid a single company to own a radio station, a newspaper, a cable-TV service and a television station--or a combination of any two--within the same market.

Because Capital Cities and ABC own several stations in the same markets, they have agreed to sell off 15 radio stations and four television stations before the FCC considers their proposed merger next January. The two companies also plan to sell off two newspapers and a group of 55 cable-TV systems.

Retains Ownership

In Los Angeles, ABC has been able to retain ownership of KABC-TV Channel 7 and two radio stations, KABC-AM and KLOS-FM, because their acquisition pre-dated the FCC cross-ownership taboos imposed in the 1960s.

With the announcement of the merger, however, ABC has agreed to sell the two local radio stations--although station spokesmen said Monday that the sales are being postponed as long as possible.

“The company has asked for an extension to give us some time to determine how to dispose of these radio stations,” said George Green, KABC-AM general manager.

He said ABC will ask for an 18-month delay, beginning next January. KABC and KLOS might then be retained by ABC-Capital Cities until June, 1987, he said.

“We expect that the FCC will grant . . . or I should say I’m hoping that the FCC will grant the extension,” Green said.

A sale of KABC, the second-most-listened-to station in Los Angeles, would easily command “the biggest price of any AM in history,” Green said. A recent broadcast broker survey by Inside Radio, an industry newsletter, put the potential price tag of KABC at more than $70 million.

KIIS-FM, the top-rated station in Los Angeles, would command “well over $100 million” if it were for sale, according to Wallace Clark, KIIS general manager.

“I couldn’t afford it,” Clark said of the Gannett Broadcasting-owned rock station. Instead of arguing that purchase prices on radio stations have been inflated during the past year, doubling and tripling in some cases, Clark said he believes that they have simply been underpriced for several years.

“I think radio is just catching up with the market,” he said.

Malrite currently owns and operates five AM radio stations, six FM radio stations and four television stations. The company also has an application for approval pending before the FCC for acquisition of WLUZ-TV in Puerto Rico.