Westwood One Pays $56 Million for KIQQ-FM

Fast-growing Westwood One Inc., the nation’s second-largest radio network owner, extended its three-year spending spree Tuesday by agreeing to buy Los Angeles radio station KIQQ-FM from Outlet Communications for $56 million.

The cash purchase, which is subject to approval by the Federal Communications Commission, is Westwood One’s third radio acquisition this year. Last summer, the Culver City-based firm paid $39 million for WYNY-FM and $11 million for 50% of WNEW-AM, both in New York City.

Moreover, KIQQ--which markets itself as K-Lite for its soft rock programming format--is the sixth major Los Angeles radio station to change hands in the past year. KRTH-AM and FM together sold for $86 million, KROQ-FM for $83 million, and KTWV-FM (the Wave) and KJOI-FM for about $75 million each.

Considers It a Bargain

According to the latest Arbitron ratings, KIQQ is ranked No. 16 in the Los Angeles radio market. As such, some radio industry experts think Westwood One might be overpaying for the station.

“Sure, it’s pricey; but we think we got a bargain,” Westwood One Chairman Norman Pattiz said in a telephone interview Tuesday. “We’re excited by the fact that KIQQ has $9 million in revenues when there are players out there doing $20 million. We look at that as an opportunity.” Pattiz noted that the purchase price equaled about 18 times the station’s cash flow of $3.5 million.

Pattiz said the KIQQ acquisition was in keeping with Westwood One’s announced business plan of acquiring an AM and an FM station in New York, Los Angeles and Chicago in the next few years.

“Los Angeles is the largest radio market in the country in terms of revenue, and it’s the fastest growing,” Pattiz said. “During the first six months of 1988, revenues have gone up 18% over last year.”

Billing itself as the “America’s largest producer and distributor of nationally sponsored radio programs,” Westwood One is the parent of the Mutual Broadcasting System, the NBC Radio Networks and the industry trade publication Radio & Records--all purchased since 1985.

By acquiring radio stations, the company provides itself with captive air time for its own programming, which includes a wide variety of rock concert specials as well as talk shows hosted by Casey Kasem, Larry King and Dr. Toni Grant.

Outlet to Reduce Debt

Westwood One weathered a financial crisis last May, when the value of its stock dropped about 27% in a single day following an announcement that the company’s second-quarter revenue would fall short of expectations.

In a statement issued Tuesday, Providence, R.I.-based Outlet said it will use the proceeds from the KIQQ sale to reduce corporate debt undertaken in 1986 when Outlet management bought the company from its previous parent, Rockefeller Group. Last month, Outlet sold WIOQ-FM in Philadelphia to EZ Communications for $19.5 million.

According to the industry trade publication Inside Radio, Outlet has to close the KIQQ sale before the end of the year or face a $3-million penalty for default on terms of its loan agreements.