Noble Plans to Sell 4 of Its Radio Stations : Fast-Growing Broadcast Firm Is Feeling Strain of Heavy Debt Load

San Diego County Business Editor

Straining under a $200-million debt load taken on to acquire 16 radio stations in the past three years, Noble Broadcast Group of San Diego announced Wednesday that it plans to sell four of its stations.

Noble President John Lynch said in an interview that his company is not in serious financial trouble. The purpose of selling the four stations--on Long Island, N.Y., and in New Haven, Conn.--is partly to pay off the company's major lender, Toronto Dominion Bank, which recently told Noble that it doesn't "share the vision for the industry we have right now," Lynch said.

"So, we'll pay down our debt, take out our lender . . . and position ourselves for acquiring stations in larger markets," he said. Lynch declined to say how much of Noble's $200 million in bank debt is owed to Toronto Dominion, but one source said it was between $40 million and $50 million.

Lynch said the proposed sale would allow Noble to cash in on the appreciation of the four stations' value.

Stations on Block

But he also acknowledged that Noble's highly leveraged acquisitions of radio stations in Toledo, Ohio, and Seattle "have not performed as well as we had hoped."

Despite Lynch's assertion that he will soon be back in the market for stations, several industry sources said Wednesday that Noble, through its investment banker, First Boston Corp., has been trying to sell all of its 18 stations to certain media companies. Noble is asking $350 million but so far has found no takers, according to those familiar with the offering.

The four stations to be sold, WKCI-FM and WAVZ-AM in New Haven and WBAB-FM and WBAB-AM on Long Island, are being put on the block for $75 million, Lynch said. Noble recently turned down an offer of $70 million for the four stations, he said.

According to Bishop Cheen, an industry analyst with Paul Kagan Associates in Carmel, Noble paid $30.5 million for the New Haven stations in December, 1986, and $13 million for the Long Island stations in September, 1986. That means that Noble could book a pretax gain of more than $30 million if the properties sell for the $75 million that it is seeking.

The acquisition of the New Haven and Long Island properties was part of a highly leveraged buying spree in which Noble paid top dollar for properties en route to becoming a major U.S. broadcasting force. In April, 1988, Noble paid $65 million for KMJQ-FM in Houston, a then-record price for a single radio station.

Lynch, 44, co-founded the radio chain in 1977 with the late Ed Noble, an heir to the Life Savers candy fortune who died in 1985.

Little Room for Error

Noble's strategy has recently hit a number of bumps in the road. Ratings of newly acquired stations in Toledo and Seattle have plummeted since Noble bought them last year, cutting Noble's cash flow, said Pat Clawson, financial editor of Radio & Records, a trade magazine in Washington.

"Clearly, Noble bought stations at the top of the mark, and some of those stations are no longer generating the revenues they were when Noble bought them," Clawson said. "At those prices, there is not much room for error, and that is probably what made Toronto Dominion nervous."

Noble's plan to sell its two Boston stations to entertainer Merv Griffin fell through in June. In May, Noble's offer to buy the United Stations and Transtar radio networks for $200 million was turned down, Lynch said.

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