Looking At The KPWR Deal
Alex Meruelo saved Jeff Smulyan and Emmis Communications.
Mere weeks after Smulyan had to amend Emmis Communications’ credit agreements by agreeing to sell $80 million worth of assets by January 2018, Meruelo agrees to pay nearly that exact amount for “Power 106” KPWR Los Angeles. Most of the people I’ve spoken to today figure the conversation went something like this:
Meruelo: You need to cut $80 million. We’ll give you that for KPWR.
Smulyan: Pay $2.75 million for filing and legal fees too.
Meruelo: Done deal.
By selling KPWR, Emmis doesn’t have to look at selling clusters in multiple markets where there are additional cost savings by running multiple stations and gets out from a station that has been severely challenged by the launch of iHeartMedia’s “Real 92.3” KRRL and the loss of Big Boy to the upstart.
Thanks to its $123.5 million windfall in the FCC TV spectrum auction for agreeing to move KWHY-TV to a VHF channel, Meruelo is able to create a cluster of two stations that perfectly complement each other in KPWR and Classic Hip-Hop 93.5 KDAY. Being able to sell the stations as a package will increase revenue opportunities for both, as will the ability to use KPWR’s heritage alongside that of the KDAY brand in Los Angeles.
In one swoop, Alex Meruelo establishes himself as a major player in Los Angeles media. In addition to KPWR, KDAY, and KDEY the Meruelo Group owns two television stations. He has made a habit prior to this one of buying stations on the cheap and making money on the deals gaining KWHY-TV out of an NBC divestiture trust in 2011 for $40 million and turning that into the $123.5 auction revenue. Mereulo then acquired the KDAY/KDEY combo for $15 million, but only after other $35 million and $19 million deals failed to close. The company is also purchasing the license for a second Los Angeles market television station for $10 million.
In addition to the media properties, Meruelo Group owns multiple restaurants, an investment firm, real estate properties, construction companies, and a Reno casino/hotel. The Cuban-American also led a failed 2011 attempt to purchase the NBA’s Atlanta Hawks.