It’s very rare in this day and age for a deal to come out of nowhere and yet make perfect sense at the same time like the acquisition of Cox Media Group’s Houston cluster by Radio One. Much like its 2020 swap to expand in Charlotte or last year’s purchase of Emmis Indianapolis, the deal continues Radio One’s attempts to build scale in markets and expanding beyond their core African-American based formats.
For Cox, since the reluctant 2019 acquisition by Apollo Global Management in order to complete the purchase of Cox’s television stations, it has been quietly known that most of their radio clusters are available. The company has been attempting to boost in-demo ratings to maximize the return. With only three brands (one on a rimshot that is used mostly for added value), and the higher costs of doing business in Houston compared to other Cox markets, finding a buyer like Radio One that can combine with their existing operations also helps Radio One maximize additional savings building out their cluster.
The Stations
Following the divestitures of Radio One Gospel “Praise 92.1” KROI and Cox Classic Country “Country Legends 97.1” KTHT, Radio One will have four brands over five signals with Cox Country “93Q” KKBQ and Classic Rock “107.5/106.9 The Eagle” KGLK/KHPT joining Radio One’s Hip Hop “97.9 The Box” KBXX and Adult R&B “Majic 102.1” KMJQ.
Using the February 2023 Nielsen Audio ratings, those four brands combined for a 19.7 share. That would make them second in the market trailing the combined 21.8 share for iHeartMedia’s six station cluster. It would lead the combined 18.1 share for Audacy, 8.9 for Univision, 4.6 for Cumulus, and 4.1 for Estrella Media amongst commercial operators in Houston.
The Divestitures
Who could be in play for the two divestitures?
Radio One says it has a pending deal with a minority-owned broadcaster that is a new entrant to the Houston market for 92.1 KROI while engaged in conversations for KTHT.
One company that could fit that description is Spanish Broadcasting System. SBS, which acquired two Cox spinoffs in Orlando and Tampa last year, will soon be receiving a $64 million cash infusion from the sale of its “Mega TV” division.
Any conversation for any station being divested will always start with Educational Media Foundation. However, Houston is still one of the three markets where EMF does not have rights to its “K-Love” trademark as Univision retains the rights there. In addition with the recent CEO change at the organization there is an expectation that the days of the continuous major acquisitions by the group are going to be slowed in the short-term.
But other Christian groups such as the Houston based Hope Media Group and VCY America could be in position to pick up that slack.
Going Forward
With the sale of Houston, the expectation is that Cox will continue to seek buyers for some if not all of its radio markets. It is believed that the company will retain Atlanta due to the integrations between WSB-TV, the radio division, and the Atlanta Journal-Constitution.
With Houston joining Charlotte and Indianapolis in becoming a broader demographic play for Radio One, the company will likely continue to seek out positions where they have the ability to broaden its demographic plays. Markets such as Baltimore stick out as places where the company has room to add stations. Parent Urban 1 will receive $145.5 million for its stake in the MGM National Harbor casino outside Washington DC. While some of the proceeds will help pay for Houston, that leaves a lot more capital for future growth as well as investments in other casino and media projects.
