What happens following Tuesday’s revelation that Good Karma Brands will conclude its LMA of Emmis Communications’ “98.7 ESPN” WEPN-FM New York when its contract comes to an end in August 2024 will tell a lot about the state of the industry going forward.
Who would be interested/willing to buy 98.7? The New York Post reported that Emmis was looking for $50 million for the 98.7 facility. The last full-powered FM signals sold in New York were the 2019 sale of Cumulus’ 95.5 WPLJ along with five other stations to EMF for $103.5 million and Emmis’ sale of 97.1 WQHT and 107.5 WBLS to MediaCo for $91.5 million in cash, a $5 million note, and 23.72% of the new company. Both deals would be in line with Emmis’ current asking price before continued deprecation of station values.
Under the current ownership caps, which under the Democratic led FCC are unlikely to change, both Audacy and iHeartMedia are at the limit of FMs owned in New York. That would leave in-market options in MediaCo, SBS, and Telemundo/Univision to potentially grow. With Radio One in growth mode, do they see an opening to say bring back “98.7 Kiss-FM“? Would a suburban operator such as Connoisseur Media or Press Communications see viability in adding a full market station?
You can’t completely rule out another non-commercial buyer, but it would be very hard for another Christian network to find an audience at the price that Emmis would be seeking with EMF, VCY America, and Hope Media Group already in the market on FM. Similarly, between the purchase price, acquiring and building real estate for studios, and staffing a new station, you’d be looking at around $75 million in expenditures just to operate the facility before a single penny in revenue comes in. Does that leave someone like billionaire John Catsimatidis to pair with his 770 WABC or another entity not currently in radio with a business model that can use a 24/7 audio outlet to reach consumers as potential buyers?
That leads into whether there still is a viable format hole in the New York market? We’ve seen multiple attempts at Alternative Rock and Country come and go over the past few decades. Unless there is a buyer who is looking at running that format as a loss-leader, it makes them unlikely. A cluster strategy could see a MediaCo wanting a music format such as Variety Hits that could chip away at iHeart AC “106.7 Lite-FM” WLTW and Classic Rock “Q104.3” WAXQ along with Audacy Classic Hits 101.1 WCBS-FM to boost their Adult R&B 107.5 WBLS in demos, but otherwise any music format would be looking to be middle-of-the-pack at best without a major investment in talent and marketing.
New York has two non-commercial Talk stations in 93.9 WNYC-FM and 99.5 WBAI, but commercial Talk remains on AM between iHeart’s 710 WOR and the aforementioned WABC. But outside of Catsimatidis potentially moving his product to FM, Talk formats take time to build an audience and would require an even bigger investment in talent and marketing making it an very expensive proposition.
Can a startup FM brand breakthrough in our modern crowded audio landscape? There are currently seventeen stations in the New York market above a 2.0 share. The newest brands of those seventeen are Audacy’s “New 102.7” WNEW, which adopted that brand in July 2018, but has been a variation of AC going back to 2007 and Univision Spanish CHR “X96.3” WXNY, which launched in 2009 but its format was moved from another signal under a different name “La Kalle 105.9“. Many other brands launched since then have gone away such as “Alt 92.3” WNYL, “94.7 Nash-FM” and “New York’s Country 94.7” WNSH, “New Rock 101.9″ WRXP or have failed to take off like WEPN-FM, “K-Love” 95.5 WPLJ or “94.7 The Block” WXBK.
What would make a new format on 98.7 any different?
Unlike WFAN, the “ESPN 98.7” format was not specifically designed to be a top player in the market. Under the operation of ESPN Inc. from 2012 until 2021, the station made sure to keep national ESPN Radio programming in key dayparts such as morning drive since the primary purpose of the station was to promote and expand the national ESPN brand, not just be a New York centric outlet. It wasn’t until December 2022 that Good Karma went completely local in morning drive as it expanded the station’s local output to sixteen hours weekdays, while Audacy’s WFAN remains of the few live & local 24/7 stations in the country.
The business model under Good Karma is also different. While the company operates “ESPN Radio” Sports stations in Chicago, Cleveland, Los Angeles, Madison, Milwaukee, New York, and West Palm Beach, it has remained on AM and streaming only in three (and soon all) of its four biggest markets. The company handles all local ad sales for ESPN.com and in July took over all sales operations for the national ESPN Radio platform. It has built alternate revenue models such as keeping all on-demand content in Cleveland and Milwaukee under paywalls.
WEPN-FM had a weekly CUME audience in the August 2023 Nielsen Audio ratings of 462,100. WFAN’s streaming ratings are broken out separate from the AM/FM signals showing a CUME of 217,900. If WEPN-FM can convert half of its audience to streaming and get the other half to listen on 1050 WEPN it would be saving its reported $12-13 million in annual LMA fees while keeping its current audience. That’s not out of the realm of possibility, while continuing to grow as a digital media asset more in line with Good Karma’s overall business model.
Since signing the lease in April 2012, ESPN and Good Karma have reportedly paid nearly $130 million in LMA fees. A few months later, CBS Radio paid $75 million outright for 101.9. Emmis has already received twice the value of the station through the deal. Any proceeds they receive for selling the license to another buyer will be a major bonus. Are station valuations in the biggest market still what they were when WPLJ and WQHT/WBLS were sold four years ago? Are there any buyers out there who see value in launching a new FM in New York? Is there an audience for a new format? And most importantly will anyone care about the new product launched?
As we get answers to these questions over the next year, it will tell us a ton about the viability of continued growth in broadcast radio.
Good Karma has a tough task ahead. Their Cume 0n 98.7 is just over twice of WFAN’s stream numbers. The Fan’s streaming Cume is about 22 percent of their on-air Cume. If Good Karma could “convert” post 98.7 listeners at that rate, that gives them a Cume of a bit over 100,000. Not the greatest. And they have no streaming numbers in Cleveland, Milwaukee or Los Angeles (where there have been no numbers showing for months). None of the Good Karma sports stations are the leading sports station in their markets. But if the game is just to clear ESPN network spots, then there isn’t a problem.
Emmis has made a ton of money with the 98.7 LMA, but I doubt they’ll get what they are asking sale price. Radio station sale prices have decreased lately. And remember Jeff Smulyan had to sell $80 million in assets to pay down Emmis debt in 2017.
Well now, all forms of AC (trad and hot) have a combined share of (nearly) 18. Adults in The Big Apple apparently can go to 2 other choices if the one they’re on makes ’em unhappy. “Classics” (Rock, Hits) have more than 11. Add WBLS and you’ll push it up another 5 shares. So-where’s the opportunity? All of the above. Go ahead and call me crazy but the “Adult Hits” format is nothing to sneeze at these days in many markets. If New Yorkers want to experience a “new” format, it’s a combination of the best songs from the most listened to stations. IF it’s marketed, IF it’s got New York Talent, IF they don’t go crazy with commercial sets-98.7 can survive-and thrive. But then again, it IS the LARGEST media market in the country. Someone may be out there researching a new approach already. If someone who really understands the ART of broadcasting-and is willing to give it a shot, it could be great-and the winner would be New York Radio.
Maybe this is the year that Pacifica finally gives up on WBAI or the money finally runs out completely. I could see Fordham taking over the frequency and moving WFUV’s AAA format over. BAI seems to have been on the ninth life for years now.
My spoken-word bias is clearly showing here, but I think that there are a lot of *potential* dark-horse candidates who *might* want to create or expand a value-added offshoot of their existing news-focused content. Indeed, they might see this as a once-in-a-lifetime opportunity. That said, I can’t see these dynamics being replicated anywhere else (even here in D.C.) right now.
To start, Bloomberg clearly wouldn’t *need* 98.7. Still, it might see value in adding or (more likely) moving to FM–especially if it could then offload 1130 AM. I don’t know how valuable the tower site would be, but 1130 itself might still be of worth to someone else (e.g., iHeart or Salem).
Especially if operating WGN has been working out well for Nexstar–but even more especially if the company’s audio plans for NewsNation might indeed include (more) radio–I could see that company wanting to establish some sort of a flagship, especially alongside WPIX (even though it’s technically not co-owned).
Likewise, the technically separate Fox Corp. and News Corp. have enough brands there (some local; others national/global) that it might want to create an offshoot for at least one of them–perhaps most easily, an expansion of Fox News Headlines 24/7 (SiriusXM’s Channel 115).
Finally, the greater region still has two significant local news groups on cable: Altice USA’s News 12 Networks (which appears to already have some ties with the co-owned, national Cheddar), and Charter Communications’ NY1 (now part of the larger Spectrum News brand). One of them might want to do something that’s more audio-focused.
I do think that $50 million is a steep price here. Still, even if just one of these companies (or someone similar) has actual interest, it might indeed end up being the actual buyer.