A Witness To A Radio Acquisition
You know, when we are young, we don't always realize that what we are seeing happen can be a major historical moment in our lives and in others.
This Friday is the 31st anniversary of what was at that time the largest radio station acquisition ever made in the history of American broadcasting. Let me set the stage for you if you please.
In early 1981, San Juan Racing Association (SJR), a San Juan PR based company that owned the El Commandante race track and had interests in broadcasting, wanted to sell the bulk of their radio stations. The company I was with, Gulf Broadcast Group, reached an agreement to acquire their stations in New York, Philadelphia, Washington, Cleveland, Atlanta, and Houston. The price tag was $62 million cash plus the assumption of accounts receivable that totaled around $5 million. Once Gulf had purchased the stations, then it would then immediately sell certain stations to Infinity Broadcasting for $34 million, led by three former Metromedia Radio executives: Mike Weiner, Gerald Carrus, and Mel Karmazin. The senior SJR corporate executives were all principals in a prestigious New York law firm.
SJR had some fabulous radio properties, including WKTU/New York, WYSP/Philadelphia, WJMD/Washington, WQAL/Cleveland, WKLS/Atlanta, and KRLY/Houston. Its radio division was run by two executives: Ed Cossman and Sylvan Taplinger. WKTU was the most successful station in the group with a disco format, #1 in the ratings, and in 1981 it was billing nearly $2 million a month.
Between the time Gulf agreed to buy the stations from SJR and the time Gulf sold some of them to Infinity, we saw a number of financial and legal irregularities. I cannot go into detail on a public blog what we found but let's just say some things weren't passing the smell test!
I was fortunate to be asked to travel with my management team to San Juan for the closing whereby the money would change hands, take ownership of our stations, and then close with Infinity for them to take ownership of their new stations. The day before the closing, SJR and Gulf were still arguing about things: money, intellectual property, you name it. On the day of the actual close, an executive of Gulf's parent company, Jim Richards, asked my boss if our Chairman and CEO knew that there were issues. Failing to get a straight answer, he called and spoke to the Chairman himself, E. Grant Fitts, an attorney by profession and an expert in mergers and acquisitions. When Jim asked him what the next step should be, Mr. Fitts replied, "close the deal and we will fight later." And that's what happened. Moments later, after closing with both SJR and Infinity, we owned stations in Washington, Atlanta, Cleveland, and Houston.
After the close, I was put into fifth gear to arrange for the transport of all financial records of the stations we owned plus I was selected to collect the accounts receivables in all of these markets that had accrued prior to November 2, 1981. SJR kept their records in an old midtown Manhattan warehouse and at some AM radio transmitter radio sites in East Rutherford NJ. Boy did I learn a lot! I used to travel to New York a lot to see the Infinity executives who had offices at 655 Madison Avenue in WKTU's floor, as well as seeing the SJR people, to handle some of these post-closing activities. But after the closing there was a lot of litigation between all three parties!
Little did I know what I was witnessing until years later! Today, WKTU 92.3 is a CBS Radio station and is 92.3 NOW FM. For many years that station was WXRK and the home of Howard Stern. WYSP/Philadelphia is also a CBS Radio property today.
See you next time.
