Radio One to Sell Its L.A. Station

$137.5 Million Deal Would Take Md. Firm Out of Key Market

Radio One yesterday announced that it is selling its Los Angeles station to Bonneville International for about $137.5 million, a decision that means the Lanham urban radio giant will no longer have a presence in the nation's largest radio market by revenue.

Radio One's chief executive and president, Alfred C. Liggins III, said in a statement that the sale will enable the firm to reduce its debt, focus on its Internet strategy and initiate a $150 million stock buyback program.

"This is an attractive transaction for Radio One, as it frees up capital and management resources which can be re-deployed to execute our long-term strategy," he said.

In 2000, not long after Liggins took the helm of the company founded by his mother, he brokered a $1.3 billion deal with Clear Channel to buy 12 stations in such major markets as Houston, Dallas, Miami and Los Angeles. At the time, Radio One's strategy had been to buy struggling stations and turn them around, programming them with music and talk shows aimed at African American and urban listeners.

In metropolitan Los Angeles, where the Hispanic population is nearing 50 percent, Radio One struggled to maintain and expand its audience share. Like many other media companies, Radio One has faced stiff competition from new media such as MP3 players, and satellite and Internet radio.

Last year, the company announced that it would sell 10 underperforming stations to improve its cash flow and reduce its debt. Over the past year, Radio One stock lost about 80 percent of its value as revenue declined when advertisers shifted to other media, including the Internet.

J.P. Morgan analyst John Blackledge said the $137.5 million sale price reflects the value of a station that has no audience or revenue. Last year, according to his analysis, the station lost about $5 million.

"The sale of the troubled L.A. station makes sense for [Radio One] at this point, in our view, as reformatting and focused efforts could not turn around the station's fortunes over the past few years," Blackledge said in a statement. "We do not believe this sale precludes further station sales, and we believe [Radio One] is largely done divesting stations at this point."

Yesterday, Bonneville president and chief executive Bruce Reese said he expected federal regulators to take up to 90 days to approve the Los Angeles sale. In the meantime, Bonneville plans to enter an agreement that would allow it to take over the station's airwaves sooner.

"We're not acquiring the personnel or the format from [Radio One]," Reese said. "We basically bought the operating equipment . . . the antenna, the transmitter and the studio to operate out of. When they move out, we'll move in."

Reese said he was approached by a broker for Radio One several months ago about buying the Los Angeles station, known as KRBV (100.3 FM).

"We know we'll get the right people, we think we'll get the right ideas and we think we can do well in L.A.," he said. "It's obviously a huge radio market, and we're excited about the opportunity."

Last year, Bonneville sold Radio One a station in Washington. Reese said he expected the sale of what is now WPRS (104.1 FM) will close in the second quarter of this year, around the same time as the deal for the Los Angeles station.

Radio One's stock price rose sharply on the news, adding 65 cents, or about 59 percent, to $1.76. The company's stock has ranged from 99 cents to $7.73 over the past year.