Five thousand Houstonians representing 200 churches protested last fall against a proposed change from gospel to rock music programs by radio station KFMK-FM's new owner. The group, calling itself "Something Better," charged that the station was being sold merely for profit and "without realizing its outreach to Christians."
The new owner who intends to substitute profane for sacred music is First Media Corp. This same company stopped announcers on its WPGC-FM station in suburban Washington from holding a mock "Mormon Will" contest after Howard Hughes' death in 1976 to see which listener could make up the most original testament. (The socalled Mormon will, then the object of a court case, left one-sixteenth of the multimillionaire's fortune to the Mormon Church and its author.) The prize was to have been a trip to Utah and all the milk you could drink.
First Media is a closely held corporation owned by Richard E. Marriott and J.W. Marriott Jr., scions of the powerful Mormon family that owns the hotel, restaurant and airline catering business. The brothers are also vice president, and president and chief executive officer, respectively, as well as substantial stockholders, of that business. First Media represents a personal investment by the brothers and has no legal relationship with the Marriott Corp., whose operations stretch around the world.
First Media is so private that members of the family refused to be interviewed as did its president, Glenn T. Potter, who declared that publicity would not "benefit" the company. Written questions were answered succinctly or with no comment through a spokesman. Through public documents filed with the Federal Communications commission, and conversations with former WPGC employes, radio critics and brokers, The Washington Post has been able to put together a sketch of another, largely unknown, but growing empire: Marriott media.
It is comprised of four independent radio stations in greater Washington, Atlanta, Phoenix and Provo, Utah, as well as its pending acquistition in Houston. Among these stations are a pair rated first and second in their respective areas. In May 1978, First Media had assets of $15 million. Net income in 1977 was listed as more than $850,000. Most of the pretax profits, which are estimated to reach 30 to 40 percent of revenues at the leading stations, are thought to be plowed back into the company to acquire more properties. First Media is said to be interested in radio stations in Los Angeles, Chicago and other metroplitan areas where the Marriott Corp. operates.
According to Tim Kelly, a former promotion director and disk jockey at WPGC, the strict separation between Marriott corp. and First Media -- and presumably the family's reticence -- is linked to parental disapproval. The story goes that the two brothers decided to invest their own money in the media against the wishes of the Marriott patriarch, J.W. Marriott, founder and chairman of the board of the business that bears his name. The senior Marriott reportedly felt investment in broadcasting was too risky with little growth potential, as well as being not quite proper, and he forbade the use of corporate funds for the venture.
In this case, father didn't know best. In three of First Media's markets, the firm has combined AM and FM 1973, FM radio commanded only a 28 percent share of all radio listening; five years later, listenership had risen 75 percent, according to Broadcasting magazine. With 49 percent of the audience, FM now may present a challenge to AM's future, some broadcasting experts believe. Washington media Broker Cecil L. Richards classed FM stations along with beachfront property as an investment and said a few of the best stations were turning 40 to 50 percent profits on gross revenues.
Three years ago, the Cox Broadcasting Corp. predicted FM pre-tax revenues would reach $750 million annually by 1980, a figure they are now likely to exceed. FCC records show FMs had total 1977 revenues of $543 million in metropolitan areas and Puerto Rico, representing 30 percent growth over the previous year. In Washington, eight of the top 10 stations are FMs, more than anywhere else in the country. Revenues for 1977 were $11.8 million (out of $30 million total radio receipts).
First Media, formed as a Delaware corporation in November 1973, was referred to by several ex-employes as "the boys' toy." Richard Marriott, who is chairman of the board and treasurer, owns 49.9 percent of the voting stock; his brother J. Williard Jr. owns 31 percent and Richard's wife, Nancy, owns 18 percent. Other stockholders listed are their four daughters, whose shares are held in trust by Nancy Marriott's cousin, Ralph H. Hardy, vice president and secretary of First Media and an attorney with Dow, Lohnes & Albertson, which represents First Media. In May 1978, First Media stock was worth $3.4 million.
In addition, Richard Marriott is director of the Southeast Banking Corp. in Miami which has discretionary authority over substantial investments in Wometco Enterprises, which in turn owns television stations in Florida, North Carolina, New Jersey, Michigan, and Washington state.
Potter owns 1.29 percent of First Media stock. The Marriotts hired him in 1973 to be the company's president. Potter, 41, also a Mormon, had worked in radio in Provo and Salt Lake City before returning to his native Washington where he worked for WTOP-TV and WTTG-TV. Potter provides the overall direction and supervision for all the stations.
First Media's initial purchase in 1974 was WPGC-AM-FM, located in Mroningside, Md. FCC records show a total sales price of $5 million, financed with a $2.4 million loan from Bankers Trust. The terms were $2.5 million down, the rest in notes payable over 10 years to the former owners for consulting and noncompetitive agreements. Brokers estimate the station's market value is around $10 million. Advertising salesmen and former employes calculate annual revenues in the range of $4.5 million to $5 million and speak of a 30 to 40 percent pre-tax profit. J. Willard Marriott Jr. said through a spokesman only that First Media's return on investment was "good."
WPGC made news recently in two ways: retings and labor contracts. Arbitron, the dean of media measurers, announced in its last survey that WPGC-AM-FM was tied with WMAL-AM for first place in the Washington area with 10.9 percent of the audience each. (Unlike stations in major metropolises, WPGC is allowed to simulcast because of its location in the small Prince George's County community of Morningside.) A new rating service, Burke Broadcast Research, gave WPGC-FM a 10.6 share (plus a 1.7 share for WPGC-AM), compared with 9.5 for WMAL.
This past week, WMAL took a full page ad in The Washington Post to boast that it is still number one in ARB ratings. Counting only listeners over 18 years old or counting cumulative audience -- the total number of listeners in a week rather than in a give quarter hour -- WMAL, with its middle-of-the-road format, still has the edge. Moreover, WMAL Operations Director James Gallant explained that Burke's telephone survey tends to favor rock music stations like WPGC because, whereas few persons can remember the next day when they listened to news and weather reports, they can remember listening to music for long periods.
WPGC's contemporary format of top-40 songs appeals primarily to teenagers. According to ARB, a whopping 36.8 percent of those listening to it are aged 12 to 17. As such, WPGC reflects the success of FM all over the country. In 1973, only 19 percent of FM's listeners were teens; last year, 51 percent were. In recent years, WPGC has been trying to change its teenybopper image to one of mass appeal, according to Dan Mason, First Media's national program director until last month. All First Media's stations have the same top-40 format with only minor local variations.
Another long-time former employe noted that WPGC had been among the top three stations for years. "The Marriotts inherited a winner," he said. Some observers credit WPGC's rating to the two other stations that once played top-40 records having switched to other formats. Others cite the promotional giveaways of money, albums and other prizes, estimated by Keith MacDonald, a former disk jockey, at close to $500,000 a year.
J. Willard Marriott Jr. attributed the ratings to "good management resulting in successful programming; it has nothing to do with the union problems we had." The outcome of a May 1977 strike proved a test case for the broadcasting industry. WPGC was struck by the Washington-Baltimore local of the American Federation of Television and Radio Artists over an automation issue. Nonunion personnel were hired. At that point, the AFTRA chapter attempted to enforce agreements it had with local advertisers to withdraw their prerecorded commercials from any station AFTRA might strike, provisions that are not in the national AFTRA contracts.
WPGC filed unfair labor practices complaints with the National Labor Relations Board, which ruled in its favor last January. In June 1978, a secret election was held and AFTRA was decertified. WPGC, like all the other First Media stations and most Marriott Corp. enterprises, became nonunion. A few disgruntled former employes claimed the money First Media saved on lower, nonunion wages, fewer staffers and greater use of part-time personnel might be a factor in WPGC's current success.
In other than financial matters, does the Marriott family attempt to exert control over its radio stations? First Media runs no management editorials. Nor is there a conservative or pro-business bias to its news, according to exstaffers. (In seeking to buy KFMK-FM, the company cited the "pro-business" climate of Houston.) Apart from the Mormon will contest, which Tim Kelly claims was halted by the general manager on orders from Richard Marriott, there were few remembered instances of direct interference.On some occasions, hit records whose words were allegedly too racy for Marriott ears were banned.
As to empire building, former WPGC salesman Greg Seibold said General Manager William E. Prettyman often talked about expansion and wanting to "make this a big chain." A Washington media broker commented, "The work is out that First Media would buy more radio stations if the price were right."
First Media's second station, KAYK-AM-FM in Provo, Utah, was in receivership when the Marriotts acquired it. The court sought out the Marriotts, who are familiar figures in Provo, home of Brigham Young University, and they acquired the station in 1976 for $540,000 minus outstanding debts. A local radio correspondent said KAYK has done "reasonably well" since then. The station was once predominant in the Provo market but has since lost out to others playing country and middle-of-the-road. Its effect in Salt Lake City, 44 miles away, is minimal, he said. He estimated the station's worth at $1.5 million.
WZGC-FM in Atlanta was acquired the same year for $2.5 million in cash and notes from a chain that had incurred substantial losses from another station. (Richard Marriott offered First Media a million dollars of his own money for that sale.) WZGC-FM has a 12 share of Atlanta's audience and ranks number two in the market. It is also very profitable.
Next came KOPA-AM-FM in Scottsdale, Ariz., which was turned over to First Media in 1978 for $750,000. At the time of purchase, news clips quoted Potter as promising to retain the station's golden oldies format, probably due to the large numbers of retirees in the Phoenix suburb. Soon, however, it was changed to top 40 in deference to the influx of moneyed residents and tourists. KOPA commands a 5.2 share.
And then there is KFMK-FM in Houston. Due to the challenge mounted by mainly Southern Baptists who protest the Mormon Marriotts' rock music, the $4.5 million sale has been held up. Fcc/ action is not imminent, said attorney Tom Albers.
J. Willard Marriott Jr. denies trying to build a media empire. First Media is "strictly a personal, financial investment," he said. He added, "We have no further plans for expansion at this time," while appending this last word, "although we do look at an occasional opportunity for another radio station."