The Marriott family, best known for its hotel and restaurant holdings, recently expanded a little-known sideline business: radio and television.
First Media Corp., privately held by members of the Marriott family, has purchased its first television station.
The corporation, still characterized by its vice president and counsel Ralph Hardy as a "relatively small" operation, purchased WCPX-TV in Orlando, Fla., in May for $200 million, the largest price paid to date in that market. A local analyst said the purchase "shows people in the industry that they're very serious. They're stepping into an attractive market in a big way."
The previous high price for a television station in the Orlando-Daytona Beach-Melbourne market was $185 million for WFTV, ranked first in May's Arbitron ratings. It was purchased by Cox Communications in June 1985. The rapidly growing market has moved from 33rd-largest in the nation in 1982 to 27th-largest today.
"It's ironic that $150 million was paid for the number one station, $185 for the number two, and $200 million for the third biggest a few months later," said Jonathan Intrater, vice president of Broadcast Investment Analysts, which values broadcast properties. " First Media paid 16 times cash flow for that station," he said, adding that even 13 or 14 times cash flow would be considered high. "It would take a tremendous amount of time for them to recoup that figure." He speculated that the company purchased the station as an investment.
Although First Media, which Hardy said has a policy of declining interviews to the press, no longer is a small concern, there is still room for growth: Under Federal Communications Commission regulations, it can hold a maximum of 12 FM radio, 12 AM radio and 12 television stations.
First Media, which also owns 11 radio stations, made its first acquisition, of a local radio station, in 1974; the station reached number one in the area's Arbitron ratings shortly afterwards. "Their radio group as a whole is worth between $140 and $170 million," Intrater said. "WZGC-FM in Atlanta is their top station, a real powerhouse. It's worth $50 million to $60 million."
The company is owned by brothers Richard E. Marriott, First Media's chairman of the board and treasurer, and J. W. Marriott Jr., executive vice president. Their positions are reversed in the Marriott Corp., where J. W. Jr. is chairman and Richard is executive vice president. Other board members include Nancy Peery Marriott, Richard's wife; Hardy, her cousin; and Glenn T. Potter, the president, who was hired to run the company in 1973.
"They've got some really aggressive and winning radio stations," said Joel Denver, contemporary hit radio editor for Radio & Records. "They're a company that's had some really good successes. They have very strong management."
He cited the company's Seattle (KUBE-FM), Atlanta (WZGC-FM) and Boston (WZLX-FM) stations as examples. They are now ranked third, fourth and eighth in their respective markets by Arbitron. The Boston station has rebounded to a 5 percent share of the market from a 1 percent share less than a year ago, following a format change by First Media.
The Marriotts' capacity to view properties in terms of investment rather than earnings potential is one of their strengths, according to Intrater. The same management attitude and financial strength that has made Marriott's Roy Rogers restaurant chain a success is proving effective in the broadcast market, he said.
"Their stations are doing well, but they're not blowing anybody away," he said. "They don't have a reputation for turning property around. They maintain established stations and let the market growth pick them up." Intrater credits them with recognizing early the investment potential of broadcasting, which began drawing many investors early in the 1980s.
The television station, Orlando's CBS affiliate, was Outlet Communications' most valuable property. It was sold to help finance Outlet's leveraged buyout from its owner, Rockefeller Center Inc.
Bruce Sundlun, chairman of Outlet Communications, whose company purchased its first television station in 1948, said, "To quote broadcast executive John Hayes, 'running a TV station is like being a toll-booth collector on a bridge.' Television is much easier to manage than radio, which is much more volatile and market-sensitive."
First Media also owns WPGC-AM and WCLY-FM, two local stations ranked 33rd (last) and 13th in this area; WUSN-FM in Chicago, ranked 14th in its market; KFMK in Houston, ranked fifth; KOPA-AM and KSLX-FM of Scottsdale, Ariz., 27th (last) and 10th, respectively; and KFMY-FM and KLZX-AM of Salt Lake City. Figures were not available for the AM station, which is outside the metropolitan area, but Arbitron placed KFMY 18th of 30 in the Salt Lake City market.
At the company's inception 13 years ago, sources speculated that it was private because the Marriott clan's patriarch, J. W. Marriott Sr., felt broadcasting was a risky field. Since his death last year, however, there are no plans to link the company with Marriott Corp. "The company has always been relatively small, closely held and privately owned," Hardy said, "and I'm sure that it foreseeably will be."