When Norman J. Pattiz finished a long paper-signing day, spending $30 million plus for the Mutual Broadcasting System Inc., the founder and chairman of Westwood One Inc. went home and had a tuna fish sandwich.
Not exactly the champagne toast you might expect from a Los Angeles-born hotshot the day he merged Westwood, the country's largest producer and syndicator of pop-music programs, with Mutual, a broadcasting institution best known for news and sports, to create the second-largest radio network after ABC.
But then, Pattiz says, any resemblance between reality and what others have termed his "rock 'n' roll image . . . is usually somewhat obscure."
The tuna nightcap may well underscore the restrained way in which Pattiz is going to blend the two properties, both radio-program producers and distributors, but vastly different in image.
Westwood One provides services to radio stations and, through those services, delivers audiences to advertisers, "and that's exactly what Mutual does," says Pattiz, 42, who started his company 11 years ago with $10,000. "We do them in very different ways. Westwood is primarily an entertainment-oriented company, and Mutual is basically a news operation."
Westwood has had over the past few years a very good track record of growth. Mutual, on the other hand, was founded 51 years ago and has been owned by the Amway household-products-distribution corporation for the last eight years. It has weathered financial losses as well as three recent management reorganizations but found some success in programming with the National Symphony concerts and "The Larry King Show." With 60 percent of its clients AM stations and the bulk of its audience in the less desirable upper-age market, Mutual, "as an overall entity, certainly wasn't making any money," says Pattiz. "The satellite operation was losing millions of dollars a year, and considerable money was being spent annually on development of entertainment programming, which we did not need." Mutual's poor health was complicated by its distance from the advertising world in New York and Los Angeles. Headquartered here, it had a low priority among advertisers. "Consequently Mutual could not command the rates that they really should have justified," Pattiz says. "That was something we thought we could be instrumental in turning around."
The combined networks have more than 5,000 stations -- half the licensed radio stations in the country -- on their roster, says Pattiz, as well as a full-time staff of more than 300. Last year Westwood billed $25 million, far behind industry leader ABC Radio's $130 million to $140 million, says Pattiz. Mutual billed $29 million. "In a single stroke we have become a company that is 2 1/2 times what it was before," says Pattiz from a borrowed office in Mutual's Crystal City headquarters last week.
So far the most noticeable effect has been the firing of eight people and the transfer of 43 to a former satellite division of Mutual's, which remains an Amway property. In programming Pattiz plans to start Larry King at 11 p.m. -- an hour earlier -- beginning in February. Jack Clements, the president of Mutual, will share top executive duties with Art Kriemelman, a Westwood vice president who will be based in New York, but the two concerns will be run autonomously. Such Westwood disc jockey stars as Scott Shannon, William B. Williams and Dr. Demento will continue to be featured as will King, Ron Nessen and Rona Barrett on Mutual.
This deal is only the latest in a year of consolidations in the broadcasting business and the second in which an entertainment syndicator bought out a news operation. In April, United Stations Radio Networks purchased RKO Radio Networks. The principal owner of United is entertainment producer Dick Clark. The industry is watching closely the impact of the merger next month of ABC/Capital Cities on ABC's radio division.
What kind of opportunity does this present for a young broadcasting turk like Pattiz? "The radio-network business is a $350 million industry. That may seem like a lot of money, but it is really nothing. The radio industry overall is $6.5 billion. So the network share isn't very much. We think there is great growth potential left."
In the industry Pattiz is considered "formidable." Says Nick Verbitsky, president of the United company, which services 2,000 stations, "Pattiz is a very good, strong competitor." He is considered an innovative pace-setter in certain aspects of radio entertainment and was among the first to design all-music programs with national advertising. In an industry that often attracts the fly-by-night, Pattiz is also known for his dependability, says Charles Trubia, senior vice president, director of radio for Ted Bates advertising agency, Westwood's largest client. "He is thoroughly reliable, had good business practices and, when we have called and doublechecked [Westwood's demographic claims], Pattiz has been impeccable."
Though he is respected, the tall, brown-eyed Pattiz is still aching for credibility. He says Westwood's stockholders feel the network "has the potential to become a major player in the communications business." But for a long time the [major] networks had the recognition. "When those guys [ABC, NBC] walk in, they have instant credibility. I walk in, and I'm Norman Pattiz from California. A lot of the buyers want to know how can I tell the commercials are going to run and if the stations are going to run the programs," says Pattiz.
Contributing to Pattiz' status as a phenomenon in the broadcasting business was his unique entry into the field. Working his way through California State University at Northridge as a karate teacher and bar bouncer, he didn't know what he wanted to do after college but assumed his degree in physical education could always lead to coaching. He experimented with a year in the mail room of a theatrical agency, two years in public relations and then five years at independent Los Angeles television station KCOP.
In 1974, after rising to sales manager at that station, Pattiz was fired in a management coup and sat about, at age 31, "feeling very sorry for myself." At a friend's one night, he heard a local station playing 52 hours of Motown songs and decided to approach the station about syndicating a similar program. He invested his life's savings of $10,000, sublet an office in the Westwood section of Los Angeles -- hence the name -- and produced a 24-hour special of Motown music.
Westwood has since evolved into a multiformat supplier, producing top-40 countdown shows, concerts and interview shows for adult-contemporary, rock, urban, Spanish and middle-of-the-road stations. In Washington, 10 different stations carry Westwood programs. The company produced a 12-hour special from the US Festival, which won an award as the best special of the year, and did the first live stereo concert from Japan to the United States in 1983.
Now it can boast of exclusive radio interviews with Barbra Streisand, Bruce Springsteen and Kenny Rogers, as well as sponsorship of major concerts.
After Westwood went public 18 months ago at $14 a share (yesterday it closed at $43), Pattiz and his team started long-range planning. "We knew at that time eventually we would have to get into the news business, whether by starting or acquiring a network. We always felt we would have to be a full-service network." At about that time a Mutual representative, Pattiz recalls, contacted Westwood to see if the company was interested in buying Mutual, but when the speculation about the sale of the network became a hot topic, Mutual let everyone know it was not for sale.
In August, about the time of Westwood's second stock offering -- 1 million shares -- Westwood reopened the discussions. "We felt from the very beginning that Mutual was the best candidate. We knew that Mutual had not historically been a very profitable operation, so we thought that it could be for sale, even though they were not out there actively looking for buyers," says Pattiz. "So rule number one is go out and find something you think you can buy. We felt that Mutual could be buyable." The $30 million deal in cash and notes also included $8 million to $9 million in Mutual's common stock. In return Amway is giving $5 million of advertising to the company over the next four years and furnishing satellite delivery service worth $12 million.
Probably the best result of the purchase of Mutual so far, says Pattiz, is now his mother is happy. "It represents the first time my mother knows what I do. My mother never really understood what Westwood One did. 'Oh that's fine, rock concerts . . .' She knows what the Mutual Broadcasting System is. Though she is not exactly certain what I do, she knows that a limousine picks her up for her doctor's appointment, so things have got to be okay."