Sale of KGMB expected by the end of this year
No potential buyers of the station have been publicly identified
Emmis Communications Corp. expects to complete its planned sale of KGMB by the end of the year, according to its chairman and chief executive officer.
Jeff Smulyan mentioned the Honolulu CBS affiliate during a conference call yesterday on the company's fourth-quarter earnings. Smulyan said another station, WVUE in New Orleans, also is expected to sell by the end of the year, and Emmis is in final discussions for the sale of WKCF in Orlando, Fla.
Emmis yesterday would not reveal the identities or number of potential buyers for KGMB.
Station sales customarily involve a due diligence process that would have a station generating reports and providing information to prospective buyers. No such activity could be confirmed locally.
KGMB sits atop 41,000 square feet of valuable, fee-simple Kapiolani Boulevard land that would be included in any sale.
All 16 Emmis television stations were put on the block last May, when Emmis said the private equity firm Blackstone Group was engaged to explore "strategic alternatives for (Emmis') television assets."
Blackstone and California-based Montecito Broadcast Group LLC purchased KHON in Honolulu, KOIN in Portland, Ore.; KSNW in Wichita, Kan., and KSNT in Topeka, Kan., and had Emmis lay off dozens of employees at the mainland stations before it took possession of them in January.
At KHON, eight of nine managers resigned rather than serve under Montecito. They declined to submit lists of employees to be terminated and no mass layoffs have occurred at KHON.
Emmis' $175 million in asset sales allowed the company to post a $139.6 million profit in the three months that ended Feb. 28; it had an operating loss of $35.6 million. The company had a net loss of $268.1 million for the year-earlier quarter.
However, the company's forecast of a decline in radio revenue and rising expenses spooked investors, who sent its shares to their biggest decline in four years. Emmis stock fell $1.72, or 11 percent, to $13.28 yesterday. The shares had fallen about 25 percent this year before yesterday.
In addition to specialty magazines such as Country Sampler, Emmis owns 23 FM and two AM U.S. radio stations in cities including New York, Los Angeles and Chicago.
Emmis has been putting more money into a business with a declining cash flow from core operations, said Stifel Nicolaus & Co. analyst Kit Spring. Internet sites and other potential revenue sources haven't been able to make up the difference, Spring said.
Terrestrial radio station operators have lost audience to alternatives including Apple Computer Inc.'s iPod and services from Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., which have a combined 10 million subscribers.
"I guarantee you those people are not listening to terrestrial radio as much," Spring said.
Bloomberg News contributed to this report