Stations silent despite deadline

Eight new radio stations were auctioned by the FCC, but only four hit the air

STORY SUMMARY »

Eight Hawaii FM radio station construction permits were among 290 auctioned by the Federal Communications Commission in 2004, but only four of the stations are now on the air because the process of building them has been difficult and costly.

One winning bidder failed to meet the construction and licensing deadline, so the permit has been canceled and the bidder's $470,000 bid has been forfeited. Two others have obtained licenses and sent out test signals, but need more time to build permanent studios and hire staff.

One other is just about to sign on, joining the others on the air.

---

---

FULL STORY »

Hawaii is short four FM radio stations that should have been up and running by now, following a 2004 auction of Federal Communications Commission construction permits.

More stations to come Subsequent FCC FM auctions have resulted in the following construction permits for Hawaii radio stations: FM Auction 62: Jan. 2006 » KLHI-FM 92.5, Kahului: On the air, owned by Pacific Radio Group Inc., led by Chuck Bergson. » KNAN-FM 106.7, Nanakuli: Big D Consulting Inc., led by Donald Hildre. FM Auction 68: Jan. 2007 » KHEI-FM 107.5, Kihei: Visionary Related Entertainment LLC, led by John Detz. FM Auction 70: March, 2007 » The Kailua-Kona CP for 96.7 won by JER Licenses LLC of Maryland is now listed as vacant. Source: Databases at www.fcc.gov

Eight new Hawaii stations were made possible by the FCC's FM Auction 37, which raised a total of $178,001,500 for 258 of the 290 permits, or CPs, that were up for grabs nationwide. Four are on the air.

According to FCC regulations, once a potential broadcast licensee receives a CP, he or she has three years to build the station and file a license application, essentially certifying that the station was built as authorized and is operational.

At least one winning bidder failed in the effort and her CP has been canceled by the FCC.

Christina Bourdeaux of Maine was the high bidder for a station at 94.3 on the dial in Hanapepe, Kauai. Following the auction she obtained a CP and reserved the call letters KEEI-FM, but failed to file a license application by the permit's March 18 expiration. Other progress she might have made is unclear, as she could not be reached.

The cancellation means the forfeiture of her $470,000 winning bid, according to FCC regulations, which also provide for the Hanapepe frequency to be re-auctioned.

Consulting engineer and Kauai resident Donald Mussell Jr. is well-versed in the difficulties inherent in building stations, which can be more pronounced in Hawaii.

While not speaking specifically about Bourdeaux, he said, "When somebody thinks, 'Hey, I'll build a station in Hawaii and live off the profits,' they don't think about the costs, but if they do, they don't think high enough," he said.

It is a romantic notion affixed to a series of problems.

"A lot of newbies that apply for a CP and get it here ... either they've been here on vacation or visited, or look at the maps and think, 'Let's just put a tower here,' without even thinking of the implications to local culture, the state and county governments -- there are so many complications to adding a new tower, it's almost impossible," said Mussell.

Deep pockets needed

The winning bid is only part of the equation.

A potential licensee must have an attorney versed in myriad FCC regulations and an engineer to perform studies and ensure and attest to FCC compliance.

Building a station on the mainland is "hard, tedious and expensive," Mussell said. "But the cost of doing business here is so much higher," and logistics are more challenging.

If transmission gear is to be mounted on an existing tower, a lease agreement will be needed and "negotiating that can be a test of your patience, tolerance, whatever," Mussell said.

Then there's the cost of equipment, which varies widely.

One of Mussell's clients got a transmitter, antenna and cabling for roughly $34,000, which cost around $8,000 to ship.

Another client's much larger transmitter cost $60,000, a discount, because the client bought two. The antenna was $50,000 and along with other items, trucking and shipping, the purchase came to about $200,000.

"Shipping adds about 20 percent to the cost," but if you're in a hurry, it costs more, he said.

For an on-air studio, a typical equipment cost would be $25,000 to $35,000, "but it all has to be wired together, connected ... it's a very extensive process." A small off-air production studio can cost less than $10,000, "not including cabinets, wiring, lighting or air conditioning," he said.

Finding studio and office space "is not nearly as tough as finding the site for the transmission facilities," though thought must be given to economically linking to those facilities.

First-timer

The first newcomer to hit the airwaves with an Auction 37 station was Joel Sellers, a businesswoman from New Orleans.

She won two CPs as president of Big Island Broadcasting Inc. and set up another company so the stations would be licensed to separate entities.

Her Captain Cook Broadcasting Inc. launched KMWB-FM 93.1 in Kona in November. It simulcasts Hilo's KNWB-FM 97.1 through an agreement with New West Broadcasting Corp. and was on the air well before the Feb. 23 expiration of its CP.

"We liked the idea of a local operator, someone who really knew the market," said Sellers.

Sellers' brother Roger Cavaness and other family members were in radio "for years and years," and her brother pledged to mentor her broadcast quest. "This is my first entry into being a full owner," she said. Asked if she is having fun yet, Sellers burst out laughing. "No."

Sellers' other CP is for KUHI-FM 106.5 FM in Haiku, Maui -- licensed to Big Island Broadcasting but not yet on the air.

Since the auction, Hurricane Katrina hit her hometown and "I've been very distracted with a lot of other things happening," including the death of her brother in February.

"I was actually talking to the engineer from my brother's funeral," and found herself wondering, "do I have to deal with this right now?"

But deadlines are deadlines and "we were pretty frantic ... I don't really want to throw away a million and a half dollars," she said.

KUHI conducted on-air testing in February from the tower site, but she has received FCC permission to keep it silent until she can complete location and construction of main studios and staffing, which she expects will take less than six months.

Another broadcaster not yet up and running is Jerry Lundquist, of Connecticut-based Chaparral Broadcasting Inc., licensee of KLZY-FM 102.9 in Paia, Maui.

Unlike Bourdeaux and Sellers, Lundquist is a veteran broadcaster with stations in Jackson Hole, Wyo., and Sun Valley, Idaho.

He found the process in Hawaii to be "no more difficult than in other resort markets where real estate is highly valued and siting options are necessarily limited," he said.

The frequency initially was allocated to Honokaa on the Big Island and Lundquist struck a deal to sell it to Wyoming-based Kona Coast Radio LLC, but the deal was halted when a tower site could not be secured.

Lundquist obtained FCC permission to move the station to Paia and co-located the antenna on the Ulupalakua transmitter site.

"Final details on format, studio and staff are still being finalized, as there have been several potential local buyers," he said.

Lundquist also has sought approval to keep KLZY silent for "up to 180 days" until he can secure permanent studios and additional staff.

The FCC's authorization for KUHI and KLZY to remain silent expires Oct. 4. However, an official who asked not to be identified said, "The issue of stations that meet construction deadlines and then ... go silent is a different issue, one where we certainly ask questions to confirm completion of construction. Those are handled on a case-by-case basis."

Winners-turned-sellers

Some winning bidders sell CPs for a profit.

"Some of them never intend to try to build -- they're not really operators," said local broadcaster John Detz, in a 2004 interview.

Detz bids and builds. His Visionary Related Entertainment LLC put KMKK-FM 102.3 in Kaunakakai, Molokai, on the air last March and expects KTBH-FM 102.1 in Kurtistown, on the Big Island, to sign on this week. Its license application was filed prior to the CP expiration.

Bidders with no existing broadcast ownership can receive bidding credits that essentially stretch their dollars further than those of broadcasters seeking to expand. Maryland-based Marquee Broadcasting Inc. got a 35 percent credit and won the CP for FM 92.1 in Holualoa, Kona, for $317,850. It received $356,250 for the CP in July from Idaho-based Parrott Broadcasting LP, which didn't leave much time to get KHWA-FM 92.1 fired up. However, it was licensed March 1 and on the air April 1, weeks before its CP expired.

KHWA airs a primarily classic rock format and "is just focused on the Kona side," said general partner Scott Parker, while Parrott's Hilo stations, KHWI-FM 92.7 and KHBC-AM 1060, focus on the Hilo side. He has hired local talent including Tommy Ching, who goes by either "Polynesian Pirate" or "Kahikina" depending on the time of day, Lyman Medeiros and Lisa Casady, while Pohai, a personality from Hilo, co-hosts an afternoon Hawaiian music block simulcast on both sides of the island.

Wyoming-based Kona Coast Radio, led by prolific licensee Victor Michael, was the high bidder for what is now KHAI-FM 103.5 in Wahiawa. He bid slightly more than $2.1 million for the CP, which was purchased by California-based Educational Media Foundation for $2 million. EMF is a religious broadcaster whose Air 1 format of Christian alternative rock has aired on KHAI since last spring.