The sale of Atlanta-based Patterson, with seven Honolulu stations and 29 stations in eight other states, is the latest in a wave of radio consolidations after a new U.S. communications law went into effect early last year, raising the limit on the number of stations one owner can have.
Under an agreement announced today, Patterson will be sold for about $215 million to Capstar Broadcasting Partners of Austin, Texas, already the owner of 120 stations.
Patterson, owner of Honolulu's KSSK-FM, KSSK-AM and KUCD-FM, had become Hawaii's biggest through last year's acquisition of KIKI-FM, KIKI-AM, KKLV-FM and KHVH-AM. That brought it to the maximum allowed in this market, seven stations, local broadcasters say.
Capstar and Patterson said they expect the deal to be concluded by the end of the first quarter of next year. It is subject to the signing of a definitive agreement and the approval of the Federal Communications Commission and other authorities.
The consolidation that has been going on at the national level has been happening locally as well.
"That's pretty much what's going on," said Bernie Armstrong, general manager of Honolulu stations KQMQ-AM, KQMQ-FM and KPOI-FM.
That group's parent, Caribou Broadcasting, had started with the KQMQ stations and bought KPOI late last year. More recently it entered into what the industry calls a "time-brokerage" arrangement with KDEO, which has operated as Radio Free Hawaii.
Once approvals come through, Caribou will buy KDEO's assets, Armstrong said.
Recent local combinations have included Ohana Broadcasting's agreement to operate KGMZ-FM in addition to its own KRTR-FM. Ohana also changed its name to New Planet Radio and said it is considering other acquisitions.
Consolidations give broadcasters wider markets and an ability to sell different advertising packages to their clients, Armstrong said.
Mike Kelly, general manager of KCCN-AM and FM and KINE-FM, said consolidation and its effects are about the only topic of conversation at broadcasters' conventions these days.
"Across the country, consolidation has gone crazy," Kelly said.
Last year, CBS owner Westinghouse Electric Corp. bought Infinity Broadcasting Group for $3.9 billion, bringing together what were then the two biggest radio station operators, with a total of 83 stations.
But Capstar was active and growing, too. Now the addition of Patterson's 36 stations to its 120 will make it clearly the biggest in number of stations in what the industry calls middle-market broadcasting, the companies said.
They said the combined business is also expected to be the biggest in middle-market radio station revenues.
James W. Wesley Jr., Atlanta-based president and chief executive of Patterson Broadcasting, said the Honolulu stations are well established in a good market. "There is absolutely no change anticipated in any of our stations and I will still be involved as chairman of Capstar," he said.
Capstar was formed last year by the Dallas investment firm of Hicks, Muse, Tate & Furst Inc. which brought in broadcaster R. Stephen Hicks and set out on an acquisition campaign.
Patterson Broadcasting's ownership also involves an investment firm. Its majority shareholder is Dyson Kissner Moran Corp. of New York.