Companies will vie
to build 10 new radio
stations in islands

CORRECTION Thursday, October 21, 2004 » A story on Page C1 yesterday incorrectly reported that Big Island Broadcasting Inc. is based in Hilo and operates the radio station KHBC-AM 1060. Big Island Broadcasting Co. operates the station. The Honolulu Star-Bulletin strives to make its news report fair and accurate. If you have a question or comment about news coverage, call Editor Frank Bridgewater at 529-4791 or email him at corrections@starbulletin.com.

The rights to construct the stations will go up for grabs in a Nov. 3 Federal Communications Commission auction that has been delayed since 1997. The FCC has been snarled in controversy over deregulation, consolidation, media ownership limits and other issues since that time.

The FCC has qualified 456 bidders seeking to develop hundreds of radio stations around the nation. Of those, 42 parties have collectively put up $1.3 billion in deposits to place bids on the FCC construction permits in Hawaii, said John Detz, president of Maui-based station owner Visionary Related Entertainment LLC.

The best-known national industry player looking at entering the Hawaii radio market is publicly traded Cumulus Media Inc., based in Georgia. As of Dec. 31, it operated 266 radio stations in 56 mid-sized U.S. markets. Other publicly traded competitors such as Texas-based Clear Channel Communications Inc., Georgia-based Cox Radio Inc. and California-based Salem Communications Corp. already have stations in Honolulu and will not make bids on the new stations.

The neighborhoods that have been assigned the new frequencies are Captain Cook, Holualoa, Honokaa and Kurtistown on the Big Island; Wahiawa and Nanakuli on Oahu; Haiku and Kihei on Maui; Hanapepe, Kauai; and Kaunakakai, Molokai. That doesn't mean the stations' studios will be built in the communities -- KSSK-FM 92.3 is licensed to Waipahu, but its studios are in town, for example.

Visionary made a deposit of $1.3 million into a U.S. Treasury account to bid on eight of the frequencies on the Big Island, Maui, Molokai, Maui and Oahu. "My paper route worked very well. I saved my money and didn't buy any ice cream," Detz joked. Seriously, the company raised the money internally. Visionary owns and operates 14 stations on Maui, Kauai and Oahu.

Hawaii's other 14-station operator, Pacific Radio Group Inc., is not pursuing new stations, said Chuck Bergson, president and chief executive. Pacific Radio operates four stations in Hilo, four in Kona and six on Maui and is at its ownership limit on both islands.

Hilo-based Big Island Broadcasting Inc. put up $355,000 to bid on the rights to stations covering Captain Cook, Holualoa, Haiku and Kihei. It operates KHBC-AM 1060 in Hilo.

Fifteen companies reserved the right to bid on any number of the 10 stations set for development in Hawaii, such as Kona Coast Radio LLC, based in Wyoming.

Most others spread development desires around the nation, choosing to bid on specific licenses in several states. Some bidders, like George S. Flinn Jr., own broadcast licenses in Hawaii but have no local stations up and running.

Come the final pounding of the FCC's gavel Nov. 3, "We will know whether or not we're the winning bidder," Detz said. "Then within a short period of time we'll know whether or not they'll grant us the ability to apply for the (construction permit)."

Seeking a new broadcast frequency didn't used to be this way, but years ago the FCC saw cellular phone companies paying "outrageous sums of money for frequencies and the government saw that what they'd been giving away since the 1920s, could make them some money," Detz said.

Funds will be returned to bidders who don't prevail in buying radio stations at the auction.