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Changing the tune.

Changing The Tune

When a new owner attempts to salvage a radio station that's dropped 70 percent in ratings over five years and taken an almost 50 percent dive in billings in two years, it better make immediate changes. Right?

Wrong, says Jacob Bogan, chief operating officer of GHB Broadcasting Corp. Bogan's company will close a $1.65-million cash purchase of contemporary hit radio station KZOU FM and AM Feb. 11.

"The biggest mistake of most radio station owners is to go in with a preconceived notion of a plan without doing the homework or research necessary to form a plan that will be successful," says Bogan.

But there's no question changes will eventually have to be made.

Billings for KZOU had been steady at around $1.3 million for several years, but the past two years have seen drastic losses. In 1989 the station lost $300,000.

And 1990 looks just as bad.

Estimated revenues dropped to $675,000 and losses climbed to $350,000.

There's been unlimited speculation about what changes will be made at the new station, but Bogan says a new plan will be enacted only after focused research is conducted.

GHB did its own research before it decided to buy KZOU, and unlike some past owners of the station, it's prepared to make changes that will enhance the company's longevity in the marketplace.

Never Ending Homework

Bogan explains four basic reasons led to GHB's decision to purchase the station.

First, with the market down, the station was selling for a steal at $1.65 million compared to the $4 million price tag it carried when it sold just a few years ago.

Secondly, the new owner thinks its location in the capital might mean the city is more recession proof with a built-in group of employees.

Also, "Our experience has been in markets similar in size to Little Rock - like Columbia, S.C.," Bogan says. "We're familiar with how to operate stations within that market."

Finally, GHB is impressed with Gov. Bill Clinton.

"We're looking for potential for growth in the state," says Bogan, who sees Clinton as forward-thinking, especially in education. "We're looking at radio as a 20-year investment."

GHB had owned WCOS, a Columbia, S.C., station, since 1958 and only sold it because the $12.5 million offered for the number one station was too good to pass up. That station has played modern country music since 1976.

This successful format for GHB, along with a country station it purchased in 1990 in Pennsylvania, has led observers to speculate KZOU will switch to a country format.

"The immediate assumption is, |It's going to be the great 98 and it's going to be country,' - that's a guarantee for failure," Bogan says.

GHB has a period of two years to reinvest the money made from the sale of WCOS without having to pay a capital gains tax, and KZOU is just one of three stations the company plans to purchase in the next two years. GHB also owns seven AM stations that play various forms of religious music.

"Our intention is to buy stations and own them for the next 30 years and become a part of the cities," says Bogan.

Pointless Speculation

KZOU's ratings have steadily dropped overall over the past few years. The decline has been steepest in the 18-34 age group - from a 19.2 share of the market four years ago to a 5.7 share in 1990.

Hal Smith, former general manager, says the 12-24 age category is actually the most significant one in which to pin down ratings in the contemporary hit radio (CHR) format.

The station's 12-year-olds-plus numbers are no better, falling from a 12.3 share in 1986 to a 4.9 share in 1990.

"Anybody in the business has wondered |Will they change and what will they change to?'" says Ken Flemmons, general sales manager at KXIX 103. "But I have to go back to the common sense approach. It would be awfully hard for someone to walk in and blow a half million dollars."

While newstalk is virtually out of the question because the format doesn't do well on FM across the country or on AM in Little Rock, some say a format change is inevitable because CHR is doing poorly across the country.

The Jan. 14 issue of Inside Radio, a weekly management newsletter for the broadcasting business, shows 26 out of 35 CHR station's ratings are down in the fall rating book. Advertising is more difficult because the younger audience is a tough sell. Soft drinks, fast food and military recruiting in non-war times, are a large extent of the sales.

"GHR has had trouble all across the country," says Todd Curtis, KZOU general sales manager. "But format is not really the issue. Our goal is to maximize revenue and ratings."

A Business Turn-Around

Bogan admits that KZOU is going to be what is called in the business a "turn-around," but that doesn't necessarily mean a change in format. He says it's pointless to speculate on changes because the company is not even sure what its plan is.

"We've told employees that it's very important to us to listen to them and for us to learn what the Little Rock listeners' opinions are."

GHB will use research firms to conduct studies before making any major changes, but some plans have already been set. Close to $1 million has been allocated to help subsidize the station during the transition period.

At present, Bogan isn't expecting to make any employee changes, although he never kept secret that he wanted to bring in his own general manager.

"I think Hal [Smith] did a good job given the situation he had," says Bogan, but "My intention was to hire someone who I could work closely with."

Smith left Jan. 16, and Randy Bush is now at the station on an informal basis as an observer before he becomes general manager Feb. 11. Bush was operations manager under Bogan who served as general manager at WCOS in Columbia.

Bogan will also be at the station for about the first six months of ownership on a Monday through Thursday basis, commuting between Little Rock and GHB's home base in New Orleans, La.

PHOTO : ON YOUR MARK: Randy Bush is waiting in the wings to take over as the new general manager at KZOU and is getting ready to fight the station's 50 percent drop in billings and 70 percent drop in ratings.
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Title Annotation:GHB Broadcasting Corp. acquires KZOU FM/AM
Author:Rengers, Carrie
Publication:Arkansas Business
Date:Feb 11, 1991
Previous Article:Advertising aggravation.
Next Article:Snacking their way through the recession.

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