Giant radio groups buy up Los Angeles stations.

Large national broadcasting companies have been snapping up Los Angeles-area radio stations at a frenetic pace in recent months.

The reason is simple: L.A. happens to be the biggest market in the nation.

"You'd have to be an idiot to lose money (here), so the more stations you can get, the more you buy," said Harry DeMon, an analyst for Credit Suisse First Boston.

This explains the rapid consolidation of ownership in L.A., with hundreds of millions of dollars changing hands for at least 13 local stations.

Before the Telecommunications Act of 1996, a company could own no more than four stations in any metropolitan area. That made it difficult for any company to garner much more than 15 percent of any market's total advertising revenues.

Today, the picture has changed. CBS Corp. has about 36 percent of L.A.'s radio ad revenues - largely by acquiring four local stations since last year for its maximum of eight under the law.

Chancellor Broadcasting owns five L.A. stations - up from one prior to the legislation - and intends to further increase its presence in the market, according to company spokesman David Collins.

"What we're focused on is having maximum performance and presence in Los

Angeles," said Collins. "Drive time in Los Angeles is huge, and radio has the ability to reach those people when no other media can."

In all, five companies now rake in about 82 percent of all Los Angeles radio advertising revenues, according to DeMon.

Also included in the fivesome is Heftel Broadcasting Corp., a unit of Clear Channel Communications. Heftel made headlines in February when it agreed to pay $112 million to acquire Golden West Broadcasters' KSCA-FM. Under the agreement, a Heftel operating unit called La Nueva is supplying programming to KSCA and Heftel will acquire the station after the death of Gene Autry, Golden West's owner.

Richard Heftel, La Nueva's manager and president and general manager of Heftel's two L.A. stations - KTNQ-AM 1020 and KLVE-FM 107.5, said Heftel intends to buy more L.A. stations, but he wouldn't elaborate.

Besides its huge population of radio-listening commuters, L.A. is a valuable radio market because it has fewer non-radio media outlets than most other metropolitan areas, according to Gordon Mason, president of the Southern California Broadcasters Association.

Because of this, Mason and other analysts said, Los Angeles generates more annual radio ad revenue than any other metro area in the nation - 10 percent to 15 percent more than New York, for example.

DeMott and other industry observers say big-money corporations had been eager to enter the radio arena on a mass scale for some time, and the Telecommunications Act allowed them to do just that.

L.A.'s Biggest Station Groups

CBS Corp.                                       Share(*)

KNX-AM               News                          2.2
KFWB-AM              News                          1.8
KTWV                 Adult Contemporary            3.6
KCBS-FM              Rock                          1.9
KRTH-FM              Oldies                        4.0
KLSX-FM              Talk                          2.0
KRLA                 Oldies                        1.2
KROQ-FM              Rock                          3.6

Chancellor Media Corp.

KKBT-FM              Urban                         4.0
KBIG-FM              Adult Contemporary            2.6
KLAC-AM              Nostalgia                     2.6
KYSR-FM              Adult Contemporary            2.5
KIBB-FM              Adult Contemporary            1.7

Walt Disney Co.                                 Share(*)

KTZN-AM              Children                    N/A(**)
KABC-AM              Talk                          3.1
KLOS-FM              Classic Rock                  2.0

Heftel Broadcasting Corp.

KLVE-FM              Spanish Music                 6.0
KTNQ-AM              Spanish Talk                  2.0
KSCA-FM(***)         Spanish Music                 4.5

Cox Broadcasting

KFI-AM               Talk                          4.1
KOST-FM              Soft Rock                     3.9
KACE-FM              R&B Oldies                    1.0

Mount Wilson Broadcasters

KKGO-FM              Classical                     1.5
KGIL-AM              Show Tunes                  N/A(**)

* Share number represents the average percentage of the L.A, metro
radio-listening audience of persons 12 and over that was tuned in to
the station from 6 a.m. to midnight during summer 1997.

** Not available yet because station changed to its current format
in August.

*** Heftel has signed a deal to buy KSCA from Golden West
Broadcasters after the death of Golden West's owner, Gene Autry.
Heftel is already supplying the station's programming.

Source: The Arbitron Co.

Before 1992, for example, federal guidelines limited a company to one FM and one AM station in any one market and no more than seven AM and seven FM stations nationwide. So until recently, numerous companies owned pairs of stations in L.A. - such as ABC Inc.'s KABC-AM 790 and KLOS-FM 95.5.

A rules revision in 1992 allowed companies to lease and operate another AM and another FM station, for a total of four stations in any market and a national limit of 18 AM and 18 FM stations (and three more on each band if minority- or small business-owned). The 1996 law raised that to eight stations per market and no limit nationally.

"The act has given radio the chance to stop being the weak stepchild of media," said Dennis Wharton, a spokesman for the National Association of Broadcasters. "From 1992, CBS went from having seven stations nationwide to about 400 now."

The act's passage has raised concerns that increased concentration of ownership would dampen format diversity on the dial, and to some extent, that has materialized.

For example, Heftel Broadcasting switched KSCA to a Spanish-language format when it took over the station this year. Heftel's other two L.A.-area stations are also Spanish-language.

But Dave Beasing, a radio consultant with Los Angeles-based Jacobs Media, said the corporate buying spree is not reducing diversity in radio programming.

"These companies don't want their stations to compete directly with each other," Beasing said. "They steer their stations' formats away from one another, which means more variety."

Supporting that argument is that Heftel's three L.A. Spanish-language stations are distinct - one plays love songs, one features a morning "shock jock" and the other focuses on Spanish-language talk radio.

Another concern raised by the 1996 act is that the rise of corporate ownership would make it difficult for the smaller owners to compete and survive.

One local station owner defying this prediction is Saul Levine, whose company, Mount Wilson Broadcasting, owns classical station KKGO-FM 105.5 and the show tunes station KGIL-AM 1260.

"Deregulation has posed no real problems for us," said Levine, who has refused a number of offers for his stations. "(The corporate incursion) has made things better, actually, because the new conditions have led to raised advertising rates."

Analysts say fewer owners of bigger pieces of the radio market mean less competition, thus creating a rise in ad rates.

Industry observers say there is plenty more consolidation to come, and that the eight or so major national station owners will consolidate down to five or six within the next few years.

Likely candidates to be purchased by bigger companies include Cox Radio Inc., owner of talk station KFI-AM 640 and adult contemporary station KOST-FM 103.5, and Jacor Communications Inc., owner of KIIS-FM 102.7.

In fact, in early October, the Hollywood Reporter reported that Jacor, with 148 stations in 34 markets, was an imminent target for acquisition.