Jammed dial: but de-consolidation could present opportunities.

AS a radio executive in Los Angeles since 1990, Tim Pohlman saw firsthand the effect of corporate consolidations.

His original employer, Group W/Westinghouse Broadcasting Inc., was sold to CBS Broadcasting Corp., which in turn was acquired by Viacom Inc. and folded into Viacom's Infinity Broadcasting division.

Now, Pohlman is hoping to ride a wave in the opposite direction.

Earlier this year, he and another veteran radio executive, Chris Maguire, formed Riviera Broadcasting Group LLC with the hope of buying up smaller and mid-size stations--possibly including some put on the market by Pohlman's former employer and the other U.S. broadcasting colossus, Clear Channel Communications Inc.

Riviera, which is run from Pohlman's home in Thousand Oaks and Maguire's San Francisco Bay Area home, is among several smaller broadcasting companies snapping up stations in a radio market that is becoming increasingly fluid.

Riviera put itself on the map last month by buying KEDJ-FM (103.9), an alternative rock station in Phoenix. The group is eyeing other potential purchases in fast-growing Western markets such as Las Vegas and Tucson--and ultimately Los Angeles.

"What you're going to see is an opportunity for more independents to get into the game," said Mary Beth Garber, president of the Southern California Broadcasters Association.

So far, Los Angeles--dominated by Clear Channel and Infinity--remains a tough market for groups like Riviera to penetrate. There are few stations for sale in the market, and those that are tend to be prohibitively expensive for smaller companies.

One small Florida-based broadcaster, Styles Media Group LLC, leaped into the Los Angeles market with its purchase of the venerable hip-hop station KDAY-FM (93.5) last fall. Styles has operated KDAY since the purchase was announced last fall, and last month teamed up with radio financiers Russ Oasis and Alan and Robert Potamkin to complete the purchase KDAY and two Inland Empire radio stations from Spanish Broadcasting System Inc.

Styles executives said they want to find stations for sale in Los Angeles and string together a local cluster to compete for advertising with Clear Channel, which owns eight L.A. stations, and Infinity, which owns seven. The Federal Communications Commission doesn't allow a single company to operate more than eight stations in a market.

Companies such as Riviera and Styles are poised for an anticipated wave of de-consolidation, as larger companies divest some of the weaker stations in their portfolios after years of building up clusters. At the same time, some independent radio operators--such as Phoenix's New Planet Radio, which had owned KEDJ--are still shopping for buyers. The trends are likely to create openings for smaller- and mid-sized broadcasters.

"We're just starting to see the pendulum swing," Garber said.

For sale?

Robert Unmacht, a Nashville-based radio consultant, said he expects a wave of radio station sales as owners back down from artificially inflated prices, while recently formed acquisition companies such as Riviera take advantage of opportunities. "There may be some pruning and trading," Unmacht said. "It's just a matter of time."

Infinity spokeswoman Karen Mateo said the broadcaster is looking to unload some stations in a few markets, although she declined to say whether Los Angeles was among them. A Clear Channel spokeswoman declined to comment, saying the company does not speak publicly about its acquisition or divestiture strategies.

Just last week, the New York Post reported that Wait Disney Co. was considering selling its ABC Radio division, which owns three L.A. stations. Garber said upstart broadcasting companies likely would look to acquire Los Angeles' few remaining independent stations, such as classical station KMZT-FM (105.1) and soul station KJLH-FM (102.3)

KJLH executives did not return calls for comment. KMZT General Manager Saul Levine said the station was not for sale, adding that he believes smaller broadcasters will have a difficult time challenging the top broadcasters in large markets. "I think they have a very rough road ahead," he said.

Pohlman, who was Infinity's L.A. market manager from mid-2002 to mid-2003, said Riviera is starting out in mid-sized markets where it can compete more effectively and grow with the population, such as Reno, Denver and Phoenix. Eventually, Pohlman said, Riviera would seek out stations in larger markets such as Los Angeles.

Riviera's equity partner is Veronis Suhler Stevenson Partners LLC, a leveraged buyout fund based in New York. Kevin Waldman, managing director of Veronis Suhler, said the company views its investment in Riviera--which he declined to disclose--as seed money to build up a larger broadcasting group.

"We'll selectively look at opportunities market by market," Waldman said. "There's a lot of de-consolidation being talked about. You're starting to see a pruning of assets from some of the larger companies."

Tom Taylor, editor of the industry newspaper Inside Radio, pointed to the recent move by Entravision Communications Corp. to sever its relationship with Clear Channel for package sales of advertising on KDLD-FM and KDLE-FM, better known as Indie 103.9. Taylor said that if Entravision successfully manages Indic 103.9 on its own, it would prove that smaller radio operators can compete in mainstream formats in large markets like L.A.

"This is a classic big guy/little guy thing where the little guys can spot opportunities and act nimbly on them," Taylor said. "Los Angeles is such a rich and diverse radio market that there's lots of opportunities for everyone in this market."

Static

The Los Angeles radio market is dominated by a few players.

Company                                 Stations Owned

Clear Channel Communications Inc.             8
Infinity Broadcasting (Viacom Inc.)           7
Univision Communications Inc.                 4
ABC Radio (Walt Disney Co.)                   3
Liberman Broadcasting                         3
Entravision Communications Corp.              3
Salem Communications Corp.                    3

Source: Radio & Records and the companies.