Popular Radio Format Once Again May Be in Jeopardy.

IT'S dangerous to get attached to a radio station in Los Angeles because you never know when it's going to disappear.

Thousands of fiercely loyal listeners to KSCA-FM 101.9's adult album alternative format learned that nearly three years ago when the station was bought and converted to Spanish-language -- after which it rapidly jumped to the top-rated station in the L.A. market.

The adult album alternative (or "triple-A") format was revived when Jacor Communications converted a pair of simulcast stations in L.A. and Orange counties, KACD/KBCD-FM 103.1, to triple-A in October 1998.

And now, there's a chance the format -- a highly popular one among the affluent young-adult crowd in L.A. and Orange counties -- could vanish once again, though insiders say that's unlikely to happen.

Jacor was acquired in April by Dallas-based Clear Channel Communications, which last month agreed to buy another giant radio group, AMFM Inc. If approved by the Federal Communications Commission, the deal will make Clear Channel one of the biggest media companies in the world. But to comply with FCC ownership rules, Clear Channel has to sell 125 stations nationwide, including five in the L.A. market.

KACD and KBCD are believed to be two of those on the block, according to reports in trade publications. Clear Channel officials have not confirmed which local stations are for sale. "We expect it to be a while before we make the final decisions on that," said spokes-woman Kathryn Johnson.

While rumors of the pending sale have some fearing the loss of triple-A once again, Roy Laughlin, who oversees the two stations along with KIIS-FM 102.7 and KXTA-AM 1150, said any new owner would be nuts to mess with a winning formula.

"I think, with the signal pattern they have and the amount of money (Clear Channel) is going to ask for them, there's not any danger (the new owner) is going to change the format," Laughlin said.

KACD and KBCD together netted around $8 million in ad revenues during their first year, Laughlin said -- and the combined stations have only four employees, because most of the back-office functions are handled by other Clear Channel stations. That makes the venture enormously profitable.

Although they only manage a rating of around 0.7, the stations generate revenues on par with those having a far bigger market share, thanks to the desirable demographics of their listeners. And because they have relatively weak signals, reception is bad in the high-density Hispanic areas coveted by Spanish-language broadcasters -- making a switch to Spanish-language unlikely, Laughlin said.

Besides KACD and KBCD, other stations reportedly being targeted for sale by Clear Channel are high-rated urban music station KKBT-FM 92.3 and simulcast KXMX/KEZY-FM 95.9 in Orange County. Local sources confirm the bidding has started for AMFM-owned KKBT, though whether the other stations are being shopped around is known only to insiders.

These stations could fetch enormous prices. Before the Telecommunications Act of 1996, which relaxed ownership rules and touched off a wave of industry consolidation, radio stations typically sold for eight to 10 times their annual cash flow; today, that ratio is closer to 18 to 20. It's been estimated that KKBT might sell for as much as $300 million.

"I know (Clear Channel) expected just unbelievable bids for these stations, especially on KKBT, which is the only major signal they have for sale," said Mary Beth Garber, president of the Southern California Broadcasters Association.

But don't expect anybody to whip out a checkbook and buy up Clear Channel's local group; that's rarely the way things are done in the radio business these days.

Today, with station ownership concentrated among a handful of giant groups, radio deals have become sort of a grown-up version of Pokemon-card trading. To comply with FCC rules, which limit owners to eight stations in major markets, the giants often trade stations with each other, picking up stations in markets where they don't have enough and unloading those in markets where they have too many.

Advertisers long have worried that the consolidation could result in higher prices for air time, but analysts and media buyers say there's little evidence that has happened so far. Even so, prices for radio air time have risen so steeply as a result of Internet advertising that it's hard to analyze the effects of consolidation.

"This huge amount of dot-com advertising coming down has thrown everything out of kilter. All the stations are getting more (per unit of air time) because they're sold out," said Edith Whaley, senior vice president and radio buyer with Carat/ICG.

Whaley says there is danger of price manipulation only when a single owner controls all the stations geared to a specific demographic within a market. For example, if one company were to own all the stations in L.A. that target 18- to 24-year-old men, advertisers wanting to reach that audience would have little choice but to pay that owner's going rate.

After the AMFM deal, Clear Channel will have a large chunk of the market for women 25 to 54 years old, because it will own KBIG-FM 104.3, KCMG-FM 100.3 and KOST-FM 103.5, the three most popular stations in the market for that demographic. All three are currently owned by AMFM.

"If you want to reach adults over 50, you pretty much have to go to CBS (which owns two of L.A.'s major news stations, KNX-AM 1070 and KFWB-AM 980). If you want women 25 to 54, you'll have to go to Clear Channel," Whaley said.

Nonetheless, Whaley isn't worried that CBS Corp. or Clear Channel will raise their prices dramatically. That's because, in the post-consolidation era, radio groups aren't so much competing with each other as they are competing with other types of media. If radio stations raise their prices too high, advertisers will jump to cable TV, billboards, newspapers or the Internet, Whaley said.

Assistant Managing Editor Dan Turner writes a weekly column on marketing for the Los Angeles Business Journal.