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What happened to KEWI-AM? The past, present and future of Saline County's only radio station.

In 2011, Grant Merrill bought KEWI-AM, 690, in Benton: Saline County's only functioning radio station. Before he owned it, the station had run stably for years, but three years after his purchase, it's closed and silent.

Merrill has been known as an up-and-coming radio businessman. In 2009, he was profiled in Arkansas Business' "20 in Their 20s" feature. At that time, he was general manager of KUOA-FM, 105.3, The Hog Sports Radio, in Springdale.

So what happened?

Before Merrill owned KEWI, it was operated by Arkansas radio veteran Jim Landers. Landers, 79, started working at the same station in ninth grade when it was KBBA-AM.

Landers bought the station in 1994 and operated it for nearly two decades.

"It was in the red and we put it in the black," he said. "It was in the black for 17 years."

But after those 17 years, Landers was hoping to retire. He began searching for someone to succeed him at the station.

That's when he met Merrill.

"He came in and I was talking to him about him buying the station, and I was interested in selling it," Landers said.

So that's what happened. Landers sold the station to Merrill in 2011 for a price he declined to disclose. Arkansas Sen. Jeremy Hutchinson, R-Benton, helped Merrill make the investment by becoming a silent partner in the property, and Arkansas Tech Angels, a company that invests in startups, also lent some money.

Arkansas Tech Angels is co-owned by Curtis Arnold, a Little Rock resident and founder of CardRatings.com.

"This is one of several investments that we have made in the last two or three years," Arnold said. "This was not a typical investment for us. We usually invest in stuff that's more technology-focused. This did have a component of that through a website and social media, but it wasn't a typical type investment."

Because of the station's proven track record, Arnold said, he didn't expect the investment to be as risky as some of the previous ones he has backed.

"We thought this would be a little safer because the station had revenue before with Mr. Landers and Grant has had some experience, quite a bit in radio."

He said his company typically invests between $20,000 and $60,000 in startups, but in this case it invested "more than we normally would."

Hutchinson did not disclose how much he invested in the station.

At first, things were looking good. Merrill narrowed the station's content, focusing on sports and local news.

But there were other changes made, and some changes that were promised didn't happen.

For example, one of the stipulations of Arnold's investment was that the station begin broadcasting on FM bands.

"That never happened," Arnold said. "We didn't keep a handle on the investment like we should have in terms of being actively involved."

As months turned into years, the partners heard tales of late bills, bounced checks and unpaid employees, all while Merrill dodged communication on the issues.

Finally, this year, Hutchinson and Arnold swooped in to investigate the station's financials. Arnold found that the station "had significant debt, a lot more than we realized. Part of that was that we didn't keep tabs on it."

He didn't disclose the actual debt amount, but it was enough that the partners booted Merrill from his job. In February, Merrill left the station provided that Hutchinson sign a nondisclosure agreement regarding the station's sale. A filing by KEWI with the Federal Communications Commission stated that the station didn't have the revenue to continue operations and requested that it be silenced.

It wasn't the first time Merrill had left a station in disarray: Dan Storrs, current general manager of Hog Sports Radio, said when he took over for Merrill in July 2010, the station was "kind of in shambles," though he declined to go into further detail.

Since Merrill left, new management has been appointed to return KEWI to operational status, and to continue making payments to Landers toward fulfilling the original sale price. (See sidebar.)

Money that the investors lost, Arnold said, is already written off and the new managers are working on bringing the station back into the black. But, Arnold added, there may have been more at play than just mismanagement.

He said some of the clauses of Merrill's contract that were intended to maintain financial control were compromised.

"We feel like some contractual things may have been breached. We are going to pursue it from that angle."

Arnold said he believes Merrill's mishandling of the station's money may go beyond the management of the station, and may result in litigation.

"We're considering a lawsuit on this one," Arnold said. "We're not usually people to sue. We realize there's a lot of risk in any kind of startup. But this was an existing business ... there was less risk."

No suit had been filed last week.

As for Merrill, he's still operating Saline247.com, a site for local Saline County news. In February, he registered the domain name Sequoyah247.com for a similar service in Sequoyah County, Okla. The site currently says its content is "coming soon."

Merrill told Arkansas Business that he feels he'll be "vindicated" of any of the accusations made against him.

"We tried to work everything out," he said. "Outside of that, I wouldn't have any comment, other than the fact that we tried to do things right."

Caption: "We tried to work everything out," said Grant Merrill, who purchased KEWI-AM in 2011. In February, he left the station, and it was silenced. [PHOTO BY MICHAEL PIRNIQUE]

By Luke Jones

LJones@ABPG.com
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Author:Jones, Luke
Publication:Arkansas Business
Geographic Code:1U7AR
Date:Mar 24, 2014
Words:939
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