Originally published on May 28, 2009

Larry Wilson

Alpha Broadcasting
Chairman/CEO

Former Citadel CEO marries old-fashioned concepts with multifaceted platform in a new, debt-free radio company

Former Citadel founder/CEO Larry Wilson is back in the saddle with the acquisition of talk KXL and sports KXTG (the Game)/Portland, Ore., from Rose City Radio. Wilson’s new Alpha Broadcasting—named for the alpha dog, which will be part of the company’s logo—purchased the duo May 12 for $11 million in cash. During the course of 17 years, Wilson built Citadel from a handful of small-market stations into one of the largest radio groups in the United States. He sold it to Forstmann Little for $2 billion in 2001.

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What have you been doing for the last eight years?
I went fishing and played with my horses and my cows. My wife was very ill and it was her final years. So we just hung out. She died in early ’08 and I’ve been looking to get back in. I’m old but not finished yet and I still love the radio business. I’ve been looking for quite some time and think I found the right start of a platform.

Do you plan to operate Alpha differently from how you operated Citadel?
We have to integrate the digital platform with the terrestrial platform. We’ve got to be on the cutting edge of it and I plan to associate with people who are smarter than me that can help me figure it out. I’m totally intrigued by the digital age and our ability with the Internet to quickly satisfy the quest for knowledge like never before. We’re going to be a multifaceted platform that will include lots of elements of digital and audio. Everybody is saying it’s a challenge. I think it’s an opportunity and I’m going to try and prove it.

How will your new company differ from others?
We’re not going to have any debt. My partner is Endeavor Capital—they were my partner in Citadel, and they’re great partners. They’re based in Portland, Ore., and are very long-term-oriented in investments. [Endeavor managing director] John von Schlegell and I have agreed that initially we’re going to fund everything with equity. That’ll give us an advantage to be real broadcasters and not have to worry about the next quarter or about tripping debt covenant because we will have none.

How big would you like the company to become?
I would like to build in five or six years to $50 million-$75 million in broadcast cash flow or EBITA [earnings before interest, tax and amortization]. I think we can do that with the capital we’ve allocated.

Do you plan to keep the company private?
That’s the plan for the foreseeable future. You’d be a fool right now to say that you’re building this to go public. Look at what the public market has done. It has quit on radio. Radio is still a great medium and I’ve studied it pretty hard from the sidelines. Some of my old buddies and peers, they’ve kind of lost the faith, they may think I’m crazy and maybe I am. It delivers phenomenal results for advertisers. It entertains when you do it right. It rejuvenates and excites listeners. It can’t be just rip and read, it has to be theater of mind. I know those are old-fashioned concepts but we’re going to do them. We’re going to be involved in this community like nobody else with the Trailblazers, the Sea Hawks and the University of Oregon Ducks. We’re going to be everywhere and a major presence. That’s part of what we used to do at Citadel and that’s what we will do better this time around.

What led you to start in Portland?
I’ve always loved the Portland market. I tried to get in here years ago but couldn’t land a deal. It was on the big side of the market rank for me—I was in the 30-120 [market rank] range. I spend a lot of time here. I like the people and I have always loved these radio stations. KXL is a monster, legendary station with a great signal, great format and great heritage. And KXTG is a big-signal FM that is aligned with all these sports franchises and that is my cup of tea.

Is radio’s profit margin as viable today as it was in 2001?
If you can get the revenues up it is. When we have a great recession like we have right now you suffer contraction of 25%-30% in revenue. It’s a fixed-cost business, which is great when things are going up but it’s tough when things are going down. But when we get this revenue back up, which we will do if not in 2010, then 2011, it’s a wonderful business. I recently watched the webinar of an Arbitron study and it’s pretty clear that radio is still very viable. I talk to my friends who are still out there in the trenches. There is no doubt that radio still works big-time and gets good results for advertisers.

How can you bring advertisers back to radio?
It’s still the best buy in cost-per-thousand that’s out there and we’re going to sing that song. We're going to have the PPM starting in August in Portland, and that’s been a really good thing for radio. The diary methodology was archaic and confusing and although the PPM has problems, it’s a real plus and we’re going to find out what the listenership is. But most importantly, when you go on the radio with a good ad and a good offer from an advertiser, people come, and that’s what it’s all about. I’ll go around town and talk to every car dealer, every bank, every mortgage business, every business that’s destined to go on radio, and I’ll tell them to give us a chance and we’ll show it works. That’s what we did at Citadel years ago and it will work again today.

What is the single biggest hurdle that radio needs to overcome?
The excess of debt. If you have an excess of debt, you can’t advertise and promote your product. Nobody is doing that because everybody has had to cut back, which just guts the business.

What’s your advice to anyone considering buying stations?
They shouldn’t do it because I want to be the only one out there buying.

QUOTE
‘We’re going to initially fund everything with equity. That’ll give us an advantage to be real broadcasters and not have to worry about the next quarter or about tripping debt covenant.’—Larry Wilson