KTLA-Channel 5, the top-rated independent television station in Los Angeles and one of the top three independents in the country, has been put up for sale, the station's owners disclosed Thursday. If the station changes hands, it is expected to draw the largest sales price for a single TV station in history.
Golden West Television Inc., the privately held company that bought the station from its principal owner, cowboy singing star Gene Autry, in 1982, said it has received an unspecified number of proposals to buy KTLA. The company said it has retained the investment banking firm of Morgan Stanley & Co. to evaluate the "unsolicited" offers.
However, the announcement seemed designed to open up the station to bids. Anthony B. Cassara, president of Golden West, said a sale price of about $500 million would be "a fair estimate" of what the station may fetch. Cassara said the highest price paid so far for a TV station was the $350 million that Dallas-based A. H. Belo Corp. paid for a Houston station in 1983.
In a 1982 leveraged buy-out, Golden West paid $245 million for a package that included KTLA, a TV production company and a pay-TV service in Dallas. (In a leveraged buy-out, investors typically borrow against the assets of a company to buy out its owners.)
Golden West was formed by the New York investment firm of Kohlberg, Kravis, Roberts & Co. for the purpose of buying the station. Its investors included Cassara, who was then KTLA's general manager, and other station executives.
Cassara declined to identify the individuals or companies who have expressed interest in buying the station, but he said the proposals have come from "large (TV-station) group owners."
A number of companies that meet that description have been actively searching for stations to acquire as the result of a recent Federal Communications Commission ruling that increased the number of stations that a single owner may hold to 12 from seven. "There are major groups now in an acquisition mode that were not before the rule," Cassara said.
Industry analysts speculated that, although the most likely bidders would be big media companies that already own TV stations, the desirability of KTLA and the Los Angeles market could easily attract others that do not already own TV stations.
Although Golden West does not disclose financial results, KTLA is regarded by many analysts as one of the three most profitable non-network stations in the country. The station has parlayed a program mix of movies, reruns of network shows, live sports coverage and syndicated programs to achieve ratings that sometimes top those of the area's network affiliates.
Noting that the station has had five straight years of record revenue and operating profits, Cassara said that, in Los Angeles, "it probably ranks second (in terms of profitability) behind KABC," which is owned by New York-based American Broadcasting Cos.
Agreeing that the station could now fetch "close to double" the price it drew in 1983, Alan J. Gottesman, who follows the broadcast industry for the investment firm of L. F. Rothschild, said: "They're not making any more VHF television stations in Los Angeles, and advertising on TV is not going out of season.
"In my opinion, the price has got more to do with with the dynamic of the Los Angeles market than the performance of (KTLA)," Gottesman said. "Los Angeles is the second-largest market in the country in terms of population, and it's almost tied for first place (with New York) in terms of advertising dollars generated."
Asked why Golden West had decided to sell the station now, Cassara said one reason is the difficulty that independents have had lately in acquiring programming. "It is very, very difficult (for a single station) to compete with the major groups, the Metromedias, the three networks," who negotiate better deals with producers to buy programs for a number of stations, Cassara said.
Golden West itself wished to acquire more stations, Cassara said, "but since there don't seem to be any additional stations of the caliber of KTLA, which is what we would like to have . . . we felt that we should take a look and see if maybe we shouldn't sell."
Despite any problems the station has had in buying programs, however, "there are companies that would give their right arm to be in Los Angeles and to be the leading independent station in that market," said analyst Sharon Armbrust, who follows broadcasting for Carmel-based Paul Kagan Associates. "KTLA is an animal unto itself."