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Nbc Sells Its Radio Network

July 21, 1987|DENNIS McDOUGAL | Times Staff Writer

Westwood One Inc. gobbled up all three NBC radio networks on Monday for $50 million cash and a stock option, making the Culver City-based radio syndication company the second largest producer and purveyor of radio programming in the country.

Only ABC/Capital Cities, which operates six specialized satellite radio networks to serve target audiences ranging from teens to senior citizens, has a larger share of national radio advertising and audience. Ad revenue from radio topped $400 million in 1986.

"They (ABC) have about 40% of the market," said Norman Pattiz, who founded Westwood One in a one-room office on Westwood Boulevard 12 years ago.

"It has clearly always been ABC and, then, a bunch of other (companies)," the one-time KCOP-TV advertising salesman continued. "We've always considered ABC our prime competitor. We said we'd have to move our share up to a 25% to 30% share in order to be a No. 1 tier player along with ABC, and my sense is, with (the purchase of) NBC radio, we're at about a 30% share."

Trading of Westwood One stock on the NASDQ over-the-counter market stopped briefly Monday morning when the announcement was made that NBC's parent company, General Electric Co., had entered into a letter of intent to sell the NBC radio networks to Westwood One.

When trading resumed, Westwood One's stock climbed 3 3/8 points above Friday's high to close at $30 a share on Monday.

Under the agreement, Westwood One will acquire the news-oriented NBC Radio Network; The Source, which is aimed at younger audiences, and Talknet, the call-in talk-show network. Westwood One also will take over the long-form program unit of NBC radio entertainment. Pattiz estimated that the networks, which serve about 1,200 affiliates nationwide, will transfer about 200 NBC employees to the Westwood One payroll.

(In Los Angeles, NBC affiliates include all-news KFWB-AM (980), KTWV-FM (94.7), which subscribes to The Source, and KGIL-AM (1260), which uses Talknet.)

In addition to the networks, Westwood One could also be acquiring a labor dispute. A spokesman for the National Assn. of Broadcast Employees and Technicians said Monday that it was not immediately known how many of the 200 NBC network employees are NABET members or what their status as union members would be once the sale to Westwood One is final.

About 2,800 NABET employees have been on strike against NBC for four weeks. Both sides returned to the bargaining table in New York on Monday. One of the demands NABET has made is that its members be covered by any contract that might be negotiated, even if those employees are in a division or station that the company sells. The NABET spokesman said that NBC is balking at this demand.

Like the Mutual Broadcasting System which Westwood One acquired in December, 1985, the NBC networks will be wholly owned subsidiaries of Westwood One and will be governed by a separate board of directors, according to Pattiz. Though there may be some cross-pollination and "operating synergies," the NBC and Mutual staffs will remain separate, he said.

"The NBC radio networks will maintain their identities in much the same way as the Mutual Broadcasting System," he said.

Mutual, which Westwood One purchased from the Amway Corp. for $30 million, is headquartered in Arlington, Va., and has about 850 affiliates, including KFI-AM (640) and KKGO-FM (105.1) in Los Angeles. Though the network recently opened a Southern California bureau in the Westwood One building complex in Culver City, Mutual remains an autonomous East Coast arm of the Westwood One conglomerate.

In addition to the radio networks, the company also owns a communications satellite division and the weekly broadcasting trade newspaper, Radio & Records.

Pattiz said NBC would maintain five-year warrants to purchase one million shares of Westwood One common stock for $36.40 per share.

Though some Wall Street arbitrage experts may have been surprised by Monday's announcement, Westwood One has made no secret of its acquisitive intent. A $100-million debt offering that Westwood One tendered last October generated the cash used in both the NBC acquisition and the purchase of Radio & Records earlier this year, Pattiz said.

NBC also recently put three of its radio stations on the auction block, including KNBR-AM in San Francisco. The network owns KNBC-TV Channel 4, but no radio stations in Los Angeles.

Westwood One has no interest in buying stations, however.

(Though the Federal Communications Commission limits the number of radio and/or television stations that a single company can own, there are no similar restrictions on ownership of networks or syndication outlets.)

"We're in the radio \o7 network \f7 business," said Pattiz. "We're not in the radio station business."

Westwood One is also not in the television business, he said.

"Every now and then, we get involved to a very small extent in video packages with our radio programs," said the 44-year-old Westwood One chairman. Beyond that, he said, Westwood One has no immediate plans to enter the world of television.

Westwood One began in 1975 with such popular weekly national radio programs as "Dr. Demento" and "Off the Record" with Mary Turner, Pattiz's wife. With the acquisition of Mutual, it also lays claim to two of network radio's biggest stars, Washington-based talk-show host Larry King and radio psychologist Dr. Toni Grant.

In addition, the company also broadcasts concerts, pop music countdown shows, retrospective music programs and interviews with rock, country and blues performers.

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