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KCAL-TV Parent May Put Itself Up for Sale

CALIFORNIA / News and Insight on Business in the Golden
State

June 30, 1998|From Times Staff and Wire Reports

Young Broadcasting Inc., the parent of KCAL-TV Channel 9 in Los Angeles, said Monday that it might put itself up for sale, a move analysts said could fetch up to $1.9 billion.

Young bought KCAL in 1996 from Walt Disney Co. for about $368 million after Disney acquired ABC and its locally owned station, KABC-TV Channel 7.

New York-based Young, which owns a dozen TV stations, hired investment banking firm Lazard Freres & Co. to explore the broadcaster's options, including the possible sale. Young's stations reach 9% of U.S. households.

Young is expected to attract several potential buyers for KCAL and its group of middle-market stations in cities such as Nashville and Green Bay, Wis.

Possible bidders include Hicks Muse Tate & Furst Inc.'s Chancellor Media Corp. and Lin Television Corp.; Hearst-Argyle, Sinclair Broadcast Group Inc.; Emmis Broadcasting Corp.; and Clear Channel Communications Inc., analysts said.

Young's stock zoomed $16.31 higher Monday to close at $63.81 in Nasdaq trading.

After a year of consolidation in the television and radio broadcasting industries, Young is one of the few remaining independent companies that serve big U.S. markets. Its KCAL station, for example, can be seen by 5% of all households in the country.

"If you want a presence in a big market, this may be your last and only shot," said Victor Miller, an analyst at Bear, Stearns & Co.

Industry consolidation has been driven by looser federal regulations that allow greater cross-ownership of television and radio stations by the same company in the same market. That allows broadcasting companies to cut costs and sell advertising together.

Chancellor, for example, could presumably market its radio stations in Los Angeles with Young's KCAL.

A company such as Emmis, which buys a lot of syndicated programming for its non-network-affiliated stations, meanwhile, could gain leverage over the production companies because of the size of the Los Angeles market.

Young has been hurt recently by its affiliation with Disney's ABC network, which is mired in third-place ratings behind NBC and CBS. Six of its 12 stations, which are in Nashville and Knoxville, Tenn.; Albany, N.Y.; Richmond, Va.; Rockford, Ill.; and Green Bay, show ABC programming.

Four of its other stations are tied to CBS, one is an NBC affiliate and the last, KCAL, is independent.

Bloomberg News was used in compiling this report.

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