Regent Communications, Inc.
Regent Communications, Inc.
Incorporated: 1996 as JS Communications
Sales: $85.03 million (2006)
Stock Exchanges: NASDAQ
Ticker Symbol: RGCI
NAIC: 513112 Radio Stations
Regent Communications, Inc., owns nearly 70 radio stations in 13 small and midsize markets around the United States. The Ohio-based firm operates in a total of nine states, with its largest presence in New York. Regent’s strategy is to establish clusters of stations so that it can reduce operating costs by combining core functions, while working to increase listenership at each to maximize ad revenues. The publicly held Regent is run by cofounder and 50-year radio veteran William Stakelin.
Regent Communications officially dates its beginnings to 1996, but the firm’s origins go back much further. It was founded by a pair of radio veterans, William “Bill” Stakelin and Terry Jacobs, the latter of whom had been an insurance industry executive before founding a company called Jacor Communications, Inc., in 1979 to assemble a string of radio stations. Jacor grew rapidly during the 1980s before heavy debt put it in financial peril, and in 1992 investor Samuel Zell took it over. A year later Jacobs left to found a new company called Regent Communications, which began buying stations to take advantage of Federal Communications Commission (FCC) rule changes that allowed ownership of up to two AM and two FM stations in a single market, double the previous amount.
Over the next two years Regent acquired stations in Ohio, Kentucky, Indiana, and Nevada, and in the summer of 1995 the firm nearly doubled in size with the purchase of Apollo Radio Holding Co. for $50 million. Founded in 1988, Apollo operated three stations in Salt Lake City, two in Kansas City, and two in Charleston, South Carolina. Apollo President Bill Stakelin, who had gotten his start in radio as a teenager in the late 1950s, would become executive vice-president and chief operating officer of Regent.
In early 1996 the FCC increased radio station ownership limits again, and soon afterward Regent bought several stations and sold a handful of others to boost its holdings to 20. In October 1996 the company was acquired by the revitalized Jacor in a stock swap worth $120 million, plus $5 million in cash and the assumption of $64 million in debt. Jacor, which had closed a $770 million purchase of Citicasters, Inc., briefly became the third largest radio station group in the United States before itself being swallowed by industry giant Clear Channel Communications.
Just a month after Regent’s sale to Jacor was announced, Terry Jacobs and Bill Stakelin formed a new radio station acquisitions firm called JS Communications, which soon afterward took the name Regent Communications, Inc. Jacobs would serve as the reconstituted Regent’s CEO and chairman, with Stakelin its president and chief operating officer.
A spring 1997 deal to buy four stations from Jacor fell through, but in the fall an agreement was reached to pay approximately $23 million to buy the six AM and ten FM stations of the Park Lane Group, located in California and Arizona, as well as a firm called Alta California Broadcasting, which owned four stations near Redding, California. A short time later publicly traded Faircom, Inc., merged with Regent, which brought the company six stations in Ohio and Michigan. Other acquisitions in Arizona and California boosted the firm’s holdings to 32 by the spring of 1998. Funding for the buying spree was derived in part from a private equity sale to a group led by Waller-Sutton Media Partners LP.
In June 1998 Regent’s stock began trading on the OTC Bulletin Board. In July another station in Lancaster, California, was purchased, KAVC-FM (later known as KOSS), which boosted the firm’s holdings in the area to three.
Acquisitions continued in early 1999 with the purchase of three St. Cloud, Minnesota, stations and three in Erie, Pennsylvania. In the summer an agreement was reached to buy a total of nine country and adult contemporary stations in Utica/Rome and Watertown, New York, from Forever Broadcasting for $44 million plus 100,000 shares of preferred stock. This was followed a month later with a deal to acquire three stations in El Paso, Texas, for $23.5 million from New Wave Broadcasting, L.P. For fiscal 1999 the firm’s revenues reached $23.9 million, up from $14.8 million a year earlier, while its net loss widened from $4.5 million to $6.8 million.
In January 2000 Regent completed a new stock offering on the NASDAQ, selling 16 million shares for $8.50 each to net $136 million. The money would be used to pay down debt and make further acquisitions.
In March the company reached an agreement to swap 11 of its Ohio and California stations and $67 million in cash for nine Clear Channel Communications stations in Grand Rapids, Michigan, and Albany, New York. The deal was precipitated by Clear Channel’s purchase of rival AMFM Inc., which required the sale of 110 stations in 37 markets to comply with FCC rules. The agreement was subsequently restructured to include an additional Grand Rapids station, while three of the California stations were retained by Regent and the cash amount was upped by $13.5 million. Albany and Grand Rapids would subsequently become two of the firm’s largest markets.
In April Regent was granted a $125 million credit line from FleetBoston Financial, and in June a deal was cut to buy three stations in St. Cloud, Minnesota, for $5 million from StarCom, Inc., while a $10 million stock buyback program was initiated. In the fall the firm sold three of its California stations to Concord Media Group for $13.5 million. For fiscal 2000 Regent’s earnings topped $44.1 million, with a net profit of nearly $13.9 million.
In January 2001 the company reached an agreement with NextMedia Group, Inc., to buy WJET-FM in Erie, Pennsylvania, for $5 million, and in May a deal was cut with The Cromwell Group, Inc., to buy six stations serving Peoria, Illinois, for $20 million. Summer saw the firm purchase two stations in Grand Rapids and Flint, Michigan, for a total of $7 million, and announce plans to buy seven others in Lafayette, Louisiana, for $38.6 million from Comcorp.
In November 2001 Regent sold 900,000 shares of stock for $5.75 each in a private placement that raised $5 million, and a few weeks later it bought two more Flint, Michigan, stations for $1.3 million from Covenant Communications, giving it a total of six in the market. The company now owned 58 radio stations.
Regent Communications, Inc., is a holding company in the radio broadcasting business. Regent was incorporated in Delaware in November 1996 by William L. Stakelin and Terry S. Jacobs with the objective of acquiring radio properties, primarily in medium and smaller radio markets, that have a history of growing revenues and broadcast cash flow, have capable operating management and are in communities with good growth prospects or have attractive competitive environments.
In April 2002 Regent sold 10.5 million additional shares of common stock for $7.50 each to net $74 million in new capital, and in August a 12-station acquisition from Brill Media Co. was announced. The $62 million bankruptcy auction deal would bring stations serving markets in Pennsylvania, Indiana, Kentucky, Colorado, and Minnesota. The firm had also made upgrades to several stations and launched a handful of others, including the popular KKQZ-FM in Colorado.
In February 2003 Regent swapped four of the Brill stations in Duluth, Minnesota, plus $2.7 million in cash for five stations in Evansville, Indiana, owned by Clear Channel Communications. Revenues for the year jumped to $80.6 million while a profit of $5.7 million was reported.
Nearly 85 percent of Regent stations’ advertising revenues came from local businesses, significantly more than the industry average of under 80 percent. With such major consolidators as Clear Channel and Infinity Broadcasting cutting costs by using generic-sounding DJ’s or syndicated programs, Regent President Bill Stakelin defended the firm’s local emphasis to Billboard, stating “Radio is not a national medium … radio’s strength is localism.” Regent stations invested in community outreach, with on-air personalities frequently attending public events and sales representatives working with local businesses to create ads, many of which were recorded at the stations themselves.
In early 2004 the company engineered a station swap with Citadel Broadcasting Corp., in which Regent would give up four Erie, Pennsylvania, stations and two near Lancaster, Pennsylvania, plus $3.7 million, for five in Bloomington, Illinois. The firm had 75 stations in 15 markets.
In July 2005 Regent cofounder Terry Jacobs retired as chairman and CEO and took the job of vice-chairman. President and Chief Operating Officer Stakelin would add the title of CEO, while board member William Sutter was elevated to the job of chairman. Jacobs, 62, would focus his energies on a real estate firm he had started with his sons. During the summer the company also announced its second $20 million stock buyback program in two years, as part of an ongoing effort to boost shareholder value.
During the year the firm moved its five Albany stations into a newly purchased building, as it also began upgrading some outlets to offer high-definition digital broadcasts, a format that had been created several years earlier but seen little interest as yet from the public. Digitally equipped stations could simultaneously broadcast their regular AM or FM signal along with a new digital frequency that gave crisper sound. Online audio streaming of all of the company’s FM radio stations had recently been accomplished, as well.
Revenues for 2005 topped $85.6 million, while a net loss of $6.6 million was recorded due to a $20.8 million impairment charge from such intangible assets as broadcast licenses. The large write-down was the result of new federally mandated accounting requirements for public firms, and other radio companies had taken similar charges, which were based on comparing a station’s assessed market value to its book value. Stations that had increased in value did not get factored into the equation, so the net result was always negative.
The firm was also seeing its ad revenues falling due to competition from satellite radio broadcasters XM and Sirius, the rising popularity of personal music players including iPods (most of which did not include a radio tuner), and the gradual shift of ad dollars to the Internet. Because of these and other factors, the average time Americans spent listening to radio was down 14 percent compared to a decade earlier, according to research firm Arbitron.
- Terry Jacobs and Bill Stakelin found JS Communications and rename it Regent.
- Company prepares to buy more than two dozen radio stations in small and midsize markets.
- Regent stock begins trading on the OTC bulletin board.
- Stock moves to the NASDAQ as firm nets $136 million in new offering; Regent gets ten New York and Michigan stations in swap with Clear Channel.
- New stock offering raises $74 million; 12 stations are purchased from Brill Media.
- Jacobs retires as CEO; Stakelin assumes top post.
- Company acquires five stations in Buffalo, New York, for $125 million.
Responding to such challenges, Regent worked to build value within its existing properties. At Grand Rapids rock station WGRD, which had fallen to the low end of the local Arbitron top ten, Regent engineered a dramatic turnaround by launching a new morning show called “Free Beer and Hot Wings,” which soon stood at number one in the ratings in the coveted 18- to 34-year-old male demographic. The show garnered nearly four times the listeners of its closest rival, and was later syndicated to several other Regent stations.
In May 2006 the firm bought two FM stations in Peoria, Illinois, for $12.5 million from AAA Entertainment, while selling three others there for $2.8 million. The new stations, WZPW and WXMP, were more powerful Class B stations, while those sold were all of the weaker Class A type.
In the summer Regent sold its ten Chico and Redding, California, stations for $17.5 million and jettisoned WYNG-FM in Evansville, Indiana, for $1.5 million, while cutting a deal to buy WNYQ-FM in Albany, New York, for $4.9 million. The latter would boost its presence in that market to one AM and five FM stations. The company had been working to improve its position there after WGNA-FM had lost the popular syndicated Howard Stern show when the “shock jock” was hired by satellite company Sirius. The station was subsequently reformatted to play rock music, while the adult contemporary WNYQ was given the nickname “The Buzz” and its listenership boosted with the addition of a top-rated morning show poached from a competitor. Another Albany FM station was also reformatted to sports talk, while the company’s AM outlet there was relaunched with female-oriented talk.
In September Regent made its largest acquisition to date with the purchase of five stations in Buffalo, New York, from CBS Radio Assets for $125 million. Buffalo was ranked the 41st largest radio market in the United States, and it would become the largest that the firm had a toehold in. The new stations included three of the area’s top four rated ones as well as the most popular, country formatted WYRK-FM. Combined with its other upstate New York clusters in Albany, Watertown, and Utica/Rome, Regent ad sales representatives could sell coverage of a broad swath of the state to advertisers. Financing for the CBS deal was derived from $240 million in credit obtained from Banc of America Securities. When the dust had settled the firm would own 68 radio stations in 13 markets, including two of the four most popular in ten of them. For 2006 revenues dropped slightly to $85 million, while a huge $26.6 million loss was reported due to a $48.8 million write-down of impairment to intangible assets.
In early 2007 the company revised its stations’ web sites to make them more content-rich, which encouraged users to stay there longer and, it was hoped, look at more of the advertisements they were running. With the Buffalo deal completed, Regent management told stock analysts that the firm was planning to fine-tune its holdings in the near term rather than seek further acquisitions.
A decade after Terry Jacobs and Bill Stakelin founded the second incarnation of Regent Communications, Inc., the company was working to strengthen its portfolio of radio station clusters while facing the industry trends of declining listenership and reduced advertising dollars. Despite these challenges, the firm’s seasoned management team remained committed to its goal of offering radio with a significant amount of local content to stations in small and midsize markets.
Regent Broadcasting Management, LLC; Regent Broadcasting LLC.
Clear Channel Communications, Inc.; Cumulus Media Inc.; CBS Radio, Inc.; Citadel Broadcasting Corp.; Entercom Communications Corp.; Saga Communications, Inc.
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