About a year and a half ago, a group of mostly affluent, thirtysomething Angelenos was in mourning over the death of their favorite radio station, which switched its format from adult album alternative to Mexican regional music.
But nobody at Heftel Broadcasting is wearing black. Its station, KSCA-FM 101.9, has pulled off what is probably the most dramatic turnaround in L.A. radio history.
When Heftel bought KSCA from Gene Autry's Golden West Broadcasters in early 1997, the $112 million it reportedly agreed to pay for the station was considered an astronomical sum. The station has a medium-range signal and under its former ownership had never been able to rise above No. 25 in the rankings of L.A.-market radio stations.
Besides, Heftel planned to switch the format to Spanish language and Spanish stations aren't as attractive to advertisers as English-language ones. Despite its low position in the rankings, KSCA was a profitable station under the album alternative format because it attracted such a desirable audience demographic.
But if there were ever any doubts that KSCA would fare better as a Spanish station than an English one, they've now been put to rest. Less than a year after the format change, it rocketed to the No. 1 station in the L.A. market in the winter-quarter Arbitron survey. It dropped to No. 2 in the spring survey released last week, but its market share still increased over last winter.
Ratings, of course, don't matter to advertisers as much as demographics. But KSCA's enormous improvement in the ratings has undoubtedly had an effect on its bottom line.
"I don't know what (Golden West) was billing, but we're doing significantly more," said Richard Heftel, who manages the station's content. "It's not as profitable as it would be if it were No. 1 in English, but it's doing very well."
We'll have to take Heftel's word for it. Although Heftel Broadcasting is a public company, it doesn't report the revenues of its individual stations. Furthermore, it doesn't yet technically own KSCA. Under terms of its acquisition, the station is being leased from Golden West until Autry's death, at which time ownership will transfer to Heftel.
Richard Heftel's family no longer owns the company that bears its name, ever since a merger with Tichenor Media Systems Inc. last year. Heftel Broadcasting is now based in Dallas, owns 39 stations across the country (making it the dominant player in Spanish-language radio), and is headed by former Tichenor chief McHenry "Mac" Tichenor Jr.
It also bears a distinction heretofore unknown in L.A. radio: It owns both the top-rated stations in the market. KLVE-FM 107.5 had been No. 1 for 27 months until KSCA bumped it off last winter. KLVE regained its top status this spring by edging out KSCA, setting up what will likely be a constant battle between the two stations for supremacy.
That's just fine with Heftel, because it also owns KLVE.
Spanish radio gets more respect every year from advertisers in Los Angeles, because Spanish-language listenership continually sets new records. In the winter, KLVE pulled down a 5.3 percent share and KSCA had 5.4 percent, for a combined 10.7 percent share of the L.A. audience. In spring, KLVE rocketed to 6.3 percent while KSCA rose to 5.8 percent, for a combined 12.1 percent. Overall, Spanish stations attracted a 22.4 percent share in spring, up from 20.5 percent in winter.
Time on these stations is still considerably cheaper than it would be on comparably rated English stations. Heftel says advertising time costs about 35 percent less on a Spanish station than it would on an English station with the same ratings. While that may still be a relative bargain, it's not as much of a bargain as it was in the early '90s.
"A number of years ago, you could pay 25 cents on the dollar for a Spanish station," said Any Nizich, executive vice president with Western International Media. "But now that the population has grown so much, Spanish stations have become much more important."
Radio analyst Allen Klein of Encino-based Media Research Graphics spells out the equation like this: L.A.-market radio stations take in about $600 million a year in ad sales. So if all else were equal, the Spanish stations combined, with their 22.7 percent share of the audience, would be pulling in more than $120 million a year. But Klein thinks the number is closer to $100 million.
Still, considering Heftel's three local stations (KSCA, KLVE and KTNQ-AM 1020) own about 60 percent of the Spanish market, that means the three stations combined are pulling in around $60 million a year, Klein estimates.
"With those kinds of numbers, the $110 million or so they paid for KSCA starts to make sense," Klein said. "If anybody wants to buy Spanish, they really have to come to (Heftel)."
KSCA's rise in the ratings has been fueled by a morning deejay named Renan Almendarez Coello, who has been called the "Spanish Howard Stern" because his blue-streaked humor is similarly attractive to a male audience. His morning show attracts a market share in excess of 7 percent, a phenomenal figure in the crowded L.A. market and by far the top local show (easily surpassing the real Stern).
Almendarez, a Honduras native, had a popular morning show two years ago with KKHJ-AM 930, but quit suddenly to take a 14-month hiatus before being lured back in front of a microphone by KSCA.
"He wanted a better deal, and he sat on the sidelines until he got it," said Heftel, who is also general manager of KLVE and KTNQ. The company is considering a plan to air Almendarez's show on other Heftel Broadcasting stations, Heftel said.
News Editor Dan Turner writes a weekly column on marketing for the Los Angles Business Journal.
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