Infinity Seeks to Put KFWB in Trust as it Tries to Keep Stations
By DARRELL SATZMAN
In an 11th hour attempt to keep the company in compliance with federal ownership rules, Infinity Broadcasting Corp. has petitioned to place KFWB-AM (980) in a trust that would transfer management but not ownership of the all-news radio station.
The move was viewed as an effort by Infinity parent Viacom Inc. to retain all seven of its local stations one more than current rules allow while the Federal Communication Commission considers reforms that could loosen ownership limits in individual markets nationwide.
Infinity’s local radio cluster is second only to Clear Channel Communications, the nation’s biggest radio station chain, which owns nine outlets in Los Angeles.
If the FCC approves the application, the trust would be headed by Bill Clark, a veteran radio executive and past president of Shamrock Broadcasting, the radio arm of Burbank-based Shamrock Holdings that was sold by the company in 1996.
The station’s general manager, Roger Nadel, said he has been told by Infinity to operate as usual. Nadel and his staff learned of the decision on Nov. 15, the same day the company quietly announced the news. “We all knew that the company had intended to come into compliance, but not about the plan for the trust,” Nadel said.
Infinity has asked that KFWB be put in trust for five years. According to Infinity’s petition, the trustee would not have the authority to engage in any financial dealings outside of the normal course of business.
Meantime, the company is expected to continue pressing for changes that would allow it to keep all of its stations.
One approach would be to convince the FCC that if Infinity were forced to sell, the most likely buyer would be another media giant such as Clear Channel. Therefore, the sale would have no impact on ownership diversity in the Los Angeles market.
By tabbing KFWB for the trust, Infinity-owner Viacom Inc. elected to gamble with its local station with the weakest signal at 5,000 watts and the one that’s garnered the lowest ratings during the past two years.
Nadel said boosting the signal remains a high priority. The station is exploring how it can do that in a cost effective way that it would allow it to reach the widest possible audience, he said.
“It was a logical move. It’s all about coverage and people being able to hear your programming,” said one local radio executive. “From a signal standpoint, it’s the one you let go if you have to let one go.”
Another consideration may have been that KFWB is the only station among Infinity’s local assets that is housed in its own building. If the company were forced to cut off direct contact with one of its Los Angeles stations, KFWB would be the easiest.
Infinity fell out of compliance with current FCC ownership limits in Los Angeles earlier this year when Viacom, which also owns CBS, completed its $650 million purchase of KCAL-TV (Channel 9) from Young Broadcasting. With two television stations in the market, Viacom and its subsidiaries are permitted to own six radio stations.
In May, the FCC granted Infinity a six-month waiver that was designed to give the company time to sell one of its local stations without financial hardship. But instead of selling, Infinity waited until the final of the day of waiver before filing its petition.
Mary Beth Garber, president of the Southern California Broadcast Association, said there is precedent for placing radio stations in trust. A buying spree unleashed by the loosening of ownership rules in the mid 1990s led to many stations around the country being placed in trust until the new rules could be sorted out.
Approval from the FCC for the trust is far from certain. Despite the possibility of a revamp of local ownership rules, one FCC staff member said there would be scrutiny of such an attempt to bypass current restrictions.
“While we don’t understand the media consolidation picture in Los Angeles today it would make me nervous to eliminate these consolidation rules for the whole country,” the person said. “Increasing consolidation should make us all cautious.”
No time frame has been given, but a review of Infinity’s trust application is expected to continue into the new year.
Infinity leaves little doubt in its filing that it aims to do whatever possible to hang onto all of its local stations.
“The KFWB license trust shall terminate if it becomes lawful as a result of change in the radio-TV cross-ownership rule or a disposition by Viacom of another broadcast interest in the Los Angeles metro market,” the company said in its filing.
With Republicans now in control of both chambers of Congress, some believe that the push for loosening local ownership rules will gain momentum. If so, the FCC could recommend new rules to Congress as early as next year.