Media blitz 

TV, radio and newspapers shuffle the deck

Recent days have revealed several shifts within the local media scene. Lee Enterprises, owner of the Missoulian, announced on Fri., Jan. 16, that it will acquire the South Idaho Press, five weekly newspapers and three specialty publications in southern Idaho, and two papers in Elko, Nev., from Liberty Group Publishing. In return, Liberty will receive formerly Lee-owned papers in New York and Illinois. Also, Clear Channel Radio announced last week that it will be consolidating its Missoula news broadcast on KGVO and its morning talk show on KLYQ—home of Rush Limbaugh—in Hamilton into one program, based out of Missoula. And in the television world, local ABC affiliate KTMF decided last week to cut its 5 p.m. broadcast of Big Sky News, which, despite the title, is anchored from a studio in Davenport, Iowa. Meanwhile, competitor KECI, the local NBC affiliate, will add a 5 p.m news broadcast in hopes of picking up some of the news slack left by KTMF’s withdrawal from the time slot. The aggressive move comes mere days after the announcement of a pending sale agreement between KECI’s current owners, Lamco Communications Inc., and buyer BlueStone Television LLC.

That deal won’t officially close until the second quarter of 2004, but unless an unexpected problem arises, BlueStone will acquire stations in Missoula, Kalispell, Butte and Bozeman, as well as in Tennessee, Virginia, North Carolina, California and Texas.

BlueStone is a new kid on the Montana media block—in fact, a new kid on any block, since this transaction is the company’s first since its formation in July 2002. However, the sale is unlikely to be its last, according to BlueStone CEO Sandy DiPasquale.

“You wanna know how much we paid for it?” Pasquale asks in a phone interview from Wichita, Kan., before the reporter is able to ask his first question. “We’re not disclosing the price. How about that?”

The price tag of the transaction is only one of several aspects of the buy-out in which details have been less than forthcoming from BlueStone’s sole financial backer, Providence Equity Partners, Inc., of Rhode Island. What does Missoula know about the new company that will be providing it with local news?

Elizabeth Hanahan, media spokeswoman for BlueStone and Providence Equity, said she could not comment on what made BlueStone attractive to Providence Equity, identify newspapers and magazines in which Providence Equity currently holds a financial stake, or comment on anything else not already in the press release sent out to media sources.

Once the deal is finalized, more information will become available, according to Hanahan. Asked if Montana television consumers deserve more open information about the company that plans to serve them—technically speaking, the airwaves are a public trust—Hanahan says, “I understand the importance of how this affects the area that you live in, but we’re just in a quiet spot right now.”

The Federal Communications Commission (FCC) was unable to shed much light on the company, either. Sharon Hurd with the FCC’s office of media relations says that the FCC doesn’t have any information on either BlueStone or Providence Equity aside from an application for a station transfer. This particular transfer, Hurd explains, allows BlueStone to buy the stock but not the assets of Lamco, and therefore pay less in taxes than if they bought Lamco’s assets outright.

DiPasquale, who has owned over 20 television stations since 1980, is also the owner of Newport Broadcasting Inc., a company that he calls “a carve-out,” which owns WCTI-TV in New Bern, S.C. Because Providence Equity is partners with DiPasquale in BlueStone and Providence Equity also holds a financial interest in a New Bern newspaper, DiPasquale set up Newport as a separate company for this one particular market to avoid any possible cross-ownership issues with the FCC, he says.

“These people are probably BlueStone or Providence even though they’re speaking of Lamco and Newport Broadcasting,” says the FCC’s Hurd.

Is a similar “expansion via name change” plan in store for Montana markets? DiPasquale says that BlueStone is eager to expand, and his backers at Providence Equity surely have the money—$5 billion of it. Providence’s strategy has been to strike in the midst of “busted auctions,” finding opportunity in organizational chaos, low-profile Providence owner Jonathan Nelson told The New York Times.

The recent history of Lamco’s Montana stations resembled such chaos, according to Keith Sommer, vice president and general manager of Missoula’s KECI-TV.

“One of the most anxious things for everyone here was just not knowing and being in a state of transition for 18 months…There was a lot of, ‘Do we keep our jobs?’ because a lot of times when companies buy stations, they get rid of the general manager first and they bring in their own person.”

DiPasquale says that’s not going to happen, and that he purchased the 12 stations he owns because they are solid businesses, not because they are in trouble and need someone to turn them around. This news was met with a sigh of relief at KECI.

“My wife said, ‘Can we add something on to the house now?’” Sommer says with a laugh.

Missoula’s KTMF (ABC-23) General Manager Linda Baumann says she expects the new KECI ownership to have “no impact” on the market.

“Stations buy and sell all the time,” she says.

While that may be true, few empires are growing as rapidly—and with as much stealth—as Providence Equity Partners, which has outperformed better-known competitors such as The Carlyle Group and Kohlberg Kravis Roberts in recent years.

With the financial firepower to make it happen, and given BlueStone’s stated goal of expansion, local KECI viewers may wonder whether individual stations will receive adequate time and attention from their owner as the parent company adds to its territory. DiPasquale, however, sees no cause for concern.

“I don’t even see why that would be related at all,” he says. “It’s important that all the pieces work. We’d give the same focus and attention to each station.”

Sommer agrees, saying DiPasquale “is the kind of guy who will always be there for his team, even if he’s in the middle of acquiring other stations.”

While only time will tell what effect the KECI purchase—as well as Lee Enterprise’s trades and Clear Channel’s moves—will have on local media, if any, it’s clear that the deck, at least, is being shuffled.

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