Wednesday, March 7, 2018


Noncommercial broadcaster the Educational Media Foundation (EMF) is buying WLUP The Loop, a heritage commercial rock and talk station in Chicago.  EMF will flip 98.7 FM’s programming to satellite-delivered K-Love, a Contemporary Christian Music (CCM) format. The purchase price was $21 million, cash.

The sale is yet another sign of commercial radio’s financial peril. Cumulus Media, the nation’s number two commercial station owner, is in Chapter 11 bankruptcy. Because Cumulus didn’t have the dough, the had to pull out of a deal to buy WLUP from Randy Michaels’ Merlin Media. EMF had the money ready to go and scooped up the station at a bargain price.

EMF has been on a roll acquiring primo properties in the past few years. Less than six months ago, EMF bought 100.3 FM KWSD The Sound in Los Angeles (now KKLQ). Pubradio folks will remember that EMF bought Classical WKCP, Miami, in 2015 from APM for $21.7 million. In 2013 EMF bought WWIQ in Philadelphia from Merlin Media and converted it to K-Love as WKVP. EMF paid cash for each of these purchases.

Expect to see more commercial radio stations to be sold in the next year because of excessive debt. You might say that commercial radio is devolving but they did it to themselves. iHeartMedia, the number one commercial station owner, is close to bankruptcy. iHeart is expected to file for Chapter 11 before the end of this week.

The Loop's Disco Demolition Night July 12, 1979
For over four decades The Loop had legendary impact. According to Chicago media blogger Robert Feder [link], The Loop was never just another rock station. It became a national phenomenon in July 1979 when it staged the infamous Disco Demolition Night during a Chicago White Sox game. WLUP will become a K-Love repeater as soon as today (Wednesday 3/70 via a LMA.

In the 1990’s WLUP was one of the first stations in the country to program a "hot talk" format with shock jocks 24/7. Well-known personalities on The Loop over the years include Steve Dahl (twice), Mancow Muller, Jonathon Brandmeier, Kevin Matthews, Danny Bonaduce, Garry Meier, Liz Wilde and Ed Schwartz.

KEN SAYS: Look for commercial radio to continue to unravel. Several major owners are drowning in debt. Listeners are spending less and less time with commercial stations, causing spot prices to dip. Owners have already cut programming budgets, fired high profile personalities and slashed research and promotion efforts in attempts to please shareholders.

Next up for EMF is New York City where they are reportedly closely watching the self-demolition of WBAI. EMF would love to use its ready cash to buy 99.5 FM from Pacifica. EMF has a lesser signal to trade with Pacifica to keep WBAI on the air. Somehow the folks at WBAI frittered away the best broadcasting signal in the country.


Paperwork filed by Spotify for their upcoming Initial Public Offering (IPO) has raised eyebrows in and around the digital music industry. USA Today reported earlier this week [link] that Spotify is having difficulty making a profit even though they have 71 million subscribers.

According to the report, analysts say a big shakeout in on-demand music services is inevitable due to the economics of the business and competitors who are willing to compete at a loss. Michael Pachter, an analyst with Wedbush Securities, told USA Today:

 "It's an impossible business" due to the high royalties that have to be paid out to the record labels, music publishers and artists.”

Spotify’s competitors such as Apple and Amazon are using cheap streaming music to attract shoppers for other, more profitable, items. Pure play stream providers don’t have this option.

The shakeout has been on the horizon for quite a few years. 

For instance, Pandora, the company that pioneered the pure-play digital music hasn’t been profitable since it began in 2000. 

In 2017, Pandora lost $518 million despite having more than 75 million monthly customers.

The biggest player in streaming music today is YouTube, a free service. YouTube has become the platform of choice for companies to break new music and artists. YouTube reaches more than 1 billion monthly users. The

Many music fans are choosing to listen for free on YouTube, which has deals with all the music labels and offers on-demand selections of hits and library material. The cost is free, and many of its 1 billion monthly users choose to listen without watching the video. YouTube gets more than 1 billion visitors monthly. 

Another unknown factor is the future of radio station streamer iHeartMedia. As we reported above, iHeart is on the verge of Chapter 11 bankruptcy.


  1. There's a fine line between analysis and nonsense. Both iHeart and Cumulus are going through Chap.11 bankruptcy reorganization. Reorganization that will leave their networks of licenses mostly (if not entirely) intact but will discharge most (possibly 75%) of their debt. Why would they suddenly feel the need to sell their licenses to pay off debt? There won't be any debt!

    Even if they weren't discharging their debt, selling off properties is counterproductive if you want to discharge debt. Most of these stations have amortized their value over time, but if they sell them now for cash, they'll owe the taxes on the full market value of the license. Trying to sell a lot of these licenses would guarantee a loss on the balancesheet...not a good way to pay off debt. That's why Entercom sold almost no stations as part of its acquisition of CBS Radio; everything they got rid of, they got rid of via swapping signals with other owners in other markets. A swap doesn't trigger the same tax consequences.

    What's happening is that EMF is "preying" on "smaller" operators, especially those that only operate one signal (maybe two) in a market and thus are having trouble competing with cluster operations. When those "little guys" are finally ready to sell out, there's nobody to sell to! No major commercial operator is going to buy a singleton in a market they don't have other properties in; that'll put them at the same competitive disadvantage the "little guy" is already in. And the other players in the market may already be at the market cap (not uncommon), or they can't buy the singleton (or the singleton plus another cluster in town) because they're tied up in bankruptcy court...although that problem will clear up in a year or so. OTOH, it remains to be seen if iHeart or Cumulus are really interested in going on another buying spree. It might goose the stock price, but they're already pretty well positioned in the major and medium markets, and have spent a lot of time and effort to get OUT of the small markets.

    After all that, who's that leave to buy these one-off signals? Mostly public radio and religious radio. Public radio usually doesn't need these signals and can't realistically afford them. But big religious players like EMF can make 'em work. Hence, why EMF is buying them all.

  2. "Next up for EMF is New York City where they are reportedly closely watching the self-demolition of WBAI. EMF would love to use its ready cash to buy 99.5 FM from Pacifica. EMF has a lesser signal to trade with Pacifica to keep WBAI on the air. Somehow the folks at WBAI frittered away the best broadcasting signal in the country."

    WBAI is not totally to blame. Everyone who's been in governance within Pacifica for the last 20 years can be blamed. It's been a network-wide attack on Pacifica's most valuable asset.