Tom Richman

Rising Values

 

That left him only the conservative, cautious route -- what Mittman, the Providence station owner, calls the "streamlining strategy." Jacor looks for stations it can improve, not turn upside down or turn around. The company will buy one if the price seems reasonable; centralize some administrative functions -- such as payroll, money management, and disbursement -- in Cincinnati; then let station management get on with the job. And, oh yes, Jacobs throws in a little incentive.

At news-talk WGST-AM in Atlanta, which Jacor bought last August, news assistant Anthony Johnson hustles to pack a day's work into eight hours. "I used to turn the rest over to someone on overtime," says Johnson, "but now I adjust my pacing and it all gets done." Under the former owner, Meredith Corp., the Des Moines-based media company, Johnson was strictly an employee. Now, with the stock Jacor gave him, he's a bit of an owner himself. More important to him, a piece of every additional cash-flow dollar the station generates does into a bonus pool. "They used to give out turkeys at Christmas. They can keep the turkeys," Johnson says, "I'll take the money."

"We had budgets under Meredith, too," says one WGST manager, "and if you met them, they'd pat you on the shoulder and say, 'That's nice.' If you didn't, they'd pat you on the shoulder and say, 'That's OK. You'll make it next time." Because the Atlanta station has consistently outperformed its budget in its short history as a Jacor property, no one is quite sure how the new parent would react to underperformance. Jacobs claims to take the budgeting process very seriously. "You get what you inspect, not what you expect," he says.

The managers seem happy to live with that. "I think it's great," says general sales manager Rob Jackson, "that my new owner is giving me a bonus after just five months." Jackson and senior managers at other Jacor properties also participate in stock option plans and other management incentives.

But while attitudes have changed since the Jacor acquisition, the stations -- WGST and its "beautiful-music" sister, WPCH-FM -- have not. "[Jacobs] bought us," says vice-president and general manager John Lauer, "because we were successful."

In their last 12 months under Meredith, Jacobs says, the stations produced $1.4 million in broadcast cash flow. In just the last five months of 1985 under Jacor, cash flow was $1.2 million. "This year our goal there is $2.75 million," he says, "and we're already ahead of budget." Jacor paid $20 million for the Atlanta stations and a statewide radio network. Jacobs could probably get $32 million for them today, estimates Hal Gore, an Atlanta-based media broker.

Then there are stations WQIK-AM and -FM in Jacksonville, Fla., which Jacor bought two years ago. They generated as much cash in seven months of 1984 under Jacor as in all of 1983 under the previous owner. And only part of that improvement, says Jacobs, comes from eliminating his predecessor's $200,000 annual salary and the boat he was running through the company books.

To be sure, some cash-flow improvement in Jacksonville and in Atlanta comes with the territory. Both cities are growing. Total radio advertising in Atlanta should expand 12% to 15% per year, according to general manager Lauer. Station expenses, mostly salary, should grow no faster than inflation, say 5% to 7%. The difference, as much as 10%, is a gimme, provided only that WGST and WPCH can just retain their market share.

Employee incentives, cash management, rigorous budgeting -- nothing new or exciting here. To hear Jacobs talk about it, the whole approach seems downright dull. "I'd rather be the tortoise who finishes the race," he says, "than the hare who doesn't." Well, the man is an actuary.

But who cares if it's new or exciting so long as it works? Jacor made $1.4 million last year on the sale of two of the trio of small religious stations that were Jacobs's first buys back in 1981. The third, converted to an "urban contemporary" (that is, black) format, is under agreement.

In addition, Jacor's Georgetown, Ohio, station is on the market. "We've spent five years learning the business," says Jacobs, "and now we're going to concentrate on major markets." With no short-term debt, with its long-term debt service and preferred stock dividends covered 1.4 times by projected 1986 cash flow, and with $14.6 million in the bank from an April stock offering, the company is poised for more growth through acquisition.

And success, predictably, has bred boldness.When Jacor bought WEBN in Cincinnati this year, Frank Wood, the station's owner/operator, came with the deal. Wood has the operating experience, and reputation, that Jacobs lacks. He'll be Jacor's president and chief operating officer, and both he and Jacobs are already talking about riskier buys, the turnarounds Jacor wouldn't touch before. "I'd like to build a major company," says Wood, "with a full string of radio stations, TV, outdoor advertising."

Jacobs would, too. He looks across town to the headquarters of Taft Broadcasting Co., which has holdings in radio, television, cable TV, entertainment, and real estate. Taft generated $365 million in revenues during the first nine months of its fiscal year just ended. "They are where we want to be in 10 years," says Jacobs.

Inside this tortoise, there's still a little hare.

 PREV  1 | 2