Business Journal Article on Journal Broadcast Group

[Tom Snyder]

Rich Kirchen from the Milwaukee Business Journal gave us permission to post this article:

EXCLUSIVE REPORTS

Journal seeking TV, radio stations
After IPO, media firm has $230 million ready for broadcast deals

Rich Kirchen

Journal Communications Inc. is primed for acquiring radio and television stations and pumped with cash to pursue its plan.

So said chairman and chief executive officer Steve Smith in his first interview since the Milwaukee-based media and communications company completed its initial public stock offering on Sept. 24. Journal Communications, which raised a net $265.8 million in the IPO, can finance acquisitions with its improving cash flow and an estimated $230 million from a credit line negotiated in September.

"We're going to have a very concerted effort to grow in broadcast," Smith said during an interview at the new $113 million Milwaukee Journal Sentinel printing plant in West Milwaukee.

The company's top priority is adding broadcast stations in the 11 media markets where it already operates, including Milwaukee, Smith said. Journal Communications owns five television stations, including WTMJ-TV (Channel 4) in Milwaukee and 38 radio stations, including WTMJ-AM (620) and WKTI-FM (94.5) in Milwaukee.

After the Telecommunications Act of 1996 loosened broadcast ownership restrictions, Journal Broadcast Group increased its holdings from 15 broadcast properties to 43. Congress and the Federal Communications Commission are considering lifting the ban on newspaper-broadcast ownership in a given market, which would free Journal Communications to buy additional stations in Milwaukee. The company owns the Milwaukee Journal Sentinel and broadcast stations in Milwaukee under a grandfather clause.

Smith gave only a general response as to whether the company would pursue acquisitions in Milwaukee.

"We'd welcome the opportunity in every market," he said.

The only media market besides Milwaukee where Journal Communications owns both television and radio stations is Boise, Idaho, in which company holds six radio stations and an ABC affiliate television station.
Improving cash flow

As it seeks acquisitions, Journal Communications will benefit from cash flow improvements in its more efficient newspaper printing operation, said analyst Douglas Arthur of Morgan Stanley, New York City, in a November report on the company. Journal Communications management projects a $10 million positive swing in cash flow because of better printing processes.

The company is also likely to generate more cash as a result of its efforts to improve profit margins at some of the "turnaround" broadcast properties it acquired in recent years, Arthur noted.

Furthermore, Smith pointed out that, because the company eliminated its employee stock trust in the IPO, it has freed up additional cash. Journal Communications paid about $150 million in 2002 to pay dividends and buy back stock trust units. The IPO proceeds went to buy out employee units in the stock trust.

"Strong free cash flow plus a relatively strong balance sheet should position the company for additional radio and TV acquisitions in a new era of deregulation," Arthur said.

On the other hand, Journal Communications is just one of many media companies eager to take advantage of further deregulation in ownership, upping the ante for any deals.

"Journal Communications may have a hard time finding appropriate TV and radio acquisitions at attractive prices," Arthur said.

While the Milwaukee Journal Sentinel is the company's flagship business and still its single-largest media property, buying more newspapers is not part of Journal Communications' strategy, Smith said. Nevertheless, the company remains committed to the newspaper, Smith said, pointing to the new printing plant, which was the company's largest-ever capital project.

The new plant runs more efficiently, and with less staff, than the old presses in downtown Milwaukee, Smith said. The plant also is attracting new revenue from outside commercial printing customers. Smith said he doesn't anticipate further staff cuts at the Journal Sentinel, and said the newsroom is staffed at an appropriate level.

"We're very excited about the newspaper business," Smith said. "We expect we'll see growth out of it."

As far as speculation in the Milwaukee community that Journal Communications itself might ultimately be sold to a larger media firm, Smith said the post-IPO capital structure is designed to protect local control. Employee-owners hold 87 percent of the voting stock in the company and the founding Grant and Abert family holds another 9 percent to 10 percent, he said.

"We did this transition to grow the business -- not sell the business," he said.

Article may be found
HERE

[StarvingForHDTV]

Cool, maybe with their new lump of cash they can spring for a DTV setup for Pax 55-1 that can put out images without ghosts and include stereo sound.  I think they own that station, not positive though.

Starving

[Kevin Arnold]

Actually, it would make more sense for them to go after WDJT 58. Though Weigel wouldn't sell cheap I suspect they would part with the property for the right price. That would give them full power 58 plus 46 digita and low power 41 and 63.

[Dick Nitelinger]

Well, it was obvious when they floated the IPO that they were going to try and grow by acquisition. It'll be interesting to see what they can pick up.

On another note, Weigel restructured its ownership in the fall. WDJT-TV is now owned by WDJT-TV Limited Partnership, and WMLW-CA and W63CU were assigned to Channel 41 and 63 Limited Partnership. At least on paper, they could sell of the Class A and translator station easily. That doesn't mean that they will. On the other hand, WMLW-CA seems to run a lot more promos than commercials.

- Dick

http://www.milwaukee-horror-hosts.com

[Dick Nitelinger]

oh....

I just noticed that W63CU achieved low-power status and chnaged its calls to WYTU-LP on 16 December.

- Dick

http://www.milwaukee-horror-hosts.com

[Dick Nitelinger]

You can see the call sign history here:

http://svartifoss2.fcc.gov/cgi-bin/ws.exe/prod/cdbs/pubacc/prod/call_hist.pl?Facility_id=71424&Callsign=WYTU-LP

- Dick