50 East RiverCenter Boulevard
Our broadcast objective is to be the leader in each broadcast area we serve; the broadcaster with the best signals, the best programming and the best-managed stations.
Jacor Communications, Inc., a media holding company, is the second largest radio company in the United States measured by the number of total stations and the third largest in terms of total revenues. As of March 1998, it owned, operated, or represented 195 radio stations in 49 markets, as well as television station WKRC in Cincinnati. With its wholly owned subsidiary, Premier Radio Networks, Inc., Jacor also is the third largest provider of syndicated radio programming in the country, owning and distributing the top three radio talk shows: The Rush Limbaugh Show, The Dr. Laura Schlessinger Show, and Dr. Dean Edell. Jacor also owns NSN Network Services, a satellite distribution service. Financier Samuel Zell owns about a third of Jacor shares through his Zell/Chilmark investment partnership.
1974-84: From Insurance to Radio Broadcasting
In 1974 Terry Jacobs was an actuary working with American Financial Corp. in Cincinnati, Ohio. Interested in starting his own business, he did some research and found a growing industry that interested him--radio. In 1979 he formed Jacor Communications, incorporated it in Ohio, and quickly bought three small radio stations, each offering religion-themed programming.
According to the Federal Communications Commission (FCC), there were 8,651 radio stations on the air when Jacor was born, 4,549 AM and 4,102 FM. Owners of these stations were primarily mom-and-pop operations, because under the federal regulations no one company could own more than 14 stations, seven of each type of station, nationwide.
The Jacor stations did well, and in 1981 Jacobs left the insurance industry to concentrate full-time on his radio business. In 1984 Congress eased the radio ownership regulations somewhat and established the "rule of twelves." Under the new regulations, a radio company could now own up to 12 AM and 12 FM stations across the country. That year Jacobs began to seriously expand the company, acquiring WQIK-AM/FM, two stations in Jacksonville, Florida, for $5 million.
1985-89: Continued Growth
The Florida purchases were followed in 1985 with the acquisition of two stations in Cleveland, Ohio, for $12.8 million, and a move into the Georgia market with two stations and the Georgia Radio News Service for $20 million. In 1986 Jacobs purchased an FM station in Cincinnati for $9.3 million, and in December Jacobs merged Jacor with another Cincinnati radio company, Republic Broadcasting Corp. As a result of that transaction, Republic's head, Randy Michaels, joined the Jacor board.
The company continued to grow through acquisitions. In 1987 Jacor paid $24 million for two stations in Denver and in 1988 increased the company's presence in Florida by purchasing Eastman Radio, Inc. and two stations in Tampa, spending approximately $28.5 million. In 1989 Jacor merged BBMS Communications with the company's wholly owned subsidiary Jacor Cable, Inc., acquiring as part of that deal Telesat Cable TV, Inc. This cost the company some $4.9 million as it assumed certain of Telesat's obligations.
1990-93: Ownership Changes
In 1991 the FCC expanded the AM broadcast band, adding from 1605 to 1705 kHz. In 1992 Congress again eased station ownership rules, allowing a single company to own up to 18 AM and 18 FM broadcast stations. The FCC reported the number of radio stations operating that year had reached 11,312. Of these, the majority (4,961) were AM stations, 4,766 were commercial FM stations, and 1,585 were noncommercial, educational FM stations. As a comparison, the number of television stations broadcasting totaled 1,509.
The recession in the early part of the decade was rough on the radio industry, especially for owners such as Jacobs who had run up significant debt. Jacor sold all of the assets of two of its stations, one located in Cleveland and one in Nashville.
Early in 1993 Jacor completed both a recapitalization plan and a refinancing plan that substantially modified its debt and capital structure and transferred the ownership of most of the company to the Zell/Chilmark investment partnership. In the process, Jacor acquired another radio station in Denver. In July, Jacor also bought the license of another AM station in Cincinnati for $1.6 million in cash.
Jacor's new owners, led by Chicago investor Samuel Zell, took Jacor public before the end of the year. Terry Jacobs left the company to start Regent Communications, Inc., a new radio venture, and Randy Michaels was named CEO of Jacor.
1994-95: A Hub-and-Spoke Expansion Strategy
During its first year as a public company, Jacor continued to acquire new outlets--in Denver, Cincinnati, and Knoxville. The company also sold Telesat Cable TV, Inc., receiving some $2 million in cash for it. Revenue for the year was $107.1 million, with a net income of $7.9 million.
In 1995 the company expanded the number of stations it owned in Florida, adding two in Tampa and three in Jacksonville. It also acquired the call letters and programming of another radio station in Cincinnati. Overall, Jacor spent nearly $24 million in cash for these acquisitions. By December the company was the eighth largest radio group in the country, with 25 stations in ten broadcast areas. Revenue for the year was $118.9 million, with net income of $11 million.
The company's expansion strategy was to use a hub-and-spoke approach to grow. This involved building a cluster of stations in a high-growth broadcast area such as Denver, Colorado or Tampa, Florida and then buying stations in the same region, as Jacor was doing along Florida's Gulf Coast. The stations could then share management, develop and share regional programming, and also leverage sales opportunities, forcing advertisers to buy time on the weaker stations if they want to advertise in the larger area and to pay more for the opportunity.
1996: A New Telecom Act
February 8, 1996 was a red letter day for the radio industry as the President signed the Telecommunications Act of 1996. The new law totally eliminated the restrictions on the number of radio stations a company could own nationally, and the industry went crazy. In the first month after the law went into effect, more than $2 billion in deals were announced. According to Peter K. Pitsch of Citizens for a Sound Economy Foundation, this amount equaled the dollar amount of a whole year's transactions in the 1980s. By the end of the year the value of radio deals totaled $14.7 billion.
Jacor was one of the most active groups, going on a buying binge that increased its size by 60 stations that year. The company concentrated primarily on buying stations in the top 50 markets, and its first big purchase that year was the ten-station Noble Broadcast Group, Inc. for approximately $152 million in cash. This added radio stations in Denver, St. Louis, and Toledo to Jacor's stable, plus Noble's operations in San Diego, which provided programming and sold air time for two radio stations in that city.
Jacor also continued its Florida hub-and-spoke strategy, purchasing two radio stations in Venice, Florida, for $4.4 million in cash, and in August paying $14 million for three radio stations in Lexington, Kentucky. That same month Jacor bought the land and construction permit for a station in Englewood, Florida from the Sarasota-Charlotte Broadcasting Corp. The company also sold two stations in Knoxville and a station in Tampa, receiving approximately $7 million for the two sales.
But September saw the company's biggest acquisition to date, the $800 million purchase of Cincinnati-based Citicasters Inc., which merged with Jacor Communications Corp., a wholly owned subsidiary of Jacor. Citicasters operated 19 radio stations in eight markets: Atlanta, Phoenix, Tampa, Portland, Kansas City, Sacramento, Cincinnati, and Columbus (Ohio), and two television stations, one in Tampa and one in Cincinnati. That pending acquisition led to the first major Justice Department antitrust case tested under the Telecom Act.
Although national ownership limits were eliminated, the new act made the limits on local radio ownership more stringent. In markets where there were 45 or more commercial radio stations, a single group could own up to eight stations, with no more than five in the same service (AM or FM). For smaller markets, the limits were also tightened: up to seven stations, with no more than four in the same service, in markets with 30-44 commercial stations; up to six stations, with no more than four in the same service, in markets with 15-29 commercial stations; and up to five stations, with no more than three in the same service, in markets with fewer than 14 commercial stations, provided that no radio group could own more than 50 percent of the commercial stations in the market.
Justice intervened in the Citicasters acquisition, first by filing suit and then by requiring Jacor to sell one of Citicasters' Cincinnati radio stations. Otherwise, Jacor would have controlled 53 percent of Cincinnati's radio advertising market.
In December Jacor and Gannett made the first ever television-for-radio exchange in the industry, swapping Jacor's Tampa TV station from the Citicasters acquisition for six of Gannett's radio stations, two each in Los Angeles, San Diego, and Tampa-St. Petersburg. At the same time Jacor added spokes to its Denver hub with the acquisition of two radio stations in Casper, Wyoming and the Wyoming Radio Network from Clear Channel Radio, Inc. for a price of $1.9 million. The company also reincorporated the company in Delaware during 1996.
As of December 31, 1996, Jacor owned and/or operated 85 radio stations and one television station in 21 broadcast areas throughout the United States. Revenue was $223.8 million, with net income of $5.1 million.
Although the Citicasters merger was one of the big acquisitions during the year, it was not the largest. That prize went to Westinghouse Electric Corporation's $4.4 billion acquisition of Infinity Broadcasting's 83 radio stations. Another mega-deal was made by American Radio Systems as it paid $665 million for EZ Communications.
Radio stations made their money primarily from selling advertising time, and the price a station could charge depended on the market and how popular the station was. To attract listeners, Jacor used a strategy of regional programming, putting the same program on multiple stations, but with different commercials, different news, weather, and traffic reports. "We're shameless opportunists when it comes to developing each station in its market," Jacor CEO Randy Michaels told the Cincinnati Business Courier in a 1996 article.
Programming for its FM stations was typically music-based, but with one station in each of Jacor's cities in a region concentrating on a different type of music, such as country, rock, adult contemporary, or jazz. Jacor also developed unique regional programming for its AM stations, including broadcasting the games of professional sports teams and syndicating local hosts of popular talk shows. This approach made Jacor an industry leader in successfully operating AM stations; in Denver and Cincinnati, for example, its AM stations were the top revenue and ratings leaders among both AM and FM stations in their respective broadcast areas. This track record also meant that Jacor could expect to increase the revenue from the more underperforming AM stations it bought.
1997 to the Present
Jacor continued its acquisition spree in 1997, growing its radio station operations with the addition of new stations almost every month and moving into other segments of the radio business. It also moved its headquarters from Cincinnati across the river to Covington, Kentucky.
Jacor began the year with the acquisition of three Idaho stations (two in Boise and one in Caldwell) for $11 million in cash, thus extending locations along the Rocky Mountain Front Range, and completed a $185 million merger with Regent Communications Inc., Terry Jacobs's broadcast company. Regent had 19 radio stations, in Kansas City, Salt Lake City, Las Vegas, Louisville, and Charleston. In March, Jacor entered the Iowa markets with the purchase of two stations in Des Moines and two in Cedar Rapids for $52.5 million.
During April the company completed several deals as it bought two stations in Toledo, moved into the Rochester, New York area by buying one station for $5.5 million and swapping $16 million and one of its Cincinnati stations for three stations in Rochester, and expanded its presence in San Diego, gaining two stations in an exchange for two of its Phoenix outlets valued at around $45 million. It also added three more stations in Ohio for $6.5 million.
Jacor's programming needs also influenced some of its acquisitions that year as the company began looking at ways to leverage programming into markets where it did not have stations. In March it bought NSN Network Services, Ltd. to improve its connectivity technology. NSN was a leading provider of satellite and network services, and by the end of the year it had announced it was deploying a nationwide network connecting all Jacor broadcasting facilities, making it possible for them to share programming, financial information, and Internet services.
As another way to increase its programming, Jacor bought nationally syndicated shows. First the company acquired EFM Media Management, the syndicator for the Rush Limbaugh and Dr. Dean Edell shows, for $50 million. Then Jacor paid $190 million for Premiere Radio Networks, Inc., the largest syndicator of comedy radio programming and the producer of 52 syndicated programs, including Leeza Gibbons and Michael Reagan. The final content purchase that year was $71.5 million for the rights to Dr. Laura Schlessinger's radio therapy call-in show. To get these and other programs out to the country, NSN announced a new generation of a satellite network by which ten cities where Jacor originated national programming could uplink their content, have the programs be combined into a new digital format, and redistribute them to thousands of radio stations nationwide.
Also during 1997 Jacor faced charges by the Rainbow-PUSH Coalition that it discriminated against minorities at four of its Cincinnati stations. The FCC refused to delay license renewals, but ordered the company to submit recruiting information for the next three years. The company ended the year with net revenue of $530.6 million, more than double the $223.8 million in 1996. Costs for the refinancing of debt left the company in the red.
Despite rumors at the end of 1997 that chairman and chief stockholder Sam Zell might be selling Jacor, the announcement that Jacor was buying Nationwide Communications, Inc. appeared to put an end to that speculation. In 1998 Jacor added two more stations in Colorado and expected to complete the $620 million purchase of Nationwide, the 17-station radio group owned by Nationwide Mutual Insurance Company. That purchase gave Jacor entry to several new markets, including Dallas, Houston, Minneapolis, and Baltimore.
On the content side, Premier Radio Networks bought Hot Mix Radio Network, Inc., the producer of seven nationally syndicated "dance mix" radio programs, Chancellor Broadcasting Co., Inc. and Talk Radio Network, Inc., syndicators of Art Bell's network radio programs, "Coast-to-Coast AM" and "Dreamland," and 17 other talk radio programs.
CEO Michaels and Jacor moved aggressively into the more deregulated radio industry under the 1996 Telecommunications Act. During 1997 alone, the company completed 53 separate transactions totaling some $842 million and, as 1998 began, had $748 million of transactions pending. In little more than two years, it bought more than $2 billion worth of radio stations, programming, and satellite networking. In the process, Jacor became the third largest national syndicator of radio programs and jumped from eighth to number two among radio companies.
Principal Subsidiaries: Jacor Broadcasting Corp.; Jacor Communications Co.; Sports Radio Broadcasting, Inc.; Broadcast Finance, Inc.; Critical Mass Media; Noble Broadcast Group; Premier Radio Networks; NSN Network Services.