The last time Larry Wilson was on the cover of Radio Ink magazine was in September of 2013. Alpha Broadcasting was just getting rolling and had about 30 stations. It was clear, though, that Wilson had a plan to get bigger, and quickly. Back then Wilson told us he didn’t have a goal in terms of the number of stations, but he did want to grow the company to where it cash-flowed $50 million to $75 million: “That’s what drives me, the bottom line, and providing a great operation in a local community.”
Over the past two years, every analyst and broker in the business has said we should keep an eye on Wilson — that he has the right plan and the right financial backing. Not to mention his experience at successfully building a big radio company once before (Citadel, which was sold to Forstmann Little in 2001 for $2.1 billion). Those brokers and analysts were right. When all the pending transactions have closed, Alpha Media will own 252 radio stations in 54 markets across the United States, making it the fourthlargest company in the radio industry in terms of stations, behind iHeartMedia, Cumulus, and Townsquare.
The big question now: What’s next for Wilson and his new company? Does he try to go public? Or wait and operate for a while until the industry stabilizes?
RI: What’s your opinion on how 2015 went, for you and Alpha?
Wilson: We are pretty happy with our year. Things could be a lot better, but we’ve made substantial strides in building up our company talent pool, really significant strides. A good number of people who used to be with us and then left with the Citadel thing wanted to come back. We feel like we’ve done a lot of teambuilding. We’re looking forward to getting into 2016 with the integration of these stations and just operating for a while.
RI: Did you think you would be where you are today, in terms of number of stations and how you’ve grown?
Wilson: No idea — I would say I did have an idea, but I didn’t imagine we would be where we are today by now. We’re happy with that. We worked very, very hard in the last year. My whole team needs a break. We’re looking forward to putting 2015 behind us and starting the [Digity] integration. The nice thing about this Digity deal is the chief operating officer is coming with us, George Pelletier. He’s a great guy and knows these stations very well. It’s not like we’re grabbing 117 new stations with new people. They are new to us, but we have George as the liaison. It’s going to be a really nice deal for us.
RI: Why did the deal take so long to close?
Wilson: It’s big. It’s the biggest deal we’ve done. Very honestly, the Cumulus crash is hurting the industry. Everybody’s jittery. It’s common knowledge that the loan market right now is in disarray. Not just in radio, but across the board. I think it’s the bigger picture, too.
Everybody’s nervous about our country and what’s going to happen. With all the disarray and all the crazy shootings, the kid in Chicago, the kid in Missouri, the recent deal at Planned Parenthood, and the Paris attacks. We’re living in an insane environment, and somebody has to do something about it or it’s going to get worse. I think that’s what has Main Street America nervous. I don’t know about the big cities, but I can tell you for sure in the kind of cities and towns we do business in, people are very disenchanted with our politicians. That’s why Trump and Carson have wind at their backs — because people are sick and tired of the old-fashioned way of not being honest and not being forthright.
RI: What’s going on with Main Street advertisers?
Wilson: We’d be sailing along pretty well, and then we’d have a soft month that is unexplainable. And it’s not just us. We talk to a lot of other radio operators, and it’s striking how you go into May and then May turns out to be a dud, and that’s one of our best months. You talk to the people at the other companies and they say, “We just didn’t see it coming.” I don’t see any way to predict it, but for some reason advertisers have been turning the spout on and the spout off more often than they used to. I just don’t know the answer to why.
RI: What do you think is going to have to happen industry-wide in order for radio to get in the good graces of advertisers on a more consistent basis?
Wilson: You’re going to have to give them results. We feel like we’re getting in the good graces of a lot of advertisers and we’ve had a lot of big hits this year, but the attrition has been there — as it always has been, but it’s a little higher than usual. This is an old song for me, but if you have a compelling product that attracts listeners and you put commercials on those stations, and put them on at a reasonable level, they will work.
They work like a charm. That’s why I am in this business. Nielsen has put out a lot of research that says really good things about radio. It’s nice to see somebody academically prove it through research. I feel very, very good about it long-term. We’ve really beefed up our business development and digital side with some really strong folks. We’ve brought in Lindi Glasgow, who worked for us back in Albuquerque a long time ago, and she’s gone on from Citadel to Entercom and was a big player there. We brought back Stefan Brock, who came to us with a solid background in digital from ABC Family and Disney. Heavy lifting every day is what’s going to lead to the resurgence. I feel good about it going into 2016.
RI: What are your thoughts on taking Alpha public, compared to when you did it with Citadel?
Wilson: Unlike most of the things that are written about me, I never made a lock decision that I’m going public. All I said was that I wanted to get to critical mass — if the market opens to go public, I want to go public. But I wouldn’t go public in this environment for anything. You’ve got the two major players limping.
Although I think iHeart is doing some really good stuff — Bob Pittman is extremely smart; I think they are doing a lot of smart things. I really like what they’re doing on the events side. I’m more optimistic about them than most people. I think with those guys at the helm, and I may be wrong, but I think, given time — and they’ve got plenty of time with their backers — they’ve got marvelous properties. I know just about all of the properties they’ve got. Lowry Mays, a really good friend and mentor, assembled all of those properties. They are world-class. I patterned everything I did at Citadel after what Lowry was doing; I was trying to emulate him.
I think iHeart’s going to be a good player for a long time. I just don’t know much about Cumulus. I know those properties, especially the Citadel ones, they’re great properties. They just need some tender loving care. The big markets, I don’t know so well. Some of the destruction that’s been done in big markets is going to be hard to bring back, like KGO in San Francisco. And they’re the ones hurting the worst, the big ones. It’s encouraging that the existing owners are stepping up and buying more stock — albeit in pennies — but they’ve still got a belief that they’re good properties. They’ve got to be fixed. Everybody says they just need to get on to fixing them.
RI: So you wouldn’t be unhappy just being an operator and not being public, with the way things are right now?
Wilson: Absolutely not. We are at a reasonable debt load and this is a good cash generating business. There’s nothing wrong with sitting and operating. I just get frustrated by some of your counterparts, the stuff they’re writing about my “IPO hopes have been thwarted.” I mean, that’s ridiculous. I’m so pleased with where we are. We have tremendous diversification across the states. I think that’s important because some states are healthier than others. If you have one limping, you have one that’s booming. So that’s healthy. I think we’ve got great diversification in market size.
We’ve got some medium markets and small markets. But gosh, it’s amazing how much money some of those make. They are the community. For example, Mason City, Iowa, there’s huge cash flow there, and they’re so involved in the community, the surrounding areas and the farming communities. It’s the way radio is supposed to be. I love having a number of those unrated smaller markets where they really have great radio stations. They’re live and local, they live it every day, and it shows in the numbers.
I feel good about the platform, but it wasn’t built solely to say, “Go IPO,” and then, “Oh, my god, there’s not a window.” I wouldn’t go public in this climate, with Cumulus on their back and iHeart having the debt load they have. Look at all the radio stocks. None of them are sizzling. That’s when you want to go public. I think that time may come again. It’s still a great business. That’s what everybody forgets. It’s a great business. It gets results.
RI: What kind of market is there going to be for deals in 2016?
Wilson: I don’t know who the buyers are going to be. If I knew that, I would say it could be brisk. But I don’t see a lot of people with the firepower to buy. We want to take a little bit of a breather here and do some things operationally, keep improving things operationally, the way we’ve been doing it. Most of the deals that we’ve done lately, we’ve been the only one to show up. That’s why we’ve gotten them at what I think are very attractive multiples.
RI: What is the best deal you’ve done so far?
Wilson: Well, the Triad deal was a good deal because we bought it so cheap. Then we sold and we turned that into a very low-multiple deal. The onesies and twosies were good. I don’t have one that I would say is outstandingly a lemon or anything. Every deal has worked pretty well. Morris has worked fantastically so far. The Digity deal — I’m very happy with the deal. It gives us a lot of things I like. I wouldn’t go back and undo any of them. The best thing I’ve ever done is selling Citadel when I did.
RI: Is there one deal that was most fun for you at Alpha?
Wilson: I would say they’ve all been a lot of fun because I got to meet a lot of great new radio guys. We’ve brought new people into the company. I give [President/CEO] Bob Proffitt and our team of EVPs the credit — one of the things we’ve developed is an incredible rapport among our management team. Boy, these guys get on a conference call and they start throwing ideas out. It’s like an idea trust.
I told the guys not too long ago that I think we have a better infrastructure than we had at Citadel, and we had a damn good one at Citadel. The most fun I’ve had is putting the team together and watching them work. At the end of the day, it’s not about buying them, it’s about operating them. I think we’re pretty good at buying them, but I think we’re better at operating them. I stack our guys up against anybody in the country. I’m really proud of our team.
RI: Why do you think people want to come to work for you?
Wilson: I recently met with one of our new people for the first time. She joined us from another radio company. I stopped in her office and she said, “I just can’t believe how much support you give everybody.” And she’s at a high level; she’s a sales manager. And she said, “You give so much support to people, and it’s a fun place to work.” That’s one reason.
Here’s another. Our management team was on the phone with a few banks one time and we told them, “We’re going to have to cut this call off around 4 o’clock because we have a Halloween party for our employees and their children.” These bankers were like, “You have a what?” They never envisioned that you could have that kind of thing, but that’s the kind of stuff we do. When people do a good job, we’ll have breakfast for them and the management team will cook for them.
It sounds corny, but it’s a family. If somebody’s got a problem with their child being ill or there’s another problem, as soon as I find out about it, I’ll be the one on the phone with them to see what we can do. I’m just not sure the other companies in radio do those kinds of things. There are a lot of great companies in radio, but we really work at the relationships. We expect results. If you don’t get results, you can’t be with us. And we want superstars. You need to be a superstar to come here. But once you do that, we work very hard to make this the best place to work in the industry. Whether we are or not, I don’t know, but we’d be up there.
RI: So what kind of person do you have to be to work for Alpha?
Wilson: We’re looking for people that have a real sense of urgency and people that can build relationships. They talk about programmatic buying. That’s fine and good, but for me this business is about relationships. I went and called on a client in Peoria, Illinois — Alwan Brothers. It’s a high-end gourmet place, mostly meats. These Lebanese brothers and a cousin own the business, third generation. We’ve become friends. I’m always buying stuff from him. At Christmas time, I ship their steaks to a lot of our folks. It’s about relationships. It’s about local direct business. That’s the lifeblood of what we do. The transactional stuff is important, it’s there. If you’ve got the ratings, you get it. But if you don’t, you’ve got to beg for it.
On local direct, you have to have those relationships. If they’ve been advertising with us for a long time, it’s one of the last things they’re going to give up, because we get results. If we don’t, we tweak the package to make sure we do get results. It takes people that want to work hard and can relate well with others.
RI: Give us your prediction for how radio is going to do in 2016.
Wilson: I think we’re going to start to see more political coming in. We’ve already seen some of it. But I think it’s going to be an unprecedented election. There’s going to be more money. We are certainly working it hard. We’re working with the [Democratic National Committee] and the [Republican National Committee]. We’ve been to see them. We are talking to the PACs. We think we can get results for politicians. That’s going to give a nice bit of fuel for growth for 2016.
In our company, we feel like we’re going to grow. It’s not going to be monumental growth, but we’re shooting for 3 percent growth in 2016. I think we’ll get it. We’ve got the infrastructure now. Frankly, we’re just getting it together. It’s taken us time. We just started this thing and really kicked it off in 2013. It’s taken time to put the people back together. We’ve got a tremendous team, and I think they’re going to give us the results in 2016. I feel very confident. It’s hard for me to know what’s going to happen industry-wide because, frankly, we just put our heads down and try to drive revenue and get our share. I’m just glad that I don’t have the problems Cumulus has. Because that’s a distraction. That’s a distraction from some great properties. I don’t care how good the new person is. That’s a tough situation because you’ve got to fight battles in 17 directions. It’s like fighting a forest fire. It can back-burn on you and be on top of you before you know it. I commend them for their efforts, but I can’t predict what they will do. And they are a big part of the industry.
We think 2016 is going to be a pretty good year.