The company said it will purchase WDOK-FM and WRMR-FM from the Independent Group Limited Partnership; WZAK-FM, WZJM-FM and WJMO-AM from Zapis Communications and an affiliated company; and WQAL-FM from ML Media Partners. Cleveland is the nation's 23rd-largest radio market.
In a press release, Chancellor's president and chief executive officer, Jeffrey Marcus, said: "With this acquisition we have assembled a station group that, in one unique transaction, positions Chancellor as a leading operator in Cleveland, a market previously unserved by Chancellor's radio division."
The deals are expected to close in 1999's first quarter.
Chancellor shares rose 1 1/8 to 49 7/8 Wednesday, aided by BT Alex. Brown analyst Andrew Marcus' reiteration of his "strong buy" rating as well as news of the acquisitions.
In a research note, Marcus said the deal is a good one, partly because Chancellor plans to make the new stations part of its AMFM Radio Network. "As Chancellor extends its reach, it is able to offer national and regional advertisers more complete coverage," the analyst said. Upon completion of the Cleveland deals, Chancellor will operate stations in 20 of the top 25 U.S. markets.
Significantly, analyst Marcus said, Chancellor enters the Cleveland market as its No. 1 player. "It is unusual to have the opportunity to enter a market with a full cluster," said Marcus, "much less a market the size of Cleveland."
This is the latest in a series of recent transactions for Chancellor; in the second quarter, the company agreed to buy outdoor-advertising firm Martin Media for $610 million, then grabbed the Hicks Muse-owned LIN Television Group for $1.7 billion.
While many observers expected Chancellor to swallow fellow Hicks Muse subsidiary Capstar Broadcasting within the next year or so, Chancellor told analysts last week that such a move is unlikely.
A Capstar purchase would have to meet the company's stringent buyout objectives, said BancAmerica Robertson Stephens analyst William Meyers. "Every acquisition must be deemed strategic, fairly valued and accretive," the analyst said. "Given current prices and relative valuation, we do not believe the Capstar roll-up will be a near-term event."
Written By David B. Wilkerson