THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, December 6, 1994 TAG: 9412060334
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD
STAFF WRITER
LENGTH: Medium: 90 lines
The parent company of WTKR, Hampton Roads' top-rated television station, said Monday it is considering purchase offers for the station.
It's the second potential Hampton Roads TV station sale disclosed in the past week. Last Friday, Sinclair Broadcast Group Inc. of Baltimore said it agreed to buy WTVZ, the Fox Broadcasting affiliate in Hampton Roads, for $47 million.
Industry analysts said that around the country TV stations have been changing hands much more rapidly in the past two years - and that Hampton Roads is just joining the trend.
WTKR, a CBS affiliate that has its offices and studios in downtown Norfolk, could go for more than $100 million, analysts said. They estimated that WTKR's Providence, R.I., sister station, WPRI, which also was put on the sale block, could fetch another $125 million.
The stations' owner, Narragansett Television Inc. of Providence, bought them both in 1989 for $150 million from Knight-Ridder Inc.
Knight-Ridder had purchased WTKR, formerly known as WTAR, eight years earlier from its original owner, Landmark Communications Inc., after federal regulators moved to tighten restrictions on companies owning both TV stations and newspapers in the same market. Landmark is the parent of The Virginian-Pilot and The Ledger-Star.
Narragansett Television, an affiliate of a media-investment group known as Narragansett Capital Inc., said in a news release that it has hired the New York merchant banking firm of Lazard Freres & Co., to help it in ``evaluating its alternatives.''
It didn't say how or when it expects to complete the sale of the Norfolk and Providence stations, which have combined annual revenues of about $42 million.
``We have received a number of unsolicited expressions of interest in both stations,'' said Jonathan Nelson, Narragansett's chairman. ``Despite the growth opportunities in the television industry, we feel we have a fiduciary responsibility to respond to inquiries from well-qualified prospective buyers.''
Christopher Pike, WTKR's vice president and general manager, said he wasn't surprised by Narragansett's announcement. ``It's reality in the industry,'' he said. ``It's not really a reflection on the station, good or bad.''
WTKR topped Hampton Roads stations with a 20 percent share of the sign-on/sign-off viewing audience during the July ratings period, according to Nielsen Co.
Like other network affiliates around the country, its value has jumped in the past year for a variety of reasons, said Larry Wood, president of Wood & Co. Inc., a Cincinnati-based broadcasting brokerage.
``It's a pretty heady time to be in the business right now,'' Wood said. ``They (Narragansett) can sell the station at a profit, which probably they could not have a year ago.''
Nationally, the combined price for all TV stations sold through the first 10 months of 1994 was about $2.5 billion, according to Broadcasting & Cable magazine. That's up about $900 million, or 55 percent, from the same period last year.
Wood said that one of the biggest reasons for stations' rising values is the gathering strength of Fox Broadcasting Co. as a network player. That has forced the other three big networks to share more revenues with their local affiliates or risk losing them to Fox, which has been dangling increasingly generous compensation packages in front of station owners.
Robust local ad sales and a slight regaining of viewers from cable networks over the past year or so also have made stations more attractive to buyers, he said. In spite of rhetoric about 500 channels on cable TV, he said, ``if you're a Procter & Gamble selling soap or a General Motors selling cars, network TV is still a more efficient way to get the message out.''
Wood said that banks, after a virtual several-year absence from financing station sales, are back in the financing game. That's adding even more fuel to the accelerating sales pace, he said.
WTKR, which broadcasts over the air on Channel 3, has about 130 employees. Under Narragansett, it has beefed up its local news, public affairs and events programming. It televised Norfolk Tides baseball and the downtown Norfolk Christmas parade, for instance. It also tapes local news inserts for CNN's Headline News cable network.
Its two main competitors, WAVY and WVEC, have recently signed long-term affiliation renewals with NBC and ABC, respectively. WGNT, the other major commercial TV station in Hampton Roads, has said it plans to affiliate with the planned Paramount broadcast network. ILLUSTRATION: Graphic
WHY VALUES ARE UP
by CNB