As the new owners of KOLO-TV considered
their acquisition, they knew the
strengths of the station, which is top-rated
in the Reno market.
They were mildly surprised, however, to
discover the strengths of the northern
Nevada economy.
"It's growing market that's got a lot of
diversity," said Bob Prather, executive vice
president of Atlanta-based Gray Television
Inc. His company agreed to pay $41.5 million
in cash to acquire KOLO from Smith
Television Group Inc.
Prather said Gray Television officials
were particularly impressed by the strength
of the distribution and logisitics industry in
the region, and they were impressed as well
by the attractive business climate in Nevada.
But it was the station's quality that first
got Gray Television's attention when Robert
Smith, the president and majority shareholder
of New York-based Smith Television
Group, put out the word he was interested
in selling KOLO.
KOLO's top ranking in the northern
Nevada market was important to Gray
Television.
"We have 28 television stations, and 21
are No. 1 in their market," Prather said. "We
like strong news leaders.We like stations
that are good corporate citizens.We like to
buy good stations and make them better."
The company also likes stations in state
capitals Carson City is part of KOLO's
market and stations in college towns.
Its stations include, for example, outlets
in Lincoln, Neb.,Tallahassee, Fla., and
Knoxville,Tenn. The strategy Gray has laid
out for the investment community (the
company is publicly held with stock that
trades on the New York Stock Exchange) is
straightforward:
* Provide superior local news and community
focus.
* Leverage this market dominance to win
a larger share of advertisers' budgets.
* Improve operating margin through
focused cost control.
That cost control, however, is unlikely to
include the sort of big layoffs 10 positions
were cut seen when Smith
Broadcasting bought KOLO in March
2001.
"The transition last year was a tough
one," acknowledged Tim Perry, the KOLO's
vice president and general manager. But he
called the chances of similar cuts "very
unlikely" this time around.
"Gray does not have a history of cleaning
house," said Perry, who has been asked
by the new owners to stay after the acquisition
is completed, probably in the fourth
quarter of this year. The station employs
about 80.
Perry said Gray has a reputation in the
industry for buying and holding stations
rather than turning them over quickly in
search of a quick profit.
(That quick turnover strategy doesn't
always work. A trade publication reported
Smith Broadcasting paid $45 million for the
station. If that's true, Smith Broadcasting
dropped lost $3.5 million on its ownership
of KOLO in 18 months. Smith
Broadcasting didn't respond to an interview
request.)
While the station has undergone two
ownership changes in two years, Perry said
the previous ownership situation 50 years
in which the station had essentially one
owner in the form of Donrey Media and a
successor corporation is rare in the
broadcast industry.
"KOLO had a very privileged existence,"
he said.
The KOLO deal is the smallest of a
couple of fish that Gray Television has
frying.
By far the largest is its pending acquisition
of Stations Holding Co. Inc., which
owns 15 television stations. That deal is valued
at $502.5 million.
When the KOLO and Stations Holding
acquisitions are completed, the 29 stations
owned by Gray Television will reach 5 percent
of television households in the
United States.
The company will own 15 CBS affiliates,
7 NBC affiliates and 7 ABC affiliates.
