Classical past? KFUO-FM is sold to Joy
This article first appeared in the St. Louis Beacon, Oct. 6, 2009 - The Lutheran Church-Missouri Synod has sold radio station KFUO-FM to Joy FM , a local religious broadcaster, for $18 million plus interest for a total of as much as $26 million over a 10-year term.
The synod said is looking into ways to continue the classical music programming that KFUO has provided. Until the sale is approved by the Federal Communications Commission, it will continue to broadcast classical music at 99.1 FM. If the deal proceeds as expected, it could close in the spring.
"We are exploring the possibility of broadcasting classical music over a high-definition channel and via a radio translator system that would reach the St. Louis-area market," said Kermit Brashear, an Omaha, Neb., attorney and a member of the synod's board of directors who oversaw the sale.
"Details regarding these possibilities are not yet fully known, but we are continuing to investigate these options."
Joy FM broadcasts Christian music on two frequencies, at 97.7 and 94.1 FM. The signals are limited, reaching an estimated 545,000 listeners, and station officials have expressed a desire to reach a wider audience. With the new signal, they say they will reach a potential audience of 2.75 million.
Joy General Manager Sandi Brown said that, when the switch to 99.1 FM is made, the station's format will remain the same.
"We will continue to play contemporary Christian music, commercial free," she said, "and we will continue to be listener-supported. We will be as strong as our listeners allow us to be."
Dennis Stortz, director of operations at KFUO-FM, called news of the sale "a sad day for the radio station and the staff and, in my estimation, the St. Louis community."
He said he did not know whether arrangements to move the classical music format to a different signal could be completed by the estimated time that 99.1 would be taken over by Joy. But he said he wanted express appreciation for the backing that KFUO-FM has received over the years.
"The radio station wants to say thank you to all of its supporters, donors, advertisers and friends in the arts community for all the support all these years," he said. "Hopefully, something good will come out of all of this."
Noemi Neidorff, chairman of the Arts Board, which has raised money for the station, called news of the sale "very distressing, extremely distressing." She said the group is considering several options in response but would not get more specific; it has suspended its fundraising activities because of the uncertainties surrounding the sale negotiations.
"We feel very strongly that this is a great, great travesty to the community, that the station is sold," she said, "and we're not going to take it sitting down. We're working hard, and we continue to work to ensure KFUO remains as a vital, very important community asset. To throw away 61 years of tradition, a tradition that we on the arts board have only enhanced in the past couple of years, is indeed very, very sad."
Brashear said in an interview that under terms of the sale, Joy will pay $1.5 million at closing and another $1.5 million within the first 24 months. Beginning in year four, it will pay $150,000 a year, with the amount of principal due each year rising by $50,000. There will be no penalty for any prepayments.
Joy also will pay money from the proceeds of the sale of its two current stations, which Brashear said is anticipated to be between $2.5 million and $3.5 million. Brown said the stations have been appraised at $6 million; "what they will sell for remains to be seen."
Responding to criticism that he did not give proper consideration to other potential buyers - those within the synod and friends of the current format who want to ensure that St. Louis still will have a classical music station - Brashear said simply that "people who wanted to bid and knew how to bid and had their act together did so."
"The only people we hear from about the allegation that there wasn't an open process are people who knew what was going on and with whom we met and who never did anything," he added.
Neidorff disputed that claim, saying that her group's efforts to get involved in sale negotiations were rebuffed. "We were really kept in the dark," she said.
He said Joy at one point offered $8 million in cash, but further negotiations resulted in the $18 million, 10-year deal.
"All this tripe that they don't have the money and they don't have the creditworthiness is just that," Brashear said.
As far as a petition that was submitted by church leaders concerning the sale of KFUO-FM, Brashear said:
"The petition was not only entertained, it was received in writing by every member of the board of directors. No one on the board elected to do other than treat it with the respect it deserved and to proceed otherwise."
Left up in the air by Tuesday's announcement is the fate of an arrangement with the St. Louis Symphony Orchestra, under which KFUO-FM is broadcasting live concerts from Powell Hall on Saturday nights. Symphony spokesman Adam Crane said it was too soon to determine what will happen with the series of broadcasts, which were scheduled to run through the 2009-2010 season.
The synod has been exploring a sale of KFUO-FM for some time, primarily for financial reasons. This summer, a synod spokeswoman said that in the fiscal year that ended June 30, the station lost $255,000. Overall, the church had a recent $4.5 million shortfall in revenue that forced it to cut expenses to balance its budget.
In a statement, the synod said its decision to sell KFUO-FM "is the result of the board's continuous evaluation of church assets and a stewardship decision regarding the best use of assets for furthering mission and ministry....
"Board resolutions were issued first in 2008 and again early this year to explore alternatives regarding LCMS radio station assets. After a prayerful, thorough, and exhaustive review of the options, the offer from Joy FM has been accepted."
Brashear said the deal was "not driven by the synod's present position. It was driven by good management of assets. At its highest point of value, this station was worth $32 million, and we did nothing to maximize that return."
The synod emphasized it would continue to own and operate KFUO-AM , which offers a Christian talk format.
"We extend our heartfelt thanks to KFUO-FM's listeners, patrons and corporate partners for their generous support all these years," said the Rev. Gerald B. Kieschnick (right), president of the synod.
"We have been privileged to operate KFUO-FM for 61 years as a contribution to St. Louis and the surrounding community. Looking ahead, under God's guidance, we will avail ourselves of the opportunities this acquisition agreement will provide as we strive to reach the world with the precious and saving Good News of Jesus Christ."