Dallas Firm to Acquire KFAC-FM : $55-Million Price Tag Is a Record for Classical Station

The owners of KFAC-FM, Southern California’s largest classical radio station, said Wednesday that they had agreed to sell it for $55 million--the highest price ever paid for a classical station.

Evergreen Media Corp., a Dallas-based radio station chain, said it will keep KFAC’s classical music format as well as its current on-air personalities. However, media experts said the high price could eventually force the station to change its format to attract a larger audience and boost profits.

The sale represents a financial bonanza for station owner Classic Communications, which paid $33.5 million for KFAC AM/FM in December, 1986. Classic, which recently sold KFAC-AM in a separate transaction, will receive a total of $63.7 million for both stations.

“It’s a very nice return on investment,” said Louise Heifetz, president and founder of Classic Communications. “The station was not on the market,” she said of KFAC-FM, whose sale must still be approved by the Federal Communications Commission. “But for such an incredible amount of money, we thought that it was an offer that deserved consideration.”

KFAC-FM--the nation’s third-largest classical radio station--went on the air in 1948, and its AM sister began airing classical music in 1931 but has altered the format from time to time.

Classical radio stations have relatively small audiences. KFAC-FM, for example, garnered only 1.5 rating points during the fall, according to Arbitron Rating Service. In contrast, Los Angeles’ top station, KPWR-FM, won a 7.2 rating. Each rating point equals about 17,000 listeners over age 12, tuned in during an average quarter hour between 6 a.m. and midnight.

Affluent Audience

But listeners of classical radio tend be wealthy and well-educated individuals who are hard to reach and prized by advertisers.

“A classical radio station peels off a slice of the audience that is very desirable and that advertisers are always trying to reach,” said Pat Clawson, financial editor for Radio & Records, a trade magazine. “If you run a classical radio station with integrity, you can cry all the way to the bank.”

But many industry experts are skeptical whether Evergreen can afford to keep KFAC--Los Angeles’ only commercially run classical radio station--without changing its format. The price tag on KFAC-FM is substantially greater than the previous highest-priced classical station, Washington’s WGMS AM/FM, which one year ago went for $33.9 million.

“The buyers might think about a format change,” said Drew Marcus, a media industry analyst with Kidder, Peabody & Co. “It seems to me that if you’re paying that high a price for a station, you’re most likely to change it.”

“Classical stations are not in vogue,” said James Duncan Jr., editor and publisher of American Radio, a trade publication. “What’s in vogue is FM stations in Los Angeles. I would be very surprised for it to remain classical for long. He’s not going to be able to get the cash flow to service the debt with a classical music format.”

Scott K. Ginsburg, president of Evergreen, concedes having little experience in classical music radio. “We have not owned a classical radio station, but we have operated many specialty formats,” said Ginsburg, whose company has operated religious and Spanish language stations.

The company, which used to own Los Angeles stations KTNQ and KLVE, owns WLUP AM/FM in Chicago; KHYI-FM in Dallas; WAPE AM/FM in Jacksonville, Fla., and WVCG-AM in Miami. Evergreen has also agreed to buy WAXY-FM in Ft. Lauderdale, Fla.