Static Quo

The City of Dallas could make a fortune from WRR-FM. But powerful friends don't want anything to change at their little radio station.

"The ad revenues for WRR have consistently met or exceeded all operating expenses, including capital improvements," Poe is quick to point out. "If the station were confronted with a deficit, it could continue to operate without drawing from property tax revenues or any other city revenues."

But a look at WRR's financial data back to 1987 shows Poe is mistaken. Twice, the station landed in the red, losing a whopping $213,000 in 1987 and $16,000 in 1991. In better years, profits were meager, ranging from $3,526 in 1988 to $83,830 in 1989.

Things took a healthy swing upward in fiscal year 1993-'94, when WRR showed a net profit of $383,000. In 1994-'95, WRR posted a profit of $567,000. The station is estimating a profit of $463,000 for fiscal year 1995-'96, which ends September 30, and projects annual increases of 3 percent through the year 2001.

All "profit" figures for WRR are slightly mythical, however, since they do not reflect the special breaks the station enjoys as a city property--such as its cheap rent and tax-free status. It is all but impossible to determine--using city budget documents--whether WRR would be turning any "profit" at all if it operated under the same constraints as a private business.

Even with its unique advantages, though, the station's revenues are sluggish. Conventional industry wisdom holds that WRR's gross revenues should be much heartier, given the station's share of the Dallas-Fort Worth market. Historically, WRR should have posted annual gross revenues of from $2 million to $3 million--which has only happened in the past two years.

Looking at finances alone, a private owner could hardly do worse for WRR, and pressure is once again mounting for city leaders to sell the station.

Last March, President Clinton signed the Telecommunications Act of 1996. Among other things, restraints on radio station ownership--established long ago to prevent broadcast monopolies--were all but obliterated. In a city the size of Dallas, one company is now allowed to own up to five FM and three AM stations, says Sharon Hurd, a spokeswoman for the Federal Communications Commission. The new rules have spawned a buying frenzy by broadcast companies, who are gobbling up stations and other companies.

"It's absolutely a land rush right now," says Tom Taylor, editor of Inside Radio, an industry daily fax publication based in Cherry Hill, New Jersey. "Companies that want to grow in radio, that want to aggressively add to their holdings, can now do so. There's virtually nothing holding them back."

Clinton's signature had barely dried when Nationwide Communications--a Columbus, Ohio, broadcast company that already owns KDMX-FM 102.9 in Dallas--stunned the Dallas City Council by submitting an unsolicited offer to buy WRR for $25 million.

Until then, the city had rolled along thinking that WRR's value, at most, was perhaps $10 million. Suddenly, city leaders began to appreciate just how valuable their waif radio station might be.

"I don't think anyone had any idea what we had sitting over there [in Fair Park]. With the change in the law, WRR's signal was suddenly extremely valuable," says Councilman Bob Stimson. The city did not accept the surprise bid, but the council did order city staff to get the station appraised.

The time might be right for Dallas to pass WRR off to private hands, a notion that has been brewing for the past five years. The city could just sell the station outright and take the cash, or it could rent WRR's FM frequency to a private operator and share in the profits.

The second option, less final than a sale, would call for the city to enter into a Local Marketing Agreement. Dallas would still own WRR, but a private company would manage it. The LMA could be drafted practically any way the the City of Dallas sees fit.

Both possibilities--outright sale or LMA--were viable options in 1991, as then-Mayor Steve Bartlett saw it. "I've always maintained that it's a good radio station, but it could be much better. If a private company owned it, they would almost certainly make improvements in the signal [which now reaches about 100 miles], increase advertising revenues, and market the station better," Bartlett says. "There are just some things a city has no business owning, and one of them is a commercial radio station."

In 1994, the city started considering the possibility of an LMA, and even solicited proposals from interested broadcast companies. Two proposals were submitted, one by Fort Worth businessman Jim Stanton and the other by North Texas Public Broadcasting, parent company of public radio station KERA-FM 90.1.

But the LMA discussion died last May, when Assistant City Manager Mary Suhm recommended that the city council reject both proposals.

Under Suhm's leadership, it took two years for the city to study the LMA issue, and she ultimately concluded that neither proposal would increase WRR's profits.

Critics say Suhm's handling of the study was inept, hampered by her lack of knowledge of the radio industry.

One media broker familiar with WRR says putting Suhm in charge of the LMA process "would be like NASA putting me in charge of fixing the space shuttle."

"If the City of Dallas wanted to handle the WRR situation, it could," says the broker, who asked that his name not be used. "But look who they put in charge."

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