Lex and Terry's wet dream

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The transaction, which is expected to be completed early next year, will make Capstar and SFX the nation's third-largest radio broadcasting group, with 314 stations serving 79 markets. Dallas businessman and Stars owner Tom Hicks, who is the chairman of Chancellor Broadcasting Corp. (which recently merged with Evergreen Media Corp.), announced that he will serve as chairman of the newly formed corporation.

The corporate shopping spree began last year after the passage of the Telecommunications Reform Act, which increased the number of radio stations that can be held by a single owner in a market. Since then, more than 4,000 of the country's 11,000 radio stations have been sold or swapped, and there have been more than 1,000 corporate mergers.

In the first antitrust challenge under the act, the U.S. Justice Department last month moved to block the $54 million exchange of two SFX stations in Jacksonville, including Lex and Terry's home station WFYV-FM, for four Chancellor-owned stations in Long Island. As part of its case, the Justice Department argues that the exchange will force businesses to pay higher advertising rates, which would be passed on to consumers.

Meanwhile, in parallel transactions, SFX is extending its reach into the area of concert promotions, multiplying its ability to increase profits by "cross promoting" its concerts on its newly acquired stations.

SFX is now one of the country's leading concert promoters after a recently completed series of acquisitions of promotion companies in New York, Connecticut, and Indianapolis, which have combined assets worth $129 million.

What this corporate feeding frenzy means for the average radio listener is that entertainers pushed by SFX's concert promotions arm will soon be making more guest appearances on syndicated morning radio shows like Bob and Tom and, eventually, Lex and Terry. In essence, the already thin line between concert promotion and the editorial content of syndicated morning shows will be blurred beyond distinction. And the same morning shows, complete with the same star interviews, will be aired for audiences across the country.

The glossy promotional folder that Q102 distributes to potential buyers of The Lex and Terry Show contains a photo of a blonde stripper with gigantic, bursting boobs sandwiched between Lex and Terry, who have white mustaches painted on their faces. The catch phrase reads, "Get milk?" and the spot's headline states: "Welcome to your next Morning Show."

Although The Lex and Terry Show did not get much mention in company press releases when SFX acquired KTXQ in March, KTXQ's Fant confirms that the duo became part of SFX's corporate strategy in Dallas.

"The one agenda of SFX was to go to the market and secure the best morning talent available that was not signed to an employment contract elsewhere," Fant says. "Lex and Terry was the best show that was available that we could find."

In the coming months, Dallas listeners will confirm whether Fant's comment speaks to the quality of The Lex and Terry Show or if it highlights the lack of good talent available in the market. But in the meantime, a massive sales effort to distribute the show is under way.

Q102's director of syndication, Peter Welpton, is the man responsible for the marketing the show, a sales process that requires Welpton to compile promotional kits, work the telephones, and fly from market to market in an attempt to convince station managers that Lex and Terry will bring them ratings and boost their advertising revenue.

(Although the show's promotional material boasts that Lex and Terry are "overachieving budget goals" and attracting "national advertisers," one Q102 advertiser confirms that the station backed down from its $300 asking price for an ad during the show and accepted $125--a low figure that is almost unheard of in Dallas for a morning show.)

But no matter what fancy PR gimmick or sales line Welpton creates, his real weapon in selling the show is its Arbitron ratings, which so far leave much to be desired. The mere mention of the ratings causes Welpton to fidget in his chair, as he vaguely concedes that the show will have to first make big gains in Dallas before his job gets easier.

"If Lex and Terry succeed in Dallas, I think they can succeed anywhere. [Howard] Stern took four years before he became No. 1 in this market. My prediction is that Lex and Terry will be a success in Dallas faster than Howard was," Welpton says. "If it doesn't happen in the first full [Arbitron] book, I don't think it will spell doom for us."

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Rose Farley
Contact: Rose Farley