Journal Broadcasting

Journal Broadcasting  (Website) is an operator of 13 TV, and 9 AM and 26 FM radio stations.  Journal Broadcasting is a subsidiary of Journal Communications, the holding company that also owns the Milwaukee Journal/Sentinal Newspaper.   The company is headquartered in Milwaukee, Wisconsin.   The company was founded in 1882, and the parent company is traded on the NYSE under symbol JRN.

Since 1975, the FCC has had a cross-ownership rule that prohibits the same owner from operating a newspaper and TV/Radio station in the same market, however operations like the Journal have been “grandfathered”.  The FCC has been looking into doing away with this rule, but there is opposition to removing the rule and for now nothing has changed.

As paper newspapers are being replaced by online only versions, the point behind the cross ownership rule becomes less and less obvious, since there is no restriction on cross ownership between web sites and radio stations.

History

Several of the early pioneers in AM radio were newspapers.   WTMJ is the original radio property of the Journal company.   In 1925, Marquette University occupied a radio studio built in the brand new Milwaukee Journal Building.  In 1927, WTMJ (The Milwaukee Journal) was licensed by the FCC.   WTMJ affiliated with RCA’s NBC Blue network, which would ultimately become ABC Radio in 1943.

In the 1940s, the radio station moves to its own facility and in 1947 WTMJ-TV goes on the air.

In July 2009, the company announced it was selling its 2 AM stations (KGEM, KCID) in Boise Idaho to a Catholic radio service for $950,000.    The company also recognized an additional $19 million impairment charge to its broadcast licenses.

Major Stations – top 25 markets

Journal Broadcasting has no stations in a major market.

The largest market radio stations it owns are:

+-------------+---------------+--------+
| station     | City          | State  |
+-------------+---------------+--------+
| WTMJ AM/HD  | MILWAUKEE     | WI     |
| WLWK FM     | MILWAUKEE     | WI     |
| KQTH FM/HD1 | TUCSON        | AZ     |
| KGMG FM     | ORACLE        | AZ     |
| KMXZ FM/HD1 | TUCSON        | AZ     |
| KFFN AM     | TUCSON        | AZ     |
| KFAQ AM/HD  | TULSA         | OK     |
| KVOO FM/HD1 | TULSA         | OK     |
| KXBL FM/HD1 | HENRYETTA     | OK     |
| WKHT FM/HD1 | KNOXVILLE     | TN     |
| WCYQ FM     | KARNS         | TN     |
| WWST FM/HD1 | SEVIERVILLE   | TN     |
| KEZO FM/HD1 | OMAHA         | NE     |
| KKCD FM/HD1 | OMAHA         | NE     |
| KQCH FM/HD1 | OMAHA         | NE     |
| KSRZ FM/HD1 | OMAHA         | NE     |
| KXSP AM     | OMAHA         | NE     |

Ownership

Journal Broadcasting is about half of the parent company Journal Communications, and the radio portion of Journal Broadcasting about 1/4th of the broadcasting subsidiary.

Management

The directors and officers of the company are elected by the shareholders.  There are no formal or informal arragements that ensure that any member of the board will be re-elected (how refreshing!)

Institutional Owners:

Owner Location Approx
# Shares
 Gamco  Rye, NY 6.3 million 
 Third Ave Management  New York, NY 3.9 million 
 Barclay’s  London, England 2.5 million 
 LSV Asset Management  Chicago 2.3 million 
 Great Oaks  New York, NY 2.1 million 

Financial Condition as of 2008 (10-K)

The Journal Communications company had very large impairments against both its newspaper and broadcasting businesses in 2008.

Unlike most radio owners, because its core business is a Newspaper with a union workforce, the company has a significant unfunded pension obligation.  As the profitability of the newspaper business deteriorates, that will ultimately become a problem for the parent company.

Because the newspaper, TV and Radio businesses are hard to separate, the financial analysis is a “todo ” item.

Key Balance Sheet Items: (2008)

Total Assets:  $x Million

  • Value of Radio Station licenses: $x
  • Goodwill and other intangible Assets:  $x Million
  • Cash:  $x Million
  • Accounts Receivable: $x Million  (x days of revenue)
  • Land, Buildings, Equipment (net) $x Million

Debt:

  • Current Liabilities:  $x million
  • Long Term Debt:  $x Million

Stockholder Equity:  $x Million

Credit Facility

The company has an $475M credit facility from a group of banks.   $215  million is currently borrowed against the facility.  

Swap transactions

10-k Notes

Profitability

Note that debt and interest cost are for the entire business, not the radio/TV business segment

All numbers in $million 2008 2007 2006 2005 2004
Radio+TV Revenue $79 84      
License Impairment $51
Operating Income
(Without Impairment)
$29 $21      
Long Term Debt Balance $215  $178       
Debt Service Cost $8  $9       

Stock Performance

Nasdaq.com has only 10 years of stock price history online.  

In 1999, the stock was about $18 a share.   It fell below $10 in 2008, and hit its low in March 2009 at $.39 per share after the company announced it would reduce its cash dividend to $.02 per quarter in order to repay debt.

Leave a Reply