from Cape Cod Online
February 6, 2003
Local broadcaster Albert Makkay has sold his company and its three prominent Cape radio stations yesterday to a fellow war veteran for $32 million.
Makkay Group Broadcasting, which owns WCIB-FM "Cool 102" in Falmouth, WRZE-FM "the Rose" in Hyannis/Nantucket, and WPXC-FM "Pixy 103" in Hyannis announced yesterday that it has been purchased by Qantum Communications Corp.
"This is the right price at the right time by the right person," said Makkay, chairman of the company.
Transfer of ownership will take effect once the deal receives approval from the Federal Communications Commission.
Longtime radio entrepreneur Frank Osborn, who heads Qantum, said the three Cape stations are the company's first acquisitions. Osborn, whose company is based in Connecticut, owns a house in Harwich Port.
"The primary strategy here is we believe in the growth of the Cape region," he said.
Osborn said he plans no major changes to any of the three stations' formats or personnel. Makkay currently employs 40 full-time and 10 part-time workers.
"These are successful stations for which we're paying a lot," Osborn said. "You tend to change formats when something unsuccessful is happening."
The deal appears to dwarf recent local acquisitions. In 1996, Boch Communications group purchased what is now WCOD, WDVT "The Vault", and WTWV "The Wave" for a total of $2.8 million. In 1998, WQRC purchased WOCN "The Ocean" for $1.7 million.
Cape Cod is the 183rd largest radio market in the United States with 202,200 total listeners ages 12 and up, according to Arbitron ratings service. In last fall's ratings, WRZE, WPXC, and WCIB were the fifth-, sixth-, and seventh-rated stations in the region, respectively.
But those rankings are deceiving, said Gregory Bone, owner and general manager of WOCN and WQRC, two other Cape stations. The Makkay stations have a powerful hold on listeners in the important 18- to-34-year-old demographic.
"The Makkays have dominated in the youth market for years. For them, it's a very lucrative market," Bone said.
The $32 million price tag sets a standard, Bone said. "But I don't think you take that and divide by three and that's what a station is worth."
The sale of Makkay Group Broadcasting marks the end of a 15-year odyssey in Cape radio for Al Makkay and his family. All five members of the Makkay immediate family have roles with the company.
After much pursuit from Osborn, Makkay accepted Qantum's offer late Tuesday. He said that he was pleased with the price his stations attracted, but that there was a personal aspect to the deal as well.
"One of the reasons I sold (to Osborn) is he is a 'Nam vet," he said. "I'm a Korean vet. I don't think I would have sold to anyone who wasn't in the military."
Makkay's Pixy 103 brought Adrian Cronauer to the Cape for a charity Chili Challenge in 2001. Cronauer served as disc jockey in Vietnam and was the inspiration for the movie "Good Morning, Vietnam."
Osborn said he served with the Marine 1st Division during the Vietnam conflict.
While not a full-time resident of the Cape, Osborn said he has great affection for the area.
"I've been coming to the Cape 50 years and I will tell you that when I was mentally escaping Vietnam, the place I thought about was the Cape."
Osborn said he is bullish on the radio industry's prospects. Radio accounts for 35 percent of an average consumer's daily media exposure, he said, but just 8 percent of all advertising dollars are spent on the medium.
He thinks $32 million was appropriate.
Qantum is in the process of purchasing another radio chain, which owns stations in five media markets around the country, Osborn said. He would not name the chain or the markets, except to say they are not in the Northeast.
from the Boston Herald
February 6, 2003
"Right time, right price, right guy," said Al Makkay, who started WPXC-FM (102.9) playing albums with his wife, Maureen, out of his Centerville garage in 1986.
The sale includes Hyannis' WPXC as well as WCIB-FM (101.9) of Falmouth and Nantucket's WRZE-FM (96.3). Radio stations tend to sell for between 12 and 16 times annual cash flow, radio industry insiders say.
Frank Osborn, who runs Qantum out of Stamford, Conn., declined to say the multiple his group is paying for the stations. But, he said, it's "significant."
"They're high-quality stations," Osborn said. "They have excellent signals. They've been very well positioned. They're successful, and we believe there's unusual growth potential in the Cape region."
Not a bad deal for a mom and pop operation that went on the air in 1987 as a newly licensed frequency, using an antenna on a Hyannis tower and a control board in a garage. WPXC ("Pixy 103") played classic-rock hits.
"We put in a 1-800 toll-free line and asked the listeners what they wanted to hear," Makkay said. "They wanted to hear Led Zeppelin, the Stones, Bruce Springsteen, Jimmy Buffett, Aerosmith, The Eagles. We brought rock 'n' roll to Cape Cod."
The family-run company went on to buy a Nantucket station for $600,000 at a bankruptcy auction in 1992 and turned it into WRZE ("The Rose"), a top-40 station.
In 1994, Makkay bought WCIB in Falmouth for $2.5 million, eventually converting it to its Cool 102 laid-back classic-rock format.
Makkay has since been running the stations with his wife and three children. "The kids came back from college and decided to go into business and grow with us."
With limited expansion opportunities on the Cape, and pursued by Qantum, Makkay said the time was right to sell.
"I liked the guy," he said of Osborn. "He's a 'Nam vet. I'm a Korean vet."
Osborn, who grew up in Belmont, said the stations' formats will stay the same.
"You've seen what we're paying for these things," he said. "You only pay that for successful properties."
With more than a dozen FM stations, some say Cape Cod, the nation's 183rd-largest market, is saturated.
"In terms of its size, they've got a ton of radio stations down there," said Clark Smidt, a longtime radio-industry veteran and consultant who has worked with Makkay in the past.
But Osborn says the growth in year-round residents and retirees makes it an increasingly attractive market. "It's becoming much more of a full-time community."
And despite major consolidation in the radio industry that's left a few giant players in control of many of the nation's stations and most of its listeners, those behemoths have yet to gain a beachhead on Cape Cod.
"I think it's a very smart buy for Qantum," Smidt said.
Last March, Osborn sold a cluster of radio stations in Connecticut and New York. Osborn said within two weeks, the company is likely to announce the purchase of more stations in five other markets. Qantum was formed to buy and run radio stations.
The last two years have been slow for radio station transactions. But the advertising market has held up and revenue has been growing. Smidt expects to see more sales.
Updated: 7-February-2003
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