Sunday, May 30, 2010 | 11:01 a.m.
Saying Las Vegas remains a promising advertising market despite the recession, the chairman and CEO of Beasley Broadcast Group Inc. on Friday announced plans to buy two Southern Nevada radio stations for about $8.5 million.
The deal calls for George Beasley to buy KOAS-FM and KVGS-FM from Riviera Broadcast Group LLC and for Naples, Fla.-based Beasley Broadcast Group Inc. to manage the stations.
Beasley Broadcast Group already owns three radio stations in Las Vegas: Coyote Country 102.7 KCYE-FM, Classic Hits 96.3 KKLZ-FM and NewsTalk 720 KDWN-AM.
KOAS operates as 105.7 The Oasis, broadcasting oldies adult contemporary music; while KVGS is branded as 107.9 The Alternative and plays alternative rock.
Federal Communications Commission records show the Riviera licenses for those stations are held by RBG Las Vegas Licenses LLC of Sacramento.
Riviera, which also has operations in the Phoenix area, didn't immediately comment on the deal.
Beasley Broadcast and George Beasley entered into a management agreement in which Beasley Broadcast will receive 40 percent of any advertising revenue sold by its existing Las Vegas sales teams for KOAS-FM and KVGS-FM until George Beasley completes the acquisition of the stations.
Once the stations are acquired by George Beasley's company, GGB Las Vegas, Beasley Broadcast will provide both stations with sales and other management services and will be entitled to 50 percent of the monthly operating income from KOAS-FM and KVGS-FM, or $10,000 per month, whichever is greater.
GGB also granted Beasley Broadcast an option to buy the stations for $8.5 million plus any losses incurred until the exercise of the option.
"This transaction allows Beasley Broadcast Group to leverage its existing Las Vegas operating and management capabilities to immediately generate new cash flow through a structure that requires no capital commitment,'' George Beasley said in a statement.
"Our existing Las Vegas cluster is benefiting from the focus we placed on identifying the right management leadership, and the 24 percent increase in revenue generated by our three stations in the market in the 2010 first quarter significantly exceeded the overall market, which remains economically challenged," he said. "Notwithstanding the current economic and market challenges, we continue to believe that Las Vegas remains one of the most vibrant and promising radio markets in the country and this transaction is intended to benefit all Beasley Broadcast shareholders both near-term and long-term as the local economy rebounds.
"On an immediate basis, the company will generate guaranteed management fee revenue while the option to purchase these stations at an attractive price presents potential further upside to Beasley Broadcast Group. Finally, KOAS-FM and KVGS-FM complement our existing Las Vegas station cluster as their current oldies and alternative rock formats, respectively, do not overlap with our existing stations in the market," he said.