Alpha Media’s Liquidation

Shall we be honest here?

Alpha Media was a clusterfuck.

I’m sorry to say it but the dictionary definition of clusterfuck is “a disastrously mishandled situation or undertaking.”

It all started out with the best of intentions.

Founder Larry Wilson cashed in his Citadel investment by selling to Forstmann Little.  The sale price was $2.1 billion.  That’s not what Wilson took home, but he had plenty to try consolidation again.

This time, hand-picked markets, live and local to make his competitors uneasy and what’s not to like.

Until he bought 116 Digity stations – does anyone even remember that company except Dean Goodman who laughed all the way to the bank with $264 million of Alpha’s money.

That was end of Alpha.

Now Stephens Radio owns almost 30% of Alpha and Stephens knows a thing or two about dying radio companies because he’s seen a few and made lots of money selling off the parts.

And that is Alpha’s fate – liquidation.

Larry Wilson is retiring.

David Stephens is good at liquidating properties others cannot run and that’s what’s likely to happen with Alpha.

The situation is a lot more critical as the radio industry struggles to keep ad revenue billing up and if a recession comes – let’s not even think about it.

Here’s what is likely with the Alpha liquidation.

  1. A long goodbye.Stephens knows how to hold them and knows when to fold them.  He is a proven expert at selling properties while continuing to run the ones he can’t sell. There is no station too big or too small to be dealt for a profit even with tiny market Digity stations in his possession, Stephens’ skills will be tested.

  2. This is going to take some time. And from the past, that’s just fine with Stephens who also knows how to run a group even as he is selling off the parts.  This is not his first rodeo – I mean, radio liquidation. 

  3. Alpha stations will be squeezed as the ultimate game is not to own a large radio group but to sell the parts when it is accretive. Stephens didn’t spend the millions it took to gain some control of Alpha to build a rag-tag station group.  He’s a seller and an operator until he can be a seller again.

  4. Meanwhile Larry Wilson is done with radio. At 73, it is not likely he will dabble in radio.  He’s well off, happily remarried and enjoying life.

  5. Bob Proffitt, Larry’s main executive, is likely to stay put and oversee Alpha stations.

In a way the radio industry was not a good fit for Wall Street.

They dumped debt on these companies, employed their usual cost reduction strategies and eventually ruined the radio business at the worst possible time – the advent of the digital age and the Millennial generation.

Arguably not one radio group is better off because of consolidation – certainly not the big ones -- iHeart, not Cumulus and not Entercom.

Alpha has no other options than to find an investor like David Stephens who knows how to sell radio stations.

As sad as it is that Larry Wilson miscalculated the need to put Alpha in terminal debt to own the non-essential Digity stations, it is fortunate David Stephens has arrived.

As with many other radio groups, everything is for sale.

Jerry Del Colliano is a professor at NYU Steinhardt Department of Music and Performing Arts Professions.  His background includes Clinical Professor of Music Industry at the University of Southern California, TV, radio, program management, publishing and digital media.

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