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Stabroek News

RJR negotiating sale of AM frequencies - Cliff Hughes among investors
published: Friday | January 19, 2007


Left: Cliff Hughes, owner of Nationwide News Network, is already telling his listeners to get ready for his move from Kool 97 FM.   Right: Lester Spaulding, RJR chairman, says he's talking to three potential investors for five AM frequencies.

The RJR Group, which says it has come to the end of its cycle of major investments in radio, is attempting to flog, via lease agreements, five AM radio frequencies it acquired in the 1950s in the early days of wireless broadcast by Radio Jamaica.

Cliff Hughes' Nationwide News Network has emerged as the most likely candidate to acquire the frequencies, but RJR's boss, Lester Spaulding insists that no deal has been done as he is talking to a range of potential partners.

"I've been talking to people generally and at least three of them remain active," Spaulding told The Financial Gleaner.

"However, I can't name any of them because we have confidentiality agreements."

The RJR Group has evolved, since the 1930s, from a small wireless radio operator, serving a handful of Jamaicans who owned radio sets, into one of the country's largest media companies, with sales last year of $1.4 billion and after tax profit of $114 million.

The company now operates three radio channels, including its flagship RJR 94 FM, as well as the free-to-air-television provider TVJ. It also controls at least three cable television content providers.

RJR's last major activity in radio was more than a year ago when it rebranded its sports-oriented channel, Radio 92, as reggae-based station HITZ 92 FM, clearly aimed at winning young listeners in a market segment controlled by IRIE FM.

"I personally - and importantly, the group - don't want to make any more investments in radio," said Spaulding. "And anything that I have which I consider redundant, I have to seek a way to turn into a valuable asset."

In fact, RJR's concentration over the medium term will likely be on television.

Last August, RJR Group agreed to pay up to US$1.75 million for a combined 72 per cent of the cable content providers, the reggae music outlet, RETV and the 24-hour news station, JNN. Spaulding, which has been signalling that he will soon head into retirement, has argued that these systems have potential for reaching Jamaican and Caribbean markets abroad, thus enhancing the group's earning capacity.

"The next major development for the group is likely to be high definition television," he said. "We have to go digital, Our development going forward is going to be very interesting."

It is that philosophy and RJR's strategic positioning of its future that are behind the plans to turn the frequencies, including what used to be the flagship 7.20 AM band, into income and profit. Among the other frequencies up for sale are 5.50, 7, 5.80, 7.70 and 6.80.

"When we moved to primarily FM," Spaulding explained, "we continued to transmit on 7.20 AM, running parallel with RJR 94 FM." The other frequencies - with transmitters in areas such as Baileys, St Mary; Llandilo, Hanover, Spur Tree, Manchester, Falmouth, Trelawny and Morant Point - were turned down or taken off the air.

"The best option, in the circumstance, is to look for somebody to lease them," said Spaulding.

He declined to say what value RJR has placed on the bands or the lease model offered to prospective clients.

Hughes was unavailable for comment, but media analysts say that an agreement with RJR would make sense for the media entrepreneur. Since the late 1990s he has shopped his radio programmes around the radio market without securing a long-term home for its operation.

At present, Nationwide's flagship programme, an evening news and current affairs magazine, is broadcast on the government-owned KOOL 97 FM on slots leased from the station. Another morning programme recently lost its home on Michael Lee Chin's HOT 104 FM.

"It would be in Cliff Hughes' interest, if it can, to tie-up a long-term deal with RJR," explained one media analyst. "There would be a sense of stability to the operation and his programmes would not appear to be economic conflict with the offerings of the station from which he leases time. There would, in that sense, be clear definition to Nationwide News Network, which would not be hopping from station to station in this market."

And with Hughes concentration of current affairs and talk, the lower fidelity quality of AM bands would hardly hurt, analysts say.

Notwithstanding the confidentiality agreements and Spaulding's claim to be speaking to bidders other than Hughes, Nationwide has been signalling a move to AM radio, telling listeners to its evening current affairs show to look out for 'I AM'.

business@gleanerjm.com

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