SYRACUSE — Edward (Ed) Levine, the president and CEO of Syracuse–based Galaxy Communications, LP, is planning to become full owner of his company that operates several radio stations in both Syracuse and Utica.
Levine has partnered with Alta Communications, a Waltham, Mass.–based private-equity firm that has served as Galaxy’s majority owner since 2000.
“They’ve been in the company for 12 years, which, for private equity, is two-and-a-half lifetimes,” Levine says.
Levine currently owns a 20 percent stake in Galaxy Communications, while Alta owns an 80 percent stake ahead of the upcoming transaction, he says.
Levine approached Alta at the end of 2012, and indicated his interest in making an offer to buy Alta’s ownership stake in Galaxy for $13 million, he says. The firm accepted the offer.
“So my joke is … Galaxy is being sold to me,” says Levine.
New York City–based Atalaya Capital Management LP is providing the financing, according to Levine. Atalaya describes itself as an “alternative-investment firm primarily focused on investing in credit opportunities,” according to its website.
Each plans to file for a full transfer of control with the Federal Communications Commission. The FCC will then have to approve it.
“I would anticipate that by the early Fall, I will be the sole, 100 percent equity owner of Galaxy,” Levine says.
The company name would then change from Galaxy Communications, LP to Galaxy Communications, LLC, he adds.
The transaction will take a firm “that was a very good company with a challenged balance sheet and makes it now a very good operational company with a very good balance sheet,” Levine says.
“By removing a significant amount of debt from the company, it gives us tremendous flexibility to either … look at other acquisitions in the broadcast field, look at other acquisitions in the event field, and being able to continue to invest in the product without worrying about debt levels that might not have been market levels anymore,” Levine says.
When asked how the transaction removes debt from the company, Levine says, “We were able to buy out Alta at a number significantly less than what was owed as they are winding down their fund.”
The website for Alta Communications lists Galaxy Communications as a “middle-market radio broadcasting company formed to acquire radio stations in Syracuse, Albany, and Utica, N.Y.”
Alta Communications typically invests between $10 million and $30 million of equity in each of its portfolio companies, according to its website
Galaxy acquired nine Clear Channel stations in the Utica–Rome market in 2007, and then sold five of the stations to two other companies to comply with federal ownership restrictions, according to articles published in The Central New York Business Journal.
In Syracuse, Galaxy operates WTKW-FM (TK99/TK105), which serves as the flagship station for both Syracuse University football and men’s basketball broadcasts. Its sister-station, ESPN Radio 97.7 FM/100.1 FM (which also transmits at both 1200 AM and 1440 AM), broadcasts men’s lacrosse and women’s basketball games.
Galaxy also operates KROCK (WKRL 100.9 FM and 106.5 FM).
Besides TK99/TK105, ESPN Radio, and KROCK, Galaxy also operates Syracuse radio stations that include Sunny 102 (WZUN 102.1 FM, 106.1 FM in Oswego) and ESPN Deportes (WSCP 1070AM in Oswego), which is ESPN’s Spanish-speaking network, according to the Galaxy website.
Galaxy’s 96.9 WOUR serves as the network affiliate for listeners in the Utica–Rome area, according to the Galaxy website. Besides WOUR, the company also operates Mix 102.5 (WUMX-FM), KROCK 94.9 (WKLL-FM), and ESPN Radio 99.1 FM and 1310 AM.
Galaxy Communication employs about 80 people between its Syracuse headquarters and the location in Utica. Most of the employees, or between 70 percent and 80 percent, work in the Syracuse location, Levine says.
The Utica stations operate at 39 Kellogg Rd. in New Hartford, according to the Galaxy website.
Galaxy annually generates about $13 million in revenue, Levine says.
Local market advertising-revenue increase
As Levine takes steps to become Galaxy’s full owner, he’s noticing a trend in the Syracuse radio market and has a theory as to why it’s occurring.
Advertising revenue in the Syracuse radio market through May 31 is up about 12 percent compared to the same time period in 2012, according to Levine.
He’s citing figures from Miller Kaplan Arase, LLP, a Los Angeles–based accounting firm that Levine says surveys the Syracuse radio market every month.
Levine believes the reduced print schedule for The Post-Standard for delivery to homes and newsstands is a factor in the increased radio-advertising revenue.
The reduced print schedule took effect earlier this year when the Syracuse Media Group became the parent company of both the newspaper and its sister website, Syracuse.com.
Levine is citing the combined advertising revenue of his company, Galaxy Communications, along with two of its local competitors, Clear Channel Communications, which operates six radio stations (WSYR 570 AM, WSYR 106.9 FM, WHEN 620 AM, WWHT 107.9 FM, WYYY 94.5FM, and WBBS 104.7FM) at 500 Plum St. in Syracuse, and Cumulus Media, which operates four radio stations (WSKO 1260AM, WNTQ 93.1 FM, WAQX 95.7FM, WXTL 105.9 FM) at 1074 James St. in Syracuse.
“We’re doing better than the overall market,” Levine says, declining to provide more specific numbers for Galaxy Communications.
When Galaxy crafted its budget for 2013, Levine and his team believed the advertising revenue in the Syracuse radio market would increase two to three percent over the 12-month period.
“That was our best guess,” he says.
Levine has operated in the Syracuse radio market for about 20 years, he says, and can’t recall seeing a double-digit, year-to-date advertising revenue figure like the figure for May.
Radio-advertising revenue nationwide in the first quarter was “flat,” according to Levine, and he’s hearing that advertising revenue in the second quarter will increase two to three percent compared the same quarter a year ago.
“The industry itself has not gone up double digits,” he says, figuring the revenue increase in the Syracuse market isn’t part of a national trend.
The newspaper reducing its weekly print schedule is a “major difference” in the Syracuse market compared to any others, Levine says.
Contact Reinhardt at firstname.lastname@example.org