News broke on Monday of ESPN New York dropping its 98.7 FM signal, which it leases from Emmis Communications for $12.5 million annually, instead focusing on distribution through 1050 AM and other digital channels. Good Karma Brands owns and operates the AM frequency, but all programming on that frequency emanates directly from ESPN, while the company contributes to 98.7 FM through a local marketing agreement.
Recent data from the company demonstrates that 60% of ESPN New York listenership comes outside of radio, and eight out of 10 radio listeners are expected to find the station on its AM transmission. As a result, the value proposition of remaining on FM continues to diminish, providing a means for the company to focus its resources elsewhere.
When the lease of 98.7 FM ends on Aug. 31, 2024, Emmis will have the ability to lease the signal to another entity or sell it altogether. In order to sell it, the company is said to be looking for an offer around $50 million. When discussing the announcement on yesterday’s edition of The Michael Kay Show, the program informed its listeners that there are plenty of other ways to consume the program each day and that it is not set to end any time soon.
“We will still be everywhere, but we will not be on the FM dial anymore,” co-host Peter Rosenberg said on ESPN New York on Tuesday.
Sports talk radio consumers and other media pundits viewed this move as the company surrendering to WFAN in the New York ratings battle, the preeminent outlet in the locale for several years. In fact, WFAN Boomer & Gio producer Al Dukes posted an image of a white flag in response to the news. Kay and his program have an opportunity to gain a share in the ratings with the revamped WFAN lineup that includes a new pairing of Evan Roberts and Tiki Barber in the afternoons, but will soon no longer be directly opposed on the FM dial.
“Our competition – I don’t even know if I should say this,” Kay articulated. “I really believe within a calendar year, bankruptcy’s on the table, so would that be a failure of them or just the industry has changed?”
Audacy, the parent company of WFAN, was suspended by the New York Stock Exchange and under consideration for being delisted because of “an abnormally low selling price.” Within the next 12 months, $632.4 million in debt will come due and has reportedly commenced negotiations with lenders to restructure it to avoid bankruptcy. The aggregate total of Audacy’s debt equates to $1.9 million, and the company reported an operating loss of $135.3 million compared to operating income of $23.3 million in Q2 2022.
Adjusted EBITDA for the quarter equated to $14.4 million, down 62.5% year-over-year (YoY) concurrent with total revenues pacing down 4%; however, digital revenue is pacing up 7%. In an effort to avoid filing for bankruptcy, the company recently reached a deal to sell radio station assets in Phoenix, Ariz. and Boston, Mass. Within that filing, the company forewarned that if talks with creditors stall, the resolution of bankruptcy could occur thereafter.
The future of play-by-play rights with ESPN New York is in question following the news since the New York Knicks and New York Rangers have a clause in their contract regarding the cessation of broadcasts on FM radio. Conversely, the New York Jets do not have such a provision and could look to shop their rights to Audacy or iHeart stations, according to a report from Andrew Marchand of the New York Post. ESPN New York also carries New York Islanders games as a network affiliate; however, a preponderance of those broadcasts are moved to the AM signal when Knicks or Rangers games are occurring simultaneously.
