University regents call time-out on KUT signal expansion

One of public radio’s biggest split-format stations, Austin’s KUT, is pursuing a signal expansion that follows a familiar playbook for strengthening audience service: buying a new channel to air music while dedicating its flagship signal to news programming.

But for this station serving a city that makes weirdness a point of civic pride, there’s a distinct difference to its ambitions to become a dual-station operator. It will put rock and alternative music, not classical, on its new signal; 90.7 MHz, the FM channel that has served KUT’s news and music audiences for decades, will go all-news.

That’s if and when the University of Texas Board of Regents, the governing board of KUT’s licensee, approves the proposed $6 million purchase of 98.9 MHz, a commercial frequency that’s now broadcasting classic rock hits under the call letters KXBT. The regents took only five minutes to discuss the purchase during their July 11 meeting, then postponed a vote that would have cleared the way for KUT to seal the deal.

The delay surprised KUT General Manager Stewart Vanderwilt, who had been working for six months on the acquisition.

The regents put the transaction on hold as they sought reassurances that it would be prudent to spend $6 million on a radio station.

Their doubts about the deal, according to several sources involved in the negotiations, came down to skepticism about radio’s future.

Anthony Paul de Bruyn, UT’s assistant vice chancellor for public affairs, couldn’t say when the board will next take up the proposed purchase, and he declined to elaborate on the regents’ concerns. The next regents meeting is scheduled for later this month, but the agenda hasn’t been posted yet, according to Erin Geisler, KUT spokesperson.

But KUT officials and their brokers at Public Radio Capital, who helped put the deal together, remain optimistic the sale will go through.

“As I understand it, the regents have some questions,” Vanderwilt said. “We are going to work hard to answer their questions. Until they act, I can’t speculate. But I’m confident we are going to get it done. KUT’s track record is flawless in terms of being self-sustainable and meeting our goals and obligations.”

With its mixed format of NPR News and contemporary music, KUT reaches 300,000 listeners on a weekly basis, according to cumulative audience ratings provided by KUT. Its business plan projects that the second all-music station will attract a weekly cume of close to 200,000 in its first year of operations, according to Geisler.

The Austin American-Statesman, which first reported details about the delayed transaction, pointed to disagreements between UT-Austin President Bill Powers and the nine-member Board of Regents over issues unrelated to UT’s public radio service. Conflicts over academic matters and a proposed tuition increase may have bled into KUT’s proposed expansion plan, it reported.

Whatever the internal university politics, public radio analyst Tom Thomas doesn’t doubt the regents’ need to thoroughly review KUT’s expansion strategy and the overall outlook for over-the-air broadcasting. He’s confident that they’ll come to the conclusion that a broadcast-centered service strategy will serve KUT well into the future.

Audiences for digital audio content are growing, Thomas said, but broadcast is where the potential for real growth in listenership and revenues remains.

“Right now, while the whole array of online services is exciting in the possibilities, they are dwarfed in comparison to the numbers of people we see on our broadcast channels,” Thomas said.

Public Radio Capital, the Colorado-based consultancy that advises stations on signal expansion and other business strategies, “remains very bullish about broadcast,” said Erik Langner, who is brokering KUT’s purchase. “It penetrates 94 percent of all Americans over the age of 12. It’s omnipresent. It’s free. It’s easy to access, and it’s a proven way to get revenue and drive people to websites.”

As evidence of the viability of KUT’s expansion bid, Langner pointed to a similar — and much more expensive — purchase that KERA in Dallas completed in 2009. The joint licensee spent $18 million to buy the noncommercial frequency 91.7 MHz and convert it into a public radio contemporary music-mix format. Triple A music once had a much bigger footprint on KERA’s radio service, which now broadcasts all-news on 90.1 FM. Since launching a differentiated music channel under the call letters KXT in November 2009, the Triple A service has been a resounding success for the Dallas pubcaster.

“KXT is doing very well, and we are really excited where listenership is going,” said Jeff Ramirez, KERA’s v.p. for radio. In April, its weekly cumulative audience was at 347,300.

With the addition of KXT to its channel lineup, KERA licensee North Texas Public Broadcasting has doubled its listenership in its area, Ramirez said.

Thomas predicts similar audience response if KUT’s purchase goes through. They will follow “a very successful model that’s been used around the country of providing a full-time reliable service in each of the formats,” he said.

Within UT-Austin, College of Communications Dean Roderick Hart still firmly believes the purchase of KXBT is a no-brainer. He expressed confidence that the regents will approve it.

“All the evidence we have now is, the purchase is right on the money,” said Hart. “We are a well-educated community and known as the ‘live music capital of the world.’ I can’t imagine a safer investment in radio than in Austin, Texas. The operation here is so darn successful.”

Related links

Questions about the long-term viability of over-the-air radio prompted UT’s board of regents to postpone a decision on KUT’s proposed signal expansion, the Austin American-Statesman reported.