Indianapolis-based Emmis Communications Corp. has agreed to lease struggling Los Angeles radio station KMVN-FM to Mexico’s Grupo Radio Centro in a deal that likely will lead to an acquisition of the station.
Under the seven-year deal that takes effect April 15, GRC will pay Emmis $7 million annually, with $14 million paid up front. Mexico City-based GRC will have an option to acquire the station at any time for $110 million. Or, Emmis can require GRC to buy the station in the seventh year for $110 million.
KMVN has struggled since it flipped formats from country to rhythmic oldies in 2006.
“It is always difficult to part with a station and our people, but in these challenging times, it is the right decision for Emmis,” CEO Jeff Smulyan said in a written statement.
Radio analysts say the deal is bad news for Emmis, which devoted nearly three years and millions of dollars in promotional support to the station, in addition to a big contract it gave to morning man Rick Dees.
But the agreement does provide welcome cash to the company that’s been slashing jobs and reducing pay in an effort to cut costs. Emmis shares were up 3 cents this morning and were trading at 45 cents each.
Grupo Radio Centro owns 14 stations in Mexico, 11 of which are in Mexico City, where the company is based.