WEST PALM BEACH — From hugely successful News/Talk KXL-FM 101.1 to Adult Alternative KINK-FM, Alpha Media’s home market station group is highly competitive. So are such stations as WDJX-FM in Louisville, and WDHT-FM “Hot 102.9” in Dayton.
Other markets are laggards for Alpha, including many that came with its $254 million purchase of Digity LLC in 2016. Alpha completed the transaction in early 2017.
It included a forlorn group of stations in West Palm Beach, including Hot Adult Contemporary blowtorch WRMF-FM 97.9, which can be heard from Indian River County south to Key Largo.
These stations, Wilson claims in the FCC filing, were crux to the Digity deal. “Alpha acquired a group of incredibly high-performing stations … The West Palm Beach Cluster had phenomenal signal clarity and reach, management, employees, and advertising revenue. Without the West Palm Beach Cluster, Alpha would not have been interested in acquiring Digity, LLC.”
Why, then, did Alpha in late September 2018 agree to spin WRMF along with Country WIRK-FM 103.1, FOX Sports Radio affiliate WMEN-AM 640, Classic Hits WEAT-FM “Sunny 107.9,” Urban AC WMBX-FM “X102.3,” Rhythmic Top 40 “Party 96.3” W242CI, which uses the WMBX HD2 signal, and Talk WFTL-AM 850?
That’s open to interpretation.
As RBR+TVBR reported at the time, the deal was likely the key topic of conservation in a lower-level conference room beneath the cacophony of consultants, vendors, air talent and radio industry C-Suiters parading around the 2018 Radio Show at the Bonnet Creek Resort in Orlando. There, top-level executives at Hubbard Radio held court early Wednesday morning with CEO Ginny Morris and President/COO Drew Horowitz.
It presaged an $88 million transaction, handing Alpha’s prized former Digity LLC cluster to Hubbard.
At the time, RBR+TVBR called the West Palm Beach cluster the “crown jewel” in the Digity deal. It appears Wilson couldn’t agree more, based on comments he filed with the FCC on Thursday (4/15) in an attempt to derail the Audio Division’s approval of license transfers tied to Alpha’s expected emergence from debtor-in-possession status.
Hubbard closed on its purchase in January 2019. The exit from West Palm Beach left Alpha with 213 stations in 46 markets around the country.
By this time, the majority of Alpha’s equity was owned by private investment groups including Stephens Investments Holdings LLC and its associated entities, represented
on the Alpha Board of Directors by Noel Strauss; Breakwater Investment Management, represented on the Alpha board by Saif Mansour; and Endeavour Capital V.
Wilson discloses, “I had disagreements with various Alpha board members at various times throughout my tenure as CEO and Chairman, most often with Noel Strauss.”
One of these strong differences in opinion involves a plan to purchase stations from Morris Broadcasting in Palm Springs, Calif., which Wilson claims at the time were losing “approximately $500,000 a year.” Wilson says he knew of an experienced management team to take the stations to profitability.
“At the last minute before the transactions were finalized, Noel Strauss tried to convince
me not to purchase the Palm Springs cluster,” Wilson states. “However, I was confident in my assessment of the cluster’s potential—and, with it, the huge potential upside to Alpha purchasing the stations given that the stations were currently severely underperforming. I ultimately convinced Noel Strauss to relent. The Palm Springs cluster is now one of Alpha’s most successful clusters.”
While that worked in Wilson’s favor, a plan to ditch Stephens Health Care, an entity controlled by Stephens Investments Holdings, in favor of a new health insurance “consulting firm” as part of a 2017 cost-saving effort was — according to Wilson — by Strauss.
“The Integro team indicated that they could save us $1 million over the next year on our
health insurance costs without diminishing our coverage,” Wilson said. “When I attempted to move forward with the Integro deal, which meant exercising Alpha’s right to cancel its current contract with Stephens, Noel Strauss went behind my back and instructed Alpha’s CFO, John Grossi, that Alpha would be turning down the Integro opportunity and sticking with Stephens. Upon learning that information, I immediately contacted Noel
Strauss, who told me that Alpha was sticking with Stephens, ‘end of discussion.’”
This action so incensed Wilson that he “immediately resigned due to Noel Strauss’s blatant disregard for the best interests of Alpha.” However, that didn’t last long. “After much subsequent back and forth, I agreed to resume my position at Alpha on the condition that Schott Shanen and the Integro firm would become Alpha’s new health care consultant.”
While Wilson was back, his influence — in his view — was greatly thwarted.
“After I resumed my position, Noel Strauss consistently treated me with disrespect
and generally refused to even listen to my opinions regarding Alpha,” Wilson states.
Around this same time, Strauss and Mansour together began making decisions for Alpha without consulting Wilson, the other Alpha board members, or any of the company’s minority shareholders, Wilson claims.
“From June 2018 to January 2019, to my knowledge Alpha never held a Board
meeting and I never received notice of any such meeting,” Wilson adds.
Meanwhile, debt was building. The West Palm Beach stations, if sold, could bring a bevy of much-needed dollars to Alpha. Aware that the company he founded needed an equity infusion “to sustain the Digity acquisition,” Wilson connected with former Digity CEO Dean Goodman and Southern Stone Communications head Paul Stone “to flesh out a proposal whereby they would provide Alpha with between $30 million to $40 million in capital in exchange for equity in Alpha.”
That didn’t happen. Why? According to Wilson, Strauss and Mansour “unilaterally rejected that proposal, and did not present it.” Strauss and Mansour, in fact, reportedly told Wilson that they “would not stand for any dilution.” Thus, Wilson says, “they unilaterally declined my proposal because they did not want the ownership of their investors Stephens and Breakwater to be diluted.”
Instead of Wilson’s proposed equity infusion, Strauss and Mansour signed off on a loan agreement with Alpha lenders including Intermediate Capital Group, which required the disposition of $110 million of Alpha assets by the end of the year. At that time, $110 million was approximately 25% of the company’s assets, Wilson says.
This, Wilson claims, put the wheels in motion to spin the West Palm Beach cluster — and, he assails, for a price lower than its estimated worth.
With no board vote on the divestment, Wilson began his campaign to call out Strauss and Mansour for their actions, and “deceit.”
This includes a January 2019 email sent to Alpha Media CFO John Grossi, expressing his concerns about how the company was being operated. In it, Wilson was blunt with respect to how he departed Alpha Media.
“We need to manage our affairs according to the operating agreement and the mandate of corporate law, both of which were ignored in the handling of my firing,” he wrote.
Wilson then stated in the letter of how he learned of the Hubbard deal for the West Palm Beach cluster, “again, with no due authorization by the board.” He wrote in January 2019, “The agreement was filed with the FCC indicating that it was duly authorized. Now, I find out that a board meeting has been called for January 23 to authorize the agreement. This indicates that the FCC has been misled. Having a board meeting to approve after it has been executed and filed is a sham.”
And, he added, “If there had been legitimate duly called board meetings to consider the loan agreement amendment and the sale of WPB, I would have stringently opposed both as not being in the best interest of the company. But to do so now is problematical. If I oppose the sale of WPB now, I would suggest that Alpha breach the definitive agreement with Hubbard that management has entered into without board authorization. To vote in favor now is an admission that the agreement was not properly approved and clear evidence that the FCC has been misled by Alpha. During my career, I have never done anything to mislead the FCC.”
Today, the stations under Hubbard are stronger than ever, with WRMF’s morning program, The KVJ Show, a dominant choice.
If it were up to Wilson, they’d be pouring dollars into a company that very much needs them.