Red Rock’s liquidation brings new owners, formats
Duluth’s radio landscape experienced a significant change this year when Red Rock Radio sold the company’s stations following the passing of majority shareholder Myron Kunin, who was best known for founding the Regis Corp. chain of hair salons. Three years after his death, surviving family members decided to liquidate the broadcasting assets, and many were purchased by other regional station owners.
Because it has been the Duluth market’s ratings leader for many years, KQDS-FM was the most noticeable station to be sold. It was acquired by Wausau-based Midwest Communications, the largest owner of radio licenses in Northeastern Minnesota.
A change that received less notice was Red Rock’s sale of the KZIO-FM transmitter and translator station, known to listeners as “94X.” They were acquired for $300,000 by Minnesota Public Radio. Through the purchase, MPR sought to improve its Duluth and North Shore footprint for The Current, a channel aimed at younger listeners that features a deep play list of indie-style music, particularly songs performed by Minnesota musicians.
The Current had been available on the Internet via streaming audio. MPR expanded its horizons in 2016, obtaining a Duluth license to broadcast with 99 watts. Although its antenna was high on Tower Hill, the low-power signal tended to disappear at Pike Lake. When KZIO went up for sale, it offered MPR a better option for terrestrial radio. Its transmitter near Two Harbors generates 50,000 watts of power. It is supplemented by a 250-watt Duluth translator.
“It has been a good thing for us to do,” said Nick Kereakos, MPR’s senior vice president, chief technology officer and general manager of regional services. “The 104.3 signal (KZIO) reaches a lot more people in the area. Now, we have 170,000 people in our footprint.” They include listeners in Duluth, along the North Shore, across Lake Superior on the South Shore and those south of Duluth, he said.
Following deregulation of the radio market, the local station ownership model slowly eroded. It was replaced by corporate ownership of multiple call signs. MPR now has 46 stations in its Minnesota network (15 in Northeastern Minnesota). That compares with 312 owned by Connecticut-based Townsquare Media (which owns 12 regional stations) and 77 owned by Wausau-based Midwest Communications (which has 13 regional properties).
MPR differs from other chain operators in one key way. It is a non-profit. Individual listeners, commercial underwriters and taxpayers provide financial support rather than companies that buy traditional advertising. Despite that status, however, MPR has actively pursued a growth agenda during its 50-year history.
“We’re always looking at opportunities,” Kereakos said.
In public radio, having more stations translates into having more listeners which, in turn, generates more donations. MPR combined that strategy with another one broadly adopted by commercial station owners – consolidating many functions in a central headquarters and benefitting from economies of scale. The Current, for instance, produces most of its programs from a single studio at KCMP in Northfield.
Based in Duluth, part time DJ Mike Novitzki produces a locally oriented version of The Current that is broadcast at 8 p.m. on Sundays. It is available at 2 p.m. Mondays as streaming audio and also as a podcast.
He admits that Top 40 radio tends to be the ratings leader in the Duluth market but added, “Duluth has a robust live music scene. I talk to performers on the show and give them some air time.”
Beyond broadcasting, Novitski said MPR supports local artists by supporting local concerts. Assisted by Minnesota’s Arts and Cultural Heritage Fund, MPR helps promote performances, offsetting costs such as cover charges.
“I help create a connection between musicians, bar owners and fans,” said Novitski, a former on-air personality at KUMD, which also broadcasts alternative news and music.
“We’ve been a long-time marketing and promotions partner of many concerts and events, including ones at the Red Herring, Lutsen, Sir Bens, Pizza Luce and Bent Paddle. We really try hard to integrate the Duluth and Twin Cities music scenes,” Kereakos added.
There’s general agreement that The Current will have limited financial impact on existing commercial radio stations in the Duluth market. But what about other non-profit stations? KUMD, which calls itself “Duluth Public Radio,” has some similarities but its pockets aren’t nearly as deep.
“Our fundraising goal might be $40,000 for the pledge drive. We’re talking totally different numbers than MPR,” said Ira Salmela, KUMD’s interim station manager and director of development. KUMD conducts two fundraising campaigns each year.
On its 2016 Tax Form 990, MPR reported revenue of $100.6 million. Of that amount, $62.8 million originated from contributions. MPR pays four of its vice presidents in excess of $200,000 per year and six senior vice presidents earn from $205,000 to $425,000 (according to 2014 Form 990). President and CEO Jon McTaggart’s salary was $644,000.
That’s not what the Federal Communications Commission had in mind when it opened up the FM spectrum to higher-fidelity broadcasting, said long-time Twin Ports station owner and radio personality Ken Buehler.
“Commercial broadcasters said they’d set aside the lower end (of the FM dial) for community radio. That’s what the FCC had in mind. The FCC didn’t have MPR or even Wisconsin Public Radio in mind. They felt every little town would have a low-power community station. MPR is an aberration – a very successful one – but an aberration,” he said.
“We have not seen any dip in fundraising,” Salmela said. But some at KUMD find it troubling that some people don’t know the difference between MPR and the university station.
“Some people think if they are members of MPR they are also an underwriter of KUMD,” said Salmela, who noted that 200 volunteers assist the station. “But if you are an underwriter of KUMD, your money stays in town. You are truly helping a local organization, not one that sends some of its money to Minneapolis. We are all about supporting local business. We believe in this community. For MPR, it’s a business. For us, it’s a true a community effort.”
As for programming, Salmela is confident about KUMD’s news, public service and music. The station’s play list goes beyond rock and roll and includes blues, blue grass, jazz, music by women and even a program that exclusively plays Bob Dylan’s songs.
“After The Current started, we’ve discovered we have a very loyal customer base in terms of our local content. The Current can never be who we are. So we’re very confident about that,” she said.
Kereakos is equally confident about The Current and MPR’s other stations.
“The Current, even before the signal was here, had a strong relationship with Duluth. We were always asked why we weren’t on the air. We want to support what makes the music community thrive. We have relationships there with various music venues and want to support Duluth and the North Shore,” he said.
Buehler, who sold his radio stake before the group ownership model created nationwide broadcasting mammoths, conceded that it’s here to stay. But he doesn’t discount the financial viability of single station ownership.
“The most important thing is what you put on your signal. If it’s good and people listen to it, advertisers will still want to reach those people and you can be successful. Just because you’re a big company doesn’t mean you have good programming,” he said.