The Journal News from White Plains, New York • Page 22

BUSINESS www.nyjournalnews.com 2D Monday, April 1 2, 1 999 The Journal News RK Radio company-tunes strategy to big cities THE CORPORATE PROFILE: BIG CITY RADIO "We had intended to sell it all along because it was never part of our overall plan." The company's strategy does not focus solely on technology. It also revises programming to offer what it considers more compelling. At Y-107 in Hawthorne, the focus is on country music because, Thomson says, there is little available on radio in the New York area. Thomson said the strategies are working across the country, and stations that were so small they had not even been measured for audience reach are now reporting small, but growing ratings. Financially, Big City still has a way to go.

The company last month reported a year-end, 1998 revenue increase of 35 percent, to $15.9 million. But attributing the loss to the cost of continuing to acquire stations, the company reported a net loss of $17.5 million, or $1.24 a share, for 1998. That compares with a loss of $16.9 million, or $1.77 a share, for 1997. Kirschner, who became vice president for engineering. Subotnick has been involved for many years in media enterprises with John W.

Kluge, the billionaire chairman of Metromedia Co. Big City says Kluge has no financial interest in the company. Kirschner has more than 20 years of experience in radio engineering. Kakoyiannis is a veteran of more than 25 years of radio broadcasting. He is rather camera- and press-shy, and usually declines to speak to reporters or pose for photographs, even for the company's annual report to stockholders.

Big City bought the New York City-area stations between 1994 and 1997, and WRKL in Pomona was part of the package. But it was not a station Big City was aiming for since it was not close enough to New York City to fit in the company's strategy. "We weren't trying to abandon the community by selling the station," Thomson said. half-million listeners in New York, New Jersey, Connecticut and Pennsylvania, according to Arbitron, a service that gauges radio audiences. Paul Thomson, Big City Radio's chief financial officer, said the acquisitions and mergers will continue.

He declined to say which stations are under consideration, or where they are located, but he said Big City will focus only on the country's top 20 markets. The company must buy small because frequencies for stations in top markets are simply no longer available, and Big City doesn't have the money to purchase a mega-station, Thomson said. "So driven by those realities, we devised a new strategy," he said. The new strategy of synchronizing frequencies was molded largely by three broadcasting veterans: Stuart Subotnick, who became Big City's chairman; Michael Kakoyiannis, president and chief executive; and Alan ish, made its debut. Residents of Polish descent make up 7 percent of Rockland's population, according to estimates from a 1996 U.S.

Census Bureau update. Big City Radio said it will now focus on growth. Its strategy is acquiring small suburban radio stations and using new technologies to make them into medium-sized players. The brainchild of three radio veterans, Big City Radio buys small FM stations that operate on identical frequencies around major metropolitan cities. Big City engineers the stations to operate together.

Because the combined stations have the potential to reach more people, Big City hopes they can be marketed as larger entities and bring in more advertising revenue. So far, the company has merged operations to form four stations one each near New York City and Los Angeles, and two outside Chicago. The New York station, New Country Y-107 in Hawthorne, Big City Radio is neither very big nor does it directly serve big cities. But the Hawthorne radio company is getting bigger, its executives say, and its radio stations are close to some of the country's biggest cities. Founded in 1994 and publicly traded since December 1997, the company has been in the spotlight during the past few months after it sold Pomona radio station WRKL, one of Rockland County's best-known outlets for information.

The $1.6 million sale of the 35-year-old station wasn't without controversy. Big City Radio said it could not say what the station's future held since it was selling it. The new owners, Polnet Communications which operates two Polish-language radio stations in the Chicago area, weren't talking. The question was quickly answered. A day after WRKL signed off, Polski Radio New York, a mix of music and on-air disc jockeys speaking Pol 1KKER: YFM (AMEX) HEADQUARTERS: 1 1 Skyline Drive, Hawthorne, N.Y.

10532 TELEPHONE: 592-1071 WORLDWIDE WORK FORCE: 123 TRI-COUNTY WORK FORCE: 50 which is also the company's headquarters, was formed by merging stations that broadcast on the 107.1 frequencies in, among other communities, Hampton Bays on Long Island and Long Branch in New Jersey. The station now reaches a THE EXECUTIVES MICHAEL KAKOYIANNIS, PRESIDENT AND CHIEF EXECUTIVE AGE: 56 1997 PAY: $2.34 million in salary, bonus and other compensation. BACKGROUND: Kakoyiannis has been involved in the radio broadcasting industry for more than 25 years in various functions, including sales, marketing and general management. He is one of the founders of Big City Radio. RESIDENCE: Garden City, N.Y.

OTHER TOP OFFICERS Paul R. Thomson, vice president and chief financial officer. 1997 pay: $280,000 in salary, bonus and other compensation. Bryan Subotnick, executive vice president, corporate development. 1997 pay: $175,000.

Alan D. Kirschner, vice president, engineering. 1997 pay: $174,000 in salary, bonus and other compensation. FOOTNOTES Aside from Michael Kakoyiannis, the company was also founded by Stuart Subotnick, now its chairman. Subotnick has long been involved in media enterprises with John W.

Kluge, chairman of Metromedia Co. Kluge has no financial stake in Big City Radio, the company said. Other company executives include Silvia Kessel, executive vice president; Arnold Wadler, executive vice president, secretary; Richard Marston, vice president, general manager of Big City Radio's properties in Chicago; and David Howard, vice president, general manager of Y-107 in Los Angeles. THE NUMBERS THE STOCK If you had bought 1,000 shares of Big City Radio on Dec. 31, 1997, when the company went public, you would have paid $8,125.

If you had held those shares through Dec. 31, 1998, you would have lost $4,062.50, or 50 percent (an annual equivalent of 50 percent). By comparison, the 500 had a total return of 28.58 percent. 5-YEAR EARNINGS PER SHARE Fully diluted and after extraordinary items '94 '95 '96 '97 '98 1 -YEAR COMPARATIVE TOTAL RETURN 40 20 0 -20 -40 THE BOARD Stuart Subotnick, 57, chairman and founder, Big City Radio; vice chairman, president, chief executive, Metromedia International Group. Other boards: Central Park Conservancy, Metromedia Fiber Network Carnival Corp.

Michael Kakoyiannis, 56, president chief executive, founder, Big City Radio. Anita Subotnick, 55, private investor, married to Stuart Subotnick. Arnold Wadler, 55, executive vice president, secretary, Big City Radio; executive vice president, secretary, general counsel, Metromedia International Group; executive vice president, general counsel, Metromedia Fiber Network Inc. Silvia Kessel, executive vice president, Big City Radio; president, Kluge executive vice president, chief financial officer, treasurer, Metromedia International Group; executive vice president, Metromedia Fiber Network Inc. Leonard White, president, chief executive, Rigel Enterprises.

Other boards: American Film Technologies, Metromedia International Group. Michael DeChilloThe Journal News New Country Y107's morning disc jockey Jim Kerr at work in the station's Hawthorne studio. Y107 is owned by Big City Radio which operates stations near New York City, Los Angeles and Chicago. Big City Radii 9 I jjgwfc 1 5-YEAR REVENUE AND INCOME (in millions of dollars) 1994 1995 1996 1997 1998 Mar31 Jun.30 Sept. 30 Dec.31 '98 '98 '98 '98 Dec.

31 '97 REVENUE 2.3 5.7 8.6 11.7 15.9 1994 1995 1996 1997 1998 INCOME THE TRIVIA Since its incorporation in August 1994, the company has acquired the assets of 16 radio stations and sold two. Big City Radio leases about 3,200 square feet in Hawthorne for its headquarters. The company owns broadcasting towers in Arcadia and Ventura, Long Branch, and Highland Park and Morris, 111. 52-WEEK HIGH: 4 52-WEEK LOW: 37s YTD CHANGE: percent AVG VOLUME: 11 ,500 ANNUAL DIVIDEND (1998): n.a. 1999 EPS (ESTIMATED): $1.19 ANALYSTS' ADVICE: no analyst recommendations Sales per employee, 1998: $129,268 Interest expense, 1998: $12.6 million Big City Radio said it will issue its annual report and company proxy within the next two weeks.

Its annual meeting is scheduled for May 20 at 1285 Avenue of the Americas, the New York City offices of its attorneys. New Country Y-107 in Hawthorne reaches a half-million listeners in New York, New Jersey, Connecticut and Pennsylvania. Reported by PHIL WAGATtie Journal News Source): The Journal News research, Bloomberg News, Big Qy Radio Royal Crown targets teen-agers with new power cola: RC Edge gency room attendants who need to ward off sleep, he said. Spencer said Royal Crown will spend $1.3 million on marketing the new drink through July. That is only a fraction of the $100 million campaign that Pepsi-Cola said it was spending to introduce its Pepsi One starting late last year.

"We have to live within our means," Spencer said. "If RC wants to sell more cola, it needs to differentiate itself from Coke and Pepsi," said beverage industry watcher John Sicher of Beverage Digest. Spencer hoped that by targeting males between ages 12 and 20, RC Edge will bring new customers to the entire Royal Crown group of beverages. It also may appeal to college students, truck drivers and emer amino acid said to boost energy. Royal Crown could use a boost.

Its overall sales volume for brands that include RC Cola and Diet Rite drinks has tumbled 32 percent over the past three years, according to figures from Beverage Marketing an industry research and consulting firm. In that same period, industrywide soft-drink sales rose 10 percent. RC Cola accounted for 0.7 percent of the $56 billion U.S. soft drink market in 1998, Beverage Marketing figures showed. That was far behind the cola leaders Coca-Cola Classic at 20.6 percent and Pepsi-Cola at 14.5 percent In addition, RC Cola has been falling further behind the leaders as its sales volume sank 16.7 percent last year while Coke and Pepsi were up.

SKIP WOLLENBERG The Associated Press NEW YORK The Royal Crown a distant rival to Coke and Pepsi in the cola wars, has come up with a drink it calls a power cola loaded with extra caffeine and other energy boosters. RC Edge, which began showing up in delis and convenience stores over the past month, is being marketed mainly to teen-age boys on the radio, in magazines and on the Internet. With 63 percent more caffeine than Royal Crown's flagship RC Cola, RC Edge packs a punch closer to that of Jolt Cola from Global Beverage Co. of Rochester, N.Y., and the high-caffeine citrus drinks Mountain Dew from Pepsi-Cola Co. and Surge from Coca-Cola Co.

They all are aimed mainly at active teens. "There is nothing good about giving a sugary drink with a mildly addictive stimulant to kids," Patricia Lieberman, who has studied the effects of caffeine for the Center for Science in the Public Interest, a public health advocacy organization, said last week. She said the danger is that people served high-caffeine drinks may come to crave them over more healthful beverages. Radio ads planned for 25 major markets over the next few months irreverently depict RC Edge drinkers as kids who might take a chainsaw to a flower patch or hit golf balls through the principal's window. "We are walking a fine line between having some fun and being a little mischievous," said Jeffrey Spencer, a top marketer for Royal Crown, based in White Plains.

He said there is nothing mean-spirited intended. The beverage, which is being individually sold in 20-ounce cobalt blue plastic bottles sold, should be available nationally by May. Soft drink industry analysts say Royal Crown needs a spark and that RC Edge appears to have been inspired by the recent popularity of functional drinks that do more than satisfy thirst. In addition to the extra caffeine, RC Edge carries two marginally exotic ingredients Indian ginseng said to be "prized for its ability to strengthen and assist the body's resistance to stress" and taurine, an (rrr Nanuet MedicAl Services, RC. Ptovidmf Una Beit PJufiiaU GluAopteictic Gate PlufAictd Medicine.

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