Goldman-Sachs Calls in Vig, Takes Over Radio Station

Nassau Broadcasting gets out of dept by giving control to Goldman Sachs

Saturday, May 09, 2009

BY MEIR RINDE

Goldman Sachs will take a controlling stake in Nassau Broadcasting, the Princeton-based owner of WPST 94.5 FM and 53 other East Coast radio stations, in exchange for forgiving part of the company's debt.

In a memo to employees dated April 27, CEO Lou Mercatanti said Nassau has "been working with our lenders to come up with a viable plan to refinance or restructure the company's debt in the face of the country's worst credit crisis and advertising markets in decades."

The move was precipitated by the coming due of a debt package on Sept. 30, he said yesterday.

Mercatanti said the company's listenership has increased in the last three years but advertising has fallen. Nassau carried substantial debt from a recent expansion into New England.

"We acquired quite a few stations in the last few years, and if there was a wrong time to do it, that was it," he said.

Mercatanti and his management team will continue to operate the company, but due to FCC rules the ownership change will require Nassau to sell WWHQ and WNNH in New Hampshire and WHXR in Maine, the memo said.

In addition, stations in Boston and Cape Cod will be moved into separate companies while continuing to be operated by Nassau, in part because of lenders' conflicting interest in other radio companies.

Nassau is "ahead of the curve" with the restructuring, as the economic and credit environment will force other radio companies to make similar changes in the coming year, Mercatanti said.

Tom Taylor, executive news editor at Radio-Info.com, said the restructuring reflects the inflated prices that radio stations were selling for over the past few years.

"If you look at WPST by themselves, they're doing fine," said Taylor, who worked on-air at the station in the 1970s and 80s. "It's just that the company got aggressive and got caught in the pincers of too much debt and a serious advertising downturn."

The restructuring is relatively favorable to Mercatanti in that it lets him continue to manage Nassau and keep partial ownership of the company, Taylor said.

Goldman Sachs will gain an 85 percent equity stake in exchange for about two-thirds of its debt, the memo said.

Nassau traces its history back to WTOA, which was purchased from the Trenton Times in 1974, renamed WPST and later turned into a Top 40 station, according to the company's website.

Mercatanti purchased the station in 1986 and expanded the company. The privately held broadcaster has 300 full-time and part-time employees, he said.

It operates stations in New Jersey, Pennsylvania, Maine, New Hampshire, Vermont, Massachusetts and Maryland, covering about 8.1 million people.



Contact reporter Meir Rinde at mrinde@njtimes.com or (609) 989-5717.





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