KOLO's new owner plans few changes

As the new owners of KOLO-TV considered

their acquisition, they knew the

strengths of the station, which is top-rated

in the Reno market.

They were mildly surprised, however, to

discover the strengths of the northern

Nevada economy.

"It's growing market that's got a lot of

diversity," said Bob Prather, executive vice

president of Atlanta-based Gray Television

Inc. His company agreed to pay $41.5 million

in cash to acquire KOLO from Smith

Television Group Inc.

Prather said Gray Television officials

were particularly impressed by the strength

of the distribution and logisitics industry in

the region, and they were impressed as well

by the attractive business climate in Nevada.

But it was the station's quality that first

got Gray Television's attention when Robert

Smith, the president and majority shareholder

of New York-based Smith Television

Group, put out the word he was interested

in selling KOLO.

KOLO's top ranking in the northern

Nevada market was important to Gray

Television.

"We have 28 television stations, and 21

are No. 1 in their market," Prather said. "We

like strong news leaders.We like stations

that are good corporate citizens.We like to

buy good stations and make them better."

The company also likes stations in state

capitals Carson City is part of KOLO's

market and stations in college towns.

Its stations include, for example, outlets

in Lincoln, Neb.,Tallahassee, Fla., and

Knoxville,Tenn. The strategy Gray has laid

out for the investment community (the

company is publicly held with stock that

trades on the New York Stock Exchange) is

straightforward:

* Provide superior local news and community

focus.

* Leverage this market dominance to win

a larger share of advertisers' budgets.

* Improve operating margin through

focused cost control.

That cost control, however, is unlikely to

include the sort of big layoffs 10 positions

were cut seen when Smith

Broadcasting bought KOLO in March

2001.

"The transition last year was a tough

one," acknowledged Tim Perry, the KOLO's

vice president and general manager. But he

called the chances of similar cuts "very

unlikely" this time around.

"Gray does not have a history of cleaning

house," said Perry, who has been asked

by the new owners to stay after the acquisition

is completed, probably in the fourth

quarter of this year. The station employs

about 80.

Perry said Gray has a reputation in the

industry for buying and holding stations

rather than turning them over quickly in

search of a quick profit.

(That quick turnover strategy doesn't

always work. A trade publication reported

Smith Broadcasting paid $45 million for the

station. If that's true, Smith Broadcasting

dropped lost $3.5 million on its ownership

of KOLO in 18 months. Smith

Broadcasting didn't respond to an interview

request.)

While the station has undergone two

ownership changes in two years, Perry said

the previous ownership situation 50 years

in which the station had essentially one

owner in the form of Donrey Media and a

successor corporation is rare in the

broadcast industry.

"KOLO had a very privileged existence,"

he said.

The KOLO deal is the smallest of a

couple of fish that Gray Television has

frying.

By far the largest is its pending acquisition

of Stations Holding Co. Inc., which

owns 15 television stations. That deal is valued

at $502.5 million.

When the KOLO and Stations Holding

acquisitions are completed, the 29 stations

owned by Gray Television will reach 5 percent

of television households in the

United States.

The company will own 15 CBS affiliates,

7 NBC affiliates and 7 ABC affiliates.