THE NEW NEW VISION: NO MORE FLIPPING

Jason Elkin is at it again.

Along with longtime partner John Heinen and a new financial backer, Elkin is building a substantial group of small- and medium-market TV stations.

Under the New Vision Television banner, Elkin and Heinen made their big move last month, agreeing to purchase the Montecito group of four network affiliates— KOIN Portland, Ore. (CBS, DMA 23), KSNW Wichita-Hutchinson, Kan. (NBC, DMA 67); KHON Honolulu (Fox, DMA 72) and KSNT Topeka, Kan. (NBC, DMA 138)—for $330 million.

Already in the portfolio: WIAT Birmingham, Ala.(CBS, DMA 40); WJCL Savannah, Ga. (ABC, DMA 97); KIMT Mason City, Iowa (CBS, DMA 153); and WKBN (CBS) and WYFX-LP (Fox), both Youngstown, Ohio (DMA 103).

New Vision also has an agreement to run WKBN, the ABC affiliate in Youngstown, along with his other stations there in a virtual ABC-CBS-Fox triopoly.

And it has virtual duopoly in Savannah, under an agreement to run WTGS, the Fox affiliate, in tandem with WJCL.

With unannounced letters of intent to buy still more stations, New Vision is well on its way toward its goal of a group with $100 million in cash flow. That would make the group worth well over $1 billion on the open market.

Elkin and Heinen have done this twice before over the past 15 years—found a financial backer and stitched together a good-sized TV group only to turn around and sell the stations within a few years to appease backers eager to cash in on the growth.

But this time it’s different, says Elkin in this interview with TVNewsCheck Editor Harry A. Jessell.

This time, Elkin says, New Vision’s new financial backer—the Dallas-based hedge fund HBK Capital Management of Dallas—has promised patience.

New Vision will be able to operate the stations for a good long while and test some of Elkin's ideas for growing new media and local advertising revenue, he says.

An edited transcript follows:

So how is the latest iteration of New Vision different than the first two?

New Vision I and New Vision II kind of came and went quickly and that’s because we used traditional equity, which had a real, time-based component to it.

In the case of New Vision I, we bought stations in ’93 and they were gone in ’95. We just exploded. We doubled cash flow in a year and we had a very cantankerous board meeting where the management did not want to sell and the equity people wanted to monetize their gain. Unfortunately, they outnumbered us.

In New Vision II, in 2002, we wanted to grow and get bigger and bigger and bigger, and the equity people again saw a gain and thought it would be a propitious time to monetize that.

With New Vision III, when we went out to raise funds, the first question we asked people was about their horizons because we didn’t want to go through all the trouble of building a group and not enjoy running it. We have a lot of unique and creative ideas.

Now our financial source is a hedge fund out of Dallas and the private equity part is run by brilliant guys who are really into building solid foundations and solid businesses that punch out cash flow. They’re not looking to flip the stations.

So this is a new New Vision that’s in for the long haul or at least for the longer haul?

Right. And, you know, nobody really knows what the long haul is. Did Mark and Randall Mays ever think that Clear Channel would end up going private?

I thought that with these private equity funds it’s usually a five-to-seven year play at best.

This hedge fund money is more into having a portfolio of solid business companies rather than just buying and selling, buying and selling.

So, you’re digging in.

We’re digging in, absolutely. We believe that broadcasting is incredibly healthy. I mean look at the multiples. But we think that the multiples are low and this is a great time to buy. I see a day with multiples north of 20.

Here’s one question that’s been bothering me about these hedge funds and private equity groups. A private equity firms buys a group of stations, comes in and cut costs and then after a few years it sells to another private equity firm. George Lily was the manager of the Montecito group and he had a reputation as a lean operator. Now you’re going to come in and find more fat to cut?

No, no, no. I’m so glad you asked that because if you look at my reputation and New Vision’s reputation, you’ll see that we don’t cut. We build. We grow. We grow the top line.

I just assume that cutting is the first thing you’ll do as the new owner.

No. Not this new owner. We’re not foolish. We keep an eye on expenses, but every business that New Vision has ever had, we had more employees the day we left than when we started. We focus on getting higher ratings and higher advertising dollars and putting out better news products.