Metromedia to Divest Radio Units : $285-Million Deal to End Its Involvement in Broadcasting

Metromedia said Monday that it has agreed to sell nine radio stations and a Texas radio network for about $285 million to an investor group headed by the president of Metromedia’s radio unit.

The sale, if approved by regulators, effectively will end Metromedia’s involvement in broadcasting, which dates from the early 1950s. Metromedia sold its seven television stations last year for nearly $2 billion and has put its two remaining radio stations on the block.

The deal involves rock station KMET-FM in Los Angeles and outlets in New York, Philadelphia, Washington, Detroit, Dallas and Tampa, Fla. Also included is the Texas State Networks, which provides news and sports in English and Spanish to 200 Texas radio stations.

“It is difficult to leave radio after more than 30 years, but we have decided to concentrate on Metromedia’s substantial telecommunications businesses,” said John W. Kluge, chairman and president of Metromedia, which is based in New York.

Metromedia said the sale is the largest ever of a radio station group and includes stations in six of the nation’s top 10 radio markets. The stations’ potential audience is 44 million people, the company said.

In the past year, Metromedia has sold the seven television stations, its outdoor advertising business, the Ice Capades, the Harlem Globetrotters and 15 skating rinks for a total of more than $2.7 billion. Analysts said the spinoffs represent a strategic shift and an effort to pay down the $1.2 billion in debt that Kluge took on when he took Metromedia private in 1984.

The television stations were purchased by Rupert Murdoch, owner of 20th Century Fox Film Corp., in a move seen by many analysts as part of an effort to create a new nationwide television network.

Metromedia’s largest remaining businesses are long-distance telephone services, electronic pagers and cellular telephone systems in New York, Boston, Miami and the Baltimore-Washington area.

The radio station sale is structured as a leveraged buy-out, under which the debt assumed in the purchase is repaid from the acquired company’s earnings. The group is led by Metromedia Radio President Carl C. Brazell Jr. and other members of the unit’s management and is being organized by the Wall Street investment banking house Morgan Stanley & Co.

Morgan Stanley also will take an equity position in the new company, but it is not known whether it will remain involved for an extended period. The firm declined to comment on the transaction.

Brazell, 45, has been with Metromedia for 17 years, the past three as president of radio operations. He said that the $285-million sale price was “reasonable” and that his group did not plan to sell any of the stations to fund the purchase.