Memorial services will be held Nov. 15 at 11 a.m. at First AME Church, 2270 Harvard Blvd., for Bill Shearer, the former owner of radio station KGFJ Los Angeles. Sherer died Nov. 2 after a lengthy illness.
KGFJ first signed on to the air in Los Angeles in 1926. KGFJ was the first station to broadcast 24 hours-a-day, beginning in November 1927.
By the mid-1960s KGFJ was owned by East West Broadcasting Inc. Shearer made the transition from entrepreneurial manager to owner of radio station KGFJ-AM. His significant operating experience in the radio business, his ability to provide owner equity, the minority tax certificate policy which served as encouragement to a motivated seller, and seller financing were key to his success.
As a new account executive at KGFJs, Shearer learned the radio business while rising through the ranks. He was an account executive for eight years at four different stations and vice president/general manager for 11 years, including two years at KGFJ prior to its buyout. Shearer’s operating background positioned him to purchase KGFJ in 1986, when its owners, Inner City Broadcasting, decided to sell its Los Angeles stations. Inner City sold KUTE-FM relatively quickly, but had difficulty finding a buyer for KGFJ due to the limited market for AM stations.
Inner City, seeking a minority buyer to provide tax certificate benefits and recognizing that an experienced Black entrepreneur such as Shearer would be a strong candidate, suggested that Shearer put a financing package together. In August 1986, Shearer and a partner purchased KGFJ for $4.5 million, providing a downpayment of $100,000 and working capital of $300,000.
As president and managing partner of East-West and general manager of KGFJ. Shearer owned 60 percent of the company. His partner, a Black physician in Los Angeles who was silent with respect to East-West’s operations, obtained 40 percent—the balance of KGFJ’s $4.5 million purchase price was financed by Inner City in the form of senior and junior debt. East-West originally planned to borrow the senior portion of the debt from Wells Fargo Bank, but the Bank decided against the loan at the last minute. Inner City subsequently financed the purchase with the understanding that East-West would refinance the senior debt a year later. In December 1987, East-West secured a $1.4 million loan from Greyhound Financial Corporation to refinance Inner City’s senior debt on schedule.
Securing the Greyhound loan was not easy since it was East-West’s first round of outside financing. Greyhound required the debt to be fully secured by the station’s assets and the stock of the borrowers, as well as with the personal guarantees of Shearer and his wife.
In Shearer’s opinion, minorities who want to own and operate a company must possess two critical ingredients, experience and equity. The quality of management is important to a lender, and financing is more easily available to operators with operating experience. Further, for a lender to provide financing, the entrepreneur must have equity to contribute.
Shearer believed his ability to contribute personal funds was important to his lenders, and that the inability of many minority entrepreneurs to contribute personal equity is a major obstacle to business ownership.