Originally Posted by Steely Dan
Antenna plan just a ploy, some think
October 28, 2005
BY DAVID ROEDER Business Reporter Advertisement
Chicago Sun-Times
How real is the plan to build a 2,000-foot tower for digital broadcast antennas on the lakefront? Real estate executives said Thursday the proposal is unlikely to be realized and that it is just a tactic for squeezing rent concessions from Sears Tower.
But a developer involved in the enterprise, J. Paul Beitler, insisted the project has secure financing. Because it is essentially an antenna mast holding little besides some sky-high restaurants to draw tourists, there's no pre-leasing requirement for construction to begin.
"This is not a fairy tale,'' Beitler said. "We didn't show this to the mayor to have fun or to tease the city.''
Beitler has partnered with LR Development Co. to propose the tower for land LR controls at Peshtigo and Illinois near Navy Pier. Beitler recruited well-known architect Cesar Pelli to provide the design.
Its primary purpose would be to serve the broadcast needs of stations making a move to digital from analog programming. But executives familiar with the economics of antennas doubted the new building could financially compete with Sears or the backup site for most stations, the John Hancock Center.
One broadcast executive acknowledged the idea could be useful in negotiations with Sears Tower. Larry Wert, president and general manager of WMAQ-Channel 5, said, "An alternative broadcast site is a good thing, given the leverage opportunity and the backup opportunity.''
Wert declined to comment on the Beitler plan or Channel 5's involvement in it. Several other TV station bosses didn't return calls.
In the late 1990s, the stations floated various ideas for a freestanding site for digital antennas, including spots on Chicago's West Side and in northwest Indiana. The antennas must be higher than Sears Tower to provide clear digital signals to Chicago homes.
At the time, broadcasters said there were technical reasons why Sears Tower and the Hancock couldn't squeeze digital equipment next to the analog gear. Those technical issues disappeared or were resolved once negotiations got serious.
Sears Tower, the city's tallest building and transmission site for most Chicago TV stations, has ample space to serve broadcasters now and well into a digital future, said Barbara Carley, who manages the building as director of CB Richard Ellis Inc.
Her opinion is no surprise, but it was echoed by another executive with experience in negotiating antenna deals. "One hundred percent of the digital requirement in Chicago has been satisfied,'' he said.
The executive said Beitler might be trying to revive an old dream of adding something tall to the skyline. In the 1980s, Beitler pushed a "world's tallest building'' for the southwest corner of Madison and Wells, but falling demand for office space killed the idea.
"It's very expensive to construct the systems needed to serve the broadcasters,'' the executive said. Asked if there was substance to Beitler's plan, he replied, "I think he's puffy, frankly.''
A critical point is whether Beitler carries commitments to negotiate antenna space on behalf of Chicago's TV stations. Beitler declined to discuss his arrangement with the stations, saying he is bound by confidentiality clauses.
Insiders estimate that the antennas produce more than $10 million in annual income for Sears Tower. The slightly shorter Hancock building is believed to earn less than $2 million a year from its antennas.
Beitler said the $300 million tower has secured a construction loan from LaSalle Bank that's contingent only on the city granting zoning approval. If that comes, "we are going ahead with this tower,'' he said. "I expect to start in July.''
One TV station leader downplayed the Beitler idea, taking an "I'll believe it when I see it'' approach.
Carley said the antenna leases at Sears Tower have an average of about five years to run.
While the Hancock is the backup TV site for most TV stations, the owner of its commercial space, Shorenstein Realty Services LP, has spent heavily to offer all stations improved emergency power in the event of blackouts, said Chuck Fendrich, senior vice president at Shorenstein.
The stations shared costs with the landlord. "I would have a hard time seeing them walk away from that capital commitment,'' Fendrich said. He said the leases extend beyond 2010.
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