Thursday, July 23, 2009

Creditors take control of KRON's owner

U.S. Bankruptcy Court Judge Arthur Gonzalez, who presided over the Chrysler bankruptcy, yesterday approved the sale of bankrupt Young Broadcasting to its secured lenders.

Three of Young's 10 stations, including KRON 4, will stay under control of a new company with a board of directors that includes Vince Young but also more representatives of the creditors.

The other stations will be opearted by Grey Television, which owns 31 stations in small, medium and large (Atlanta, No. 9, is their largest) markets. Gray will get a $2.2 million annual fee for managing the stations as well as a piece of the profits, if there are any.

We cobbled this item together from reports by TV Newwday, Michael Malone at Broadcasting & Cable and Television Business Report. Let us know if you see any errors or have any insights. (Photo credit: Screen grab from KRON's "NewsCenter4" in 1978)

1 comment:

Anonymous said...

The 86-year-old media mogul must come up with $500 million by October to help pay down his firm's $1.46-billion debt or find himself in default and at the mercy of his lenders. If he doesn't raise enough money from the auction, he could be forced to unload more stock in the media companies that he controls through National, Viacom Inc., which owns Paramount Pictures, MTV and Nickelodeon, and broadcast giant CBS Corp.
Investors are watching to see whether Redstone's debt woes trigger the unwinding of his holdings. They note that even if Redstone were to sell off all of his non-voting shares in both CBS and Viacom, that would generate about $750 million before taxes, not even close to paying off National's debt.

Redstone could also sell some voting shares without giving up his majority stake. Recently, Viacom voting shares have surged in value, signaling that investors believe the stock will become more valuable or that there might be a change in control.

Some have speculated that Redstone might put CBS in play, but it is not an ideal time to sell a media company. CBS, which derives about two-thirds of its revenues from TV and radio station advertising, has been particularly hard hit and its stock has been battered.

The prices fetched by the theaters will determine Redstone's next move.

A conclusion of the auction could spell the end of Redstone's contentious business relationship with his daughter. For the last two years, the two have feuded over issues of succession at their family empire and they have long disagreed about the viability of the theater business.

Many believe that Shari Redstone will trade her 20% stake in National for the theaters that were spared from the auction. That includes National's circuit in Russia, where she spearheaded the building of the largest modern multiplex in Moscow, making National the first major American circuit to venture into that fast-growing market.