From The Weekend Wires:
The largest privately-held commercial broadcast operator in the U.S., Pappas Telecasting Inc., filed for Chapter 11 Saturday with plans to sell its 30 TV stations under bankruptcy court protection.
Pappas cited "the extremely difficult business climate for television stations across the country" in papers filed with the U.S. Bankruptcy Court in Wilmington, Del. The Fresno, Calif.-based company reported in court filings it has more than $536 million in debt and assets of $460 million.
Pappas-owned TV stations in the bankruptcy filing include KPTM-Fox 42 and KXVO-CW 11 in Omaha but not KHGI-NTV in Kearney.
Pappas blamed the "poor ratings of the CW Network" for some of the financial trouble that forced it into bankruptcy. CW Network targets people in the 18- to 34-year-old age bracket with shows like America's Next Top Model and Smallville. It is a property of Time Warner Inc. and CBS Corp. .
A spokeswoman for News Corp. (AU:NWS: news, chart, profile) , which owns Fox, declined to comment. News Corp. is the owner of Dow Jones & Co., publisher of Dow Jones Newswires. Spokesmen for Time Warner and CBS did not respond immediately to requests to comment on the bankruptcy filing.
News of Pappas' financial woes and the credit crisis made it tough for Pappas to find a buyer outside of bankruptcy, court documents say. In the weeks leading up to Saturday's filing, Pappas failed to come to terms with top lenders who are owed $303 million.
Banks led by Fortress Capital Corp. refused to finance an effort to continue to try to sell the company in bankruptcy court. Pappas decided to file for Chapter 11 protection "in an effort to accomplish an orderly sale of the stations as a going concern," court documents say.
Founder and Chief Executive Harry Pappas said he is offering $2 million in bankruptcy financing to fund operations while the company is in Chapter 11.
Analysts have said media and retail companies are among the most vulnerable businesses in the economic downturn, which was triggered by the U.S. housing market decline.
Advertising budgets in furniture, appliance, real estate and related sectors bore the immediate brunt of the housing market downturn, denting revenues at Pappas over the past year, court documents say.
Pappas also said the cost of converting from analog to digital TV broadcasting has weighed on its operating costs, which were already strained by higher energy prices. To gear up for new digital TV requirements, Pappas stations have had to operate duplicate transmission facilities, the company said.
According to a Pappas press release, KPTM, achieved revenue increases for the first quarter of 2008 of 27.9 percent over the same period in 2007, exclusive of any political advertising.
Monday, May 12, 2008
From The Weekend Wires: