In a stunning turn of events, a Nevada Federal Bankruptcy Judge has — in an oral ruling — paved the way for Ed Stolz, who lost ownership of his three FM radio stations in a protracted California federal court battle over unpaid music royalty fees, to regain ownership of the properties.
What does this mean? The telenovela-like saga of the stations will more than likely end up with the stations in someone else’s control. In an exclusive interview, the court-appointed receiver, Larry Patrick, tells RBR+TVBR it is simply a last-minute act of desperation for an individual financially unable to keep them.
On January 31, Judge August B. Landis of the U.S. Bankruptcy Court for the District of Nevada gave its verbal approval to an “Emergency Joint Motion” that forces Patrick — the court-appointed receiver in the California case — to turnover Major Market Radio LLC’s KRCK-FM 97.7 in Palm Springs, Calif.; Golden State Broadcasting’s Class A KREV-FM 92.7 in Alameda, Calif.; and Silver State Broadcasting LLC’s Class C KFRH-FM 104.3 in North Las Vegas, Nev., to Stolz and the licensee’s parent, Royce International Broadcasting.
Why? Golden State, Silver State and Major Market Radio are each debtors in Nevada, and the ruling paves the way for Stolz’s bankruptcy estate to take on the licenses of KRCK, KREV and KFRH. A motion to dismiss the case was denied on Monday (2/7).
Landis’ decision, which clashes with that of California Central District Court Judge Jesus Bernal, is the latest monkey wrench in a most difficult series of events involving Patrick, an esteemed media broker whose Patrick Communications is one of the nation’s most highly regarded brokerages.
As Patrick sees it, Landis arrived at his ruling based solely on information provided by Stolz — with much of that information simply erroneous. “The bankruptcy judge, hearing no testimony and looking at pleadings, put the value of the stations at $40 million,” Patrick tells RBR+TVBR. KREV, KRCK and KFRH were sold for a combined value of $6 million; KREV was marketed by broker Doyle Hadden for one year at a reported asking price of more than $18 million.
With no Bond & Pecaro station valuation data in hand and relying only on what Stolz supplied the bankruptcy court, Patrick says, Judge Landis sided with Stolz.
While that’s frustrating and disappointing to Patrick, it doesn’t mean the California case is over. In fact, Patrick says, Bernal could play the pivotal role of final arbiter. “There is no guarantee that Ed Stolz will emerge from bankruptcy,” Patrick says. “The court said, ‘Get a loan.’ But, there is no revenue aside from the VCY America LMA.”
That arrangement is tied to VCY’s March 15, 2021, agreement to purchase the three FMs for $6 million from Patrick, as the court-appointed receiver of KREV, KRCK and KFRH. As RBR+TVBR has extensively reported, Patrick gained control of the stations after Stolz, as part of WB Music Corp. v. Royce International Broadcasting Corp., was found to ultimately owe millions of dollars in unpaid music royalty fees. To satisfy the debt, Federal District Court Judge Bernal ordered a sale of the stations, with a portion of the proceeds going to the music rights holders.
Here’s the rub: ASCAP and those owned unpaid music royalty fees have received their money in full.
Stolz reportedly still has outstanding debt of $1.089 million that must be dealt with; it is unclear if these are unsecured debts that a bankruptcy would reduce or negate in a settlement.
Then, there is an outstanding judgment against Stolz in San Francisco regarding a broken transmitter lease.
As such, Patrick laments, “We wait until Judge Bernal gets the order, reads it, and decides what to do.”
Meanwhile, Patrick puts part of the blame on this latest twist in the long-running Stolz saga on the FCC’s Media Bureau and former Chair Michelle Carey. “Had the FCC approved the VCY sale … we’d all be done,” he says. “This is a last-second desperate attempt to stave off losing ownership.”
Yet, it worked — at least for now. “When Stolz gets to the point of putting together a plan, I don’t think he has a chance,” Patrick believes.
Meanwhile, Stolz will likely keep VCY America’s LMA intact, although he has every right to reject it. Why? Royce no longer has two of three studio leases, and VCY America has placed its own equipment inside at least one of the three stations.
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