Young stations segue to Gray


It is common for humans to go gray; not so common for television stations, but that is just what’s happening for a significant chunk of the Young Broadcasting portfolio. The contract just hit the FCC sending most of the group to a consortium of lenders. The outlines of the deal are as we reported earlier – the stations involved (not all of Young’s portfolio) will go for about $220M.

No one lender will have a controlling interest in the group, but two will have an attributable interest. Highland Capital Management LP and Raymond Wechsler are the pair in that limited group.

$200K of the price will be credited against secured obligations and cure amounts, and the remaining $20M is the estimated amount of liability the creditors are taking on.

As a technical matter, the group is basically going from Young Broadcasting Inc. to New Young Broadcasting Holding Company Inc., but will still operate as Young Broadcasting and retain local licensee names.

The stations going under the care and feeding of Gray include:

* Nashville TN: WKRN-TV ABC

* Albany-Schenectady-Troy, NY: WTEN-TV and satellite WCDC-TV, both ABC

* Richmond VA: WRIC-TV ABC

* Green Bay WI: WBAY-TV ABC

* Davenport IA-Rock Island-Moline IL: KWQC-TV NBC

* Lafayette LA: KLFY-TV CBS

* Sioux Falls, SD: KELO-TV CBS. KELO also has MyNetworkTV on a DTV multicast, and has three satellites, KDLO-TV & KPLO-TV, both Sioux Falls, and KCLO-TV Rapid City SD

Gray would be paid an annual fee of $2.2 million, plus a bonus for exceeding broadcast cash flow (BCF) targets. The baseline BCF for 2010 is $38.6 million. Gray will also receive bonus payments if the stations under its management are sold for a total price exceeding $250 million. The management agreement will take effect on the 11th day after the sale is approved and run through December 31, 2012.

Not included in the Gray management contract:

* Knoxville TN: WATE-TV ABC

* Lansing MI: WLNS-TV CBS

* San Francisco-Oakland-San Jose CA: KRON-TV MyNetworkTV

RBR/TVBR observation: A quick eyeball survey of Gray’s extensive portfolio reveals operations in numerous similarly-sized markets, but no market overlap whatsoever between the two companies. With no ownership cap issues to deal with, that makes Gray uniquely qualified to manage this group of stations.