By DERRICK GINGERY, Greater Fort Wayne Business Weekly
derrickg@fwbusiness.com
The owners of all four of Fort Wayne's commercial television stations now find their companies in flux.
Staff at WANE, channel 15, and WFFT, channel 55, are waiting for their parent companies to determine whether they will sell. WFFT parent Nexstar Broadcasting Group Inc. and WANE parent Lin TV Corp. announced May 17 and May 18, respectively, they would explore "strategic alternatives" including sales of the companies.
Lin retained J.P. Morgan Securities Inc. for its effort. Nexstar retained Goldman Sachs Group Inc. No sale of either company is assured, according to written statements from Lin and Nexstar.
Neither company expected to make any further comment until the processes are completed, according to the statements.
Alan Riebe, WANE station manager, would not comment. Bob Blacher, WFFT vice president and general manager, also would not comment. Blacher is retiring June 1.
Granite Broadcasting Corp., owner of WISE, channel 33, and operator of WPTA, channel 21, is preparing to emerge from Chapter 11 bankruptcy protection. A federal judge approved the company's restructuring plan May 18.
Private-equity groups recently have shown an interest in broadcast acquisitions. The New York Times Co. announced this month it completed the sale of its broadcast group to Oak Hill Capital Partners for $575 million, and Clear Channel Communications said last month it would sell its TV stations to Providence Equity Partners Inc. for $1.2 billion.
Morningstar analyst James Walden said May 22 he could not speculate on what could happen to Lin TV because he had the company under review. He did say the amount of political advertising dollars local TV attracted last year is proof they still can be moneymakers.
"They generate very generous cash flow," Walden said. "Even with all the new forms of media, local TV stations are still relevant."
Several analysts have said in published reports that Lin, Nexstar and others may be thinking now is the time to pull the trigger, given the deals that already have occurred. Private-equity investors see more value in television stations than do public markets, analyst Marci Ryvicker, of Wachovia Capital Markets in New York, told Bloomberg News.
"Nexstar may have forced Lin to move," she said in a May 18 story from the wire service.
Lin TV operates 30 stations in 18 markets, including Fort Wayne, Indianapolis, Lafayette and Terre Haute. Nexstar owns, operates or provides content for 49 stations in 27 markets, including Terre Haute and Evansville as well as Fort Wayne.
Kit Spring, an analyst with Stifel Nicolaus, wrote in a May 18 client note that Lin could be valued at $20 to $23 a share. It could be even higher if the buyer already owns some television stations and can cut Lin's corporate expenses.
Lin shares were trading between $19 and $20 a share at Business Weekly's deadline May 23.
"This could perhaps be achieved by combining TVL (Lin TV's ticker symbol) with NXST (Nexstar Broadcasting's ticker symbol) ..." Spring wrote.
Spring also said in the note he expects buyers for Lin to emerge. If the company is purchased and taken private, it would be the second time Lin TV has done that in the last decade. In 1998, private-equity firm Hicks, Muse, Tate & Furst Inc. purchased the company. It took the company public again in 2002.
Granite Broadcasting filed for bankruptcy in December to deal with its massive debt, which had reached $644 million on Sept. 30.
Granite's restructuring plan allows secured debt holders to receive $200 million in new debt notes. Their remaining outstanding debt will be converted into nearly all of Granite's new equity, according to court documents. Unsecured creditors will receive a 100-percent recovery, up to an $11-million cap, on allowed unsecured claims. Holders of common stock also will receive compensation.
Although the court found no damages were caused, a court-appointed examiner indicated Granite Chief Executive Officer W. Don Cornwell and the Granite board of directors may have violated their fiduciary duties when they allowed Cornwell last year to direct efforts to find financing when Granite was nearing a deadline for interest payments.
The examiner reported, according to court documents, Cornwell had a conflict of interest by negotiating his severance package while simultaneously arranging financing for the company. Cornwell was told to remove himself from the process, but continued to be actively involved.
Several parties in the case disagreed with the assessment and the court also noted several facts existed that allow Cornwell to defend himself.
Harbinger Capital Partners Master Fund I Ltd., Golden Tree Master Fund II Ltd. and others objected to the restructuring plan. The companies said last year a restructuring proposal they offered was better than a counter proposal that was accepted.
Granite owns WISE and operates WPTA in Fort Wayne through a shared services agreement with Malara Broadcast Group.