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Pappas Broadcasting
- Thread starter CarterB
- Start date
R
rickradio
Guest
No kidding...
I thought I saw someone here say that the Pappases had "tons of money."
Well, David Kaye, I guess they won't be burning that 4,000 gallons of propane for long...
Thanks, CarterB.
I thought I saw someone here say that the Pappases had "tons of money."
Well, David Kaye, I guess they won't be burning that 4,000 gallons of propane for long...
Thanks, CarterB.
CarterB said:
To clarify, Pappas filed for Chapter 11 bankruptcy protection for 13 of their television stations, which are held under one of several Pappas corporations. The two Pappas radio stations -- KTRB/860 and KMPH/840 -- are not part of the bankruptcy filing.
However, the TV stations include KTNC/42 in San Francisco, as well as KMPH-TV and KFRE-TV in Fresno, which are key stations in the Pappas group. Another 17 Pappas TV stations and the two radio stations were not listed.
Although the filing was made because the stations in the Chapter 11 group were having "financing issues as it applies to the stations financed by the mostly non-bank lenders," according to Harry Pappas, I don't think that it can be said that KTRB is completely in the clear financially. The stations are still part of the same family-owned group.
I have a copy of the full press release, which, strangely enough, has not been posted at www.PappasTV.com yet. Perhaps it will appear on Monday.
DJ
Everybody needs help once in a while when they might have trusted the wrong groups for financing. And things are tough all over the place. Nobody is immune. Hopefully Pappas will recover just fine.
rickradio said:
They DO have tons of money. Notice that only SOME Pappas TV stations (fewer than half) filed for reorganization. The stations are incorporated separately with different loans and probably different ownership mixes. Several things emerge in the story: (1) Pappas stations are doing better financially than TV stations on average, (2) the Chapter 11 affects only 13 stations with 17 and KTRB radio unaffected.
Newsperson responds:
It sounds like the filing will keep the said lenders from foreclosing on the named TV stations. That is a common reason for filing a bankruptcy. Also as part of a bankruptcy a filer can ask to cancel certain contracts and for a TV station that could include proram contracts.
The most common contracts that get canceled are real estate, such as a building lease. You may remember in 2003 K-Mart was able to cancel many of its store leases through bankruptcy. They can also get out personal services agreements.
In this situation it sounds like a one issue filing and that millions of dollars are owed to lenders and this will stall any foreclosure. It may also give the opportunity to re-negotiate some of the terms.
Are the Reno TV stations included in this?
What are your other thoughts?
Newsperson
It sounds like the filing will keep the said lenders from foreclosing on the named TV stations. That is a common reason for filing a bankruptcy. Also as part of a bankruptcy a filer can ask to cancel certain contracts and for a TV station that could include proram contracts.
The most common contracts that get canceled are real estate, such as a building lease. You may remember in 2003 K-Mart was able to cancel many of its store leases through bankruptcy. They can also get out personal services agreements.
In this situation it sounds like a one issue filing and that millions of dollars are owed to lenders and this will stall any foreclosure. It may also give the opportunity to re-negotiate some of the terms.
Are the Reno TV stations included in this?
What are your other thoughts?
Newsperson
newsperson said:
This sounds like the lenders are venture capitalists and there has been a difference of opinion on the exit strategy... Pappas likely does not want to sell the group, while the vc's likely do. Bankruptcy stays off the ability of the vc's to force a sale.
newsperson said:
Yes, the Reno TV's are a part of the filing. Pappas is blaming the mediocre performance of The CW as part of the reason for going Chapter 11. Yet, there were some Pappas stations that I don't understand weren't included as part of the filing, including their Wisconsin station that has never made money and probably never will with its current programming (WWAZ), the digital-only MyNetworkTV station in Des Moines (KDMI) as well as its CW sister in the market (KCWI), and the Yuma CBS (KSWT) that has been having trouble going full-power digital.
And to think, Pappas just spent a LOT of money in Reno to refurbish and upgrade their
TV facilities in that shopping center they broadcast from...
The website (as of this posting) that David Jackson showed in an earlier post has not
had a gnu press release in nearly six months, though they had a number of them last
year...should be interesting...
--jay
TV facilities in that shopping center they broadcast from...
The website (as of this posting) that David Jackson showed in an earlier post has not
had a gnu press release in nearly six months, though they had a number of them last
year...should be interesting...
--jay
It is under the Bankruptcy Chapter, and therefore the name. It is really a reorganization, however, and is sometimes referred to as "debtor in possession."
From the Cornell Law School site:
U.S. Code collection
TITLE 11
TITLE 11—BANKRUPTCY
How Current is This?
CHAPTER 1—GENERAL PROVISIONS
CHAPTER 3—CASE ADMINISTRATION
CHAPTER 5—CREDITORS, THE DEBTOR, AND THE ESTATE
CHAPTER 7—LIQUIDATION
CHAPTER 9—ADJUSTMENT OF DEBTS OF A MUNICIPALITY
CHAPTER 11—REORGANIZATION
CHAPTER 12—ADJUSTMENT OF DEBTS OF A FAMILY FARMER OR FISHERMAN WITH REGULAR ANNUAL INCOME
CHAPTER 13—ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME
CHAPTER 15—ANCILLARY AND OTHER CROSS-BORDER CASES
From the Cornell Law School site:
U.S. Code collection
TITLE 11
TITLE 11—BANKRUPTCY
How Current is This?
CHAPTER 1—GENERAL PROVISIONS
CHAPTER 3—CASE ADMINISTRATION
CHAPTER 5—CREDITORS, THE DEBTOR, AND THE ESTATE
CHAPTER 7—LIQUIDATION
CHAPTER 9—ADJUSTMENT OF DEBTS OF A MUNICIPALITY
CHAPTER 11—REORGANIZATION
CHAPTER 12—ADJUSTMENT OF DEBTS OF A FAMILY FARMER OR FISHERMAN WITH REGULAR ANNUAL INCOME
CHAPTER 13—ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME
CHAPTER 15—ANCILLARY AND OTHER CROSS-BORDER CASES
Newsperson responds:
SFstatic; Yes I see Chapter 11 as reorganization and 7 as liquidation.
I also see 13 as "adjustments of debts of an individual with regular income".
So 13 for individuals and 11 for business can have simular outcomes.
It appears that 7 may be used for individuals and business.
Remember that Harry Pappas said a few months ago that he wanted to sell his stations? This may be a smart chess move to provide more time so he can find a buyer(s). There must have been alot of pressure to force this blockade.
Yes I have been to the Reno shopping center glass house TV station and had the full tour. With selling enough TV stations Harry could wind up free and clear in Reno and it would make the most sense to keep those stations since that's his hometown now.
KTRB has no debt since they didn't buy it from anyone. It's an upgrade from Modesto and the money spent for KTRB is so small compared to the purchase of any of the TV stations.
Speaking of KTRB and news from them?
Newsperson
SFstatic; Yes I see Chapter 11 as reorganization and 7 as liquidation.
I also see 13 as "adjustments of debts of an individual with regular income".
So 13 for individuals and 11 for business can have simular outcomes.
It appears that 7 may be used for individuals and business.
Remember that Harry Pappas said a few months ago that he wanted to sell his stations? This may be a smart chess move to provide more time so he can find a buyer(s). There must have been alot of pressure to force this blockade.
Yes I have been to the Reno shopping center glass house TV station and had the full tour. With selling enough TV stations Harry could wind up free and clear in Reno and it would make the most sense to keep those stations since that's his hometown now.
KTRB has no debt since they didn't buy it from anyone. It's an upgrade from Modesto and the money spent for KTRB is so small compared to the purchase of any of the TV stations.
Speaking of KTRB and news from them?
Newsperson
Eric Stein said:
Where did you read that? Unless I missed it completely, it isn't mentioned in the press release.
Your reference, please?
DJ
Eric Stein said:
That's interesting. None of the quotes included in the Marketwatch article are in the press release, but they aren't attributed directly to anyone at Pappas. (Which could mean that they are from the actual court filing.) It seems funny that they'd be willing to bash the CW in court documents, but not in their press release.
The Marketwatch article also gets the call letters of the Pappas Fresno station wrong; it should be KMPH, not KPMH.
It also closes by saying that "Laura Davis Jones of Pachulski Stang Ziehl & Jones represents Pappas in the bankruptcy case," while the press release states that "Pappas Telecasting is represented in the Chapter 11 case by Michael B. Solow (of) Kaye Scholer LLC, 3 First National Plaza, 70 W. Madison Street, Suite 4100, Chicago..."
I know this thread is spinning off-topic, but this (as well as Sam Zell's public speeches which spilled the beans of Tribune dropping them in favor of FOX in San Diego) should be taken as a wake-up call for The CW to improve their performance, or dismantle completely. These stations were expecting to see an improvement from UPN and WB ratings with a combined lineup, and made long-term reverse-compensation deals, and this is starting to hurt the stations that signed on with The CW.
The soft economy isn't helping any either.
The soft economy isn't helping any either.
Peg Brickley, who wrote the Marketwatch article, was kind enough to forward a copy of the "Declaration of Harry J. Pappas in support of Chapter 11 Petitions and First-Day Orders," which was filed in the U.S. Bankruptcy Court in Delaware on Saturday. This is the document that formed the basis of her article.
Based on the 40-page affidavit, I'd say that too much blame is being placed on the CW, which is only mentioned in a few brief paragraphs (although five of the stations are CW affiliates). In fact, the first event leading to the Chapter 11 case listed is "Downturn in the Economy."
Blame is also placed on high operating costs, advertising market conditions, cost of converting to digital television, inability to make payments or comply with restrictions in prepetition credit agreement, and -- notably -- the leaking of information that drove down the bidding price on the TV stations that Pappas is trying to sell.
The affidavit states "the market became aware that Debtors were in default under certain provisions of the Prepetition Credit Agreement, and as this information leaked into the market, prospective purchasers sensed the opportunity to buy at distressed prices."
Also: "the Debtors filed their bankruptcy petitions today in an effort to accomplish an orderly sale of the stations as a going concern to preserve asset values for the benefit of the Debtors' creditors, including the Prepetition Lenders."
DJ
(Aside to the moderator: yes, this is all radio-related, because Harry Pappas owns not only 99% of Pappas Telecasting's capital stock, but 100% of the voting stock in San Francisco's KTRB/860. Their fates are linked closely, if not directly.)
Based on the 40-page affidavit, I'd say that too much blame is being placed on the CW, which is only mentioned in a few brief paragraphs (although five of the stations are CW affiliates). In fact, the first event leading to the Chapter 11 case listed is "Downturn in the Economy."
Blame is also placed on high operating costs, advertising market conditions, cost of converting to digital television, inability to make payments or comply with restrictions in prepetition credit agreement, and -- notably -- the leaking of information that drove down the bidding price on the TV stations that Pappas is trying to sell.
The affidavit states "the market became aware that Debtors were in default under certain provisions of the Prepetition Credit Agreement, and as this information leaked into the market, prospective purchasers sensed the opportunity to buy at distressed prices."
Also: "the Debtors filed their bankruptcy petitions today in an effort to accomplish an orderly sale of the stations as a going concern to preserve asset values for the benefit of the Debtors' creditors, including the Prepetition Lenders."
DJ
(Aside to the moderator: yes, this is all radio-related, because Harry Pappas owns not only 99% of Pappas Telecasting's capital stock, but 100% of the voting stock in San Francisco's KTRB/860. Their fates are linked closely, if not directly.)
Pappas: See National TV board for story, links to Press Release, Financial info
See the national TV board for post and links to the Pappas Press Release (well hidden on the Pappas website)
http://www.radio-info.com/smf/index.php/topic,99461.0.html
Basically, Harry hocked some of his houses to expand, couldn't make the payments and the lenders wouldn't extend or change the terms of the deal(s).
The company says it is the largest privately held television broadcaster in the United States.
Saturday's bankruptcy filings and a bit of web searching show it is a highly leveraged one.
The company reported $536 million in debt and only $460 million in assets on papers filed with the bankruptcy court.
It owes top lenders $303 million. Those include Fortress Credit Corp., which is the largest secured creditor. Fortress and Credit Suisse Securities led a syndicate that did a $305 million re-financing agreement with Pappas in March, 2006.
(That's the syndicate tied to the bankruptcy filings.)
The Fresno Bee reports Pappas owes "more than $5.8 million to its top 20 creditors. The biggest sum owed, $1.4 million, is to Fox Broadcasting. KMPH is a Fox affiliate."
(Like to know more about that... reverse compensation for FOX in Fresno??
Unconnected to the instant bankruptcy filings, Pappas owes TV Azteca $129 million as part of settling lawsuits and countersuits connected to to their joint effort to start up Azteca America.
A 2003 deal to carry the network on KAZA-TV/DT, Avalon (Los Angeles) was extended in January to require carriage through 2012. The extension allows Pappas to carry his competing TuVisión network on KAZA-DT's .2 channel.
The Azteca America startup may have been the big rock that slammed Pappas into the hard place:
Pappas intended to have ten stations committed the network, and according to the Valley Voice newspaper, had signed deals to buy seven.
At the same time, Univision started the TeleFutura network and bought a dozen full-power stations across the country from Home Shopping Network.
Valley Voice wrote that "reliable sources" said the move by Univision "hurt the Pappas negotiations and all but one of those purchases fell by the wayside with Mr. Pappas losing substantial earnest money he had put up."
We know what happened to the Pappas/TV Azteca affiliations. Pulled due to "underperformance." Has TuVisión done any better?
An SEC 10-K filing by Ares Capital Corp. shows that at the end of 2007 it held $20,844,789 in "senior secured loans" due in February of 2010, at interest rates of 14.73 percent. They were acquired in March of 2006.
Since Pappas is a privately owned company, it doesn't have to make SEC filings, and the bankruptcy court filing is one window open to what its financial condition is like.
See the national TV board for post and links to the Pappas Press Release (well hidden on the Pappas website)
http://www.radio-info.com/smf/index.php/topic,99461.0.html
Basically, Harry hocked some of his houses to expand, couldn't make the payments and the lenders wouldn't extend or change the terms of the deal(s).
The company says it is the largest privately held television broadcaster in the United States.
Saturday's bankruptcy filings and a bit of web searching show it is a highly leveraged one.
The company reported $536 million in debt and only $460 million in assets on papers filed with the bankruptcy court.
It owes top lenders $303 million. Those include Fortress Credit Corp., which is the largest secured creditor. Fortress and Credit Suisse Securities led a syndicate that did a $305 million re-financing agreement with Pappas in March, 2006.
(That's the syndicate tied to the bankruptcy filings.)
The Fresno Bee reports Pappas owes "more than $5.8 million to its top 20 creditors. The biggest sum owed, $1.4 million, is to Fox Broadcasting. KMPH is a Fox affiliate."
(Like to know more about that... reverse compensation for FOX in Fresno??
Unconnected to the instant bankruptcy filings, Pappas owes TV Azteca $129 million as part of settling lawsuits and countersuits connected to to their joint effort to start up Azteca America.
A 2003 deal to carry the network on KAZA-TV/DT, Avalon (Los Angeles) was extended in January to require carriage through 2012. The extension allows Pappas to carry his competing TuVisión network on KAZA-DT's .2 channel.
The Azteca America startup may have been the big rock that slammed Pappas into the hard place:
Pappas intended to have ten stations committed the network, and according to the Valley Voice newspaper, had signed deals to buy seven.
At the same time, Univision started the TeleFutura network and bought a dozen full-power stations across the country from Home Shopping Network.
Valley Voice wrote that "reliable sources" said the move by Univision "hurt the Pappas negotiations and all but one of those purchases fell by the wayside with Mr. Pappas losing substantial earnest money he had put up."
We know what happened to the Pappas/TV Azteca affiliations. Pulled due to "underperformance." Has TuVisión done any better?
An SEC 10-K filing by Ares Capital Corp. shows that at the end of 2007 it held $20,844,789 in "senior secured loans" due in February of 2010, at interest rates of 14.73 percent. They were acquired in March of 2006.
Since Pappas is a privately owned company, it doesn't have to make SEC filings, and the bankruptcy court filing is one window open to what its financial condition is like.
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