Gray TV Deal Not Getting Any Young-er

Company still on sidelines as FCC reviews license transfers

By Michael Malone -- Broadcasting & Cable, 6/14/2010 12:01:00 AM

WHEN A bankruptcy court judge signed off on Young Broadcasting’s reorganization plan April 19, it appeared Gray Television finally had the green light to begin managing seven Young stations—a service it was already being paid for since the pact was struck last summer (Station to Station, April 26). With the pounding of the judge’s gavel, Gray execs said they were set to start executing their strategy at the Young stations.

But almost two months after the ruling, Gray remains glued to the bench, as both parties are awaiting FCC approval on license transfers. Yet Gray continues to be paid its $2.2 million annual fee by Young.

“We’re ready, willing and able to do anything [Young] asks us to do,” says Gray Television President/COO Robert Prather. “Hopefully it’s resolved soon, but it’s wait-and-see until then.” (Prather says Gray is also awaiting a federal court decision on the Young stations before it can proceed, but didn’t know specifics of the case.)

Young did not return calls for comment. An FCC spokesperson said the license transfer application was filed May 26 and is pending; Young filed it after a consortium of debtors was awarded control of the Young stations in April.

Prather did not offer specifics about Gray’s strategy for the stations, but details emerged from discussions with managers inside Gray and Young. While Young has, in some cases, one general manager overseeing stations in different markets, under Gray the group will have one GM per station. Vacant GM positions will be filled.

Gray, meanwhile, will assign one Young station to each of seven Gray general managers for oversight, including the chiefs at WKYT Lexington and KAKE Wichita.

Insiders say Gray will install a more rigid operational structure at the Young stations, with staffing and salaries following a by-the-book model based on market size and revenue. “It’ll be more cut and dried,” says one Young manager.

Multiple insiders say Gray will be given the opportunity to acquire the Young stations once the management agreement is up. “Being intimately involved with the stations, [managers will] know which ones are good buys,” says one insider.

Gray has banked more than a million dollars for the management deal thus far. “They’ve paid right on time,” Prather says.

Competitors are curious how Gray’s management will affect the local landscape. One Nashville rival says WKRN was particularly aggressive during the recent floods, prompting him to wonder if Gray already had boots on the ground.

Others say it’s status quo. “We haven’t really seen anything that would indicate a management change,” says WLUK Green Bay VP/ General Manager Jay Zollar. “We’re keeping our eyes open.”

It’s difficult for Young staffers to stay focused amidst such uncertainty, but they’ve soldiered through dysfunction for years, and will continue to as the change keeps moving toward some eventual resolution. “I think we’ve become accustomed to it,” says one Young reporter. “Now it’s, all right, well, whatever. People just shrug their shoulders and say, if it happens, it happens.”

E-mail comments to mmalone@nbmedia.com and follow him on Twitter: @StationBiz