Local TV

New Station-Group Finances Could Give Life to Syndie Marketplace

Tribune's emergence from bankruptcy and healthier finances for ION, Young, Pappas and others are cause for optimism 4/26/2010 03:45:00 AM Eastern

IN 2010, TV station groups such as Tribune and Young
are due to restructure their finances, eliminate debt
and exit Chapter 11 bankruptcy, giving syndicators
hope that cleaned-up balance sheets will augur a livelier
programming market. Other groups, including Ion
and Pappas, already have gone through this process and
emerged on the other side.

“This is a good thing for the industry,” says Justin
Nielson, analyst at SNL Kagan. “Now stations can start
trading at the right multiples, and they won’t have that
overhanging debt that’s been in the picture over the past
three years.”

EntourageThis debt-for-equity swap scenario, which leaves broadcast
groups under bank ownership, is now common. Broadcasters
expanded ownership over the past decade by acquiring
highly leveraged assets under the assumption that the
advertising market would remain
healthy. Instead, many TV station
businesses have crumbled in the
past two years due to the advertising
recession, which saw revenues
drop as much as 25%. As a result, stations have not
had money to invest in new programming or even,
in some cases, to continue to pay existing license fees
for previously acquired shows.

New reasons to play
Tribune’s reemergence is particularly good news for
syndicators, but other groups—including Ion, Young,
Pappas, New Vision and Freedom—also may be more
willing to play in the syndication market now that their
finances are looking healthier. Ion, in particular, with
58 TV stations in markets across the country, may become a
more active buyer of syndicated programming, says a company
source. Two years ago, Ion bought CBS Television Distribution’s
Criminal Minds and Ghost Whisperer for primetime
runs. With plenty of time to fill, Ion may want to acquire more
first-run and off-net programming in the coming months.

Tribune has remained an active buyer of syndicated programming
since it first entered Chapter 11 bankruptcy in
December 2008. It has acquired Warner Bros.’ Entourage and
Curb Your Enthusiasm for late-night time slots, and renewed
Twentieth’s Family Guy and NBC Universal’s Maury, Jerry
and Steve Wilkos for cash license fees and barter.

Still, Tribune’s purchases have been cash-light compared
to previous acquisitions; the broadcaster paid top dollar for
Warner Bros.’ Two and a Half Men back in 2006, prior to being
acquired by investor Sam Zell. With strong stations in New
York, Los Angeles and Chicago, Tribune often sets the pace
when it comes to syndication sales.

That Tribune is preparing to exit bankruptcy just as Warner
Bros. is bringing out The Big Bang Theory for sale is not a coincidence.
Warner Bros. sits on Tribune’s creditor committee and
knows exactly where Tribune stands. And Warner Bros. has
made it clear that it expects to get big bucks for Big Bang.

“Tribune’s bankruptcy shouldn’t be an issue,” says one
syndicator. In fact, “it’s more likely that their finances will
be on track,” says Bill Carroll, VP of programming at Katz
Media Group. “It should have a positive effect, not a negative

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