After an initial deal to sell its WB affiliates in Detroit and San Francisco collapsed, Granite Broadcasting announced Tuesday it found a new buyer--actually, four private-equity firms--that will pay $150 million in cash for its two stations.
But the sale price is $30 million less than AM Media, a unit of Washington-based private-equity firm Acon Investments, agreed to pay in September for WDWB Detroit and KBWB San Francisco. The deal was killed by the announcement in January that The WB and UPN would shut down and merge into The CW. The CW affiliation in both Detroit and San Francisco was immediately awarded to CBS-owned UPN stations.
Granite opted to affiliate with Fox’s new MyNetworkTV in Detroit but lost out on that service in San Francisco, where Young Broadcasting’s independent KRON will be the MNT outlet.
When AM Media balked at its deal in Feburary, it sent ripples across Granite. The company warned that it was running out of cash to service its debt. It also had to walk away from a deal of its own to buy a station in Binghamton, N.Y., that was to be funded by proceeds from the two WB stations.
Now, Granite says its new deal – with Canyon Capital Advisors, LLC, D.B. Zwirn & Co. L.P., Fortress Investment Group and Ramius Capital Group – will provide some financial release. The company will take $45 million of the cash to fund its purchase of WBNG Channel 12, the CBS-affiliated TV station serving Binghamton and Elmira, N.Y. Another $25 million will go for “general corporate purposes” and to repay company debts.
The investment firms have created two entities for the stations: DS Audible San Francisco LLC and DS Audible Detroit LLC. On a conference call Tuesday with investors, Granite said the earlier deal with AM Media valued the Detroit station at $100 million, now $85 million, while San Francisco was initially valued at $80 million, now $65 million. Both deals included $10 million for a non-compete agreement.
Granite CEO Don Cornwell wouldn’t say who would be running the stations for the buying group, declining to comment on rumors that Kevin O’Brien, former Cox and Meredith executive, was behind the deal. “I think they should speak for themselves,” said Cornwell of the new owners.