KRON: Back in the Conversation - Broadcasting & Cable

KRON: Back in the Conversation

Media General-Young merger agreement gets the business buzzing about S.F. station’s would-be buyers—again
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KRON San Francisco has been every local broadcaster’s favorite discussion topic since Young Broadcasting infamously paid $823 million for it in 2000, only to see the station turn into the planet’s most expensive independent when it lost its NBC affiliation a short time later. KRON has become Topic A again, as the surprise merger between Media General and Young has industry watchers nattering about whether KRON will be dealt—to NBC, Fox or to another group.

George Mahoney, president and CEO of Media General, sang KRON’s praises in a call announcing the marriage with Young. “Young has done a terrific job taking that station from something that was in a cashflow deficit situation and turning it to a cash-flow positive,” Mahoney said, noting “there are lessons there for Media General and maybe the industry.”

Mahoney declined further comment.

Young attempted to auction KRON in 2010, but the bids were too low to merit a sale. Young emerged from Chapter 11 that year free of $800 million in debt. Featuring a scrappy corps of multimedia journalists cranking out oodles of local news, KRON is now profitable; the station took in an estimated $31 million in revenue last year, according to BIA /Kelsey. (One potential issue: At presstime, KRON’s on-air talent and VJs in the SAG-AFTRA union rejected management’s latest contract offer.)

An informal poll of industry M&A vets puts KRON’s value at around $100 million—much of it tied to the station’s spectrum. KRON is an outlier at Media General, which consists of a batch of network affiliates clustered primarily in the Southeast. Yet there is value for a strategic buyer. “They’re not building any more fullpower stations in major markets,” noted one former Young executive.

Others believe NBC may try to grab KRON and shift its O&O from KNTV in San Jose. (NBC also owns Telemundo station KSTS in DMA No. 6.)

NBC Owned Stations dismissed the chatter. “This rumor comes up regularly,” the group said in a statement last week. “We’ve had no discussions about buying KRON and don’t expect to have any.”

Some observers counter that since NBC did not move forward on a deal for KRON the other times Young shopped it, there’s no reason to think it will now. “They have a station [in the Bay Area],” said a former NBC exec. “They have a great facility. The market knows who they are. What’s the upside of going to KRON?”

Others dangle some compelling possibilities: That Sinclair, a factor in just about every station transaction, views KRON as its ticket to the major-market dance. That Fox will do in the Bay Area what it did in Charlotte, N.C.: buy an also-ran station and take the affiliation from the incumbent (in S.F., Cox’s KTVU). After all, San Francisco is the only Top 10 market where Fox does not own a station.

Time will tell how Media General plays its hand. “The situation may not be static,” said Barry Lucas, senior VP of research at Gabelli & Co. “There are a lot of balls in the air in the broadcast M&A landscape.”

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

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