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NBC-Granite S.F. deal done - Broadcasting & Cable

NBC-Granite S.F. deal done

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NBC finalized a deal late Sunday night to buy Granite Broadcasting Corp.'s
KNTV(TV) San Francisco for $230 million, giving the peacock web its
14th owned-and-operated station.

The network has also agreed to buy Telemundo Communications Group Inc.'s 11
owned Spanish-language stations, including one in San Francisco, and it has a 32
percent unattributable stake in Paxson Communications Corp.

The San Francisco deal resolves what has been months of uncertainty as to
which station in the market would be the NBC affiliate come Jan. 1.

Almost two years ago, after Young Broadcasting Inc. outbid NBC for KRON-TV,
the powerhouse NBC affiliate in the market, NBC demanded that Young start paying
the network $10 million per year in so-called reverse compensation to renew the
affiliation starting in 2002. Young said no.

But Granite then offered to pay more than $30 million per year for the
privilege of being the NBC affiliate in San Francisco, on KNTV.

NBC said yes, with the new deal effective January 2002. But Granite ran into
severe economic problems and it became unclear whether the company would be able
to come up with the steep annual fees it had promised to pay NBC.

Meanwhile, the prospects for KRON as an independent are significantly lower
once it loses its affiliation in January.

Several months ago, Young approached NBC about purchasing KRON, which Young
paid $823 million for in 2000, outbidding NBC by more than $50 million. 'It's
like stealing,' Young chairman Vincent Young told analysts at the time.

NBC told Young it valued KRON as an independent, which meant that NBC
wouldn't pay more than about one-half of what Young paid for the station.
Sources said talks broke off with Young after it refused to drop its price for
KRON below $750 million.

While Granite won't get the NBC affiliation after all, it did get a handsome
return for KNTV -- its initial cash investment in the station, back in 1989, was
$45 million.

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