Pappas Broadcasting

[TedL]

(About CW's performance wrote:)
These stations were expecting to see an improvement from UPN and WB ratings with a combined lineup, and made long-term reverse-compensation deals, and this is starting to hurt the stations that signed on with The CW.

When and which stations are paying CW Reverse Compensation?  How did that become an acceptable part of the affiliation agreement?

Ted

[TedL]

Peg Brickley, who wrote the Marketwatch article, was kind enough to forward a copy of the "Declaration of Harry J. Pappas in support of Chapter 11 Petitions and First-Day Orders," which was filed in the U.S. Bankruptcy Court in Delaware on Saturday. This is the document that formed the basis of her article.

Can you post the PDF somewhere and advise of the link?  I'd like to read it. I'm sure others would.

Thanks,

Ted.

BTW, was enjoying the Stan Kenton stuff early this morning on KABLRadio.com.  When is "Gaslight" on?
I haven't heard any Offenbach or Doug Pledger in a while : ) Serious about the Gaslight, though.

[DubbaDon]

The Fresno Bee is reporting that creditors have forced Mr. Pappas into Chapter 7 Bankruptcy.
http://www.fresnobee.com/263/story/601856.html

[TedL]

The Fresno Bee is reporting that creditors have forced Mr. Pappas into Chapter 7 Bankruptcy.
http://www.fresnobee.com/263/story/601856.html

They have petitioned a judge to order an involuntary bankruptcy.

"Filed Monday in the U.S. Bankruptcy Court for the District of Delaware under Chapter 7 of the Bankruptcy Code, the action could lead a judge to order the sale of personal property to pay off debt. "

<snip>
Lenders Fortress Credit Opportunities, Ableco Finance LLC and Silver Oak Capital LLC, saying Pappas personally owes them $15 million, are asking in their Chapter 7 filing for an interim trustee to protect their interests while the matter can be sorted out.

<snip>

In their Chapter 7 filing, creditors say Pappas and his wife, Stella, personally guaranteed $30 million of a $284 million loan that Pappas Telecasting secured in March 2006.

Creditors said the $284 million loan was based on an agreement that Pappas would sell enough of his television stations to repay $100 million of the debt. The rest would be paid on what the filing calls "a reasonable schedule."

[SFStatic]

The court may go for the 7, or they may allow Pappas to operate as a debtor in possession. Have seen the flip where creditors tried to force a 7, and a court allowed the station to operate under Ch. 11.

[DavidKaye]

The court may go for the 7, or they may allow Pappas to operate as a debtor in possession. Have seen the flip where creditors tried to force a 7, and a court allowed the station to operate under Ch. 11.

This might work if the creditors think Pappas can dig himself out from under this or can't find anybody else to take them over.  If there's a sell-off, who else could operate the stations any better?  They're already located in TV-saturated markets, so they can't really affiliate with any networks better than what they have now.  And is there any more belt-tightening they can do?  I understand the Pappas stations are already run fairly lean.  About the only thing they could do is operate the whole thing out of one or two centers similar to NBC Burbank. 

[DubbaDon]

They looked at Central-Casting several years ago with Omaha and Fresno as hubs.  The problem is that they have too many different program streams: ABC, CBS, FOX, CW and MyNW across 4 Time Zones.  Central Casting works best when you have the same program stream across several stations (same programs - same time zones).

Unfortunately, Central Casting is what the networks might be doing to By-Pass Local Broadcasting in the near future - dealing directly with the cable and satellite operators instead of broadcasters.  It works for ESPN, FX, and several hundred other channels, now available to the home viewer.

[newsperson]

Newsperson responds;

Central casting........right now affiliates are in a position to receive compensation for for re-transmission on cable. This has been replacing network compensation.  If the networks decided to bypass affiliates they could, except the would miss out on a lot of audience as local TV stations are out and about in their community promoting viewership.

Now onto Pappas........Now that the creditors have thrown back an involuntary Chapter 7 at Harry Pappas that is a hard blow. However Harry will certainally fight back and could deminish its effectiveness.

Now that a Chapter 7 has been filed it could have an effect on other Pappas stations that were not included in the bankruptcy. Even if he doesn't want to sell certain properties, the court could force a sale.

In this situation what would happen to KTRB and KMPH?

Is any company in the position and have the desire to acquire a hihg power AM in San Francisco? 

We already know that Citadel is not buying stations anywhere, Clearchannel is already overloaded, so who is left?

I will look forward ot your comments.

Newsperson

[DavidKaye]

I will look forward ot your comments.

I think KTRB will be a very hard sell until Pappas moves the transmitter and hooks it up to a power line so they at least have a viable physical plant to start with. 

[DubbaDon]

I'm a former employee (let go after 8 years of loyal service - hired by the old Pappas - fired by the new Pappas).  At 2008 NAB, I was approached by several vendors asking about payments.  Apparently, Pappas's VP of Engineering Dale Scherbring had been ducking vendors and their collection calls for so long, they thought I could help them.

Fortunately, I'm out of the mess.

It was an interesting ride seeing how the structure and actions of the company changed over the years.  I joined them because I considered him to be a pure broadcaster.  Then they brought on corporate management from outside Mr. Pappas's inner circle (mostly Omaha folks); over time to company went from being a broadcaster to being a bottom feeder.  I don't know if Mr. Pappas saw it or was too busy with other ventures.  It's too late now.