After dealing with Interep’s radio rep business early last week, bankruptcy trustee Kenneth Silverman closed out the week by filing a deal Friday to sell Interep Interactive. Unless a topper bid is made by December 9th, the interactive rep business will be sold to Mission Media Group (MMG), a company headed by Interep Interactive’s CEO, Adam Guild.
As of today, December 1st, MMG is operating Interep Interactive under a temporary management agreement. Assuming the sale is approved by US Bankruptcy Judge Robert Drain at the December 9th hearing, MMG will pay $200,000 cash at closing and an additional $100,000 over five months at no interest to acquire Interep Interactive, which includes Winstar Interactive Media, Interactive Video Network and Gamma Ray Media. Adam Guild, the son of Interep founder and retired CEO Ralph Guild, is the last member of the founding family to be involved in day-to-day management at Interep. The motion filed with the court notes Adam Guild’s connections to the company in bankruptcy, stating that the sale agreement “represents the protection of arm’s length negotiations between MMG and the Trustee and the Trustee believes that the purchase price under the Agreement is fair.” MMG will assume Interep Interactive’s obligations under employment agreement with its employees, except that Adam Guild will waive any claims he has against the debtor estate.
Although Interep’s radio rep firms shut down last week after a federal bankruptcy court approved a deal to have Clear Channel-owned Katz Media Group pay $3.64 million to release all radio clients from their rep contracts. And while Katz immediately signed deals with CBS Radio and Entercom, we’re still waiting to see how other former Interep clients decide to handle their national business. The largest remaining is Spanish Broadcasting System (SBS). RBR/TVBR has gotten no response to emails sent over the long holiday period to CEO Raúl Alarcón and other corporate contacts inquiring as to what SBS will do for national representation.
While the radio rep firms have closed their doors, Interep’s two television rep firms continue to operate, although Silverman has indicated that can’t go on for long. SBS, in fact, is one of the clients for its Mega TV operation. Compared to the network O&O in-house reps and the collections of rep firms owned by Cox, Petry and Katz, the two TV rep firms at Interep are rather small – but they are in a desirable growth niche, US Hispanic television. Azteca America Spot Television Sales (AATVS), established in 2005, sells national spot for most of the major Azteca America network affiliates. Hispanic Independent Television Sales (HITS), established in 2007, represents independent Hispanic TV stations, and its HITS Network division also reps several cable and satellite channels aimed at US Hispanics. Both TV rep firms are based in New York and headed by President Tom Marsillo, with staffers in six other offices across the country.
Also yet to be dealt with is Morrison and Abraham, the media sales consulting firm headed by President Sue Novicki.
While some backroom functions may continue at Interep for some time to sort out dollars coming in from outstanding sales deals and pay out dollars to client stations and creditors, the operations described above should be sold off very quickly.
RBR/TVBR observation: What sealed Interep’s fate? It probably should have avoided Wall Street, particularly after seeing Katz fail as a public company and end up in the arms of Clear Channel. With Interep so highly leveraged as a standalone company, it was not surprising that Katz, with Clear Channel’s deep pockets, was able to go after market share and sink the competition. Once Katz began offering revenue guarantees to lure away Interep clients, it became virtually impossible for Interep management to stop the downward spiral. Katz might not have been able to go that route had Interep been able to recapitalize well before its $99 million in public bonds were about to come due. Indeed, if Interep had never tapped the public markets for debt and then equity, it might have had more flexibility to stay competitive when the advertising markets tightened.