In May 2019, Deb McDermott gained the industry’s attention for the acquisition of television stations in Providence, R.I., and Lincoln, Neb., by the company she holds the title of CEO for, Standard Media Group. Six months later, Standard Media added nine properties from Waypoint Media in a deal valued at $59.2 million.
The deals cemented Standard Media’s role as a acquisitor, with McDermott, who is perhaps best-known in the media world for her association with ABC affiliate WKRN-2 in Nashville, partnering with Soo Kim on the company’s build-out.
Now, as 2021 begins, McDermott is shedding her ownership interest in the two stations acquired in May ’19.
A 27-page document uploaded to the FCC’s LMS proposes the transfer of control of 100% of the membership interests of Standard Media Group LLC from McDermott Communications to Paducah Television Operations LLC.
Translation: McDermott’s equity interest is being transferred to Soo.
To illustrate the change, an organizational chart was submitted to the Commission. Pre-transfer, McDermott controls Standard Media Group, and under that WLNE-6 in Providence, R.I., and KLKN-8 in Lincoln, Neb.
The McDermott-led group purchased the stations from Citadel Communications LLC for $83 million.
Post-transfer, Standard Media would be a unit of Paducah Television Operations, housed under Soo-controlled CNM Television Holdings, a division of his Community News Media LLC.
Soo Kim has generated much attention over the last year. As a dissident shareholder of TEGNA, he attempted (and ultimately failed) to win a seat on the board and gain control of the broadcast TV company. He’s also in partnership with Emmis Communications founder and CEO Jeff Smulyan, as Managing Member of the entity holding attributable interest in Mediaco — now the licensee of WBLS-FM & WQHT-FM in New York.
Is there a financial obligation tied to this transfer request, which awaits FCC approval?
Yes. Sort of.
A $55,803,225.17 Amended and Restated Floating Rate Subordinated Convertible Note, dated Dec. 10, 2020, appears to be integral to the transaction. The note holder is Soo’s Paducah, and it is exercising a conversion option.
What does this mean? It’s complex but it appears McDermott is acquiescing her ownership interest in the stations in return for the multi-million dollar loan, which has a maturity date of March 5, 2023.
Why? A plausible explanation is that Soo is assisting McDermott on closing the Citadel transaction consummated nearly 1 1/2 years ago, as some $27,196,774.83 may have been paid thus far in a deal struck before anyone knew the COVID-19 pandemic would strip local TV of ad dollars across much of 2020.
And, with Nebraska and Rhode Island far from political hot spots, the election-year windfall could have been peanuts compared to what was seen in Florida, Georgia or Arizona.
Serving as legal counsel on this transaction is Scott Flick of Pillsbury Winthrop Shaw Pittman. He was not immediately available for comment when reached by RBR+TVBR.