The owner of WOAM-AM & WPMJ-FM in Peoria IL flatly states that Kelly Communications is not headed into bankruptcy, as incorrectly reported in RBR earlier this week. The company is, however, taking a breather to try to deal with an increasingly untenable situation brought about by five predominant factors, according to owner Bob Kelly. They include: (1) Flat income over a 5-year period; (2) drastic increases in operating expenses over this same period; (3) lack of ability to obtain refinancing in today’s market; (4) inability to produce the operating funds to continue; and (5) no indication that this situation is going to improve in the near future. Kelly is exploring various options, including the sale or refinancing of the stations, and hopes to have them back on the air within 6-12 months one way or the other. The company has been operating in central Illinois since 1986.
RBR/TVBR observation: Kelly is worried that others will find themselves in a similar situation. Companies paid a certain price to enter markets. If revenue growth was plugged in as a factor in meeting covenants, and the growth fails to show up…well, enough said. He thinks television, newspaper and other media sectors face the same vulnerability.