Lenders try to down-chapter Pappas


Pappas Telecasting is already working under Chapter 11 to resolve its current financial difficulties. Principal Harry J. Pappas reports that “three of the more than eleven lenders of the Fortress loan group” want to ratchet the situation down to involuntary Chapter 7 status. “This was a precipitous action taken by three of the non-bank lenders in the Fortress loan group after various of my affiliated television stations filed for Chapter 11,” said Pappas. “We are confident that the petition filed against us will be converted to a Chapter 11 or, as likely, be entirely dismissed by the court.”

13 of the group’s 30 television stations are exploring options under Chapter 11 protection. The group, hit by a combination of weak revenues, further weakness being experienced at its CW affiliates, a tight credit market, and capital expenses associated with the DTV conversion. Attempts to sell some of the properties on the open market have not met with success.

Pappas also owns AM radio stations in San Francisco and Modesto CA.

RBR/TVBR observation: You can just hear the nerves jangling. Money is tight, and that has a lot of people on edge.

A lot of company execs are saying Q2 is looking like more of the Q1 same-old same-old, and then pinning at least a modicum of optimism on the second half of the year. But we’ve been hearing that prosperity is around the corner, just a few quarters into the future, for quite a few years now. (Isn’t that what President Hoover was saying?)

But many execs are getting too smart to be overly optimistic, and that’s a good thing. Promise what you know you can deliver and try to be a pleasant surprise by beating the promise. The thing to remember is that broadcasting is still a profitable business with sound fundamentals. Maybe everybody will have to adjust to a new reality on margins and property valuations, but eventually – if only by an act of nature – equilibrium will be restored to the industry’s balance sheets. We obviously need to strive for patience, and that includes you money guys.