CORRECTED: See note at bottom
Young Broadcasting no longer has any talks underway to sell its largest station, MyNetworkTV affiliate KRON-TV San Francisco. After more than 10 months of negotiations with potential buyers, having officially put the station on the auction block in January, Young announced late yesterday that “there are no current active discussions with possible buyers of KRON-TV.”
The company also announced Q3 results, although that still excluded KRON as a discontinued operation held for sale. Revenues for the rest of the Young group declined 0.4% to $36.2 million. Station operating performance (SOP) was up 12% to $11.6 million. Beginning with Q4, KRON will again be included in Young’s financial results. The company said, though, that it would "continue to try to arrange the disposition of KRON-TV."
With $825 million of debt outstanding, Young said it is negotiating with its major creditors to try to restructure its debt. In its quarterly SEC filing, the company noted that if it is not able to restructure its debt and violates its loan covenants with its senior lenders, it might have to seek protection under Chapter 11 of the federal bankruptcy law.
Young did not hold a quarterly conference call with analysts and did not provide any information about revenues or SOP for KRON. It recorded a net loss of $9.6 million for discontinued operations (KRON), 8.2% more than a year ago. Its net loss for the rest of the company grew 20.8% to $15.9 million, so the bottom line net loss was $24.8 million, 10.5% worse than a year ago.
Besides KRON, owns five ABC affiliates, three CBS affiliates and one NBC affiliate in medium to small markets.
RBR/TVBR observation: What now? Selling KRON was supposed to be the way to clean up a heavily overleveraged balance sheet. As Moody’s Investors Service noted in September when it downgraded the company’s debt, there is a question of whether Young has enough asset value to cover its debt. The company’s warning of a potential Chapter 11 filing in its SEC filing is not just legal CYA.
Note: The original report stated that Young’s SOP was down 12%. In fact, SOP was up 12% to $11.6 million.