Gray Television of Atlanta will take over management of KLFY TV-10 and six additional stations owned by Young Broadcasting through a plan that received preliminary court approval Wednesday, MediaDailyNews reported.
Young will continue to operate its remaining three stations -- San Francisco, Knoxville, Tenn., and Lansing, Mich.
Young Broadcasting, which filed for Chapter 11 bankruptcy protection in February, is being purchased by its secured creditors for about $220 million, with some unsecured creditors receiving 10 cents for every dollar owed. Pending FCC approval, that means Young’s new owners are Highland Capital, Eaton Vance, Credit Suisse and Oppenheimer -- all of whom are its senior secured lenders.
The announcement of the purchase came July 15, a day after Young backed out of a planned auction of its 10 stations. The company reneged on the auction after evidently getting no bids at or above a satisfactory level from the 66 potential buyers it had reached out to. The struggling media company posted a net loss of $370 million in 2008; the bankruptcy allows it to escape from almost $350 million in debt.
This week New York Southern District Bankruptcy Court Judge Arthur Gonzalez not only tentatively approved the sale of Young to its secured lenders but also approved the new owners’ choice of Gray Television to manage seven of the stations for an annual fee of $2.2 million.
The plan calls for the remaining three, including the troubled KRON, a MyNetworkTV station in San Francisco that Young paid a record $823 million for almost a decade ago (at the time it was a successful NBC affiliate, but Young did not renew the contract amid a dispute with the network), will continue under the management of Young President Deborah McDermott.
The order from the U.S. bankruptcy court called for Young’s current board of directors to be dissolved and reconstituted with five members. “Those members would include Vincent Young, current chairman-CEO-president of Young, two current board members and two new independent directors selected by the buyers and elected by the current board,” TVNEWSDAY reported.
The online broadcast news source went on to call the selection of Gray to manage most of the properties a coup for the Atlanta-based group, noting that Gray was one of five bidders for the management job.