Tuesday, February 17, 2009
Nashville's WKRN Channel 2 won't lose jobs in bankruptcy
By Wendy Lee • THE TENNESSEAN • February 17, 2009 Young Broadcasting Inc., the parent company of WKRN-TV, Channel 2, in Nashville, filed for Chapter 11 bankruptcy amid steep declines in ad revenue and swift competition among stations for clients, according to court documents filed in U.S. Bankruptcy Court in New York last week. The company said it needed the protection to deal with mounting debts. Locally, Young Broadcasting's Chapter 11 filing will not affect its Tennessee operations, according to Gwen Kinsey, general manager for WKRN-TV and WATE-TV in Knoxville. No layoffs will occur at the local stations as a result and although ad revenue is down industry-wide, there is a "very healthy cash flow" at the local stations, Kinsey said, but she declined to state by how much ad revenue has declined. "We have money in the bank," Kinsey said. "Our normal day-to-day operations aren't going to be affected." Young Broadcasting listed total assets at about $574.6 million and total liabilities at around $980.4 million, according to court documents. The company, which owns and operates 10 television stations across the nation, said operations would not be restructured. "In these difficult economic times, domestic media companies across the board have witnessed an unprecedented decline in advertising revenue and, as a result, industry-wide revenue and operational performance has suffered," James A. Morgan, the company's executive vice president and chief financial officer said in court documents. Morgan said the decline in ad revenue had been going on for years, but it has been "accelerated and exacerbated" by the recession and "dislocation" of the credit markets. The company owes about $338.1 million in a senior credit facility and had $484.3 million outstanding under senior substantiated notes as of the end of December, according to court documents. Losing on two ends Broadcasting companies nationwide are suffering because they purchased stations starting in the 1980s at inflated prices, said Ray Harris, assistant professor of multimedia at Lipscomb University. The problem is the amount of time a station can air commercials is limited due to hours in a day and the ad price is determined by the economy, Harris said. Stations "are losing on two ends," Harris said, explaining that they're either losing ad accounts altogether or their existing customers aren't able to spend as much as they once did. "It's a double whammy." In response to the declining revenues, Young Broadcasting had a cost savings initiative to save the company more than $25 million by the end of fiscal 2010 by reducing the workforce by 15 percent, bringing in new technology, creating a consolidated accounting system and terminating certain outside professional services, according to court documents. In January 2008, the company planned to sell its largest station, KRON-TV in San Francisco, because it had suffered cash flow losses but had to suspend the sale process in November 2008 amid the decline in market conditions. In January and February this year, the company decided to forgo making the interest payments on some of its debt. Earlier this year, the company's stock was de-listed from Nasdaq.