UPDATED: Creditor Files to Liquidate Equity Media, Claims Company Cannot Meet Payroll Obligations

by Mark Hengel  on Wednesday, Dec. 10, 2008 12:29 pm  

Several companies are in the due diligence stage of purchasing between six to eight of the companies high-power stations, Patrick said. Discussions are on going for between eight to 12 stations total, he added. The company's high-power stations are the only stations drawing real interest, though. Of the 48 properties, about 15 are high-power stations, he said.

High-power stations have greater worth because they can demand that local cable carriers carry their signal, Patrick said. Low-power stations do not cover an entire market area and cannot demand that cable carries broadcast their signal, he said. Several of the high-power stations that could sell for between $5 million and $6 million, Patrick said.

Court documents only point to one sale that Equity pursued and received less than required: the sale of KWBF-TV in Little Rock to Nexstar Broadcasting Group Inc. of Irving, Texas, for $4 million - half what Silver Point believed the station was worth. Patrick said a buyer did evaluate the Little Rock station at $8 million, but the buyer decided to back off.

The company also sold six stations - both high and low power - to Luken Communications for $17.5 million.

FCC Investigation

The lawsuit also claims Equity hindered the value of its properties by making false statements to the FCC about the amount of educational programming broadcast by KLMN-TV in Great Falls, Mont.

The FCC placed a hold on license renewal, assignment and transfer of control applications for all of Equity Media's full-power TV stations, and that in turn killed a deal to sell KUTF-TV in Utah to Univision for $15 million.

The FCC placed a "hold" on license renewal, assignment and transfer of control applications for all of Equity Media's full-power TV stations, according to court documents.

The FCC's actions resulted in a deal worth $15 million falling through. Univision had agreed to accept KUTF-TV in Utah as payment for $15 million in outstanding preferred stock Equity Broadcasting Corp. held in the Spanish-language broadcaster.

Dealings With Creditors

Meanwhile, Equity has run into trouble with two of its vendors.

IntelSat, which provides satellite services to the company, has demanded that Equity Media pay all amounts due by Dec. 3. IntelSat wrote in an e-mail that it would cut services to or partially cut services to Equity Media's stations unless payment was received. Equity Media owes $583,931.25 to IntelSat, according to court documents. IntelSat has agreed to transmit Equity's transmissions until Jan. 3, according to court documents.

And Equity failed to pay $1.3 million to CBS for programming provided to RTN before its sale to Luken Communications. CBS has filed suit in federal court in California.

Silver Point believes Equity is also four months past due on payment for content provided by NBC, according to court documents.



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