It has been a busy six months for radio

George
Media Services Group

Inside Radio: Spring blossoming of mid-market deals

"Inside Radio" ran an interesting story today on the state of radio station trading ("Spring blossoming of mid-market deals"). The article shared a few of my own thoughts and observations. You can check it out by clicking HERE.

George
Media Services Group

Congratulations to Media Services Group's Jody McCoy on the Bahakel/Woodward transaction!

March 30, 2012

Dubuque, Iowa/Charlotte, NC - Friday, March 30, 2012 – Beverly B. Poston, President and CEO, of Bahakel Communications, Inc., and Tom Yunt, President and CEO of Woodward Communications, Inc. (WCI), jointly announced the sale of Bahakel’s four station radio cluster in Waterloo/Cedar Falls, Iowa to WCI. Jody McCoy of Media Services Group acted as the exclusive broker for the transaction representing the seller.

Effective April 1st the addition of the Waterloo/Cedar Falls, Iowa 4-station group increases WCI’s broadcast holdings to 11 stations in the region with their other radio station cluster in the Green Bay, Appleton/Oshkosh, Wisconsin markets. Woodward Communications, Inc., headquartered in Dubuque, Iowa, has six operating divisions: daily newspaper, weekly publications, commercial printing, niche B-2-B magazines, radio and a full-service advertising agency.

In announcing their purchase of the Waterloo/Cedar Falls group Yunt said, “We are very excited to add these outstanding stations to the Woodward Radio Group (WRG) and our “dynamic employee-owned media company,” and we look forward to the opportunity of serving the greater Waterloo/Cedar Falls communities. The stations are well positioned with their heritage and formats and have a wonderful track record in serving their valued listeners and advertisers.”

Poston said that “it is with highly mixed emotions that we sell the stations but that the decision was made easier because of the quality company that Woodward is, the fact that it is employee-owned and their commitment to provide such excellent services to the various communities in which they operate.”

She further added “that we (Bahakel) recently purchased an additional television station in Montgomery, AL, as well as an additional radio station for our Chattanooga cluster so this was done as some realignment of our properties. We leave Waterloo very reluctantly but comforted in knowing that our stations and employees will be in such wonderful hands.”

Bahakel also owns and operates six radio stations in Colorado Springs, CO and Chattanooga, TN and six television stations in Montgomery, AL (two stations); Jackson, TN; Columbia, SC, Myrtle Beach/Florence, SC, and their flagship station, WCCB-TV in Charlotte, NC.

Contact for Bahakel Communications, Ltd is Jim Babb (704-632-7217).

Jody McCoy
719.630.3111

George
Media Services Group

Two more station transactions close

Although the pace of station trading remains slow, Media Services Group closed two more transactions last week.

M&M Broadcasters closed on the purchase of KRHC AM/KBEY FM, Burnet;
KHLE FM, Kempner; and KHHG FM, Hamilton; all Texas, from Munbilla Broadcasting Properties, LTD.

Bill Whitley of the Dallas office of Media Services Group served as the exclusive broker for this transaction.

Big Toe Communications, LLC completed the acquisition of the assets of radio stations WHPI-FM, Glasford, IL; WPIA-FM, Eureka, IL; WZPN-FM, Farmington, IL and
WWCT-FM, Bartonville, IL, from Independence Media Holdings, LLC.

Stephan Sloan of Media Services Group’s Providence office represented the seller in this transaction.

Well done Bill and Steph!

George
Media Services Group

Meet the Media Services Group partners: Greg Merrill

This post completes my series of highlights of my partners at Media Services Group. We are proud of the twenty years of service to the broadcast industry. We wrap up with another of our co-founders, Greg Merrill.

Greg anchors our Salt Lake City office from Logan, Utah. Over 26 years as a broker/consultant, and with a thorough knowledge of the broadcasting industry, he as prepared hundreds of appraisals and station analyses. In addition, he has 13 years of owner/operator experience.

Greg has served as a Court Appointed Receiver for District Court Boise (KDJQ-AM) and has been involved in Bankruptcy cases and/or served as expert witness in:

•Boise, Idaho Federal Bankruptcy Court
•Salt Lake City Federal Bankruptcy Court
•Expert witness in Phoenix, Arizona; Eugene Oregon; Seattle, Washington; and Bakersfield, California

Greg has sold over 150 stations in Utah, Idaho, Montana, Wyoming, Nevada, Arizona, Colorado, New Mexico, Washington, Oregon and California. He holds a B.S. Business Administration degree and a Master’s Degree in Communications from Utah State University.

I am honored to work with this group of professionals. Collectively, we bring hundreds of years of service to broadcasters, lenders and investors. All of my partners put integrity first. Maybe that's why we're still around and successful after twenty years.

George

Media Services Group

Meet the Media Services Group partners: Providence office

Our Providence office is staffed by veterans Bob Maccini, Stephan Sloan, and Ted Clark (with Diana Todd really running things). In addition to an active station brokerage practice, our Providence office anchors our broadcast valuation practice, which in my humble opinion, is the best in the industry.

Bob Maccini commenced his broadcasting involvement at Old Stone Bank, Providence, RI where he managed the bank's Communications Lending Group for five years. Subsequently, he founded and managed Chapman Financial Services, a subsidiary of Chapman Associates which provided investment banking services to the broadcasting industry.

Bob was one of our co-founders when Media Services Group was launched twenty years ago. Since, he has worked with numerous financial institutions in broadcasting related workout transactions and has been appointed as a receiver and examiner by various courts to oversee and sell radio and cable television companies.

Bob serves on the Boards of Saga Communications and GAP Broadcasting, and is President/CEO of Ando Media. He holds a B.A. degree in Economics from Holy Cross College and an M.B.A. degree in Finance from Babson College.

Stephan Sloan assists clients in a variety of investment banking, brokerage, appraisal, portfolio management, and expert testimony tasks. Stephan has helped clients obtain more than $40 million in senior debt and helped broker radio stations with an aggregate value of more than $200 million. He has appraised or assisted in the appraisal of radio, television, and cable television systems valued in excess of $500 million for clients that include the Federal Deposit Insurance Corporation (FDIC) and the Resolution Trust Corporation (RTC).

Working closely with Bob in Media Services' Broadcast Portfolio Group, Stephan has helped financial institutions with problems in their broadcast and cable loan portfolios and in court-appointed receivership assignments. He has also been accepted in state court as an expert witness on radio station valuation, finance, and receivership matters. Steph attended Salve Regina University.

Ted Clark is an analyst in Providence. He joined the firm in 1997 and since that time has performed valuations of radio, television and cable television systems totaling in excess of $560 million. Prior to joining Media Services Group, Ted (or as we call him, "Dr. Clark") worked as a research scientist and software developer in the biotechnology industry. He received his B.S. degree from the University of Rhode Island and performed his graduate studies at Dartmouth College.

George
Media Services Group

Meet the Media Services Group partners: Tom McKinley

Tom McKinley joined Media Services Group in 1996, opening our West Coast office. He has been involved in the sale of over 100 radio stations across the country. In addition he has done numerous appraisals and has also acted as a consultant to broadcast groups and stations.

Prior to joining MSG, Tom had 25 years of broadcast experience, first in sales management and then as VP/GM of stations in New Haven, Kansas City, Seattle, and San Diego/Los Angeles where he ran a regional Southern California station. He was also Executive VP/GM of All News WTOP-AM and WASH-FM, two of the Washington, DC market’s leading stations. In addition he was Senior VP Corporate for Noble Broadcast Group, which at the time was one of the largest broadcast groups in the country.

Tom's additional experience includes National Sales Management at Major Market Radio, Manager West Coast, and Executive VP Stations, New York, as well as President, Group W Radio Sales. Tom opened the Media Services Group office in Metro New York in 2006, and maintains a West Coast office in Northern California.

Tom's been known to frequent an Irish bar or two. He is also MSG's designated story-teller. If you know him, you know what I'm talking about!

George

Media Services Group

Meet the Media Services Group partners: Jerry Johnson

Jerry manages Media Services Group’s Minneapolis office. His fourteen-year association with WCCO, coupled with twenty-five years as a station broker, has provided him with a keen knowledge of the media industry and the "deal process" of buying and selling properties.

Jerry has been involved with transactions for more than 160 media properties covering nine states. Additionally, he has appraised more than 60 broadcast properties in the Midwest and surrounding areas. Jerry is a member of the National Association of Media Brokers and a member of five broadcasting organizations. He has authored articles for the Minnesota Broadcasting Association newsletter and contributes to many national trade publications.

George

Media Services Group

If you're looking to acquire radio or TV stations, make sure we know about you!

I believe that 2010 will bring a number of new and returning broadcast station owners into the marketplace. Clearly some of the "roll-ups" of the past will be all or partially unrolled. As a station broker, it is critical for me to identify these new, potential buyers. If you fit that description, please get in touch. Let's talk about what you might want to buy and how you intend to pay for it.

A good way to begin is by completing a simple Buyer Profile form and faxing or emailing a copy to me. Click here for the form:

http://www.mediaservicesgroup.com/adminjax/ktmlpro/images/uploads/Small%20Market%20Radio%20Buyer%20Profile%20v2.pdf

You can email a pdf of the completed form to me at: George@MediaServicesGroup.com. My partners and I can then do a better job of identifying potential acquisition targets for you. Obviously, we keep all of the information confidential.

My fax is: (904) 285-5618

Let's do some business in 2010!

George
Media Services Group

Meet the Media Services Group partners: Bill and Mike Lytle

Continuing in the New Year to introduce you to my partners at Media Services Group, please meet Bill and Mike Lytle in Kansas City. Bill was with us at Chapman Associates and was one of the co-founders of MSG twenty years ago.

Bill is our "senior statesman." In his 50 plus years in both radio and television, Bill has been involved in announcing, sales and management. He served as the General Manager at KXTR-FM and the Sales Manager at both KMBZ-AM and KNBC-AM, all in Kansas City.

Bill received his B.A. degree from Northwestern University and performed his graduate studies at the University of Kansas, where he spent 15 years as a guest lecturer in Strategic Sales (and where he remains a die-hard sports fan). Bill is an experienced specialist in station management consulting and sales consulting.

Like father, like son. Bill's son Mike also works in our Kansas City office. Mike received his degree in Psychology from the University of Kansas in 1978. After spending a large portion of his professional career in the computer consulting industry, he moved into the broadcasting arena. Prior to station brokerage, he was involved in radio sales, broadcasting and production work in the Kansas City market.

George

Media Services Group

Meet the Media Services Group partners: Bill Whitley

From the "Palace in Dallas" comes the one and only Bill Whitley.

When Bill isn't tending cattle at the ranch just outside scenic Seymour, TX, he runs our Dallas MSG office. We worked together back in the Chapman Associates days. When Media Services Group launched twenty years ago, Bill went "independent" for a few years; but he eventually saw the err of his ways and signed on with us eleven years ago.

Bill has been in the broadcast brokerage field for over thirty years. From his Dallas base, he has been active nationally with an emphasis on media properties in the southwest. (None of the rest of us dare do any business in Texas or adjoining states without asking Bill's permission to enter first). Bill has completed over $300,000,000 in broadcasting transactions and personally handled an estimated three hundred and fifty appraisal assignments.

Prior to his brokerage career, Bill worked in television production in Dallas-Fort Worth. In radio, he held sales and management positions in Temple, Dallas, and Little Rock.

Bill has also served as a receiver for broadcast properties in Texas and Louisiana. He has worked with trustees, debtors, creditors and the courts in Chapter 11, Chapter 7, receiverships, and foreclosure proceedings in both a consultant and broker role. He has served as an expert witness in court proceedings relative to broadcast station values in Texas, New Mexico and Arkansas. He has served as a guest lecturer at several universities and has been a panelist on valuation seminars for state broadcast associations.

"Wild Bill" Whitley holds both Bachelor and Master’s Degrees in Radio-Television from his beloved Texas Christian University. "Go Horned Frogs!"

George

Media Services Group

http://www.mediaservicesgroup.com/location.cfm?id=3

Meet the Media Services Group partners: Jody McCoy

Jody McCoy runs MSG's office in Colorado Springs. Early in his broadcast career, Jody was successfully involved in radio and television sales, sales management, and general management of stations. Former employers included Turner Communications, Group W, and Jefferson-Pilot Communications. He has also participated in FM radio station ownership in Kansas, Michigan, and Colorado. He is currently the president of Optima Communications, licensee since 1989 of KRDO 105.5 FM, serving Colorado Springs.

Jody entered the broadcast brokerage business in 1992 and since that time has brokered the sale of hundreds of stations worth hundreds of millions of dollars. He has experience as an expert witness regarding station values and other broadcast issues. He has worked on technical upgrades for radio stations, including having upgraded KRDO from a class A to a C3 to its current status as a C2. Jody has also been an adviser to clients on Local Marketing Agreements and Joint Sales Agreements.

As an operator, owner, and broker, Jody has the experience and knowledge to provide effective guidance to banks, investors, and company management in workouts and restructuring assignments.

His academic background includes a B.A. from the University of Virginia, and a M.A. in Communications Management from the University of North Carolina at Chapel Hill. He has also completed the courses of the Mass Media Institute at Stanford University, the National Association of Broadcasters Sales Management at the Wharton School of the University of Pennsylvania, and the Young Executives Institute at the Kenan Flagler Business School at UNC Chapel Hill.

EMF closes two purchases

Media Services Group's Jody McCoy announces two closings with Educational Media Foundation:

KABW-FM from College Creek Media http://www.mediaservicesgroup.com/press.cfm?id=1379

KXPC-FM from Portland Broadcasting http://www.mediaservicesgroup.com/press.cfm?id=1380

Good work, Jody!

Broadcast industry news

We have assembled a web page of RSS feeds from the broadcasting industry. It is a great way to get your morning news "fix" quickly. Click here and add us to your bookmarks:

http://www.mediaservicesgroup.com/index.cfm?pg=newsinfo

George
Media Services Group
http://www.mediaservicesgroup.com/location.cfm?id=3

Meet the Media Services Group partners: Bob Heymann

Bob Heymann is a hard core Tar Heel fan. He is also a darn good broker.

Highlighting my partners on the occasion of MSG's 20th anniversary, I would like to focus on Bob, who runs our Chicago office. Prior to opening that office, Bob spent 24 years brokering radio and TV stations from coast to coast with a total aggregate value in excess of $500,000,000.

A few of his record setting transactions include:

•Sale of WNIB-FM (now WDRV) Chicago for $165,000,000
•Sale of WPNT-FM (now WILV) Chicago for $75,000,000
•Sale of KOMA AM&FM Oklahoma City for $54,000,000

Among his other business enterprises, Bob was co-founder and chairman of the nation’s first broadband cable system and chairman of the largest telecom information company partnered with Pacific Bell (now AT&T).

Prior to beginning his brokerage practice, Bob managed KQAK San Francisco and previous to that, he held management positions and consulting relationships with some of the largest broadcasters in America including NBC, CBS, and Evergreen Media.

Bob got into broadcasting early (becoming interested at 14 years old!) and was one of the youngest people ever to receive a First Class Radio Telephone Operator License from the FCC.

Bob has a B.S. degree from the Kenan-Flagler School of Business at his beloved University of North Carolina. He regularly makes the trek to Chapel Hill to attend ballgames. Go Heels!

George

Meet the Media Services Group partners: Eddie Esserman

Media Services Group just celebrated our 20th birthday. During that time, we have helped our clients buy and sell a lot of radio and TV stations, with transaction volume in the billions of dollars. It all started two decades ago when several brokers with Chapman Associates, myself included, decided to set out on our own and form MSG with a laser focus on client service. Several credit crunches and recessions later (along with a boom or two), we're still at it.

Over the course of the next few months, I want to highlight in these pages the guys I work with at MSG. We have a great team, and I am proud of my association with each and every one of them.

What better partner to start with than the one I've known the longest? Eddie Esserman and I met in Atlanta over 30 years ago; back then, we were kids (and competitors) in Atlanta radio. He was still relatively fresh out of Georgia Tech and a stint in the record business (get him to tell you his Willy Nelson story some time).

Like many of us, Eddie began his broadcast career in high school as an announcer. With a keen interest in engineering. he holds a General Radio Telephone license, having earned a First Class Radio Telephone license as a teen (and is still a practicing "ham").

After college, he returned to broadcasting in the programming department for the Pacific and Southern group of stations, migrating to the sales side and managing sales departments for two Atlanta stations. He became the Vice President and General Manager for Shamrock Broadcasting’s Atlanta outlet, WFOX.

In the mid 1990’s Eddie managed one of the country’s first large market duopolies (in San Francisco) for Shamrock. He pursued ownership after leaving Shamrock in 1995 and owned and operated in Macon and Savannah (I was proud to be his exclusive broker on those deals). After selling those stations, I talked him into joining us at MSG.

In addition to managing our office on beautiful St. Simons Island, GA, Eddie owns stations in nearby Brunswick, GA and not-so-nearby south Texas. Together, we are partners in a tower company (USAntenna, Inc.) with towers in the Southeast.

Eddie is a frequent faculty member of the NAB’s Education Foundation Broadcast Leadership Training Program. He has testified as an expert witness in bankruptcy matters and been a court appointed broker. And he is a great guy.

Catch Eddie's blog ("Esserblog") here: http://www.eddieesserman.blogspot.com/

George

Media Services Group announces the sale of KAKS-FM, Fayetteville, AR

Carroll County Broadcasters has reached an agreement to purchase KAKS FM serving Fayetteville, Arkansas from Davidson Media Arkansas Stations LLC. Carroll County Broadcasters is headed by Jay Bunyard who owns 16 Arkansas radio stations. Davidson Media is headed by Felix Perez ,CEO and owns 37 radio stations. The sale is pending FCC approval.The purchase price is $1,110,000.

Bill Whitley of the Dallas office of Media Services Group served as the exclusive broker for this transaction. http://www.mediaservicesgroup.com/press.cfm?id=1378

Buying Your First Station

Over 22 years as a media broker, I have received hundreds of calls for advice on, “How do I buy my first radio station?” Perhaps not surprisingly, the volume of those calls dropped off as prices escalated in the late 1990’s. Now that stations have become much more affordable (read “cheap”), the inquiries are returning. It is once again possible for an entrepreneur to get into station ownership.

I will touch on some FAQ’s in this post which have come up consistently from first-time-buyers. The success rate for would-be buyers is no doubt pretty low. However, all owners were, at some point, first-time-buyers. The most vexing question in the process:

“How do I raise the money without having a deal, and how can I get a deal without having the money?”

This is the proverbial “chicken and egg” question. I maintain that you have to raise the money (equity) first. Without an equity commitment, brokers, sellers and lenders simply will not take you seriously. If you see any deals at all, they will be those left after every other real buyer has already passed.

“How do I raise the equity?”

Unless you have a gold-plated resume with a solid management track record, you are probably not going to get the attention of institutional private equity investors. In fact, in the current environment, you might not even get a returned phone call.

Your best bet is “angel” investors. Work your network of connections. Hit the “Doctor, Lawyer, Dentist” circuit in your area. Use LinkedIn ( http://www.linkedin.com ) or other networking tools to connect with people looking to invest their money. This is a real “shoe leather” process, but likely determines whether or not you will own a radio station.

“What is the difference between debt and equity and why does it matter?”

Debt is a loan, usually secured by assets and personal guarantees. The money is less expensive than equity. Pricing is generally based on a negotiated number of basis points over LIBOR or the Prime Rate. Terms are usually five to seven years.

Equity is ownership. Equity is riskier than debt, so equity investors expect a higher return on their money. In the event of a liquidation, the debt holders generally get their money first; anything left over (usually nothing) goes to the equity holders. Pricing reflects this inherent risk. In the go-go days, equity investors were looking for internal rates of return (IRR) in excess of 30%; more recently, returns were in the mid to high teens. Most equity wants to “cash in” within five years.

Before the current economic chaos, banks would typically loan 5x – 6x cash flow on a deal. The balance of the purchase price (together with working capital) was funded with equity.

“What is Broadcast Cash Flow?”

Operating Revenue minus Operating Expenses (excludes interest, income taxes, depreciation and amortization).

“How does seller financing work?”

Typically seen most often in smaller market deals, the seller functions as the bank. The buyer puts up a down payment (which must be enough for the seller to pay off his lender if there is one) and gives the seller a note for the balance. Terms are negotiable.


“Will the banks make small loans? Define ‘small.’”

Banks generally preferred making loans greater than $10 million. Today you would be hard pressed to find a bank willing to make a loan to a broadcast company (let along a first-time-buyer).

The SBA guaranteed loans often come up. Yes, technically they are an option. But in the real world, the documentation and red tape involved usually stops the process dead in its tracks.

“I know broadcasting, but I don’t know anything about finance. Can I still get a deal done?”

Probably not. Either learn basic finance (that’s what night school is for) or pair up with a partner who has a financial background. If any of the terms I have used in this post are foreign to you, you have a long way to go.

I owned my first station two years after finishing my MBA.

“How are stations priced?”

Stations are usually priced as a multiple of annual Broadcast Cash Flow. Before deregulation, the multiples tended to range between 7x and 10x. Deregulation saw them spike at times into the 20’s (and sometimes based on projected cash flow as opposed to actual, historic cash flow). At this writing, they are probably in the 5x – 7x area, though with so few deals being completed, it is difficult to say for sure.

I intend to discuss pricing for “stick” deals in a future post. But a first-time-buyer can forget doing a stick deal.

“Is institutional private equity an option?”

In good times, maybe (see above). In tough times, no.

“How do I get a broker to work for me?”

Brokers only get paid when deals close. And, like real estate, they typically work for the sellers. For a broker to “carry your flag,” he/she has to be convinced that you are a “real” buyer (that you will show up at closing with a check in full). Commercial break: http://www.MediaServicesGroup.com

“I am a good programmer, but do not have any sales or management experience. Can I get a deal done?”

Probably not. Bring a solid manager onto your team.

“When do I get a lawyer involved?”

Early in the process, ideally before you present a letter of intent to a seller. Interview several, and hire the best you can afford. I recommend that you use FCC attorneys with transaction experience.

“What is the actual buy/sell process?”

After identifying a deal and raising the necessary capital, you typically submit a letter of intent to the seller. It defines the broad business terms of the deal, and is usually considered non-binding (use counsel!). Once the letter of intent has been signed by both parties, you 1) begin negotiating the formal purchase agreement (with counsel) and 2) conduct your due diligence (financial, technical, and legal). There is usually a 30 to 60 day window to complete these steps.

Money usually goes into an escrow account (and is at risk) upon the signing of the purchase agreement. 5% of the purchase price is a typical escrow deposit, though this varies. The assignment application (which includes the purchase agreement) is filed with the FCC. Barring objections, the FCC staff will typically approve the transaction within 60 to 90 days. You can close at that time; however the FCC grant does not become “final” for another forty days. Lenders often require buyers to wait for finality before closing.

“I don’t have any radio experience, but it looks like a great business. Can I finance a deal to buy a station?”

No. Unless you won the Lotto.

New Tools on the Media Services Group Website

We recently added some useful features to the Media Services Group website. On the Links page (http://www.mediaservicesgroup.com/index.cfm?pg=links), you will now find links to a comprehensive group of broadcasting companies.

But perhaps even more helpful information can be found on the News & Info page (http://www.mediaservicesgroup.com/index.cfm?pg=newsinfo). We have assembled there a cross-section of RSS feeds from industry trade publications and informative blogs. You might find it useful for a quick industry briefing first thing each morning.

If you have any other ideas for improvements, please let me know: George@MediaServicesGroup.com or by your comments on this blog.

George

http://www.mediaservicesgroup.com/

Workouts: Two Perspectives

Much like the early 1990’s, “workout” is now a prominent term in the broadcasting industry vernacular. A workout refers to a non-performing loan which has been moved into a lender’s “workout” department for collection. The process is usually resolved in one of two ways: 1) the loan is restructured under more lenient terms, or 2) assets are sold to repay the outstanding debt.

As you might suspect, borrowers and lenders have two very different perspectives of the workout process. Without taking sides, I will attempt to present an overview.

Broadcasters

The broadcaster wants to restructure the loan(s) on terms which allow him to pay back the obligation from the business’ free cash flow. Generally, they want to buy time. This often means deferred payment terms, a lower interest rate, debt forgiveness, equity infusion, and possibly asset sales. An alternative (but a difficult one when credit is “frozen” as it is now) is to simply refinance the loan with a new lender.

The broadcaster takes the position that the current problems are a “bump in the road,” and given time, effort, and flexibility on the part of the lender, everything will work out just fine.

If the lender refuses to negotiate acceptable restructured terms, the war escalates. A Chapter 11 bankruptcy filing is in the broadcaster’s arsenal to stave off foreclosure (at least temporarily).


Lenders

Lenders simply want their money back. And they don’t much care how it happens. Ideally, they would like to see the borrower/broadcaster refinance their debt with a new institution. Failing that, they want the assets sold . . . immediately. If the broadcaster refuses to cooperate (in their view), the lender might take steps to have a receiver appointed, charging the receiver to liquidate the company.

If the lender believes that the problems are temporary, they may agree to restructure the note, generally collecting fees for the restructure agreement, and usually with provisions that they will be made “whole,” perhaps getting additonal security.

Lenders often (but not always) want to avoid the bankruptcy court. At times, they can negotiate a forbearance agreement with the borrower to agree to allow a receiver to be appointed, perhaps with the broadcaster’s agreement as to who the receiver will be.

And now, a word from our sponsor. The choice of a receiver is critical. The ideal receiver has M & A transaction experience as well as station operating expertise. That is a rare combination. You can probably count on one hand the number of firms serving the broadcasting industry who have that expertise (Media Services Group is one; Larry Patrick’s company is another). Unfortunately, a number of “consultants” hang out their shingles in every downturn; check the track records before hiring workout expertise.

Those are my thoughts, what are yours?

George