Equity Media Holdings

Equity Media Holdings
Type	Public (NASDAQ: EMDAQ)
Fate	Chapter 7 Bankruptcy
Founded	1998
Founder(s)	Gregory W. Fess, Larry E. Morton
Headquarters	Little Rock, Arkansas, USA
Key people	Henry G. Luken (President, CEO); Gregory W. Fess (COO, SVP); Neal Ardman (VP TVOps)
Industry	broadcasting
Services	TV Stations
Subsidiaries	CASH, Equity Broadcasting
Website	emdaholdings.com

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Equity Media Holdings was a broadcasting company based in Little Rock, Arkansas that owned and operated 31 television stations across the United States. Prior to March 30, 2007, the company was known as Equity Broadcasting, which is now used for its broadcast station subisdary. The company has a focus on Hispanic and Asian American communities in large markets while owning a combination of English-language network affiliates in medium and small markets. On April 10, 2009, Equity announced a fire sale of all stations to occur on 16 April in Dallas.^[1]. Many stations were sold to broadcast companies, such as Daystar Television Network.

In late 2005, Equity launched the Retro Television Network, a programming service with a lineup of "classic" shows from the 1950s-1980s which currently airs in part or full in numerous markets (controversially replacing UPN in one). Equity no longer owns RTN and no longer provides centralcasting services for the network.

[edit] Financial troubles

In the company's annual report for 2007, released on April 2, 2008, Equity said that the company is in default on its credit lines, and that if it cannot find additional financing it "will need to cease all or a portion of its operations, seek protection under U.S. bankruptcy laws and regulations, engage in a restructuring or undertake a combination of these and other actions." An earlier indication of Equity's troubles came one month previous, when its board of directors appointed its chairman, Henry Luken, to replace Equity founder Larry Morton as president and CEO.^[2] Morton remained the chair, president and CEO of Retro Television Network.

Additionally, the Retro Television Network was sold to Luken's company, Luken Communications, on June 25, 2008.^[3]. Luken Communications continued to operate RTN out of Little Rock, Arkansas as a client of Equity's C.A.S.H. system.

In June 2008, Equity instituted a companywide suspension of news programs.^[4]

In November 2008, Equity began attempts to sell all of its TV stations^[5] and cut most of the company's top management^[6] in a move which Chief Restructuring Officer Paul Brissette believed could allow the company a chance to avoid bankruptcy.

Equity filed for Chapter 11 bankruptcy on December 8, 2008 after the company defaulted on a loan worth $41.5 million.^[7] One of its creditors, Silver Point Finance, soon filed to change the bankruptcy from a voluntary Chapter 11 to an involuntary Chapter 7 in an attempt to foreclose on Equity assets, as they felt that there was no way Equity can reorganize under Chapter 11, nor do they have enough funds to cover payroll. ^[8]

Silver Point ended its attempts to push the company directly into liquidation on December 23, in return for the appointment of Kim D. Kelly, a new Chief Restructuring Officer (CRO) who would exert near-total control to run the company and handle decisions on the sale of the individual stations.^[9]

Trading in Equity Media Holdings Corporation (EMDA.Q) common stock, units, and warrants were suspended on December 18, 2008; NASDAQ announced on January 15, 2009 that the Equity-related securities are to be de-listed permanently.^[10]

The sale of Equity's flagship Little Rock TV station KWBF (now Nexstar Broadcasting Group's KARZ-TV) closed at the end of January 2009; similarly-named RTN radio station KWBF-FM had also been sold (to Flinn Broadcasting Corporation) and has been silent since November 2008. Equity had also unexpectedly terminated a deal with the Southland Conference to carry Central Arkansas University basketball games on KKYK-DT, effective January 14, 2009.^[11].

Silver Point extended a $58 million "debtor in protection" loan on February 2, 2009 to keep Equity on-air under chief restructuring officer Kim D. Kelly, but at a hefty interest rate premium: 8% above the current London Interbank Offered Rate. The chief restructuring officer will not be answerable in any way to Equity's board.^[12]

On April 10, 2009, Equity announced a fire sale of all stations to occur on April 16 in Dallas.^[13] Of 119 stations offered for sale, sixty were sold (pending bankruptcy court approval) at a total of $21.3 million. Daystar Television Network bid $7.4 million for seven full-power stations (WNGS, WNYI, KQUP, KWBM, KCBU-KNBX and WBIF) and nine low-power stations. Existing programming is expected to be replaced with religious programming ^[14] as Daystar takes control of stations.^[15]

Max Media bid $1.3 million for three full-power Fox TV affiliates (and three low-power stations) serving Missoula, Great Falls and Butte-Bozeman, Montana. The other Fox affiliate, WMQF, was sold to MMMRC LLC, with the sale closing on June 22, 2009^[16], and its' call letters changing to WZMQ the next day.^[17]

WGMU-CA (and its' translators), a MyNetworkTV affiliate, was officially sold to Convergence Entertainment & Communications LLC in July 2009. Equity continues to seek a buyer for the remaining stations.

[edit] Retro Television Network

Equity Media had been paid to provide centralcasting services for RTN after that network was sold to Luken Communications for $25 million in June 2008. Equity had held an option to re-purchase RTN from Luken; that option expired unexercised on December 24, 2008.^[18]

On January 4, 2009, a contract conflict between Equity and Luken Communications, the owners of RTN, interrupted the programming on many RTN affiliates^[19] with Luken alleging that Equity had left many obligations to RTN's creditors, including programming suppliers, unpaid. As a result, Luken restored a national RTN feed from its headquarters in Chattanooga, Tennessee, via SES Americom-owned satellite AMC 9 (83.0°W), with individual feeds to non-Equity-owned affiliates to follow on a piecemeal basis. Equity owned or operated stations lost RTN affiliation immediately, though Luken vows to find new affiliates for RTN in those areas. ^[20] A message displayed on-screen by Equity's stations in place of RTN gave Henry Luken's cell number as a contact number for viewers.^[21]

As of January 7, 2009, various Equity-owned or operated stations were broadcasting classic movies (or in some cases, Retro Jams) in place of RTN's content;^[22]. Around January 21, some of these stations began to carry This TV, a new subchannel network owned by MGM and Weigel Broadcasting. ^[23]

[edit] Digital transition issues

In mid-December 2008, Equity filed notice with the Federal Communications Commission that more than a dozen of its individual analogue-only full service stations would not be able to acquire equipment for digital TV transition without court approval, and these recently-constructed full-power stations would therefore go dark at the end of digital transition (originally scheduled for February 17, 2009; since extended to June 12, 2009). Stations with existing digital broadcasts or low-power broadcasting stations on channels 2 - 51 would not be affected.

Equity has requested that the FCC extend the expiry dates of digital construction permits for these stations, a possible means of retaining the affected licenses until a buyer can be found.

Full-service stations scheduled to go dark at the end of digital transition include:

KEGS (Goldfield, Nevada)^[24]
KPBI (MyTV, Eureka Springs, Arkansas)^[25]

Affected stations to be sold to Daystar:

KUTF (TeleFutura, Logan, Utah)^[26]
KQUP (ex-RTN, Pullman, Washington)^[27]
KWBM (MyTV, Harrison, Arkansas)^[28]
WBIF (This TV, Marianna, Florida)^[29]
WNGS (This TV, Springville, New York)^[30]
WNYI (Univisión, Ithaca, New York)^[31]

Affected stations to be sold to Max Media:

Affected station to be sold to Tyler Media:

KUOK (Univisión, Woodward, Oklahoma)^[35]

Affected station to be sold to Valley Bank:

KWWF (ex-RTN, Waterloo, Iowa)^[36]

* While KLMN had already applied to reduce its analogue signal power to 50 kW,^[37] the license remains that of a full service station. Its new owners therefore must convert it to digital to continue broadcasting after 6/12/2009.

Equity's situation is unique due to its rapid and recent expansion. Many of its full-service stations were built during the last few years of digital transition and are in the position of needing to flash-cut to digital in 2009 or cease operation. Established full-service broadcasters (who signed on before the start of transition) had (with rare exception) been required to operate existing digital simulcasts on another channel for several years and digital equipment is therefore already in place.

[edit] C.A.S.H. system

A trait unique to Equity Media Holdings is their usage of a centralized group-wide hub (called by Equity the Central Automated Satellite Hub, or C.A.S.H, system) where all production, programming, and master control is handled from a facility adjacent to the company's headquarters. Though such hubbing is done on regional scales for many groups, no other company has done it to the scale and magnitude of Equity and C.A.S.H.

Various C.A.S.H. stations are available free-to-air throughout North America on Ku band via Galaxy 18 (123°W) ^[38] or on C band via Galaxy 3C (95°W). ^[39] The feeds are in a format which can be fed directly to a terrestrial television transmitter with no further studio processing.

Former logo as Equity Broadcasting

Satellite transponder space is rented from Intelsat, which claims as of December 2008 to be owed over $580,000. As Equity currently has no equity and no cash,^[40] there is a risk that Intelsat could shut down some or all of the Equity C.A.S.H. feeds in the near future.

[edit] Stations

Note: The stations are listed in alphabetical order on the part of their call letters.

¹Stations not owned but managed by Equity Media Holdings.

²On April 4, 2008 Equity announced the sale of all five of its Southwest Florida stations (WUVF, WLZE, WEVU, WBSP and WTLE) to Luken Communications, LLC for $8 million. Equity has cited corporate financial losses as a reason for the sale.^[41] Additionally, on June 25, 2008, Equity disclosed that it was also selling its stations in Amarillo (KEYU, KAMT), Waco (KWKO), Minneapolis (WUMN, WTMS), Oklahoma City (KUOK), and Tulsa (KUTU), as well as its Retro Television Network, to Luken.^[3] Luken has since abandoned plans to acquire Equity-owned stations in six markets.

Under the protection of Chapter 11 bankruptcy, Equity Media Holdings sold 60 TV stations at auction in Dallas on April 16, 2009 for $21.3 million, according to Patrick Communications, which conducted the auction of behalf of Equity.^[42]

[edit] Univision Stations

KEYU - Amarillo, Texas²
KLRA - Little Rock, Arkansas
KUKC-LP - Kansas City, Missouri
KUOK / KUTU-CA - Oklahoma City/Tulsa, Oklahoma²
- WJMF-LP - Jackson, Mississippi (rebroadcaster of KUOK)
KUTH - Salt Lake City, Utah¹
KUWF-LP - Wichita Falls, Texas
KXUN-LP - Fort Smith/Fayetteville, Arkansas
WUDT-CA - Detroit, Michigan
WUMN-CA - Minneapolis, Minnesota²
KWKO-LP - Waco, Texas²
WTLE-CA / WLZE-LP - Naples/Fort Myers, Florida²
- WEVU-CA / WBSP-CA - Fort Myers/Naples, Florida (formerly a UPN affiliate; rebroadcaster of WLZE-LP)²

[edit] This TV Stations

KWWF - Waterloo, Iowa
KFDF-CA - Fort Smith, Arkansas

[edit] TeleFutura Stations

[edit] MyNetworkTV Stations

KPBI-TV - Fort Smith-Fayetteville, Arkansas (formerly a WB affiliate)
KPBI-CA - Fort Smith-Fayetteville, Arkansas (formerly a Fox affiliate)

[edit] Fox Stations

[edit] Other Stations

KMCC - Laughlin, Nevada - A Mega TV affiliate (Owned by Cranston II; managed by Equity)
KNBX-CA - Las Vegas, Nevada - a repeater for KMCC
KUSE-LP - Seattle, Washington - rebroadcasts Daystar Television Network programming, via KWDK

[edit] Expansion

Acquisition of two New York-area stations by Equity Media were pending in 2008 but were not completed:

WBQM-LP- Brooklyn, New York - A Cornerstone Television affiliate ^[43]
WMBQ-CA- Cranford, New Jersey - An MTV2 affiliate ^[44]

The following construction permits had been issued to Equity before its 2008 bankruptcy filing; the status of any station construction or acquisition plans is uncertain given the current financial situation

Reno, Nevada (another station)
West Palm Beach, Florida

[edit] Other Properties

Arkansas RiverBlades (a defunct ECHL hockey franchise in Little Rock, Arkansas; Equity owns 51% interest in team)
Arkansas Twisters (an af2 arena football franchise in Little Rock)

[edit] Liabilities

As of December 2008^[update], key liabilities appear to be:

$41.5 million to private equity firm Silver Point Finance LLC of Greenwich, Connecticut.
$1.3 million to CBS Corporation for RTN programming run during the time Equity owned Retro Television Network.
$583,931.25 to Intelsat.
Undetermined additional liabilities to NBC (as a programming supplier) and Univisión.

[edit] See also

[edit] References

[edit] External links