ABC 6 faces tough market if owner sells

PROVIDENCE, R.I. (WPRI) - WLNE-TV ABC 6 may have trouble finding a buyer if its owner decides to sell after a 30 percent drop in revenue pushed the station into receivership last week.

“There are a lot of stations on the market and not a lot of buyers right now,” said Blair Levin, a fellow at the nonprofit Aspen Institute who was a senior official at the Federal Communications Commission until May. WLNE may be more attractive if its balance sheet is cleaned up during receivership, he said.

The airwave spectrum licensed to ABC 6 by the FCC “always has value,” Levin told Eyewitness News.

Global Broadcasting of Southern New England LLC, the company that owns WLNE, may strike a deal with its creditors to continue operating the station or seek out a buyer, said Edward Atorino, a veteran media analyst at Benchmark Co. in New York.

There is “not much” of a market for local broadcasters right now, and “it is hard to get financing,” which could hamper any sale, Atorino said. The FCC would have to approve a change in WLNE’s ownership.

Sovereign owed millions

Last Thursday, a Rhode Island Superior Court judge placed WLNE into receivership, a state law version of bankruptcy, at the request of Kevin O’Brien, who controls Global Broadcasting. The station “is insolvent and unable to meet its obligations as they come due,” O’Brien said in a court filing.

Global Broadcasting currently owes $9.5 million to Sovereign Bank on its mortgage, which is secured by WLNE’s property and equipment, O’Brien’s attorney, Allan M. Shine, told Eyewitness News. The amount of money Global Broadcasting owes to vendors and other creditors will not be known until they file claims, he said.

Matthew McGowan, a Providence attorney, was named WLNE’s temporary receiver, giving him responsibility for managing the station’s day-to-day operations until a permanent receiver is appointed in August. He did not respond to a request for comment.

Steve Doerr, WLNE’s vice president and general manager, remains in place, and the station’s roughly 70 employees have not been affected, a person familiar with the matter told Eyewitness News. The station will continue broadcasting during the receivership process, which may last six months to a year, Shine said.

Advertising sales shrinking

WLNE’s revenue from advertising and other sources was $5.9 million in 2009, down from $8.2 million in 2008, according to estimates by BIA Financial Network Inc., a Virginia research firm. A decade ago, in 2000, WLNE’s revenue totaled $15.1 million.

The station’s sales had already declined 27 percent by 2007, the year its owner of 24 years, Freedom Communications of California, sold WLNE for $14 million to Global Broadcasting, which was created by O’Brien and another media executive with local ties, Robinson Ewert, who left the company last year.

Although broadcast TV revenue declined throughout the Providence-New Bedford television market over the last decade, WLNE did not maintain its share of spending. Its percentage of total revenue at all local stations declined from 16.9 percent in 2000 to 9.8 percent in 2009, according to BIA.

The Providence-New Bedford TV market is the 53rd-largest in the nation with 619,610 households, according to Nielsen. The Boston market is seventh-largest with 2.4 million.

Closing newsroom unlikely

It is “very rare” for a major network affiliate in a large TV market to become insolvent, Atorino said. “Before the credit-market-economic collapse, this never happened. The world has changed,” he said. Large media companies including Tribune and Citadel Broadcasting have filed for bankruptcy protection.

WLNE was hit by a triple-whammy – high debt, a recession-driven drop in advertising, and major changes in the media landscape, Levin said. “The broadcasting model is changing dramatically,” he said.

If WLNE is sold, the most likely buyer would be either a wealthy individual or a company that already owns a station in the Providence-New Bedford market, which could then merge the two channels’ news operations to save money, Atorino said.

Even if an independent buyer wanted to cut costs, it is unlikely he or she would close ABC 6’s news operations, Levin said. “The local news is the thing that distinguishes them,” he said.