ABC threatens to drop Ch. 6; owner fights price tag

March 17th, 2011 at 12:17 pm by under General Talk

With less than a week to go before the auction of WLNE-TV, ABC has warned potential buyers there’s no guarantee the network will keep the station as an affiliate or let it continue branding itself as “ABC 6″ once their current deal expires at the end of this month.

“ABC has the right to approve, in its sole discretion, any operator of the station,” the Disney-owned network’s attorney wrote in a March 4 court filing obtained by WPRI.com. “The consent of ABC is required before anyone may operate the station as an ABC affiliate after March 31.”

ABC said WLNE can only use the name “ABC 6″ and the website “abc6.com” as long as it has an affiliation agreement with the network, which it is not promising to renew without knowing the identity of the new owner.

ABC did not say where it would air its programming in the Providence-New Bedford market if it ended its affiliation with Channel 6. WLNE has been an ABC affiliate since 1995, when it switched with WPRI following CBS’s purchase of this station. That reversed a previous affiliation swap they did in 1977. (WPRI is now owned by Providence-based LIN Media.)

In a separate filing this week, WLNE’s current owner, Kevin O’Brien, disclosed that the station’s gross sales last year totaled $8.47 million and argued its court-appointed receiver, Matthew McGowan, is asking far too little in exchange for Channel 6. He called on the judge to block the sale.

Citadel Communications Co. Ltd. has offered less than half that amount – $4 million – as the stalking-horse bidder for WLNE, CEO Phil Lombardo told WPRI.com last month. Another party will need to top that price to take over the station at auction next week.

Bronxville, N.Y.-based Citadel’s $4 million offer is 70% less than the $14 million that O’Brien’s Global Broadcasting of Southern New England paid to buy WLNE from Freedom Communications in 2007. Citadel owns four stations in the Midwest.

ABC’s warning that it could end its affiliation with WLNE after March 31 “has effectively chilled the sale process of the station” and “is directly negatively influencing the sales price,” O’Brien asserted in his filing.

Peter Bowman, a media appraiser in Virginia hired by Sovereign Bank, pegged WLNE’s fair market value at $9 million a year ago. The price would be discounted by 30% to $6.2 million if a sale had to take place quickly, Bowman said.

Bowman confirmed the accuracy of the numbers in a brief phone interview with WPRI.com Thursday. He declined to comment further, citing confidentiality agreements. O’Brien cited Bowman’s analysis as evidence McGowan had not done an adequate job marketing the station.

Up to six parties may bid on Channel 6, McGowan said last month. Former Providence Mayor Joseph Paolino is leading one of the investor groups looking at purchasing the station.

ABC told the court it has discussed a new affiliation agreement with several potential WLNE buyers, but it is under “no obligation” to actually agree to one following next week’s auction.

O’Brien said WLNE earned a profit in 2010, citing information provided by broker Cobb Corp., and argued that its positive cash flow should allow McGowan to continue operating the station while seeking more money for it.

O’Brien also claimed to have received offers of as much as $1.85 million for land in Tiverton that hosts a tower WLNE no longer uses, and said McGowan should sell that parcel separately to maximize its value.

Final bids for WLNE are due Friday. The station is scheduled to be auctioned on Tuesday.

More Channel 6 coverage on Nesi’s Notes:

(photo: WPRI/Ted Nesi)

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15 Responses to “ABC threatens to drop Ch. 6; owner fights price tag”

  1. [...] discretion, any operator of the station,” ABC’s attorney wrote in a March 4 court filing obtained by WPRI. “The consent of ABC is required before anyone may operate the station as an ABC affiliate after [...]

  2. Joseph says:

    If WLNE loses it’s ABC affiliation, I think the most likely home for it would be WLWC Channel 28.

    WLWC currently has The CW, but it could (if the CW were to pre-feed it’s programs to WLWC) air CW programming from 5 to 7 P.M. weekdays, run Diane Sawyer’s ABC newscast at 7 P.M., a syndicated show at 7:30, and ABC prime-time starting at 8 P.M.

    The “Kids’ CW” Saturday-morning block could air on Sundays over WLWC.

    WLWC probably wouldn’t have a news department. But I could see WJAR producing six hours of news a week for WWLC: A half-hour weekdays at 12:30 P.M., and another half-hour nightly at 6:30 (times when WJAR isn’t producing local newscasts of its own).

    But if ABC were to abandon WLNE, the station might not get sold. Potential bidders would likely pull out of the auction. The station itself would probably go out of business and go off the air.

    1. Ted Nesi says:

      Good analysis, Joseph – all plausible, though I have no idea whether Four Points would be interested in ABC affiliation or if WJAR would want to produce WLWC’s newscasts, though I could imagine it. It’s certainly something to watch.

  3. [...] ABC threatens to drop Ch. 6 as O’Brien bashes the $4m [...]

  4. will says:

    I think this is a shakedown play by ABC/Disney to extract the biggest reverse compensation payment they can get from would-be bidders.

  5. bill says:

    i find it hard to beleive that if citadel made the purchase that abc would negate the contract agreement. Phil Lombardo owns stations in des moines, sioux city, iowa and lincoln nebraska are all abc affiliates. citadel operates a low overhead business model compared to other stations in those markets….but has a successful track record.

  6. [...] Meanwhile, WLNE is in receivership and about to go on the auction block — a situation complicated by ABC’s threat to drop the station from its affiliate roster. [...]

  7. A Modest Proposal says:

    Do we really NEED WLNE? I have an antenna and WCVB is a FAR better quality ABC affiliate than WLNE. ABC 6′s newscasts are tacky-looking as opposed to the uber-professional Channel 5. Even their picture quality pales in comparison. Growing up prior to cable, our family would watch WNEV 7 (now WHDH) for CBS rather than 6 because of better signal quality. The question needs to be asked: with our state economy in the tank, couldn’t we follow the lead of NH and simply be subsumed by the Boston TV market? It would be nice to keep maybe 10 & 12 and receive 4, 5, 7, 25, 38 and 56 on cable again.

    1. Ted Nesi says:

      *Maybe* keep Channel 12!? Now that’s just hurtful.

      1. dolores says:

        I don’t want to loose channel 12 i love this station please think of the little people.

  8. [...] Barring unforeseen events, we should know who WLNE-TV’s new owner is by the afternoon as its long odyssey through receivership finally comes to an [...]

  9. [...] denied an objection by ABC 6′s previous owner, Kevin O’Brien, who argued McGowan was not obtaining enough money for the station. O’Brien paid $14 million in 2007 to buy WLNE from Freedom [...]

  10. [...] question is what Lombardo will do once WLNE is his. The station booked about $8.5 million in gross sales last year, according to ex-owner Kevin O’Brien. That was in a banner political [...]