NY’s Citadel buys ABC 6 as judge accepts $4M cashMarch 22nd, 2011 at 12:02 pm by Ted Nesi under General Talk
A Superior Court judge approved the sale of insolvent WLNE-TV ABC 6 for $4 million in cash Tuesday to Citadel Communications Co. Ltd., a small New York broadcaster founded by a former chairman of the National Association of Broadcasters.
The total value of the deal is more than $5.8 million because WLNE will retain cash, receivables and other assets in addition to receiving $4 million in cash from Bronxville, N.Y.-based Citadel, its court-appointed receiver Matthew McGowan said.
Citadel and ABC already have an affiliation agreement in place that is just awaiting the two parties’ signatures, ABC’s attorney Jennifer Doran said. The Disney-owned network effectively blocked three competing bids. Sovereign Bank, WLNE’s biggest creditor, also supported the sale to Citadel.
Citadel owns four TV stations in Illinois, Iowa and Nebraska, three of them ABC affiliates and the fourth a CBS affiliate, founder and CEO Phil Lombardo told WPRI.com last month. The company is not related to radio giant Citadel Broadcasting, which owns WPRO-AM and other local stations. Lombardo, who was in court Tuesday, said he is also an investor in a 24-hour cable news station in Sarasota, Fla.
“There is a lot of work to be done,” Lombardo told reporters after the hearing before departing for a celebratory lunch at Hemenway’s Restaurant. “We now need to formulate our plans to make the station very successful.”
Lombardo said he planned to “refocus” WLNE’s newscasts and make it the first high-definition station in the Providence-New Bedford market. Layoffs are “possible” but it’s too early to say whether they will be required, he said. “We’re going to evaluate every person in the station,” he said.
Associate Justice Michael Silverstein 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 Communications.
A total of 54 investor groups expressed interest in buying ABC 6, about 12 of which were “very interested” and received a term sheet, but only four submitted formal offers, McGowan said.
The four were Citadel; former Providence Mayor Joseph Paolino’s group, which bid $2.2 million; former WPRO-AM general manager Mitch Dolan’s Brine Broadcasting, which bid $4.2 million; and Tim McDonald’s Liberty Investors Group, which bid $4.3 million, McGowan said.
ABC’s network officials negotiated with all four bidders but declined to approve any group except Citadel as a potential affiliate, both sides’ lawyers said in court. McGowan said he could not support a buyer who did not meet ABC”s approval. ”They’re asking me to take a huge risk here” if he did, McGowan said.
WLNE began paying ABC for network programming at the beginning of this year, and Citadel’s Lombardo said he does not oppose that so long as the affiliate payments are reasonable. He also said Citadel planned to “put its armor on” and negotiate new retransmission payments with cable and satellite companies like Cox Communications, Verizon Communications and DirecTV.
Citadel will formally take over management of the station on April 25 under a local marketing agreement, or LMA, just days before the key May ratings period begins. Lombardo said he hopes the FCC will approve Citadel as WLNE’s new licensee by the end of June.
ABC 6 General Manager Steve Doerr, who joined the station in October 2007, and Chief Engineer Jim Brown will remain in place at least until Citadel receives formal FCC approval.
ABC 6 has struggled since it came on the air as WTEV-TV in 1963. “The only way to fix the station is to work hard, be consistent, be patient,” and thereby win the trust of viewers and advertisers, Lombardo said.
This post has been updated and expanded since it was first published.
(photo: Ted Nesi/WPRI)