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How hedge fund deal cost minority owners their control of WTMP in Tampa

TAMPA — The Cherry brothers were teens in Daytona Beach when their father, publisher and civil rights activist Charles W. Cherry Sr., started taking them on road trips to the bay area.

As they neared Tampa, Glenn and his older brother, Charles II would lean into the Chrysler's radio and look for WTMP-AM 1150, a station that played soul music when few did. Soon, they were cruising to James Brown, Marvin Gaye and Curtis Mayfield.

Glenn grew up to become a veterinarian. Charles II finished law school. But they remembered WTMP.

In 1997, the Cherry brothers bought WTMP. Glenn became general manager.

Glenn Cherry knew that the power of a black-centered radio station went well beyond musical playlists. His father's interest in media had spun off of civil rights work. The sons saw radio as an opportunity to shape a community.

Right away, Cherry installed a civic-minded talk show host named Jetie B. Wilds, who rallied listeners around social and political issues. Wilds' Saturday morning Citizen's Report helped WTMP stay relevant.

"There were many voices in the community," Cherry says. "What WTMP chose to do was amplify those voices."

But, these days, not even Cherry has a voice at WTMP.

A New York hedge fund firm owns the station.

Programming decisions are made over a thousand miles away.

And Cherry was powerless to intervene last month, when the new general manager bumped Jetie B. Wilds from his prime spot on Saturday mornings.

What had happened?

They borrowed money to grow.

• • •

Since 2007, 42 minority radio station owners have buckled under bankruptcies, liquidations or loan defaults, according to a study by Santa Clara University law professor Catherine Sandoval.

Stations that had provided programming to a distinct local black audience were gobbled up into the corporate ether.

Minority radio owners were already hit hard by a 1996 law that allowed companies to buy up multiple stations, amassing combined audiences that lured away advertisers.

"Black broadcasters are being pushed out of the market," said LaVonda Reed Huff, an associate professor of law at Syracuse University, who specializes in minority broadcast ownership. "And with it comes a watering down of the local content, so you don't have a local person who is able to speak to the issues affecting the community they serve."

In Campbell, Ohio, Imus in the Morning replaced a popular black radio show hosted by Kenneth King, "Brother K," after WGFT-AM went to the same hedge fund that assumed control of WTMP.

"They told me to laugh more and lighten up," King said. When he wouldn't, "they just came in one day after the show and said my services would no longer be needed," he said.

• • •

For the Cherrys, things turned sour in 2004.

It was the year their father succumbed to cancer.

It was also the year they borrowed $20 million from D.B. Zwirn Special Opportunities Fund, a New York hedge fund looking to loan black broadcasters money. They used the loan to refinance debt and to expand holdings.

While Charles II and sister Cassandra Kittles oversaw the family's newspaper ventures, Glenn Cherry stayed at the helm of the radio enterprises.

At the time, WTMP was riding a wave of commercial success after securing the popular syndicated Tom Joyner Morning Show.

WTMP was known in the community for sponsoring charity events like the Nights of Kings and Queens, a black-tie event that honored nonprofit agencies. Glenn Cherry organized public forums on topics of health and welfare in the black community. He called for a protest when a local television station's radio personality contest left out black disc jockeys.

"As black broadcasters we chose to serve black audiences," Cherry said, "so the public affairs piece we felt was important in the overall makeup of the community."

Part of the $20 million from Zwirn went to refinance debt accumulated from the purchase of WTMP-FM and four stations in Jacksonville. Another portion went to expansion; the brothers purchased three FM stations in Savannah.

The Cherry brothers' newly expanded company was called TAMA Broadcasting Inc. It included eight FM stations and one AM.

"There weren't that many people with eight FMs," Cherry said. "So our plan was to grow the group up and sell off some of them," to pay off the debt with Zwirn.

But three hurricanes would help blow that plan off course.

• • •

Zwirn and its holdings were purchased by Fortress Investments Group, another New York hedge fund, in April 2009.

Since early March, the St. Petersburg Times has made repeated attempts — by telephone, e-mail and Federal Express — to talk with Fortress officials for this story. A list of questions sent to Lilly Donohue, managing director, went unanswered, as did phone messages and e-mails to vice president Peter Leibman, a former top Zwirn executive who joined Fortress. Attorneys representing the company did not respond.

The way Glenn Cherry tells it, the Zwirn deal required that the Cherry brothers make a certain amount of advertising revenue each business quarter. If not, they could be in default of the loan.

But selling radio commercials while Hurricanes Charley, Frances and Ivan dotted the coasts of Florida was a problem.

"Here and Jacksonville, it did a number on us," Cherry recalled. "Everybody was running around dodging."

At least three of the four Jacksonville TAMA stations were off the air for about a week. Wind damaged the roof of the transmitter building and crippled one station's tower.

TAMA lost at least $100,000 in ad revenue between August and September, Cherry said.

In the third quarter of 2004, the brothers fell short of their quota.

Zwirn made no special allowances, Cherry said. A technical default meant the deal would have to be rewritten. The Cherry brothers signed a new plan that cost $300,000 in upfront fees.

Their old interest rate: 13 percent.

Their new interest rate: 25 percent.

"We had to go along with this because we couldn't allow them to take the properties," Cherry recalled. "It was predatory lending at its finest."

The hurricanes passed, but the brothers would be faced with a tsunami of an economy for the next few years.

When the Zwirn deal terms ended in 2006, the Cherrys were required to pay about $40 million — double the amount of the original loan. But their plan of selling stations to make enough money to pay off Zwirn had never materialized.

When they couldn't pay, Zwirn took control of TAMA's nine stations.

At the time, Glenn Cherry downplayed the significance.

"For us, this is not anything unusual — this is how the system works," Cherry told a Times reporter in September 2007.

But behind closed doors the Cherry brothers and Zwirn were battling for control, Cherry now admits.

The Cherrys owned the Washington Street building that housed the operation. Their names were on the license filed with the Federal Communications Commission. It had not yet been transferred to Zwirn.

Zwirn began exercising control over personnel, programming and financing at all of the TAMA stations. The company hired a Dallas radio management company to oversee operations.

Glenn Cherry filed a complaint with the FCC, saying Zwirn was operating stations without a license. Zwirn had to pay a fine but ultimately obtained the license in the name of the management company.

In May of 2008, Zwirn fired Glenn Cherry as TAMA's chief executive and obtained a restraining order barring him from meddling in its business.

Zwirn made the Cherry brothers this offer: walk away debt-free.

They turned it down.

"You don't just walk away with nothing," Glenn Cherry said.

• • •

People on the streets of Tampa still call Glenn Cherry the "WTMP man."

He didn't listen to the station for a year after the deal went sour.

He still goes to work each day in the same office. Zwirn moved operations to N Howard Avenue.

These days Cherry devotes time to the family's other ventures, the Daytona Times and the Florida Courier, a statewide newspaper focused on black affairs. The brothers still own two stations in Daytona Beach and Greenville, S.C.

But the memory of losing the station they grew up on still stings.

"I knew WTMP when it was in its heyday," Cherry said. "I just wanted to return it to the prominence that it had in the community before."

In January of 2009, the Cherry brothers filed a $250 million federal lawsuit in the Middle District of Florida, claiming that Zwirn practiced "unscrupulous and predatory lending" and targeted their stations for a takeover.

The court sided with Zwirn. The case is currently on appeal.

Some black Tampa leaders have decried the changes at WTMP — among them, James Ransom, board member for the Tampa Organization of Black Affairs. He took note when Jetie B. Wilds' Citizen's Report was moved from popular Saturday mornings to quieter Sunday nights.

"TOBA is definitely concerned about the reduction of public service affairs programming on WTMP," Ransom said.

On Feb. 27, Wilds broadcast his last Saturday morning show.

"This is Jetie B. Wilds with the Citizen's Report; we'll see you next week," said the gravely voice. "Not next week. I'm sorry."

In a news release, WTMP program manager Sam Nelson — who works out of Jacksonville for the Dallas management company hired by Zwirn — said he was "enthusiastic about having Jetie continue with the station and having his insight into the issues that affect our community."

Callers to Jetie's last Saturday morning show were less than enthusiastic about the schedule change.

"Almost a decade and a half of work ought to have some merit," one caller said. "The community wants the Citizen's Report on Saturdays, and if WTMP don't want that, we don't want them."

Nicole Hutcheson can be reached at nhutcheson@sptimes.com or (813) 226-3405.

. FAST FACTS

How WTMP

was lost

April 2004: Glenn and Charles Cherry II borrow $20 million from the D.B. Zwirn Special Opportunities Fund to pay debts and buy three FM stations in Savannah, bringing their TAMA Broadcasting holdings to nine radio stations.

August 2004: Hurricane Charley knocks out power to several TAMA stations, soon followed by Hurricanes Frances and Ivan. The Cherry brothers are unable to make an advertising quota stated in the Zwirn contract. They're forced to pay $300,000 in default fees. They refinance at a higher interest rate.

2007: When it's time to repay Zwirn, the Cherrys can't do it. Zwirn takes control of the nine radio stations and fires Glenn Cherry as CEO.

January 2009: The Cherry brothers sue Zwirn, claiming predatory lending. A year later, the court sides with Zwirn. The case is under appeal.

How hedge fund deal cost minority owners their control of WTMP in Tampa 04/10/10 [Last modified: Saturday, April 10, 2010 10:11pm]

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