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Bankruptcy leaves TV station in limbo

WTVT-Ch. 13 may be worth less than half of what was paid for it about four years ago, and the station may have to be sold as part of a bankruptcy reorganization, court documents show.

The television station, among the top rated in the Tampa Bay area, was bought for $385-million in 1987 by Gillett Holdings Inc. with the help of junk bonds from Drexel Burnham Lambert Inc.

But today, the station is being valued at about $170-million, according to the reorganization plan filed in the Gillett bankruptcy case in Denver.

The plan calls for creditors to be paid through either the sale or refinancing of assets. And one of the plums in the Gillett bankruptcy is WTVT.

"The plan calls for certain debt reductions over a specified period of time," said Bob Selwyn, president of Gillett Broadcasting. "It is clearly possible that could involve (selling) television stations."

Clarence V. McKee, chairman of WTVT, who once held a controlling interest in the station, declined several requests for interviews for this story.

Gillett Holdings owns three television stations, but WTVT is the largest and is in the biggest market.

"At some point in the future, there is $170-million of value that can be realized from WTVT is what the plan assumes," said Marc Rowan, a spokesman for Apollo Investment, Gillett's largest creditor.

Apollo, headed by ex-Drexel executive Leon Black, would gain control of Gillett if the bankruptcy plan is approved.

Several factors are responsible for the sharp drop in WTVT's value. Television stations were among the hottest investment commodities during the 1980s. Three of the bay area's five broadcast stations, WTSP, WFTS, and WTVT, were bought and sold during the decade.

The price of stations was bid up to astronomical levels.

"In the go-go era, Gillett overpaid for some properties," said Michael Kupinski, a media analyst with A.G. Edwards & Sons in St. Louis.

Then, during the Persian Gulf war, advertisers cut back drastically on spending. When the war was over, the country was still in a recession and the dollars have yet to return to the television industry.

WTVT Holdings Inc., the parent company for the station, had revenues of $40.7-million in 1988. That fell to $38.3-million the next year and stayed about even in 1990 with revenues of $38.7-million, according to court documents.

While that was an increase, the station did not register the double-digit annual revenue increases that were once common in the bay area. And the buyout was based on those double-digit expectations.

The station's revenues took another dip in 1991. Through September, revenues fell by 10 percent, compared with the same nine-month period one year earlier, and were on a track for a 12 percent decline for the full year. Final figures for the year were not available.

"As well-run as they are, given the industry conditions of the last few years, (Gillett's television stations) do not generate enough cash to service the debt," Selwyn said.

If the station is considered without the debt from the buyout, it is profitable, bringing in about $20-million annually after expenses, but before depreciation and amortization are included, court documents show.

That means that debt is what sunk the ship.

"Gillett represents one of the more classic overleveraged situations of the 80s," said Mariel Clemensen, director of high-yield research at Lehman Bros. in New York. "It is one of those extreme examples."

This year, WTVT is expected to show an improvement. The CBS affiliate carried the Olympics and the Super Bowl, and it should benefit from political advertising.

That presents the owners with a quandary. The station represents one of the best hopes for raising cash for a successful restructuring. But because prices of television stations are depressed, a sale could mean the station is sold for less than it's worth.

Gillett bought WTVT from Gaylord Broadcasting. Gaylord received a $116-million minority tax break on its gain from the sale because Gillett teamed up with McKee, who is black.

As part of the deal, McKee was to receive $1-million after he ceded his ownership in the station back to Gillett. That was completed recently and court records show the $1-million has been allocated for payment to McKee.

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