Fewer Stations Than FCC Expected Won’t Go Digital

No other stations are expected to soon follow in Equity’s footsteps and fail to transition, said a half-dozen dealmakers we surveyed. Broadcasters will continue to face a decline in ad sales and more may file for bankruptcy, but they seem likely to continue to operate, said industry brokers and lawyers. “I think Equity is a purple cow in the DTV transition and was slowed in large part by its lack of financing,” said lawyer Robert Rini. Communications lawyers use that term before the FCC to contend a client faces unusual circumstances.

One of Rini’s clients is buying an Equity station and plans to help it continue broadcasting after Friday’s DTV switch by helping it build a low-power digital facility, he said. Rini declined to name the client or station. It’s likely to switch to digital Thursday, and has an FCC DTV construction permit good until December, Rini said. It’s in his client’s interest to continue to run the station, Rini said. “I don’t have a sense that there’s going to be a large number of stations that go off the air due to economic reasons.” Though there “may be some if the ad market doesn’t make a recovery in the next six months or so,” he added.

Almost all Equity Media stations that aren’t switching to digital Friday will by Aug. 1 and continue broadcasting at full power, said Kim Kelly, the company’s chief restructuring officer. The rest likely will still be available as multicast streams of TV stations, she said. “We were concerned about this issue, and I believe we all worked toward the best possible solution in a difficult environment,” Kelly said. “We've been working very closely with the commission to make sure these sales can move on an expedited basis.” KUOK Woodward, Okla., will be run as a low-power DTV translator by its buyer, she said.

Another lawyer who helps arrange deals said he too wasn’t aware of other stations that will soon go off-air. When Congress delayed the transition by almost four months, it gave stations “more time to adjust,” the attorney said. “A lot of radio and TV stations are in bankruptcy or financial distress,” but would be hurt even more by not going digital. Station broker Brian Pryor called Equity “somewhat of a unique case,” pointing to its recent auction where the broadcaster sold most of its stations (CD April 27 p10). “Not all of their stations sold,” said Pryor, a managing director of Media Venture Partners. “The lender was Silver Point Capital and for obvious reasons I can see why they wouldn’t want to put more money into the company to build out DTV operations since there is a questionable market for these remaining stations and the rest of the company has been dismantled.”

FCC officials haven’t heard of other stations that won’t make the transition besides those publicized by the commission, said one. An agency spokesman didn’t reply to messages seeking comment by our deadline. Stations earlier listed by the FCC as not making the transition that now will, according to our analysis of FCC data, are KCWK Walla Walla, Wash.; KXVA Abilene, Texas; WLNY Riverhead, N.Y.; and WMTJ Fajardo, P.R. Stations affiliated with ABC, CBS, Fox or NBC in financial trouble likely will find a buyer if put on the block, so they'll continue to run, said broadcast lawyer Peter Tannenwald. “But if you're not a network affiliate, I don’t know who would come in and pick it up.”