Equity Sells RTN

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photoman76

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I think it keeps Equity Media Holdings from filing for bankruptcy. Luken Communications is owned in part by Henry Luken, who is the CEO of Equity Media Holdings. I don't think there will be any changes to the FTA channels.
 
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Mr Tony

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yeah I read that yesterday and chuckled

peter selling his company to paul when paul is the head of peter's company before that.....

so it goes from one hand to the other...like when Equity "sold" the 5 stations in Florida they own (all low powered) to the same "owner" (the ceo of their company who broke off a new entity)
 
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Mr Tony

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from the equity site
Equity Media Holdings Corporation - Equity Media Receives Up to $37.5 Million in Asset Sales Transaction With Group Led by Largest Shareholder Henry Luken III

LITTLE ROCK, Ark., June 25, 2008 (PRIME NEWSWIRE) -- Equity Media Holdings Corporation (Nasdaq:EMDA) today announced it has closed an asset sales transaction with Luken Communications, LLC, a group led by Equity Media's largest shareholder Henry Luken III (the "Investors"). The Investors purchased Equity Media's Retro Television Network (RTN) subsidiary for $18.50 million. Equity Media has the option to repurchase RTN at any time during the next six months. Concurrently with the closing of the RTN sale, the Investors purchased for $1.50 million warrants to purchase up to 8,050,000 shares of Equity Media for $1.10 per share. Equity Media also has entered into asset purchase agreements with the Investors for the sale by Equity Media of certain television stations. Equity Media has received a $5 million prepayment on the stations sale from the Investors. The stations sale will be consummated, and Equity Media will receive the remaining payment of $12.5 million, upon receipt of FCC and certain other approvals. Following consummation of the station sales, Equity Media will continue to own and operate 100 stations in 35 markets representing 24.8% of U.S. television households based on Equity Media's current stations roster.

The transactions with the Investors were approved by a special committee of the board of the directors of Equity Media, which received an opinion from an independent investment bank that the consideration being received in the transactions was fair, from a financial point of view, for Equity Media's unaffiliated stockholders.

Equity Media will use a portion of the current proceeds from the transactions to retire a portion of its credit facilities in a principal amount of $17.5 million. The remaining current and future proceeds from the transactions will be used for working capital and to fund operations as Equity Media continues to explore ways to maximize shareholder value, including pursuing strategic partnerships, potential further sales of assets, cost cutting initiatives and additional financings. Equity Media has entered into an amended engagement agreement with Thomas Weisel Partners with respect to these efforts.

Equity Media has also executed an amendment to its existing senior secured credit facility.

The transaction overview with the Investors is as follows:

Sale of Retro Television Network

Equity Media today received $18.5 million in cash for all of the outstanding shares of Retro Programming Services, Inc. ("RTN"). RTN is a growing network with 73 affiliates that currently covers 38% of U.S. television households. Equity Media has the option ("RTN Option") to repurchase RTN for $27.75 million plus an amount equal to the capital and net operating expenditures invested by the Investors prior to the repurchase (together with a return on such expenditures at the rate of 12% per annum), which is exercisable at any time through December 24, 2008. The Investors received a license to utilize Equity Media's Central Automated Satellite Hub ("CASH") delivery technology in operating RTN. Equity Media will maintain the RTN operations center in Little Rock, Arkansas and create communications links between any new operations center created by Luken Communications, LLC. These operations centers will serve as backup to each other with the data required to operate each of the centers redundant.

As part of its engagement by Equity Media, Thomas Weisel Partners will explore strategic alternatives, including potentially working with strategic partners, for the repurchase of Retro Television Network during the option period and also will assist in identifying additional sources to help finance additional digital networks, similar to the RTN model, that Equity Media may develop using the CASH technology system. Management of Equity Media believes that the transaction with the Investors will allow for RTN to continue expanding affiliate relationships and its national reach during the option period. Equity Media will work with the Investors to assist in the continued growth of RTN as Equity Media makes efforts to realize on its current objective of repurchasing RTN.

Sale of Certain Television Stations

Equity Media has entered into an agreement with the Investors to sell certain television stations currently affiliated with Univision/Telefutura located in six markets including Amarillo (Texas), Waco (Texas), Fort Myers/Naples (Florida), Minneapolis (Minnesota), Oklahoma City (Oklahoma) and Tulsa (Oklahoma). Equity Media today received $5.0 million as an initial payment from the Investors, which is nonrefundable except in certain circumstances. Equity Media will receive an additional $12.5 million upon consummation of the stations sale, which is subject to Univision's right of first refusal held on these stations and customary Federal Communication Commission approval. Equity Media has the right to terminate the agreement prior to consummation of the sale, subject to certain provisions.

Warrant Purchase

Equity Media sold warrants to the Investors to purchase 8,050,000 shares of Equity Media's common stock at an exercise price of $1.10 per share, exercisable through September 7, 2009 (the "Luken Warrants"). The purchase price for the warrants was $1.5 million. In the event the Luken Warrants are exercised, the Investors' ownership stake would increase from approximately 20% ownership to approximately 30% ownership. In connection with the amended engagement agreement between Thomas Weisel Partners and Equity Media, Thomas Weisel Partners received warrants to purchase up to 1,075,279 shares on the same terms as the Luken Warrants, as well as a cash fee, in consideration of its assistance with the transactions with the Investors.

Amendment to Senior Secured Credit Facility

Equity Media has also entered into an amendment to its senior secured credit facility. Equity Media will use a portion of the current proceeds from the transactions with the Investors to pay down a portion of such credit facility. Following this pay down, approximately $38.5 million will be outstanding under the credit facility.

Equity Media previously announced a management realignment and will focus on leveraging its core assets as a digital delivery platform, disposing of non-core station assets, realizing increased revenue and cost reduction opportunities across Equity Media's media platform, and offering new opportunities for content delivery for digital networks and station owners.

"On behalf of the Board of Directors and management we are excited to have closed on the transactions. The proceeds of these transactions enable us to continue to offer the depth of our technology platform, television stations and new business opportunities for our partners and shareholders," said John E. Oxendine, Chief Executive Officer of Equity Media Holdings Corporation. "Equity Media has an exciting technology platform that complements management's mission to offer compelling media services to content owners, advertisers, and affiliates."
 
Pepper

Pepper

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Kinda like Echostar selling receivers to Dish, both of which have the same majority stockholder. Amazing the tricks that go on in the corporate world.
 
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Mr Tony

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yep

or when broadcast companies create a "new" (shell) company to buy another TV or radio station because of FCC rules on how many stations one can own
 
FTABman0

FTABman0

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True Tony,
Being in AM & FM broadcast radio for over 20 years and being a guy on the inside workings of the stations I have worked for the FCC limits one owner 5 radio stations in one market. Nothing says you can not go over to another part of the state or out of the market coverage area and start another 5! Most new owners put a “No Operations Clause” in buying contracts to stop the past owner from starting a new station in the market. Killing the little guy! They do control the amount of power for each station also. You can’t own say 2 FM stations with the same power, they regulate that.

AM radio power is different, the last one I worked at we had to turn our power down at night to 145 watts from 5,000. We tried for 10 years for the FCC to allow us full power at night but they did not want us to “drift” into other states with our station programming. (takes away from the states local advertizing) Getting a full power license for AM stations is just about impossible now if you got granted a half power application when you started. The government has full control over all airwaves and that will never change!

Also, there can only be one station in one market that has the most power. We have a station here that is 50,000 Kw and say if you applied for a radio broadcast license and was granted a license and wanted that power or more you would be denied. The most powerful station in any market also has control over EBS (Emergency Broadcast System) since they can cover the whole county and then some!

It is all in who was there first and who has the most money! With radio, you will see more stations being combos with one owners these days! Since these owners and corporations (Clear Channel and others) can’t start new stations in a large market, it is easier to buy the little guys out and acquire them that way! It is a big racket and they find all the loop-holes and jump through them and get by with it! Got to love the big corporate guys!

I suspect it is the same with television stations also.
 
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Mr Tony

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TV is different

in smaller markets one owner cannot own more than one of the big 4 stations in a market. Where I use to live (Duluth, MN) the CBS was sold to a company who turned around and told the NBC station to "run it". They did that in Indiana too..same thing. The ABC in the market went to the FCC stating that this "new" company was a shell company. from wiki
Malara Broadcast Group purchased KDLH from New Vision and outsourced most of the station's functions (including local news) to longtime rival KBJR. That station was owned by Granite Broadcasting. Under this agreement, KDLH laid off most of its staff and KBJR began to handle nearly all of KDLH's operations. Filings with the FCC showed Malara could operate KDLH with as few as two people on the payroll. Malara makes SEC filings jointly with Granite leading to allegations that Malara is simply a shell corporation for Granite. If these allegations are ever found to be true, Granite would be in violation of FCC rules regarding duopolies. The FCC does not allow common ownership of two of the four largest stations in a single market. The Duluth market has only five full-power stations, which are too few to allow duopolies in any case.

Larger markets is different. I know in Minneapolis we have 2 major "duopolies" and one "minor"

major...ABC and an Independent station..same owners (Hubbard..yes the same people who started USSB)
Fox & My are owned by Fox
minor...Univision and Telefutura owned by Equity :)
 
FTABman0

FTABman0

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Stanley S. Hubbard & United States Satellite Broadcasting are names from the past! Almost forgot about those past history names! How many years has that been, since 1998 when they sold to DirecTV?

Great Info Tony!

Wow! I thought it would be different for television. You would think that the FCC would step in and stop the “shell” companies from forming since they are same ownerships. I guess that would take away form the annual income in license and renew fees for the government.

So I guess this sort of thing will go on and on! Big corporate companies want it all when it comes to entertainment especially TV and Radio. You got to ask though, who does that hurt in the long run. The suits with the big company’s backing them with the cash want full control over the money in any major or minor markets! It’s criminal! :mad:

Kevin
 
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Mr Tony

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Stanley S. Hubbard & United States Satellite Broadcasting are names from the past! Almost forgot about those past history names! How many years has that been, since 1998 when they sold to DirecTV?
yep. 1998ish. Hubbard owns all 6 ABC stations licensed to Minnesota (KSTP in Minneapolis and 2 satellite stations, KAAL Austin, MN and WDIO/WIRT 10/13 in Duluth and Hibbing). Still have a channel list for USSB somewhere around here

Wow! I thought it would be different for television. You would think that the FCC would step in and stop the “shell” companies from forming since they are same ownerships. I guess that would take away form the annual income in license and renew fees for the government.
I wish they would too...but I guess thats how lots of stations stay on the air..LMA agreements
 
FTABman0

FTABman0

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I too have a USSB channel list around here also! I also have the DirecTV remote here that has the channel line-up (sticker) on the back of the remote!

I was going to ask if he (Hub)was still going anything else satellite or TV but you got that one answered Ice!

Nevertheless, great information. I figured it would have been the same for television but I am a radio man and never crossed over to the moving pictures side of broadcast although my voice is the closest thing for me to do TV for even now I still voice-over television spots.

Talking about that I had to take a picture of one of the first dealer store displays that I have that lights up! I think the starter is bad (Florescent tube) or I would have lit it up for the picture!

I modified the LNB on the display to shine on the dish when it works!

Past things................ are they great to reflect on!
 

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