Young Broadcasting CEO defends San Francisco station from suggestion that it is overvalued in light of sale of Granite station in market.
Young Broadcasting CEO Vincent Young told securities analysts on a conference call this morning there is no comparison between Young’s KRON San Francisco, which is appraised at around $400 million, and crosstown KBWB, which Granite just agreed to sell for $65 million.
“KRON produces tens and tens of millions of dollars in revenue in that market, which the Granite station never did and never could,” Young said. “We have very little in common with that station. Whatever they sold it for—whether it was $300 million or $3—it doesn’t really have much to do with KRON.
“KRON is not a stick,” he said. “KRON has the ability to produce in the next couple of years upwards of $100 million in revenue.”
The call followed release of Young’s first-quarter results, which include a 6.3% gain in net revenue to $48.4 million. During the call, it was Stephen Weiss, of Banc of America Securities, who wondered why Young was valuing KRON at six times the market price for KBWB.
Rather than comparing KRON with KBWB, a weak UHF station, Young said, it would make more sense to compare it with the other VHF stations in the market—the stations carrying ABC, CBS, NBC and Fox.
Added Young Executive VP Jim Morgan: “You’re really comparing a stick to a real viable station with over 10% of the market share in audience and revenue. We are a real station versus an opportunity.”
KRON has been a drag on Young’s earning and balance sheet ever since NBC yanked its affiliation in 2001 and forced it to make its way as an independent.
But KRON’s worse days are behind it, Young said. The San Francisco market is rebounding to the benefit of all broadcasters, he said. And KRON will return to the ranks of network affiliates as an affiliate of Fox’s My Network TV this fall.
“We are thrilled to be affiliated with this new service,” Young said. “We think it has very powerful meaning for the value of KRON long term—very powerful.”