Acme will use proceeds from the sale of WTVK Fort Myers-Naples to pay off senior debt. The UHF station will switch from WB to CW this fall. Acme also reports a 10% increase in net revenue in the first quarter.
Acme Communications Inc. announced today that it has a deal to sell WTVK Fort Myers-Naples, Fla., to Sun Broadcasting for $45 million. The all-cash transaction is expected to close by the end of the third quarter of this year.
The publicly traded Acme today also reported healthy growth in the first quarter. Net revenues from continuing operations increased $10.6 million, up 10% from the first quarter of 2005, it said.
WTVK is currently affiliated with The WB, and will switch to CW with the launch of the new network in September 2006. Fort Myers-Naples is the nation’s 66th largest television market, based on television households.
“The strategic monetization of this station reflects our focus on maximizing our assets to the benefit of our shareholders,” said Acme Chairman/CEO Jamie Kellner in a prepared statement. “We will use the proceeds to eliminate all amounts outstanding under our senior credit facility, significantly strengthening our financial position.”
After Acme pays back its current debt, it will have approximately $39.6 million available to borrow under its revolving credit line. Acme CFO Tom Allen told TVNewsCheck that the funds could be used to buy back stock.
Sun Broadcasting is apparently new to TV broadcasting. According to Allen, Sun is controlled by Joseph Schwartzel, who also controls Meridian Broadcasting, licensee of radio stations in the market. Schwartzel could not be reached for comment.
The Blackstone Group served as financial advisor to Acme.
Acme’s 10% increase in net revenue for the first quarter reflects a 7% gain in non-political revenue and a 21% increase in revenue at The Daily Buzz, the group’s morning news venture.
Broadcast cash flow for the quarter came in at $1.1 million compared to just $150,000 for the first quarter of 2005. Adjusted EBITDA was $278,000 compared to a loss of $683,000 in the first quarter of 2005.
The loss from discontinued operations for the first quarter was $541,000 compared to $1.2 million for the first quarter of 2005 on lower losses at KUWB Salt Lake City, Utah, which was sold to Clear Channel Television.
The net loss was $3.8 million compared to a $4.6 million in the first quarter of 2005.
Based on current second-quarter pacings, and including the results of WTVK, Acme said it expects second-quarter net revenues to increase 4% to 5% over 2005. It expects cash-based station expenses to be relatively unchanged from the prior year, resulting in broadcast cash flow of $1.3 to $1.5 million. That compares to $1.1 million in the second quarter of 2005.
Acme owns seven other TV stations in six markets: KWBQ and KASY, both Albuquerque-Santa Fe, N.M.; WBDT-TV, Dayton, Ohio; WBXX Knoxville, Tenn.; WIWB Green Bay-Appleton, Wis.; WBUI, Champaign-Springfield-Decatur, Ill.; and WBUW Madison, Wis.