The two closely related TV groups own 14 full-power TV stations, mostly in Lousiana and Texas. CCA says the bankruptcy is the result of its inability to reach a “workable restructuring agreement” with lenders.
Long rumored to be in financial trouble, two closely related TV station groups—Communications Corp. of America and White Knight Broadcasting—yesterday filed for protection from creditors under Chapter 11 of the U.S. bankruptcy code.
The bankruptcy petition was filed in the U.S. Bankruptcy Court for the Western District of Louisiana in Lafayette, where the two groups are based. The bankruptcy involves 14 full-service stations in markets no larger than Shreveport (DMA No. 81).
CCA is principally owned by Thomas Galloway; White Knight, by his son, Sheldon.
Anne Crump, the FCC attorney for CCA, said it would be wrong to say the two groups were commonly managed despite the father-son relationship. “They work together on time sales, but the programming is completely separate and apart,” she said.
In a prepared statement released this afternoon, CCA said it was forced into bankruptcy after failing to “reach a workable restructuring agreement with senior and junior lenders.”
The bankruptcy will not affect the day-to-day operation or personnel at the stations, the statement said. “The company’s revenue and cash flows have been very stable in recent years and growing in 2006. The stations are expecting to report a robust second half of 2006.”
CCA and White Knight declined comment beyond the statement.
CCA and White Knight have had the stations on the trading block since last fall, but were apparently unable to find suitable buyers.
CCA and White Knight filed bankruptcy petitions for more than a dozen corporate entities that hold their FCC licenses. But the judge in the case, Gerald Schiff, consolidated the cases into one proceeding.
Under Chapter 11 protection, CCA and White Knight will be sheltered from creditors’ lawsuits while they try to reorganize their operations and finances. Unless the bankruptcy judge rules otherwise, current management can stay in place.
According to FCC filings, Thomas Galloway owns 50% of 10 full-service stations that operate under the CCA banner. The other 50% is held by Apollo Capital Management, an investment firm.
The 10 CCA stations (and their DMA ranks): KWKT Waco-Temple-Bryan, Tex. (94); KYLE Waco-Temple-Bryan, Tex. (94); KVEO Harlingen-Brownsville, Tex. (92); KPEJ Odessa-Midland, Tex. (159); KMSS Shreveport, La. (81); WGMB Baton Rouge, La. (96);KTSM El Paso, Tex. (99); KETK Tyler-Longview, Tex. (111); KADN Lafayette, La. (124); and WEVV Evansville, Ind. (100).
Thomas Galloway and CCA President and COO Wayne Elmore are 50/50 partners in WDBD Jackson, Miss. (89), but it is not part of the bankruptcy.
According to FCC filings, Sheldon Galloway is the sole owner of the four full-power White Knight stations, which include KFXK Tyler-Longview, Tex. (111); KSHV Shreveport, La. (81); WVLA Baton Rouge, La. (96); and WNTZ Alexandria, La. (176).
Three of the stations—KFXK, KSHV and WVLA— are in the same markets as CCA stations, giving the Galloways virtual duopolies in Tyler-Longview, Shreveport and Baton Rouge.
Like his father, Sheldon also owns a station in Jackson, Miss., WUFX, that is not part of the backruptcy.
Handling the legal work on the bankruptcy is New Orleans attorney William H. Patrick of Heller, Draper, Hayden, Patrick & Horn. He could not be reached for comment.