Citadel Winning Bidder For WLNE Providence

A Providence, R.I., judge has approved Citadel Communications’ $4 million stalking-horse bid for WLNE, the ABC affiliate in Providence-New Bedford, R.I. (DMA 53).

Citadel’s bid may have been aided by ABC’s announcement last week that the station’s affiliation agreement, which expires at the end of this month, would not automatically transfer to a new owner.

After the hearing, Citadel CEO Phil Lombardo said, “There is a lot of work to be done. We now need to formulate our plans to make the station very successful.” That’s according to a WPRI.com report.

Lombardo said he wants to make WLNE the first high-definition station in the Providence-New Bedford market. When questioned about layoffs, he said they were “possible” but added that it’s too early to determine that. “We’re going to evaluate every person in the station,” he said, according to WPRI.

WLNE’s previous owner, Kevin O’Brien of Global Broadcasting of Southern New England, called the auction flawed and said he is considering legal action. “It was the most outrageous, flawed asset auction in the history of television,” O’Brien said. “It’s the greatest rip-off since the Dutch bought Manhattan from the Indians.”

Global paid $14 million for WLNE when it purchased it from Freedom Broadcasting in 2007. Global went into receivership, a form of bankruptcy, in mid-2010. The $4 million Citadel paid works out to about a 3.3-times cash flow multiple, O’Brien said.

“It was mishandled from very beginning by the receiver,” O’Brien said. “The stalking-horse bid was flawed, and I objected to it. I was working on renewal of the ABC affiliation agreement, I urged the receiver to complete that agreement, and he didn’t. I was told ABC stopped negotiating with anyone but Citadel. ABC chilled the entire process.”

ABC’s 11^th-hour announcement that there was no guarantee of an affiliation agreement with a new owner helped push down the sale price, several industry observers said.

“ABC is trying to negotiate a significant split on retrans fees and that distanced a number of people who would normally be interested,” said a source familiar with the situation. “ABC is getting very aggressive and the [retrans split] number is a pretty high hurdle. Relative to the market, it’s way above Fox. The net effect is inhibiting a more robust sale process by the court.”

Bronxville, N.Y.-based Citadel owns three other ABC-affiliated stations, including WOI in Des Moines-Ames, Iowa (DMA 73).

Matthew McGowan of the Providence law firm Salter McGowan Sylvia & Leonard, was the court-appointed receiver. As of press time, he had not returned phone calls seeking comment. Phil Lombardo of Citadel also had not responded to requests for comment.

O’Brien, who sought to stop the auction because of the low price, said he’ll consult with his attorney before deciding on whether to take legal action. “I would think anyone in my position wouldn’t see any other avenue,” he said. “But I haven’t decided yet.”