The Most Important, Least Known Man In TV

Five years ago, if you’d asked just about anyone in broadcasting who Soohyung Kim was, the response would have been a shoulder shrug and an “I dunno.”

Today, he still remains an unknown to most broadcasters, even though he has spent the past five years advancing to the top ranks of TV station owners.

The 39-year-old hedge fund manager has leveraged a $100 million investment in bankrupt Young Broadcasting into a $1.6 billion merger that will combine Media General and LIN Media and effectively put him in control of the nation’s eighth largest TV station group, according to the BIA/Kelsey-TVNewsCheck revenue-based ranking.

The relatively few that have gotten to know him are impressed, however. “I think he brings clearly a knowledge of the [broadcast] business from 30,000 feet,” says Mario Gabelli, among the more influential broadcast investors. “I’m not saying I would make him my general manager, but in the context of financial engineering, I give him an A+.”

Standard General, the hedge fund Kim heads, owns roughly 30% of Media General. The percentage increases to 67.5% when one includes the other shareholders of Young broadcasting, which Kim and Standard General eventually came to control before the takeover of Media General.

Assuming the LIN-Media General merger is consummated, Standard General will own approximately 20% of the combined company. The percentage shoots up to 67 when adding Standard General’s share with that of other Media General shareholders. LIN shareholders will own 33%.

Kim is highly private and press-shy, according to multiple sources. He declined to be interviewed for this story.

One thing is clear: Kim is bullish on broadcasting.

Sources familiar with his thinking say he views local broadcast as a “sleeping giant” that has suffered historically from its fragmentation. According to those sources, he believes one of the keys to future success will be developing more proprietary and regional content and pushing the delivery of state-of-the art digital video to mobile devices.

Additional insights into Kim’s thinking, and how he operates, can  be gleaned from public records, and a number of people familiar with him professionally and personally were willing to comment.

HOW HE GOT HIS START

Kim, who was born in South Korea and moved to the U.S. as a child, attended the prestigious and demanding public Stuyvesant High School in New York City, where he was captain of the fencing team. In a tacit acknowledgement of its location in a world financial center, the school offers an elective course called The Mathematics of Financial Markets.

Kim went on to attend Princeton University where he graduated on June 3, 1997, with a B.A. from the Woodrow Wilson College of International and Public Affairs.

From there, he jumped immediately into the financial sector as an analyst on the proprietary trading desk of Bankers Trust Co. and into a lucrative career as a financial player.

If Kim appears hard-wired for success, giving back also appears to be in his DNA. He serves on the charitable boards of the Stuyvesant High School Alumni Association and Greenwich House. Earlier this year, he was elected president of the Stuyvesant High School Alumni Association.

One common theme emerged from interviews with those who know him.

“He’s the smartest man I know,” says Dr. Elissa Kramer, current vice chairman and former chairman of the board of Greenwich House in New York. Greenwich House provides social services and programs in arts and education to New Yorkers. Kim serves on its board and is head of the development committee.

Kramer recruited Kim for the board. “He has a fresh way of looking at things,” she says. “He’s not afraid, in terms of contact and culture, to crack a couple eggs.”

She calls Kim a clear, concise thinker who projects self-assuredness.

“His posture is one of someone who’s very modest,” she says. “He’s not loud in public at all, he’s very polite. But when he has an idea he’s interested in putting forth, he puts it forth. He also listens, which is unusual.”

For others who know and have worked with Kim, his overarching intelligence makes an indelible impression

“There’s a lot of rigor in his analysis,” says George Mahoney, president-CEO of Media General. “He’s very thoughtful in his approach. He saw the value in broadcasting when he took a position in Young. I think he quickly realized the industry was about to consolidate and wanted to participate in that upside.”

Deb McDermott has been with Kim for his entire broadcasting ride. She kept the Young stations going during the turbulent bankruptcy, and when Kim took control of the company, he rewarded her by making her the CEO.

McDermott, who is now SVP, broadcast markets at Media General and in line for a similar post once the merger with LIN is completed, says she appreciates the confidence that he has shown in her, especially in the business where top woman executives are rare. “I see him as gender-blind. He just picks the best people.”

As a person, Kim is unassuming, straightforward and honest, according to McDermott. As a broadcaster, she says, he wants to make money not by cost cutting, but by building up the stations. When Standard General took control of Young, it spent $25 million to upgrade the stations for high definition TV. “That brought all our facilities to the state of the art. That was huge, huge,” she said.

Kim also saw that bonuses were paid to management even though no bonus plan was in place. “They had no obligation to do that,” McDermott added.

Kim and former partner Nicholas J. Singer founded Standard General in 2007 with $100 million in seed money from Reservoir Capital, according to the publication Hedge Fund Alert.

Kim and Singer were alumni of Och-Ziff Capital and later Cyrus Capital Partners. Och-Ziff is an asset management firm with funds offering a variety of investment strategies, including arbitrage, corporate credit, long and short approaches and private investments. Cyrus Capital is a distressed-debt fund run by Stephen C. Freidheim. The “C” stands for Cyrus.

Freidheim appears to be the thread linking Kim’s three jobs before creating Standard General. Freidheim was a managing director and partner at Bankers Trust, where he was responsible for proprietary trading and investments in high-yield and distressed debt.

Friedheim left Bankers Trust in 1999 to co-found Och-Ziff (originally called Och Ziff Freidheim). In 2004, he formed Cyrus Capital, bringing Kim and Singer with him from Och-Ziff.

Kim and Singer built Standard General on a simple strategy: Look for debt-stressed companies, including those in or flirting with bankruptcy, buy debt for pennies on the dollar, hire management to restore the companies’ financial health, cash out as circumstances dictate.

Standard General’s 2010 SEC filing of its holdings show a busy company. Its portfolio encompassed everything from airlines to gold companies to big media — Liberty Media and News Corp.

Other substantial holdings include shares of Radio Shack, Sprint and The Phoenix Companies, an insurance and financial services firm.

It’s not broadcasting, but fashion that has brought Standard General the most notoriety. It’s acquired 44% voting control of American Apparel, the financially troubled clothier that’s been grabbing headlines since June as the battle over who’ll head the company plays out publicly.

Kim and Singer parted ways — amicably according to an August 2013 story in Hedge Fund Alert. The story notes that Kim was pursuing liquid securities as Singer focused on private equity investing.

THE YOUNG OPPORTUNITY

In 2009, Standard General was drawn to Young because of its perilous financial state. But with the M&A wildfire just beginning to sweep across the broadcast sector, Kim apparently sensed an opportunity to achieve greater scale by acquiring the much larger Media General.

Standard General hooked up with Young just as it was struggling to come up with a Chapter 11 reorganization plan.

Kim, seeking to put Standard General’s cash to work, began buying out other debt holders and, three years later, controlled more than 50% of Young.

As broadcast sector consolidation accelerated, more opportunities arose. One of those involved Media General, an old-school newspaper publishing company that had recently shed its print operations and was looking to grow its broadcasting division either through acquiring or merging with another station group.

Media General’s SEC Form S-4 filing reveals much of what went on behind the scenes of the Young-Media General merger.

After J. Stewart Bryan, chairman and sole trustee of the Media Trust, which held 85% of outstanding shares in Media General, rejected an earlier merger offer, management approached RBC Capital Management to help it find another candidate.

RBC soon broached the idea of a Young-Media General combination and, at Media General’s request, approached Kim with the idea.

On Nov. 15, 2012, Marshall Morton, then president-CEO of Media General, Mahoney, then VP-COO, and James Woodward, CFO, conducted an introductory meeting with Kim in Richmond, Va., Media General’s home base. Less than a week later, on Nov. 21, Media General and Young had signed a confidentiality agreement as the two companies agreed to continue discussions.

In early January of 2013, the two companies were swapping financial projections and other key data as part of due diligence.

Throughout the negotiations, Kim dictated key terms of the deal. Among them: Requiring that Media General unwind its dual-class stock structure,  which concentrated control, and surrender the right to elect 70% of the board, which had been controlled by legacy Media General equity holders, namely the Media Trust.

When the dust settled, Kim, Standard General and Young shareholders were in command: they controlled 67.5% of the new Media General, leaving Media General shareholders with 32.5%.

That deal announced in June 2013 closed in November 2013.

Barely six months later, in March 2014, Media General and LIN announced they were merging in a deal valued at $1.6 billion.

It was a deal that almost didn’t happen.

THE LIN NEGOTIATIONS

Beginning in mid-2013, LIN was actively looking at strategic alternatives, according to SEC filings. From August through October, it was flirting with two potential partners.

Then Media General’s enhanced scale and improving financial situation stemming from the Young merger caught LIN’s attention. LIN and Media General started active discussions as soon as the merger closed on Nov. 12.

In late January 2013, Media General formed a transaction committee, with Kim heading it, to oversee negotiations with LIN, and made a non-binding, part cash, part stock offer to LIN.

Negotiations quickly heated up and over the next six weeks Media General and LIN dickered over terms of the deal.

The deal came close to falling apart a few times, but negotiators managed to keep it on track, with Kim and Media General’s transaction committee dictating key elements.

One the crucial debates centered on who would run the merged company. Kim did not object to LIN’s insistence on Vincent Sadusky, LIN’s president-CEO, being the new boss, and on March 21, the two companies agreed to merge.

Kim’s role throughout, while not spelled out in the SEC filings, clearly was pivotal.

Not only was it largely Standard General’s money and borrowing power that enabled the merger but it was Kim’s direction and approval of terms that helped define the deal.

The merger is expected to close sometime in 2015. When it does, Media General and LIN will have combined to create a massive group with 74 stations in 46 markets reaching 26.5 million, or roughly 23% of U.S. television homes.

The closing will also mark the speedy rise of Kim and Standard General from relative obscurity to controlling one of the U.S.’s largest station groups.

A BROADCASTING BELIEVER

“I think he believes, and has demonstrated that he believes, in consolidation and wants to be a consolidator,” says a source familiar with Kim and Media General.

Whether that leads to more broadcast deals for Kim and Standard General remains to be seen. Some industry veterans think he’ll take time to sort things out first.

“He’s pretty sure of himself, and there’s no reason he shouldn’t be,” says one prominent broadcaster. “He really got a great deal when he bought Young, and he’s made a fortune on it. He got the benefit of a recovering television business.

He looks like a genius, and he probably is a genius. But I think he thinks he knows more about how the business works than he actually does,” the broadcaster added.

According to several sources, Kim’s initial broadcast play, for Young, was purely financial. But, they say, his attitude has changed.

“My sense is that he really likes the business, thinks it’s a good business,” says a source. “I think he’ll be around for awhile. Ultimately he will do some kind of roll up but how big he plans to get I don’t know.

As other financial players have discovered, investing in broadcast may be hugely rewarding but carries its own set of complexities and challenges. Ask the folks at ABRY, HM Capital and Silver Point if they’re happy how their broadcast investments have turned out and they’ll likely say “yes.” But they’ll also acknowledge it hasn’t been a smooth trajectory.

Will Kim share a similar perspective five to 10 years out?

“I think it’s not going to be as smooth and easy as he thinks,” says one source. “Putting Young and Media General together was not easy. Now, putting LIN in in very short order, it’s going to be interesting from an operational standpoint how it all works out.”

This story originally appeared in TVNewsCheck’s Executive Outlook, a quarterly print publication devoted to the future of broadcasting. Subscribe here.