While there are some signs that an economic recovery may be in the offing, it
has not come quickly enough for Stations Holding Inc., parent company of Benedek
Broadcasting Corp., which filed for protection under Chapter 11 of the U.S.
Bankruptcy Code Friday.
Like most broadcasters, Benedek struggled for much of 2001 with dramatically
reduced revenues and profits.
According to Securities and Exchange Commission filings, through the first
three quarters of last year, Benedek's revenue was down about 8 percent to
$102.6 million and its operating income plunged more than 90 percent from
roughly $79 million to $5 million, although a good chunk of those previous-year
profits were due to station sales, president Jim Yager said.
Yager stressed that the Chapter 11 filing does not affect the day-to-day
operations of the station group. In fact, some of the stations held meetings
Friday to assure employees that their jobs were safe.
'It's business as usual,' Yager said Monday. 'The operating company is not in
Chapter 11, so it's not like we need a judge to approve every time we pay a
bill.'
The filing was triggered by the parent company's failure to pay interest on
more than $153 million in bonds that were issued back in 1996. The interest
payment was due last November, but with ad sales being so poor, the company
couldn't generate the revenue to meet those payments and run itself.
It's been negotiating with bondholders ever since, some of whom urged Benedek
to file Chapter 11 so that a formal reorganization process could begin, company
attorney Paul Goodman said.
Ironically, the filing comes just as signs of a recovery are being seen by
the industry, including Benedek, which will show a first-quarter revenue gain of
about 25 percent, Goodman said.
But like most broadcasters, Benedek has been under extreme financial pressure
for the past 18 months. By midyear 2001, declining revenues and profits put the
company in technical default on its credit facility.
Benedek is owned principally by Richard Benedek, who is based in New York.
Yager oversees daily operations from Hoffman Estates, Ill.
