BREAKING NEWS: Channel 6 Bought by Citadel Communications

Tuesday, March 22, 2011

 

For a bid price of $4 million and an estimated $1.8 million more for cash receivables and assets retained, NewYork-based Citadel Communications today became the new owner of WLNE-TV.

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And yes, Channel 6 will remain on the air.  And yes, Channel 6 will remain an ABC affiliate, with its attendant TV schedule and programming.

Turning It Around

WLNE has been a perennial 3rd place finisher in the local TV ratings with Channels 10 and 12, but immediately after the auction sale had been approved in Superior Court, Citadel CEO Phil Lombardo predicted a turnaround, including being the first to bring HD TV to local newscasts.

'We have a terrific staff in place here.  A terrific news department," said Lombardo.  "One way for the station to move forward is to work hard, be patient.  The audience will respond, the advertisers will respond, and you will be successful in the community."

Citadel walked away the winner after two of the four bidders, Brine Communications ($4.2 million bid) and Liberty Investors Group ($4.3 million) asked to withdraw from the auction proceedings before Superior Court Associate Justice Michael Silverstein after court-appointed receiver Matthew McGowan had asked if the competing bidders would be ready to put “cash on the barrel” immediately.

Paolino's Proposal

This left a group headed by former Providence Mayor Joseph Paolino’s group operating under the Paolino Realty banner, with a bid of $2.196 million.  Paolino told GoLocalProv that he knew his bid was well under the $4 million Citadel “stalking horse” offer, but that his plans were to take the station in a totally different, community-oriented direction.  His bid was under no obligation to retain an ABC affiliation.

“I want to localize.  If this is to be traditional media (such an ABC affiliation), I’m not in,” Paolino elaborated. “I want to make it a community operation that works with new technologies, such as using web sites and I-Phones.”

ABC Deal Critical

Despite Paolino’s maverick spirit, it appeared maintaining the affiliation agreement between ABC and any potential new buyer would be critical.  However no one but Citadel was able to reach terms with ABC in the allotted time despite, according to ABC’s attorney Jennifer Doran and McGowan, outreach and encouragement from both sides.

McGowan said during the early part of his presentation to Judge Silverstein that as a receiver, who must operate to find the best possible deal, he was “not comfortable going ahead with a bidding contest…that at the end forces on ABC a contract they are not comfortable with.”

Noting that ABC programming accounts for 67 percent of Channel 6’s ratings points that would be imperiled if the network walked away from an agreement, “you would be asking me to take a huge risk…on who would blink first on April 1st” when the current agreement, already in a second extension phase, expires March 31. Without the agreement, ABC would be fully within its rights to shut off ABC programming completely on April 1.

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Approval of the Citadel deal ends months of speculation as to Channel 6’s future since the station’s owners, Global Broadcasting of Southern New England, went into receivership after having difficulty satisfying the debt owed after acquiring WLNE from Freedom Communications in 2007.  According to McGowan’s argument, 53 parties showed interest in purchasing the station when it was first offered, which boiled down to 12 who were ready to move into final steps, including examination of the ABC affiliation, before narrowing to four, with Citadel laying out the stakes with its $4 million offer.

Tiptoe Time

For Channel 6 employees, it is tiptoe time at the station.  (See Jeff Dederian’s analysis piece, also on GolLocalProv.)  While CEO Lombardo admits, “people always get nervous” during a transition, he said, “we will bring people in, and evaluate everyone at the station...and see if we can do things more efficiently.” 

Steve Doerr, current vice president and general manager of WLNE-TV, will carry on his duties on behalf of the receiver along with chief engineer Jim Brown until the deal is finalized and the station’s license changes hands, which should be within a few months according to Lombardo, who wants to get the new regime to get underway as soon as possible.  Meanwhile, it will be business as usual at the Orms Street studio.

“It is great to have direction and follow it,” commented Doerr.  “People want direction.  The uncertainty is there to deal with, but now (the entire sales process) is over,” he added, with what appeared to be relief.

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