FOR IMMEDIATE RELEASE
PAPPAS TELECASTING ANNOUNCED TODAY THAT CERTAIN AFFILIATES HAVE FILED FOR CHAPTER 11 PROTECTION
Visalia, California (May 10, 2008) - - Pappas Telecasting Companies announced today that certain of its direct and indirect affiliates have filed for Chapter 11 protection in the United States Bankruptcy Court for the District of Delaware. This regrettable action became necessary when good faith efforts to resolve outstanding financing issues broke down between the Pappas Telecasting affiliates and their more than eleven separate mostly non-bank lenders. This filing affects only affiliates that are part of the mostly non-bank lending group and not any of the remaining affiliates.
A major element in the decision to take this action was the current extremely difficult state of the financial markets in the U.S. which limit the opportunity for many businesses to obtain new or replacement financing.
Many of the television stations' ratings and revenue performance have remained strong. In fact, the majority of Pappas Telecasting stations have outperformed industry averages in ratings growth and revenue growth in 2008. Under Chapter 11 protection, business operations will continue as normal. More importantly, the service to our viewers by the stations filing for Chapter 11 protection will not be affected.
The stations which have filed for Chapter 11 protection are:
1. KMPH-TV, Fox, Fresno-Visalia, California
2. KFRE-TV, CW, Fresno-Visalia, California
3. KPTM-TV, Fox, Omaha, Nebraska
4. KXVO-TV, CW, Omaha, Nebraska
5. WCWG-TV, CW, Greensboro / Winston-Salem / Highpoint, North Carolina
6. KPTH-TV, Fox, Sioux City, Iowa
7. KMEG-TV, CBS, Sioux City, Iowa
8. KTNC-TV, TuVisión, San Francisco / Oakland / San Jose, California
9. KAZH-TV, TuVisión, Houston, Texas
10. KDBC-TV, CBS, El Paso, Texas
11. KREN-TV, CW, Reno, Nevada
12. KAZR-TV, TuVisión, Reno, Nevada
13. KCWK-TV, CW, Yakima / Pasco / Richland / Kennewick, Washington
The Pappas Group operates another seventeen (17) television stations and two (2) radio stations through entities that are not involved in the chapter 11 cases.
"The employees of Pappas Telecasting are commended for their fine performance, as they are the backbone of the company and its heart and soul," said Harry J. Pappas, the group's founder and chairman. Mr. Pappas added, "Though it was a very difficult
decision, the Pappas entities included in the filing were compelled to do so as the conflicts with the mostly non-bank lenders allowed no other sensible option. We negotiated in good faith for several months and when talks permanently broke down, we made the filing to protect our ability to serve our viewers, our advertisers and assure the interests of our employees, and, as importantly, the interests of our lenders. The Chapter 11 filing allows time for a so-called plan of reorganization to be adopted and implemented to lead to resolution of the financing issues as it applies to the stations financed by the mostly non-bank lenders. This will ensure proper treatment of all constituencies. Relations with other lending institutions have been cooperative and non-adversarial."
"Meanwhile, at each station, it will be business as usual with our employees continuing to be compensated for their services, receive reimbursement of expenses and enjoy various benefits. We are also confident that our viewers and advertisers will see no change to our high quality programming service."
"In my over thirty-seven years in the television business, our companies have from time to time navigated through rough financial waters. During each of these cycles, Pappas Telecasting has made sure to serve the viewers with first-class programming and provide the advertisers with great ratings. We are confident that ratings and revenues will continue to be strong while we work through this temporary reorganization."
According to Pappas Telecasting's President & Chief Operating Officer, Dennis J. Davis, "In the last two years, the declining economy, the tightening and virtual freezing of credit markets, the residential housing crisis and the energy crisis have adversely affected many companies, both directly and indirectly. In particular, the television station revenue market throughout the United States has been negatively affected by the slowdown in the economy over the last year, and particularly in the first quarter of 2008. According to data collected by the Television Bureau of Advertising ("TVB"),1 gross television advertising revenues in the first quarter of 2008, exclusive of political advertising, were down 5.9 percent over the same period in 2007. Advertising revenues have been negatively impacted by the extraordinary downturn in the housing market (affecting advertising budgets in the furniture, appliance, real estate, and other related sectors) and increased energy costs, leading to reduced automotive advertising. Notwithstanding the extremely difficult business climate for television stations across the country, most of the Pappas Group television stations have overcome the challenging market trend in 2007 and 2008. For instance, KPTM, a Fox affiliate located in Omaha, Nebraska, achieved revenue increases for the first quarter of 2008 of 27.9 percent over the same period in 2007, exclusive of any political advertising. In Greensboro, North Carolina, WCWG, a CW affiliate, has achieved revenue increases in the first quarter of 2008 of 6.9 percent over the same period in 2007 exclusive of any political revenue. In Fresno, California, the Fox affiliate, KMPH-TV has achieved a 2.0 percent increase in first quarter 2008
1 The TVB is a not-for-profit trade association of America's broadcast television industry. Its members include television broadcast groups, advertising sales representatives, syndications, and international broadcasters. TVB has as its members group television broadcasters who comprise over 750 television stations in the United States.
revenues over the same period last year excluding political advertising. Including political revenue, KMPH-TV has surpassed last year's first quarter performance by 10.4 percent. In fact, more than half of Pappas' full power English language television stations in the various markets in the United States have over-performed in revenue performance as measured by the TVB television revenue survey of over 750 television stations."