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Channel 7's Parent Company Issues Debt Warning to Its Investors

Posted on: Friday, 17 March 2006, 12:00 CST

By Alan Pergament, The Buffalo News, N.Y.

Mar. 17--Granite Broadcasting, the parent company of WKBW-TV Channel 7, has alerted investors that it won't be able to make an interest payment on its debt in June without a sale or some financial restructuring to provide an infusion of capital.

The trade publication, Broadcasting & Cable, reported this week that Granite CFO Larry Wills warned investors about the situation.

However, WKBW-TV General Manager Bill Ransom said Granite's financial difficulties are not affecting the local ABC affiliate.

"Our station plans for this year haven't been changed because of this announcement," Ransom said.

According to Broadcasting & Cable, a missed interest payment could eventually force Granite into Chapter 11.

Granite has hired investment bank Houlihan Lokey Howard & Zukin to restructure its debt and raise money, the trade journal said.

Granite's $452 million in debt requires $43 million in annual interest expense and its 2005 operating cash flow was only $11.9 million on revenues of $86 million, it said.

"The company is taking the proper steps to meet its obligations in June," Ransom said.

Granite's financial problems accelerated recently when a deal to sell stations in Detroit and San Francisco fell through after Time Warner decided to close the WB this fall and join CBS to create a new network, The CW.

While Ransom said Granite's problems haven't changed Channel 7's plans, they could have an impact down the road attracting new talent. The station announced this week that two women already on staff, Melanie Pritchard and Bridget Blythe, will co-anchor its hour-long 5 p.m. newscast, effective Monday. Ken Houston, who had been co-anchoring with Blythe at 5:30 p.m., was released.

Predictably, there also may be rumors that WKBW-TV could be one of Granite's properties that will go up for sale.

"That's a corporate decision," said Ransom. "That has not been discussed with me. However, I don't think so."

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Copyright (c) 2006, The Buffalo News, N.Y.

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Source: The Buffalo News

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