Super Bowl Update

Gray Television, Inc., which owns Bowling Green, Ky. ABC/Fox/CW affiliate WBKO and operates WKRN, the ABC affiliate in Nashville, for Young Broadcasting, today that it is commencing a refinancing of its existing capital structure. Gray has commenced a cash tender offer for up to $225 million of its outstanding 10½% senior secured second lien notes due 2015.

Note holders are being offered $1,078.75, plus an early tender premium of $5.00, amounting to a total of $1,083.75 per $1,000 of face value.

Gray also announced today that, in addition to entering into discussions with its lenders relating to an amendment to its senior credit facility necessary in order to complete the Tender Offer, it has entered into discussions with certain banks relating to an overall refinancing of its senior credit facility, subject to market and other conditions. Gray expects that its refinanced senior credit facility would provide for total commitments of $665.0 million, consisting of a $40.0 million revolving credit facility and a $625.0 million term loan facility.

Proceeds from borrowings under the refinanced senior credit facility are expected to be used to repay outstanding borrowings under the company's existing senior credit facility, repurchase or redeem any notes not previously purchased in the Tender Offer, redeem the outstanding shares of the company's Series D perpetual preferred stock and pay related fees and expenses.

It's starting to look like WEHT Local (and WDRB, WNKY-NBC, WKRN and KPLR) may have hitched their wagons to the wrong syndicated talk show when they chose to pick up Survivor host Jeff Probst's new program.

The show is doing poorly - very poorly - in the ratings, averaging well under a 1 rating during its first week on the air, and reports indicate that it's done no better so far this week.

If the show doesn't start to perform better, it's likely that it won't make it to a second season - indeed, some stations could pull the plug early.  (That's rare, but it has happened.)

The New York Post reports this afternoon that reps for Queen Latifah's new show have "quietly been calling TV stations around the country offering to take over for Probst as soon as his contract is up."  No word on whether any of the stations above have been called.

For his part, Probst seems to be OK with whatever the future holds.  He said last month that no matter what happens with the talk show, he'll still be hosting the next season of Survivor on CBS.

It's been two years since Young Broadcasting exited bankruptcy protection, and now it looks like the company - which owns Nashville ABC affiliate WKRN-TV - will have a new majority owner.

New York-based hedge fund Standard General began buying shares in Young last year, and now owns a little over 36% of the company.  Its managers, hedge fund veterans Soohyung Kim and Nicholas Singer, want to take that to just over 50%, and they've sought permission to do so from the FCC.

There's no word on how much Standard General is paying to increase its stake in the company.

Young owns stations in 11 markets, including affiliates of ABC, NBC, CBS and MyNetwork TV. Gray Television (owner of WBKO in Bowling Green) currently manages seven of those stations under contract.

Gray Television, which owns Bowling Green, Ky. ABC/Fox/CW affiliate WBKO-13 and manages ABC affiliate WKRN-2 in Nashville for Young Broadcasting, reported its second quarter earnings this morning.

For the three months ending June 30, the company took in $94.691 million, a record for the company and a 24% increase over the same period in 2011.  The company credited the big gains to substantial increases in ad spending and retransmission fees.  Indeed, some ad categories were way up over 2Q2011, led by political advertising (up 467%) and internet advertising (up 31%).

Retransmission fees paid to Gray by cable and satellite operators were up 64% for the quarter, and the company's income from the management of the seven Young Broadcasting stations held steady at $600,000.

For the first half of 2012, Gray has whittled its long-term debt down by $11 million, and improved its borrowing position with a $9 million increase in its senior borrowing facility.

The company expects gains to continue in the third quarter.