Taft Agrees to Sale of 5 TV Stations : $240-Million Price Reflects Softening Market for Outlets

In a dramatic sign of the weakening market for television stations, Taft Broadcasting said Monday that it has agreed to sell five non-affiliated, or independent, television stations to TVX Broadcast Group for $240 million in cash.

The stations, rumored to be for sale since last spring, are WDCA in Washington, WTAF in Philadelphia, WCIX in Miami, KTXA in Dallas-Fort Worth and KTXH in Houston. Taft said it will use the proceeds to pay off some of its $680 million in debt and will also take a charge against earnings that it estimated at between $40 million and $50 million.

A number of potential purchasers have examined the stations since the spring, and some had forecast then that the five might fetch as much as $500 million. But their value has been eroded by a softening ad market, which has proved a particular affliction for independent stations.

The independents have proliferated in recent years, and they tend to have lower ratings and relatively higher programming costs than network affiliate stations.

Last week, Lorimar-Telepictures, a producer and syndicator of television programming, blamed the listless ad market for its decision to back out of a planned $1.41-billion acquisition of six television stations.

Poor Economy in Area

Taft’s Dallas and Houston stations were profitable as recently as last year but have gone into a tailspin as the region’s economic fortunes have declined. The two stations’ losses have reduced the group’s cash flow to almost nothing from about $25 million last year, said Sharon Armbrust, an analyst with Paul Kagan & Associates, a consulting firm in Carmel, Calif.

Some companies might have held on to the stations until the market firmed, she said, but Taft was under pressure from Robert M. Bass Investment Group, which owns 21% of Taft stock, to increase its stock price. “I don’t think I’d sell this year unless I had to,” she said.

Jeffrey Logsdon, an analyst with the Crowell, Weedon securities firm in Los Angeles, added that Taft officials “must be very disappointed with the price.”

Taft is expected to try to increase its presence in the cable market. Last month, an investor group including Taft and Bass paid $625 million for Wometco Cable, a Florida cable operator. Taft, based in Cincinnati, also owns seven affiliate stations, a programming division, radio stations and a 47.5% interest in the Philadelphia Phillies professional baseball team.

TVX Broadcast Group, based in Virginia Beach, Va., owns eight small independent stations. It has lost money since it went public in October, 1985. Company officials were said to be unavailable for comment on their plans for financing the transaction.

Analysts speculated that TVX may sell some stations that it currently owns and perhaps also float high-yield, high-risk “junk bonds” to finance the transaction.