Grant Seeks to Cut Debt to TV Show Suppliers by 50%

Grant Broadcasting System, now in Chapter 11 proceedings with debts of $200 million to suppliers of TV programs, hopes to use the bankruptcy court’s protection to trim 50% of the amount it owes, the company’s chief executive said Friday.

Testifying in U.S. Bankruptcy Court here, Milton Grant said the company will emerge in “superb” condition if it can reduce those programming debts and halt the heavy losses at its Chicago television station, WGBO-TV.

“The company is really very healthy,” said Grant, whose broadcasting concern also owns television stations in Miami and Philadelphia. “There is nothing that can’t be fixed.”

On Dec. 9., Grant Broadcasting filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code, which permits it to continue operating under existing management.

Hollywood’s leading television program suppliers are keenly interested in the Grant bankruptcy case because they fear other financially troubled TV stations will also seek bankruptcy court reorganization if Grant succeeds in substantially reducing its program debt. Those obligations are by far Grant’s largest debt, and some industry watchers believe that by cutting them, the reorganized company could become very profitable.

The bankruptcy proceeding has set off a struggle between the programmers and holders of $85 million in high-risk, high-yield bonds issued by Grant that were underwritten last year by the Drexel Burnham Lambert investment firm.

While some of the programmers want to take joint operating control of Grant’s stations, some bondholders have asked the court to install a separate trustee.

On Friday, attorneys for Grant Broadcasting seemed to be trying to establish that the company’s current chief executive has the stations well in hand.

Under questioning, Grant testified that the company has already cut expenses 18% through layoffs and other cost savings. He said management has considered a number of options for cutting losses at WGBO, which he said lost about $12 million on sales of $10 million last year.

Among other alternatives, Grant Broadcasting has considered changing the station to a specialty TV format, turning it over to bondholders, selling it, or closing it down. The financial “bloodshed” at the station “has got to cease,” Grant said.

The program suppliers have asked for permission to examine Grant executives and the company’s financial records so they may find out more about the propriety of certain financial actions. In a motion filed earlier this month, the creditors said they wanted to learn more about the company’s financial decline within a year of the time it issued $85 million worth of “junk” bonds.