Eastern Firm’s Bankruptcy May Cost TBN Its $1.5 Million

A Massachusetts firm that manufactures TV transmitters has filed for bankruptcy and placed in jeopardy $1.5 million in deposits paid by Trinity Broadcasting Network, the latest in a series of financial setbacks for the Orange County-based chain of Christian broadcasting stations.

Paul F. Crouch, founder and president of the network, which operates 17 full-power TV stations around the country on a $40-million budget, announced earlier this month that he plans to sell two stations, marring a 16-year history of continuous expansion. Trinity also produces a 24-hour-a-day Christian programming service from the studios of KTBN-Channel 40 in Tustin, its flagship.

Crouch, who is out of the country, did not respond to earlier queries from The Times Orange County Edition regarding the impact of the bankruptcy case on Trinity’s income, most of which is donated by TV viewers, or on its expansion plans.

However, according to a Trinity source, the network had heavily relied on the company--Townsend Broadcast Systems Inc., of Westfield, Mass.--for its low-power TV technology.

In documents filed May 5 by Townsend in federal bankruptcy court, the company listed $10 million in liabilities and $1.1 million in assets. On May 25, more documents filed by Townsend changed the category of bankruptcy from Chapter 11, designed to provide protection from creditors for purposes of reorganization, to Chapter 7, for liquidation.

According to the documents, Trinity had paid $1.5 million of a $2-million contract for equipment when the company began having difficulties.

After payment of administrative expenses of the bankruptcy, first in line for the $1.1 million in assets are the company’s secured creditors, who are owed about $600,000, according to Eugene B. Berman, attorney for Townsend’s unsecured creditors.

The next category is made up of former employees who are owed back wages, any governmental units owed back taxes and consumer depositors.

Trinity is part of a third category, unsecured creditors, of which the network is one of the largest, Berman said.

In recent years, Trinity has focused on buying and building low-power stations--relatively inexpensive facilities whose signals reach 15 to 30 miles. Trinity is the largest operator of low-power stations in the country, with more than 100. Crouch has been building low-power stations at such a rate that he told Trinity viewers that the network might have to buy a construction company to keep pace.

One advantage of low-power TV is that its signal is sent out over the air and requires no special equipment to receive. Thus, it can reach the estimated 50% of viewers who do not have cable, including those who cannot afford the cost and those who live in small towns or sparsely populated rural areas not served by cable.

Also, unlike full-power stations, there is no limit on the number of low-power stations an individual or organization can own.

The Townsend bankruptcy is not the only recent setback for Trinity’s low-power plans. Last week, Crouch appealed to viewers for money to repair TBN’s studios at its low-power outlet in Denver, where he said improper construction had cost the network $200,000 to $300,000.

Crouch told viewers June 13 that, for the first time in the network’s history, one of its full-power stations will soon be sold,

pending approval of the transfer by the Federal Communications Commission.

Crouch said WXLI in Greensboro, N.C., will be sold to Jack Rehburg, owner of several other Christian TV stations, including one in nearby Burlington, N.C. Until recently, the two Christian stations appeared to be competing for the same pool of viewers in a relatively small market, according to Donnell Stoneman, who covers TV for the Greensboro Daily News. Both North Carolina stations were dropped from local cable systems when surveys showed them at the bottom of viewer preference.

Crouch cited lack of financial support by local viewers as a factor in his decision to sell the station, which Trinity bought in 1984 for $1.7 million. No price was announced.

Steve Rehburg, who manages the Burlington station and is the owner’s son, said Tuesday that his company hopes, if the FCC permits, to combine the signals of the two stations to reach most of the central part of the state and to affiliate with Trinity.

Another full-power station Trinity has offered for sale, in Albuquerque, N.M., is in a small market where there is existing competition from another Christian station, as with WXLI.

Crouch had said on many occasions that he would never sell a Trinity station “until Jesus comes.”

He has since told viewers that, because of ownership limits set by the FCC, he might sell or give some of his smaller stations to other Christian broadcasters to acquire larger stations in major markets. However, no such acquisitions have been announced.