Young's Post-Ch. 11 Future Is A Gray Area

"There are probably a number of folks who would love to buy them," said one industry source. "It all comes down to price."

Potential buyers? Gray, Nexstar, New World and Local TV all could see the Young stations meshing with their current operations. Undoubtedly, others are analyzing whether some or all of the Young stations would fit in their portfolios.

"At the end of three years, I think the senior creditors will decide what they want to do," Prather said. "We'll take a look at that time."

An IPO would be another way for Young's new owners to recoup their investment. But that path is even more tangled than a possible sale, given current financial market and economic volatility.

How much is the station group worth?

Dueling estimates of Young's value were key features of the competing bankruptcy plans and offer a glimpse of what the company might be worth post-bankruptcy.

Tom Kuhn of Allen & Co., hired by the committee of unsecured creditors, painted a rosy scenario showing Young worth between $350 million and nearly $600 million by November 2012.

His valuation employed a multiple of 7-11 times estimated average broadcast cash flow of roughly $50 million in 2012. 

Contrast that with filings from Peter Cohen of Blackstone Advisory Group, hired by the senior secured lenders. He calculates Young being worth between $200 million and $300 million upon emergence from bankruptcy. His projections imply broadcast cash flow multiples of 4-6 times based on an estimated average 2010-13 cash flow of roughly $50 million.

The competing valuations reflect the current gulf between bid and ask prices for small to mid-market station groups.

The M&A market for that segment is still largely in hibernation, but sector economies are improving, credit markets are gradually easing and potential buyers and sellers are doing the math. Industry sources say bids are coming in at 6-8 times broadcast cash flow while would-be sellers are asking 10-12 times cash flow.

One more key post-bankruptcy question: What happens to KRON San Francisco, which the company purchased for a record $823 million in 2000 in what one industry insider has called  "the dumbest deal ever done in television." The purchase loaded the company with debt, and after losing its NBC affiliation, KRON's cash flow withered.

Chapter 11 has helped engineer something of a turnaround at KRON. Its cash flow has reversed course from negative to slightly positive and the station may actually be worth more than just a stick in a declining market.

NBC Universal, which has been exploring a "shared technical services" agreement with KRON, tops many lists as a likely buyer. An NBCU spokesperson, while declining to elaborate on what those services might be, noted that there is no agreement.

Multiple sources familiar with the situation say NBC has been "sniffing around" KRON but apparently didn't like what it smelled.

How much would KRON fetch? Figures range from as low as $25 million to "under $100 million," one source said.