Ktzz Hopes To Resolve Debt Woes Soon

Creditors have forced Seattle's KTZZ-TV, Channel 22, into involuntary bankruptcy proceedings, but the independent station says it should be able to make arrangements for its debts in a few months.

Three major distribution companies that furnished filmed programming to the station - MCA Television, MTM Distribution and DLT Entertainment - forced KTZZ into involuntary Chapter 11 bankruptcy protection last summer by demanding payment of debts totaling more than $4.8 million, court records indicate. With attorneys' fees, the station's debts could soar to more than $5 million.

In court papers, KTZZ reported assets of $1.26 million and liabilities of $37.4 million.

Wade Brewer, KTZZ general manager, said the owners have no intention of selling the station.

KTZZ, which went on the air June 22, 1985, broadcasts syndicated shows and reruns, paid programming and films. It has no news department but airs a 10 p.m. nightly news program prepared by KIRO-TV and broadcast from the KIRO studios.

Viewers of the station will not see any changes in programming, Brewer said.

"We're still the same station, we're still broadcasting television shows," he said. "There's just a credit problem."

Joel Watkins Jr., attorney for KTZZ, said the $1.26 million figure for the station's assets is misleading because a TV station's greatest assets are its broadcast license and the goodwill it has built with viewers.

He said the license, basically a franchise from the federal government, is worth much more than the physical and financial assets of the station.

KTZZ says the debts involved in the bankruptcy action were incurred by the previous owner, Alden Television of California. The station was purchased from Alden in 1990 by a Wausau, Wis., group incorporated as USTV of Washington.

"We inherited the debt," said Brewer . "We look at this (the involuntary bankruptcy) as a hostile collection action."

He said the debts to the three distribution companies were due and payable by the previous owner when the station was sold. But Watkins said the liability for some of those debts is in dispute.

Among the programs MCA furnished KTZZ was the popular "Leave It To Beaver," which the station heavily promoted, as well as the detective series, "Kojak." Among the shows from MTM was another KTZZ favorite, "Newhart." DLT supplied such shows as "Three's Company" and "Too Close for Comfort."

MCA, MTM and DLT filed the involuntary bankruptcy petition last August in U.S. Bankruptcy Court in Seattle. A series of hearings have taken place since then, and a meeting of creditors is scheduled for April 19, when KTZZ is expected to present its payment plans.

Brewer said the reorganization plan has "basically been approved" by the creditors. "We could be out of this in another 90 to 120 days," he said.

But Florence Deleranko of Shulkin, Hutton & Buckness, the local attorney for MCA and MTM, said there is no reorganization plan yet. She declined further comment.

Watkins, the attorney for KTZZ, said, "We have been working with the creditors and we seem to have some general agreements. These creditors are interested in trying to work something out."

He said KTZZ continues to have good working relationships with its main lenders, its parent company, its landlord and equipment lessors.

"In view of those factors, I think the prospects for a successful resolution are very good." he said.

The debt reorganization has not affected the station's operations, Brewer said. No staff members have been laid off, taxes have been paid on time, the loan payments on the purchase of the station have always been current, and KTZZ's approximately 50 employees have never had late paychecks.

"We were never late with bills here in town," he said.

The bankruptcy proceedings have made it hard for KTZZ to buy some programming, but have not affected advertising, he said.

Holders of the 20 largest unsecured claims against KTZZ have been invited to the April 19 hearing, though only the three film-distribution companies are seeking immediate payment in the bankruptcy action.

Hearst Entertainment Distribution has notified the court that it seeks immediate payment of an $11,769 debt for films and other programming supplied to the station, but it is not a party to the bankruptcy action.

Creditors with the three largest secured claims are Alden Television, for $13 million; Philips Credit Corp., $9.18 million; and AT&T Credit, $44,000.

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Brewer said other small independent stations such as KTZZ have had debt problems with program syndicators because the films and programs were overpriced.

"Programming was very expensive in the 1980s," he said. "It since has gone down considerably."