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Grant Allowed to Retain Its Management

March 04, 1987|PAUL RICHTER | Times Staff Writer

NEW YORK — A group of Hollywood studios suffered a setback Tuesday in their efforts to have a judge replace the management of Grant Broadcasting System, a television station chain that last year sought bankruptcy court protection while owing its TV-program suppliers $225 million.

In a written opinion, Bankruptcy Judge David A. Scholl in Philadelphia said that the company has "an outstanding management team," and should be given a chance to "regroup" using bankruptcy court protection.

"They have a substantial probability of success, even in the face of spirited opposition from several different sources," he said, referring to the program suppliers and bondholders who have resisted Grant's reorganization effort.

The bankruptcy reorganization, filed in Philadelphia where Grant's largest TV station operates, is the biggest ever by a television broadcaster and has been followed closely by the television industry. Many program suppliers fear that other financially troubled broadcasters will seek to shed their debts to suppliers if Grant succeeds in its efforts.

Scholl said he believes that the company was forced to file for Chapter 11 protection last year not as a result of mismanagement, but because a general downturn in demand for TV ad time that battered the non-network or "independent" television industry after five years of prosperity.

The judge did not deny the motion for appointment of a trustee to run the company, which was filed last month by MCA, Lorimar-Telepictures, Paramount and many other leading TV program suppliers. But in a footnote to the opinion, Scholl rejected any arguments for a trustee that were based on claims that Grant Broadcasting has been mismanaged.

"We find no factual basis for such a motion," he wrote.

One of Scholl's two opinions denied a motion from the bondholders that Grant Broadcasting should not be allowed to spend the $17 million in cash it currently has on hand. The bondholders, who are owed about $90.5 million, have urged that the company's three stations be sold to protect their investment.

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