December 3, 2019 − Privately held Marshall Broadcasting Group, Inc. (“MBG” or the “Debtor”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 19-36743. The Debtor, an American television broadcasting company that owns three television stations in Iowa, Louisiana and Texas, is represented by Jason S. Brookner of Gray Reed & McGraw LLP. Further board-authorized engagements include Levene, Neale, Bender, Yoo & Brill L.L.P. as general bankruptcy counsel.
The Debtors’ lead petition notes between 1 and 50 creditors; estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $50.0mn and $100.0mn. Documents filed with the Court note a single unsecured claim in excess of $25k; that of Nexstar MediaGroup Inc. ("Nexstar") which relates to $15.3mn of "SSA and JSA fees [shared services and joint services agreements fees]" and is listed as both disputed and subject to setoff. Nexstar and the Debtor remain embroiled in litigation commenced by the Debtor in April 2019, see "The Bait and Switch" below.
In July 2019, the Debtor further raised the stakes with a highly publicized call on the FCC to investigate Nexstar. The Debtor's owner, Pluria Marshall, stated: "We allege this reckless disregard for the FCC's rules of engagement has, essentially, defrauded federal regulators and consistently hampered our ability to thrive in the markets we adopted as part of the FCC agreement. We didn't think the FCC's Enforcement Bureau would look too kindly on that, which is why we're calling for a federal investigation into the matter."
The Bait and Switch
In a press release entitled "The Bait and Switch," the Debtor outlines the nature of a case it filed against Nexstar in April 2019 which alleges that Nexstar has attempted to manipulate the FCC's stated goals of increasing ethnic diversity in broadcasting by promoting and then sabotaging the Debtor's business efforts.
The press release states: "The Federal Communications Commission ('FCC') has an admirable and often-stated goal of increasing ethnic diversity in ownership of broadcast stations and ensuring that a broad diversity of voices and viewpoints are delivered on the public airwaves. Nexstar pretended to support this objective by partnering with Marshall Broadcasting Group ('MBG') to obtain FCC approval for a transaction, but as soon as the deal was done, it purposefully worked to undermine MBG. This 'bait and switch' flies in the face of the FCC’s quest for diversity in ownership and programming and is a dangerous precedent that could affect ALL minority-owned businesses in the telecommunications space.
From day one, Nexstar set out to use MBG’s minority-ownership status to obtain FCC approval of a larger transaction and then drive MBG out of business so that it could obtain MBG’s stations for pennies on the dollar."
About the Debtor
The Debtor describes itself as follows: "Marshall Broadcasting Group, Inc. is a minority owned television broadcasting company that owns three full power television stations in the United States. The company was founded in 2014 by Pluria Marshall, Jr. All three of its television stations are affiliated with Fox and are operated through shared services agreements by the Nexstar Media Group.
In 2014, Nexstar Broadcasting Group acquired the stock of television operators Grant Broadcasting, Communications Corporation of America, and White Knight Broadcasting. Due to FCC ownership limits, Nexstar sold former Grant station KLJB in Davenport, Iowa, and former ComCorp stations KPEJ-TV in Odessa, Texas and KMSS-TV in Shreveport, Louisiana, all three of which are Fox affiliates, to Marshall Broadcasting. Nexstar has a shared services agreement with Marshall Broadcasting providing master control, news, promotions, and engineering support."
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