Two little-known companies have signed a letter of intent to acquire bankrupt cable channel America's Voice.
The political-talk network plans to merge with Minneapolis-based Wild Frontier Network Inc. and Deerfield Beach, Fla.-based Carleigh Films Inc., according to a copy of the agreement filed in bankruptcy court and obtained last week.
America's Voice also plans to convert its analog channel into three or four digital channels, including one new service that chief financial officer Rosemary Swanson said will be "something that's along the Discovery Channel model."
The network will also look to lease space for digital channels to start-up networks, and to offer both West Coast and East Coast feeds for America's Voice, Swanson said.
But many issues remain unresolved, including how the sale will affect a five-year deal America's Voice signed in March to allow beleaguered 5th Avenue Channel Corp. to program 12 hours of its schedule with its own programming. The U.S. Bankruptcy Court in Washington, D.C., must also sign off on the deal.
Wild Frontier and Carleigh may spend up to $2 million in cash for America's Voice, which counts 14 million subscribers, including part-time subscribers.
Under the terms of the deal, Wild Frontier plans to acquire Carleigh and simultaneously merge WFN/CFI into America's Voice. WFN/CFI agreed to have $2 million in cash available at the closing, and the combined company will commit $1.3 million of the cash to pay off some of America's Voice creditors. The network reportedly has $29 million in debt.
WFN/CFI also agreed to lend America's Voice between $200,000 and $400,000.
America's Voice recently submitted the letter of intent to the bankruptcy court. It plans to submit a reorganization plan to the court within the next 10 days, David Mark, a bankruptcy attorney at Roseman & Colin, which represents America's Voice, said last Thursday.
America's Voice executives offered few details about the backgrounds of their potential owners. Chairman Robert Sutton said Carleigh chairman Irving Brand has "owned a lot of film companies. He likes to take companies, put them together and make a good business out of them."
Sutton added, "Wild Frontier, I don't really know anything about."
The two companies initiated the deal by contacting the network's lawyers at Roseman & Colin, Sutton said.
Brand and Wild Frontier CEO Lynne C. Gray Carbajal couldn't be reached for comment last week.
"WFN is kind of an international company. They have a lot of Western films," Swanson said.
According to a June 1999 Associated Press story, Lynne Gray was CEO of "Native American Television Inc. of Minnesota, a nonprofit organization that produces documentaries and other programming."
The potential sale of America's Voice marks the latest twist in a saga that began in December 1993, when right-wing activist Paul Weyrich founded the network as National Empowerment Television.
Weyrich resigned in 1997. Sutton then joined the network, switched its name to America's Voice and began to change the company's conservative political bent.
Swanson said Elizabeth Lurie, who was one of the original investors in the channel, now owns the majority of the company, with a 92 percent stake.
In March, America's Voice struck a five-year deal with 5th Avenue to begin running the company's two-hour Net Financial News show March 6, and 5th Avenue's programming was supposed to expand to a 12-hour block (6 a.m. to 6 p.m.) April 16.
According to a copy of the contract included in a 5th Avenue Securities and Exchange Commission filing in April, 5th Avenue agreed to pay America's Voice $1.92 million annually.
But 5th Avenue never expanded to the 12-hour block as originally anticipated, Swanson said. The company did amend its contract with 5th Avenue, but she declined to discuss the details of that contract.
Swanson said she does not know if the new owners will continue carrying Net Financial News, which runs from 10 a.m. to noon on America's Voice. "They have every intent on continuing America's Voice programming as it is, but I don't know about the rest of the dayparts," she added.
Melvin Rosen, 5th Avenue's CEO, didn't return calls last week. When asked at the National Show in May how an America's Voice ownership change would affect 5th Avenue, Rosen noted that his contract requires America's Voice to give 5th Avenue six months' notice if it wishes to terminate the deal.
Indeed, the contract states that America's Voice can terminate the deal "with or without cause upon 180 days' written notice," and 5th Avenue can terminate the deal upon 90 days' written notice.
America's Voice has struggled to gain cable carriage. Sutton said the network counts 14 million subscribers, including part-time carriage and over-the-air distribution.
He added that it only has about 1 million cable subscribers on systems owned by AT & T Broadband, MediaOne Group Inc. and Comcast Corp. Most of its distribution comes from carriage on EchoStar Communications Corp., C-band homes and PrimeStar, which is now owned by DirecTV Inc.
"One of the things we have found is [that cable operators] are waiting for us to get a finalized deal," Sutton said, noting that he hopes the ownership change will help him to close deals. "It's hard when you're in bankruptcy to try to finalize deals," he added.
Sutton and Swanson will be offered two-year employment contracts "on terms similar to their current employment arrangement," according to the letter of intent, but the agreement contains no guarantees that the remaining 50 employees at America's Voice will have jobs under the new ownership.
America's Voice has cut its staff from 90 employees to 52 since the bankruptcy proceedings began, Sutton said.
"We haven't even discussed what the operation will be like, but I certainly expect that those [current employees] will stay, and we'll probably add some more to go back to a full staff," he added.