Rich Broadcasting agreed to pay $6,000 a month to American Tower for space in a transmitter building and space on a tower on Snow King Mountain, Wyo. for stations KMTN and KZJH. Two other stations owned by Rich, KJAX and KSGT, paid $750 each to lease locations on the mountain on sites also maintained and managed by American Tower through a permit with the U.S. Forest Service.
A U.S. bankruptcy court judge in Utah has ruled that American Tower Corporation (ATC) cannot kick its tenant off of a number of their towers until March 8, 2017 if ATC and Rich Broadcasting Idaho, LLC (RB) do not reach an agreement on amended or new leases – an action that is highly unlikely.
According to court documents, RB owns radio stations located in Jackson Hole, Wyo.; Sun Valley and Island Park, Idaho, and leases ATC’s sites for $13,500 per month.
ATC said RB has only made a handful of partial payments since August 2013, with the last payment being received March 2015.
Beginning in 2010, RB and Chaparral Broadcasting entered into six lease agreements. In 2011 Chaparral sold its ownership interest in the towers to ATC.
On Sept. 25, 2014, ATC brought a breach of contract action against RP in Wyoming for its failure to pay rent owed.
RP’s counterclaims included breaches of contract, negligence, interference with contract and prospective relations, and fraud.
On Aug. 29, 2016, ATC filed two motions for summary judgment on their complaint and the counterclaims.
ATC requested that the court grant its motions on Sept. 26, 2016 because RP did not respond, and RP filed its Chapter 11 bankruptcy petition two days later, claiming at the time that ATC was its largest debtor, with a disputed amount of $477,150.
In the Wyoming action, RP said ATC, in part, caused it to fail since the tower company’s rental rates were too high, especially on five sites that were on federal land. ATC said its lease rates were proper and RB had no right as a private citizen to seek redress with an agreement that ATC has with the U.S. Forest Service.
RB also said that ATC can’t evict them because one of its stations is an emergency alert station, and it cannot be shut down without permission from the FCC.
However, ATC said RB’s only duty is to notify the FCC if it goes silent, and “the FCC does not require a tower owner to continue to provide access to a non-paying lessee.”
Before the bankruptcy court, ATC said that RB owes it $492,000, and after its filing said that it sought and obtained court approval to use cash collateral to pay ATC the required $13,500 monthly lease agreement amount.
Nonetheless, ATC said that to date, RB hasn’t paid their continuing obligation and owes them another $40,500.
According to a post-petition payment report, however, RB paid SBA Communications a monthly tower lease payment on Nov. 7, 2016 of $3,278. RB’s bankruptcy filing listed SBA as being owed $32,948.
ATC filed with bankruptcy judge William Thomas Thurman a request in November requiring RB to assume or reject the tower leases within 14 days. RB, ATC said, then replied that it was going to reject the leases.
At the same time, Chaparral objected to the time period, stating that it holds a lien on substantially all of RB’s personal property assets – including the leases – and if the six tower lease agreements are terminated or rejected, then RB will not be able to continue to transmit radio broadcasts, and it “could destroy, or substantially impair, the debtor’s going concern value.”
RB acquired eight stations from Chaparral in 2013 for $2.4 million in cash and a $1.3 million promissory note.
Chaparral said that ATC and RB were playing a game of “chicken,” but if neither of them “flinch,” the real loser will be Chaparral.
Judge Thomas gave RB’s owner, Richard Mecham, until March 8, 2017 to resolve the lease issues with ATC.
Mecham also owns Rich Media Consulting. His website states: “Sometimes it just helps to have a second pair of eyes review where the money is going and how it might be allocated more effectively.”