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Fisher Stations on the Hook?

Gannett, ABC, Entercom, Cox, Clear Channel and other broadcast groups are interested in some or all of Fisher Communications, sources say, as the Seattle-based broadcaster assesses its strategic alternatives.

The crown jewels in the Fisher treasure chest are TV, radio and real estate holdings in the Northwest, where, most notably, Fisher owns KOMO-TV Seattle, and KATU(TV) Portland, Ore.

Analysts evaluate the company's worth at roughly $800 million to $1 billion. It would probably be more valuable but for the triple whammy of a terrible economy still looming over the Northwest, a lagging ABC TV network (KOMO-TV and KATU are affiliates) and some under-managed properties.

"They've got a great collection of fixer-uppers," was the assessment of one media analyst at a major Wall Street firm.

Rumors were swirling last week that Fisher was close to a decision, with a deadline for bids set for this week.

But company President and CEO William Krippaehne Jr. denied that.

"In one aspect of our assessment process, there were some deadlines for an initial expression of interest in participating in the process," said Krippaehne. "We're still very early in the going." Bottom line: It's not too late to get involved in the process, and it won't be over for a while.

In fact, said Krippaehne, the company hasn't yet decided that asset disposal is the way to go: "It's a very formal process with Goldman Sachs that has been authorized by the board. It involves looking at a whole variety of alternatives, and it ranges from staying independent, which is a logical alternative, to selling all or part of our operations."

Other options include a simple (or not so simple) refinancing or recapitalization of the public company, Krippaehne said.

There are some high-powered financiers who believe Fisher would be better off toughing out the current rough economic patch before considering a sale of assets. "Fisher should not be for sale today," one well-known investment banker stated flatly. "If the company had any confidence and a decent lawyer, they would have just said 'no thank you' to offers and gone about fixing their performance."

In the third quarter, when many broadcasters posted solid gains for the first time in many quarters, Fisher's broadcasting revenue was flat, as problems in the airline industry kept the recession going in the Northwest.

Fisher's TV and radio operating cash flow dropped 34%, to $13 million. Long-term company debt stands at about $310 million, or 16 times annualized cash flow.

If Fisher does decide to sell the TV assets, some wheeler-dealers say the company will have its work cut out for it to get the price it wants in the current environment. And a cash sale of the bigger TV stations would have a big tax burden, a source familiar with properties said.

The Fisher broadcast properties include KOMO(AM)-TV, KVI(AM) and KPLZ(FM) all Seattle and KATU, KOTK(AM) and KWJJ-FM all Portland.

Both ABC and Gannett have an interest in the TV stations, while Entercom, Clear Channel and Cox are eyeing the radio properties.

If Fisher does decide to sell off some major broadcast holdings, it would be a shot in the arm to what has been a stagnant year for station-trading activity. BIA Financial Network says that, through Nov. 30, just 86 stations changed hands in 2002, down from 111 last year and a far cry from the more than 200 that traded each year from 1996 to 1997.