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Equity Media Ex-Boss Buys Company Assets

Equity Media Holdings Corp. has endured some tough economic times recently. But it’s getting a cash infusion from a familiar source: its top shareholder and former chairman and CEO, Henry Luken III, who is buying Equity’s Retro Television Network subsidiary for $18.5 million, as well as a handful of the company’s television stations.

Equity said it had closed on the deal with Luken Communications LLC, a group led by Luken. Under the arrangement, Equity Media has the option to repurchase RTN at any time during the next six months for a fee.

Equity Media will use $17.5 million of the proceeds to pay down debt.

The Luken group also agreed to buy TeleFutura and Univision affiliates in Amarillo and Waco, Texas, Ft. Myers-Naples, Fla., Minneapolis, Oklahoma City and Tulsa for $17.5 million—a $5 million prepayment and the remaining $12.5 million upon receipt of FCC and other approvals. The sales are subject to Univision’s right of first refusal.

The sale of the Florida stations was announced in April and was to include as a buyer Thomas A. Arnost, CEO of Equity’s station group, but the deal is instead proceeding without him and with Luken as the main buyer.

Luken resigned from his post as Equity CEO in May, remaining the company’s top investor.

In an interview, Luken said his primary interest in the deal is RTN—not the stations, which he said he purchased in large part to get much-needed cash to Equity. RTN furnishes retro programming (think “Happy Days”) and late-night infomercials to affiliate broadcasters, which sell local adds and carry it on secondary multicast channels. RTN is now running on 29 stations with more than 40 others under contract.

Luken said stations need to secure cable carriage and make a commitment to cross-promotion of the channel before the local RTN channel can go live.

RTN sends its content from a national hub in Little Rock, and Luken said he is building another one in his home city, Chattanooga, Tenn., for redundancy.

Luken said he would have bought more of the Equity stations, but is involved in enough other businesses that demand his attention. Most notably, he’s half-owner of Christensen Shipyards, a manufacturer of luxury mega-yachts. Christensen is building what Luken called the nation’s largest yacht-building facility, capable of building 60 giant yachts at once, in Knoxville, Tenn.

He also owns Jewelry TV (a shopping channel) and large amounts of Chattanooga real estate.

The Luken group also purchased warrants giving it the right to purchase up to 8,050,000 shares of Equity Media for $1.10 per share (for a total of $150 million).

Following consummation of the station sales, Equity Media will continue to own and operate 100 stations in 35 markets representing 24.8 percent of U.S. television households.

Equity Media previously announced a management realignment and said it would focus on leveraging its core assets as a digital delivery platform, disposing of non-core station assets and offering new opportunities for content delivery for digital networks and station owners.

Equity’s stock price, close to $6 per share as late as 2004, plunged in April and has remained below $1 per share.