On March 8, 2005, Malara Broadcast Group entered into a credit agreement with Granite Broadcasting Corporation. This agreement gave Malara Broadcasting $48.5 million and a revolving credit line of $5 million, which it used to purchase KDLH (from former owner New Vision Television) and WPTA, from Granite. In addition to this agreement, Malara also entered into a second agreement with Granite, under which Granite would operate, promote, and sell advertising for the two Malara stations. This is known as a local marketing agreement.
The future of Malara Broadcasting may be in doubt given several recent occurrences stemming from the death of group founder Tony Malara from leukemia and a heart attack on August 24, 2006, as well as financial woes of partner Granite Broadcasting which filed for Chapter 11 bankruptcy on December 11, 2006. Both the future of the Granite group and any rulings on who would get control of Malara could lead to massive changes with the company.
Malara Broadcasting files its financial results to the SEC jointly with Granite, leading many to believe that it is simply a shell corporation for Granite. If this is true, Granite and Malara would be in violation of the FCC's rules on duopolies. Neither Fort Wayne and Duluth have enough full-power stations to legally permit a duopoly. Fort Wayne has six stations while Duluth has five, and FCC regulations require a market to have eight unique station owners once a duopoly is formed--effectively restricting duopolies to markets with at least nine full-power stations. Similar allegations surround Cunningham Broadcasting, which many believe is simply a shell for Sinclair Broadcast Group.