In 1987,
George N. Gillett Jr. acquired majority control of the Storer stations; the $1.3 billion deal was financed through
junk bonds and represented a valuation of nearly 15 times cash flow for the group. KKR maintained a 45-percent minority ownership. To satisfy federal regulations, Gillett's existing station group was spun off to Busse Broadcasting, a company formed by Gillett employees. As the sale was pending, the era of third-place stability ended at KCST-TV. In 1987, Morgino and Buxton were replaced by Marty Levin and Denise Yamada. Levin was the first person to be a lead anchor at each of channels 8, 10, and 39 and had just been demoted at KFMB; Yamada had been a reporter for ABC's
Good Morning America. In spite of the new anchor team, KCST remained at the back of the San Diego news ratings. In the May 1988 sweeps period, it had less than half the viewers of either KFMB or KGTV at 5 p.m. and tied KFMB for a distant second at 11 p.m.
KNSD: News San Diego and a total overhaul After the Gillett purchase concluded, larger changes were seen on the horizon. Gillett's focus on news was predicted to bolster the news department. The company named a new general manager—Neil Derrough, former president of the CBS owned-and-operated stations group—who sought to fix the station's major image problems. Some stemmed from the UHF status, mostly a crutch by this point. The
San Diego Business Journal called
NewsCenter 39 "matronly", while Derrough considered its newscasts "bland, predictable, and not very interesting". Coinciding with the opening night of NBC's coverage of the
1988 Summer Olympics, on September 15, 1988, KCST-TV changed its call sign to KNSD; began promoting its cable channel number of 7 over its over-the-air channel 39; and retitled its newscasts
News San Diego. It launched a series of new programs: a monthly show hosted by former KFMB-TV personality Larry Himmel, a sports show with then–San Diego Chargers head coach
Al Saunders, and two new public affairs series. The Himmel program lasted just six months before it was canceled due to low ratings. The revamped KNSD newscasts proved more competitive at 11 p.m., but ratings continued to lag in the early evening news. In September 1989, the early evening news hour at 5 p.m. was split into half-hour 5 and 6 p.m. newscasts, a different format than KFMB and KGTV had at the time. That same year, channel 39 hired former San Diego Chargers linebacker
Jim Laslavic as its new sports director—a position in which he would spend nearly 30 years—and debuted a sports talk show featuring
Lee "Hacksaw" Hamilton, a local sports radio personality. Ritter, who had been reassigned as an investigative reporter when the news department was relaunched, departed at the end of 1989 for
KTTV in Los Angeles. The 1990 promotion of Irv Kass to the position of news director was credited with stabilizing the typical revolving door of on-air talent and strengthening the channel 39 newsroom, but the station continued to add air talent and experiment. In 1991, KNSD began airing an afternoon local talk show,
The Ross/Hedgecock Report. It paired Allison Ross, a former KFMB-TV anchor, with
Roger Hedgecock, a former San Diego mayor then hosting a talk show on
KSDO radio. The program was canceled after 15 months due to low ratings, particularly as the popular
The Oprah Winfrey Show aired on KGTV in the same time slot. It was replaced months later by a new 4 p.m. newscast, anchored by Ross. In 1993,
Rolland Smith, a news anchor with a lengthy career in New York, moved to San Diego to anchor the 4 p.m. news when Ross was taken off the program. That year, the station also started a weekend morning newscast. Over the course of the early- to mid-1990s, KNSD's news ratings increased, particularly at 11 p.m. While KGTV had been winning the late news ratings race for years, KNSD posted major increases in ratings during 1995 and moved ahead of KGTV in 1996. In early 1996, KNSD launched a morning newscast, originally 90 minutes from 5:30 to 7 a.m.
Ownership instability During much of the late 1980s and early 1990s, the ownership future of channel 39 seemed uncertain. Gillett's purchase of the Storer stations, renamed SCI Television, was troubled from the start. The junk bonds were raised prior to
Black Monday: by November 1987, Gillett recorded a 10:1 debt-to-profit ratio and faced a $153 million loan payment by October 1989. Rumors of a sale ran hot in the lead-up to the conversion to
News San Diego in 1988, particularly as Gillett, who formerly had a role with the
Miami Dolphins, expressed interest in buying the
Seattle Seahawks. At one point, KGTV reported that
Westinghouse Broadcasting was under contract to buy channel 39, which turned out to be premature. Gillett boasted that the sale of
WSMV-TV in
Nashville, Tennessee, was enough to shore up the company's finances, but the firm missed the October 1989 loan payment, prompting three creditors to ask the
United States Bankruptcy Court in Delaware that SCI Television be placed in involuntary
Chapter 7 bankruptcy This exchange offer was agreed to within hours of a deadline placed by the Delaware court. Bondholders acquired a 39-percent stake in SCI, while Gillett saw his ownership reduced to 41 percent and KKR's reduced to 15 percent; KKR also cancelled a $190 million
debit note held on SCI. Gillett failed to meet a debt payment by August 1990, prompting
S&P Global Ratings to lower the rating for Gillett Holdings from a C to a D. Gillett's financial pressures continued to mount after the sale of
WMAR-TV in
Baltimore was renegotiated to a lower price and a Denver bankruptcy judge denied any further extensions on a
Chapter 11 filing. The
early 1990s recession also negatively impacted television station cash flow and advertising revenue, on top of Gillett's failure to divest assets prior to a decline in station valuation. Facing lawsuits from multiple creditors including
Apollo Partners,
Allstate and
Fidelity Investments, Gillett Holdings filed for Chapter 11 on July 26, 1991. After reaching another agreement with bondholders, Gillett Holdings was restructured in January 1992, with Gillett as a minority owner but maintaining day-to-day operational control. Investor
Ronald Perelman, regarded as a
corporate raider and the owner of
Revlon and
Marvel Entertainment, purchased majority control of SCI Television, including KNSD, on February 17, 1993, pushing Gillett out entirely. The transaction came through a bankruptcy court-approved Chapter 11 reorganization: Perelman's holding company
MacAndrews & Forbes made a $100 million investment in SCI, which was still burdened by $1.3 billion in debt, in exchange for 53 percent of its equity. After the deal closed, SCI was folded into Perelman's New World Entertainment and renamed
New World Communications. This was one of several deals Perelman made in rapid succession, as he then purchased a stake in Genesis Entertainment via
Four Star Television and directly purchased infomercial producer
Guthy-Renker. KNSD was excluded from the deal made between the
Fox network and New World Communications on May 23, 1994, that saw New World
agree to convert 12 affiliates of ABC, CBS, and NBC to Fox. John Freeman of the
San Diego Union-Tribune hypothesized that Fox wanted to keep XETV, one of its stronger affiliates and a VHF station, over KNSD. The deal, nonetheless, had nearly immediate consequences. Because New World was under contract to acquire more stations than it could legally own (twelve), KNSD was identified as a prime target for a sale. Unsure of her employer's future, Denise Yamada left KNSD to anchor at KFMB-TV, reportedly on the condition that she earn more money than her former co-anchor Levin. New World briefly put KNSD on the market at an asking price of $150 million before withdrawing it. The possibility of an affiliation switch disappeared in 1995 when New World and NBC signed a 10-year agreement extending the affiliations of KNSD and
WVTM-TV in
Birmingham, Alabama, in exchange for limits on affiliate compensation and New World developing syndicated programming for the NBC
owned-and-operated stations, which developed as the entertainment newsmagazine
Access Hollywood. ==NBC ownership==