Amid a hyperactive deal market, TV station groups have seen their values rise dramatically over the past year.

Young Broadcasting Inc.’s stock is up, too—nearly 65%. But at $3.20, it’s still scraping bottom, a tiny fraction of what it once was.

It remains TV broadcasting’s red-haired stepchild, trying to figure out how to turn around a string of bummer years.

Saddled with $780 million in debt from its purchase of KRON San Francisco, bleeding cash, unable to unload the San Francisco station for anything near its $400 million appraised value, much less the record $823 million it paid, YBI faces a dismal future.

You'd never know it listening to Vincent Young, chairman/CEO of the company he and his father founded in 1986. He sounds like anything but an executive under pressure.

Maybe it's the $3.4 million annual compensation he pulled down last year, up roughly $1 million from the previous year despite the company's A shares hitting a low of $1.95 in late 2006. (In comparison, Hearst-Argyle Television CEO David Barrett made $2.4 million in total compensation last year.)

Maybe it's the $81 million in cash YBI has that will let it keep making interest payments at least through 2009.

Maybe it's the prospect of what Young calls a revenue "tsunami" in 2008.

Or maybe he's just been coping with the company's flagging fortunes long enough that, with apologies to Richard Farina, he's been down so long it looks like up.

"I'm sure every CEO feels like his company's stock price ought to be higher," says Young. "We do. In the sense that we're in the public market I feel like I understand the sentiment. It's all wrapped around KRON."

In what one industry insider calls "the dumbest deal ever done in television," YBI in 1999 paid a record $823 million for KRON, an NBC affiliate.

The company's obsession with acquiring the station was so strong that it was willing to outbid NBC by about $100 million.

Considering that KRON was throwing off somewhere between $50 million and $95 million a year in cash, YBI's perseverance in the face of financial obstacles might have made some sense.

But YBI never saw that cash.

Even before it had signed off on the deal, NBC vowed to yank the affiliation if YBI didn't pay $10 million in reverse compensation annually and rebrand the station NBC4.

Perhaps hoping to replicate the success it had taking KCAL in Los Angeles independent after buying it from Disney, YBI went ahead with the deal, let the NBC affiliation expire, opted for the indie/news route and watched revenues and cash flow fall off the cliff.

"They played chicken with Bob Wright at NBC and got their butts whipped," says Bishop Cheen of Wachovia Capital Markets. "They're losing tremendous value as part of this."

KRON, and YBI, have never recovered from the loss of the NBC affiliation.

YBI's attempt to run the station as an independent with heavy doses of news beginning in 2002 has generated a four-year tide of red ink and prospects are less than modest.

Although YBI doesn't publicly break out KRON's results, Cheen projects that after first-quarter 2007 cash flow of negative $1.7 million, the station may hit a positive $1 million for the full year.

Even with the expected boost in 2008 from political ads and retrans fees, Cheen's model projects only about $4 million in cash flow at KRON next year

Optimism for a turnaround rose early last year when KRON signed on as an affiliate of Fox’s My Network Television. But the optimism faded as quickly as did America’s interest in MNT’s English-language telenovelas.

If KRON is the source of YBI's problems, Young also sees it as the solution or, more to the point, getting rid of it as the solution.

"We've said to the world that KRON is a very powerful entity, with a lot of value to somebody else," he says. "If there was somebody else who could do a duopoly or triopoly with KRON, it's worth a lot of money.

“To the extent nobody can do that and the extent that it's only going to be valued as standalone entity, maybe it's not worth that much.

“There's been a lot of interest in the station over the last four to five years, but we've never gotten a transaction across the finish line. At some point there will be a transaction."

Selling KRON might be a quick fix, but it's proved to be a no-go so far. Although YBI hasn't hired a broker or investment bankers, the company has been shopping KRON for some time, quietly at first, then more publicly earlier this year.

A big gulf between the $400 million appraised value for the station and its street value is a key stumbling block.

"I've talked about KRON being worth $240 million to $290 million," says Wachovia's Cheen. "That's a far cry from the $500 million value Vince sees or the $400 million it was appraised at.

“My whole life is measured by two questions: how much and when,” Cheen says. “When, with Vincent, tends to be a very long horizon. He doesn't have to try to get deals done.

“We can argue whether that's irrational, whether his sense of value is way out ahead of the market price,” he says. “But it's fair to ask why should a guy who believes in a property's value and has plenty of cash to keep the operation going sell."

It's hardly surprising that when analysts talk about YBI, they talk about two distinct entities: KRON and everything else.

"I think Young has collection of terrific stations in the middle market," says broker Larry Patrick of Patrick Communications.

Those other properties include five ABC affiliates topped by WKRN in Nashville, the No. 30 DMA; three CBS affiliates, and one NBC affiliate.

Half of those stations are ranked No. 1 in their markets, according to YBI.

Those stations, with $166.6 million total net revenue and $63 million in broadcast cash flow last year, have been the crutch helping YBI stumble ahead dragging the KRON ball and chain.

With YBI stock cheap and closely held by Young, management and family trusts, could going private be one way for the company to climb out of its hole?

"Have we considered it? Sure," Young says. "We'll consider anything.

“I would think the stock has an awful lot of upside. It could look good if you were able to buy it all. It's on a menu of a lot of items ... but it's not something we have a circle around."

There are multiple obstacles to taking the company private. Anyone willing to ante up to take YBI private would want a clear path to control and Young is highly unlikely to surrender that control, industry sources say.

Why should he, when he continues to collect a healthy check as long as he's in charge, even if the company were to go into bankruptcy, a la Don Cornwell at Granite Broadcasting.

YBI's cash reserves may be sufficient to make interest payments—just under $70 million annually—but it's not enough to do much else, such as developing and implementing aggressive Web strategies for the company's 10 stations.

Young acknowledges that YBI has done about all it can with KRON and that the road to the station's—and the company's—turnaround is a long-term project of cutting costs and slowly rehabbing KRON.

"We could probably get the resources if we had a plan to do something special with it," he says. "It's just that … there are certain things you can't do.

“In order to attract enough viewers to be meaningful, you'd have to invest in a Dr. Phil or an Entertainment Tonight. My Network can be just the right partner with KRON if they should back into a winning show.

“You have to imagine that at some point they will come up with something that will turn that network around,” he says.

In an effort to improve the financial picture, YBI is cutting costs across its 10 properties, including KRON and driving its "Third Leg" hyperlocal sales strategy in the face of declining national ad sales.

"Others are happy to hold expenses to flat or up 3%," says Young. "We've actually been trying to move them down. When we finish '07 and if we get a tsunami of revenue in '08, that would really improve the numbers. These new dollars coming in fall right to the bottom line."

Big investors own big chucks of YBI. They include Spray-V Limited Partnership (9.1% of votes), Mario Gabelli (8.9% of votes), Eric Semler (3.4% of votes) and Westport Asset Management (2.4% of votes).

But voting control lies solidly in Vincent Young's hands.

Those institutional investors probably have already written off their investment in YBI, industry sources say, which may explain why there's been no proxy fight or other focused effort to oust Young over what some consider poor judgment in the KRON deal and excessive executive compensation.

Does all this lead to a replay of the Granite bankruptcy? Predictably, Vincent Young says no.

"We're going to be careful we don't go down that route," he says. "We have years before we might be there."