iHeart close to bankruptcy?

[CosmicMagician]

AN A/C format in Portland is going to be a lot like one in Raleigh or one in Hartford because music has been universalized by the Internet and instant communications. In fact, if you look at most of the CHR songs in Minneapolis, they are the same as the ones being played by the CHR in Santiago, Chile.

Songs are now being released simultaneously world wide, and promoted simultaneously.

So why wouldn't stations in the same format be playing substantially the same music and using the same presentation?



How can a person in Indianapolis be bored with radio because in Salt Lake City there are stations playing the same songs and doing the same formats as in their town? If you focus on the local market, there should always be an assortment of good FM signals with the most mass appeal formats for that market.



Except for block programming on some small market stations, there was never a station in those decades that played AOR part of the day and Beautiful Music another part of the day. Strong, continuous, exclusive music formats have been part of stations in all significant markets since TV forced the industry to do that back in the 50's.



Millenials use less radio because they have more options, many of them being on-demand services. They are huge consumers of music, but use a variety... including radio... of services to listen.



Very, very, very few stations "in the 70's" had DJs that played anything they wanted. And those that did had, for the most part, limited audiences. By the mid-70's those progressive or free-form rock stations that you seem to refer to had been massacred by the heavily consulted "Superstars" execution with limited playlists and sharper focus. What was left were college stations and just a couple of precursors of the AAA format...



There is no shortage on the playlists of any current music station, whether it be Urban, Alt, Country, CHR or even Regional Mexican, of artists that a year or two ago had no airplay. New artists are getting exposed... just not with the stunts such as you mention with Rush.



WMMS was one of the benchmark AOR stations in that era. Other stations looked at it for guidance on new adds, just as in CHR in the 60's we looked at stations like CKLW, KHJ and others... so the stations that were trendseters in each format added a song and all the rest of us looked at them for guidance as we reviewed Gavin, FMQB, R&R and other airplay lists each week.

So Rush's song workked because MDs at other AORs looked at WMMS and saw the add, and then the increase in play and then the comments on "good phones" from the Music Director... and they gave the cut a listen.

Rush are only a small example I made. But this is how a lot of artists in the old days of Radio got their break. (that is, if the mainstream American music industry did not pick these artists up.) I remember how a band from Portland, for example; known as Seafood Mama (later known as Quarterflash) were picked up by Geffen Records after local radio stations in Portland would play a few of Seafood Mama's songs. "Harden My Heart" became a local hit. Seafood Mama released their music on a private independent label before changing their name to Quarterflash and were very popular even before Geffen Records signed them and had them re-record Harden My Heart as well as their own debut LP.

"Very, very, very few stations "in the 70's" had DJs that played anything they wanted."

This is not true, from my recollection. Radio stations had more individuality and variety in those days. AOR and Pop stations would play whatever. They had more variety and were not nearly as strict as the music formats we have today. A Pop station in the 70s could cross into Funk/Disco music and even into Old school Country or Folk/Progressive rock. Something that cannot be done today. (i.e. Ever hear Hip Hop stations crossing into Country? Well no, because both genres are too strict and too different and apply to different audiences.) But as I said before, a Pop station in the 70s could cross into Country and even into Jazz or Disco, while being predominantly a Pop station. These days, this does not happen. And this is the main reason why these big radio corporations are boring the listeners.

 

[CosmicMagician]

Interesting that you say this, because iHeart has a number of campaigns aimed specifically at introducing independent and unsigned artists. One iHeart DJ, Bobby Bones, has introduced his listeners to numerous new songs and artists over the years. It's nice to wax about the 70s, but there are FM radio companies, including iHeart, breaking new artists every day. Cumulus actually owns a record company, and just launched the winner of a locally based talent contest. There are a lot of great things happening in radio today, if you'd just listen.

While it is true that many people are still listening to FM and AM radio - the main thing that I hear about people, from all generations - is that the music these days is "pretty terrible" and has no originality. Also the music industry will only sign artists that they deem live up to their quality standards - "it has to be marketable or you're not getting signed". I think that this is what is wrong with the music and radio business (not musicians) these days - but that People (in these industries) these days are more afraid to take risks, than they were in the past. (I'm talking about all this new music on CHR stations featuring things like Autotune, synths and electronic drums - this is the kind of stuff that people say they hate.)

 

[TheBigA]

While it is true that many people are still listening to FM and AM radio - the main thing that I hear about people, from all generations - is that the music these days is "pretty terrible" and has no originality.

That's OK. For them there is classic hits. But I know a lot of musicians, and they all care about the music they make, and they believe that they have to take risks in order to succeed. Maybe you need to get out of your comfort zone and try some new music. Don't be so negative and critical about everything. It's hard to take risks and chances on new things when you always compare it to the past. Ask Elton John. He puts out new music all the time, only to have it compared to Your Song. He will tell you that it's hard to compete with the past.

 

[davideduardo]

Ever since the FCC began deregulations in 1996 the radio business has flunked in popularity as a form of media and is helping to fail the American music industry. These two big corporations (iHeartMedia and Cumulus) are owned by men that just do not care; and are just superfluous, careless and greedy.

Untrue. Back to the very days of the Red and Blue networks, radio groups have been owned by publicly traded companies with shareholders whose man interest lies in whether they will see income and growth from their investments.

Radio is not in the music business. The relationship is synergistic.

But going back to the days of the first recordable CDs, the problem for the music industry has been the consumer's desire for free music. Pirate CDs, and then, in 1999, Napster and other file download sites pulled the rug from under retail music sales.

Now, the issue is that most music is consumed by downloads and streaming, and the hottest part of the streaming option is in on-demand services.

What has changed is the way consumers want to pay for and consume music. The entire issue is user based, not corporate or radio industry based.

The problem with radio today is that these big corporations (for example) swallow the whole industry and allow no individuality.

Sorry, but there are now over 20,000 stations and translators on the air, and most of them also offer streaming. iHeart owns 800 stations. About 4%... less for Cumulus.

For example, WOGY 94.1 (Froggy 94) in Memphis was bought by Entercom Media in 2000, from Sinclair and switched from Country music; to two Hot AC brandings, 94.1 The Buzz and then 94.1 WKQK and both failed miserably in ratings. This was a big mistake; as competitor Kix 106 was now the only station in Memphis to broadcast country and had no competitor. By killing Country on 94.1 Entercom now are finally seeing the damage they have done over a decade later. And they had no choice but to flip the station in 2014 back to country music as WLFP 94-1 The Wolf. Entercom are reluctant to admit it but realize that flipping a format on 94.1 in Memphis is taking too much of a step.

Or, if you want to look at the underlying data you will see that WOGY was signficantly lagging in billings, and the AC window looked to have more revenue potential. As all of us who have been actually responsible for stations and formats, not every launch or relaunch gets the desired level of success. So, perhaps, today Entercom has seen that the country competitor may be less dominant and might be more vulnerable.

The point here - is that a lot of the people employed in these large radio industries are careless and irresponsible.

Some people in every industry are slackers. But to tar and feather the folks who work in radio just because you think we should be doing things your way is unfair and unfortunate.

They are clumsy and hasty and just do not understand what a radio listener really wants in a station, or even care to.

Yeah, sure. Thats why the major stations across the country spend millions of dollars a year researching perceptions and music preferances, and additional millions to get radio ratings to see how well we are doing.

A Radio listener wants variety, they do not want a big change or a "big leap". (same Country songs played over and over again

Actually, listeners want to hear their favorite songs every time they tune in. If, each time that happens, they are met with a bunch of secondary or unfamiar songs, they go away.

"Variety" is not "lots of songs". Variety is a perception created by playing the strongest songs at all times. In fact, when comparing perceptual data for different formats, the highest "best variety" scores go to CHR stations that generally have less than 100 songs in regular rotations and which play the top songs 120 times a week.

- or for example, the station suddenly flipping from Mainstream Country to a strict Hot Adult Contemporary format.) This is what throws listeners off. (just take a look at how much The Buzz 94.1 lasted in Memphis - only 5 years, compared to the 8 years country as Froggy 94.)

Stations change format all the time. The reasons have to do with revenue and available billing in the market and for particular formats. There are plenty of examples of stations with good numbers but with lower than expected billings... one of the reasons being that the station is the second or third in a format, and the "big guy" takes much of the revenue and not enough trickles down to to the other player or players.

 

[davideduardo]

While it is true that many people are still listening to FM and AM radio - the main thing that I hear about people, from all generations - is that the music these days is "pretty terrible" and has no originality.

That's strange. I mostly hear that there is great music in all genres today. But I tend only to listen to current music opinions from people who actively listen to current music. There are always old fuddy-duddies who say that "their" music was so much better than the crap today... they also spend time telling kids to get off their lawns.

 

[CosmicMagician]

That's OK. For them there is classic hits. But I know a lot of musicians, and they all care about the music they make, and they believe that they have to take risks in order to succeed. Maybe you need to get out of your comfort zone and try some new music. Don't be so negative and critical about everything. It's hard to take risks and chances on new things when you always compare it to the past. Ask Elton John. He puts out new music all the time, only to have it compared to Your Song. He will tell you that it's hard to compete with the past.

What I really mean is - I noticed this, but it seems that Classic Hit stations and Classic Rock stations are all the rave in terms of FM ratings today. The CHR and Top-40 stations are ironically and strangely getting the lowest ratings, in most markets. While stations that play classic songs are listened to, more. My explanation for this is that the Boomers and even some Millenials are listening to these retro 70s and 80s songs. Because they believe (not my personal opinion) that the new music on radio just sucks. <<< And I hear that opinion from people of all ages and creeds. Even an Alternative rock station here in Louisiana, has flipped to Classic rock:

http://www.radiodiscussions.com/showthread.php?699923-RIP-Planet-Radio-Lafayette

Alternative is usually used to appeal to young adults and teenagers, so if there's a switch to Classic Rock from Alternative, this is a little clue that people of all generations are growing more unsatisfied with modern music.

^^^But I would say, that this is explained to the greed and carelessness that is going on in the Music industry as well as the Radio business. Radio has become a fierce cut-throat competition; and this is exactly why Citadel Broadcasting was forced to fold, even after a 27 year old existence. Karma like this will bring down Cumulus and iHeartRadio; or at least make both of these organizations, for example, vulnerable.

 

[CosmicMagician]

Untrue. Back to the very days of the Red and Blue networks, radio groups have been owned by publicly traded companies with shareholders whose man interest lies in whether they will see income and growth from their investments.

Radio is not in the music business. The relationship is synergistic.

But going back to the days of the first recordable CDs, the problem for the music industry has been the consumer's desire for free music. Pirate CDs, and then, in 1999, Napster and other file download sites pulled the rug from under retail music sales.

Now, the issue is that most music is consumed by downloads and streaming, and the hottest part of the streaming option is in on-demand services.

What has changed is the way consumers want to pay for and consume music. The entire issue is user based, not corporate or radio industry based.



Sorry, but there are now over 20,000 stations and translators on the air, and most of them also offer streaming. iHeart owns 800 stations. About 4%... less for Cumulus.



Or, if you want to look at the underlying data you will see that WOGY was signficantly lagging in billings, and the AC window looked to have more revenue potential. As all of us who have been actually responsible for stations and formats, not every launch or relaunch gets the desired level of success. So, perhaps, today Entercom has seen that the country competitor may be less dominant and might be more vulnerable.



Some people in every industry are slackers. But to tar and feather the folks who work in radio just because you think we should be doing things your way is unfair and unfortunate.



Yeah, sure. Thats why the major stations across the country spend millions of dollars a year researching perceptions and music preferances, and additional millions to get radio ratings to see how well we are doing.



Actually, listeners want to hear their favorite songs every time they tune in. If, each time that happens, they are met with a bunch of secondary or unfamiar songs, they go away.

"Variety" is not "lots of songs". Variety is a perception created by playing the strongest songs at all times. In fact, when comparing perceptual data for different formats, the highest "best variety" scores go to CHR stations that generally have less than 100 songs in regular rotations and which play the top songs 120 times a week.



Stations change format all the time. The reasons have to do with revenue and available billing in the market and for particular formats. There are plenty of examples of stations with good numbers but with lower than expected billings... one of the reasons being that the station is the second or third in a format, and the "big guy" takes much of the revenue and not enough trickles down to to the other player or players.

Funny, where is all this money coming from? Last time I checked, Cumulus was almost about to file for bankruptcy? They are in extreme debt. So are you telling me that they are illegally receiving automatic funds? Where are these funds coming from? How do you know all these things? The only thing it can come from are Corporations or our own Government itself? Wait, do you mean corporations like CBS, Disney, AT&T, Liberty Media, and General Electric? Yep, that's right, these corporations are just a few that could be giving Cumulus and iHeartRadio their "corporate welfare".

I don't mean to sound like a Conspiracy theorist; but how in the world are these two big radio industries funding themselves? Some kind of scandal I haven't heard about?

 

[TheBigA]

What I really mean is - I noticed this, but it seems that Classic Hit stations and Classic Rock stations are all the rave in terms of FM ratings today. The CHR and Top-40 stations are ironically and strangely getting the lowest ratings, in most markets.

Depends on the market. Since this is the Cincinnati board, I'll confine my comments to Cincinnati. WUBE has been consistently one of the most listened-to radio stations in town. Country is a very currents-based format. Country is where a lot of musical chances are being taken in writing and performing. It's selling well, and country artists regularly perform in stadiums, not unlike classic rock acts. The audience for country is very young, and they listen on FM.

 

[davideduardo]

What I really mean is - I noticed this, but it seems that Classic Hit stations and Classic Rock stations are all the rave in terms of FM ratings today. The CHR and Top-40 stations are ironically and strangely getting the lowest ratings, in most markets.

That's not true.

CHR is Top 40. Two names for the same format. And the format is doing very well.

Perhaps the issue is that you are looking at the ratings data that is publicly published for 12+. The classic hits and classic rock stations tend to show better in 12+ than they do in the sales target demos of 25-54 and its subsets; that is because many of the listeners are over 55 which is not a profitable target in transactional radio markets.

We also see that there is generally only one classic hits station and one classic rock station in each market where those formats "look good". WAXQ and WCBS-FM in NY are alone in the formats, while CHR has three players, Z-100. Amp and WKTU. So the larger CHR share is split between several stations.

While stations that play classic songs are listened to, more. My explanation for this is that the Boomers and even some Millenials are listening to these retro 70s and 80s songs. Because they believe (not my personal opinion) that the new music on radio just sucks. <<< And I hear that opinion from people of all ages and creeds.

You are basing an incorrect conclusion on a false premise.

Even an Alternative rock station here in Louisiana, has flipped to Classic rock

Alternative rock stations, particularly those that are newer to the format (post-2000) have generally had a hard time achieving revenue goals. And that is why some have flipped, or alt has been put on the lesser facilities in a cluster.

Alternative is usually used to appeal to young adults and teenagers, so if there's a switch to Classic Rock from Alternative, this is a little clue that people of all generations are growing more unsatisfied with modern music.

No, it is a statement that formats that depend on bail bonds providers and pawn shops for revenue just can't get the billings.

It's also a demonstration that alt is now less a young adult format; young adults are overwhelmingly supporting rhythmic music, and favoring rock less and less as the Edison studies have shown over the last 20 years.

But I would say, that this is explained to the greed and carelessness that is going on in the Music industry as well as the Radio business. Radio has become a fierce cut-throat competition; and this is exactly why Citadel Broadcasting was forced to fold, even after a 27 year old existence. Karma like this will bring down Cumulus and iHeartRadio; or at least make both of these organizations, for example, vulnerable.

Citadel went into Chapter 11 and was sold to Cumulus because they took on too much debt and were not, in retrospect, well managed.

Radio has always had "fierce cut-throat competition". Today, we see nothing like the 60's and 70's Top 40 wars like WQAM vs. WFUN or KHJ vs. KRLA and KFWB. The industry is, if anything, less rabid about competition and less likely to do the million dollar contests and the "Car a day in the month of May" givee-aways.

 

[CosmicMagician]

That's strange. I mostly hear that there is great music in all genres today. But I tend only to listen to current music opinions from people who actively listen to current music. There are always old fuddy-duddies who say that "their" music was so much better than the crap today... they also spend time telling kids to get off their lawns.

I've known plenty of stations who have dropped their Top-40 or AC format for a Classic Hits or Classic Rock format, in order to compete. If this isn't a sign that people are growing dissatisfied with music and radio, what is your explanation for that? I recall Townsquare Media ditching their own Top-40 station and flipped to Classic rock in order to compete against Cumulus' Classic Rock. So what does that tell you? The only stations getting the ratings on radio these days are the Classic Hits and Classic Rock stations if you do not include Country or Hip Hop. The Top-40 and Hot AC formats are going downhill fast!

 

[davideduardo]

Depends on the market. Since this is the Cincinnati board, I'll confine my comments to Cincinnati. WUBE has been consistently one of the most listened-to radio stations in town. Country is a very currents-based format. Country is where a lot of musical chances are being taken in writing and performing. It's selling well, and country artists regularly perform in stadiums, not unlike classic rock acts. The audience for country is very young, and they listen on FM.

Good point. And, while listed as Hot AC, WKRQ is the #1 station in 18-24, 18-34, 18-49, 25-49 and a bunch of the other demos. It's #2 overall in women, and #1 in the younger demos... and young adult women are the target of CHR. WKRQ is behaving like a full CHR, but with an even better age range.

The "true" CHR, WKFS, is a much more limited signal, and does not cover much of the market... so it underperforms and likely delivers by default a lot of the CHR audience to 101.9.

 

[CosmicMagician]

"You are basing an incorrect conclusion on a false premise."

No, I am basing this on a personal experience / conclusion with people I've met; of all generations and creeds. It is mostly half of the Millenials; i.e. "Radio sucks!" and the other half listen to the CHR.

I see it all around me, too - why would a Top-40 station, or even an Alternative rock station, both suddenly switch to Classic Rock? To me this is a sign that most listeners are fed up with modern music and want something from the past; and the CHR/Top-40 listeners are the minority. Even Country and Hip Hop are more successful in ratings. You've got it all backwards.

Edit: To make a long story short, the Modern music Top-40 stations are the minority these days when it comes to ratings. Which is real ironic - And these Classic Hits/Rock stations are getting the more attention. Even Country and Hip Hop get the most ratings but the Classic stations follow. The CHR stations are doing fairly poor compared to the other aforementioned formats. This shows that most radio listeners these days, are totally bored with modern music. It is pitiful when a Classic Hits station will beat out a CHR or AC station. I live in Louisiana, and this is what happens all over the state. CHR stations are flunking way behind and are no longer the cashcows.

 

[davideduardo]

I've known plenty of stations who have dropped their Top-40 or AC format for a Classic Hits or Classic Rock format, in order to compete. If this isn't a sign that people are growing dissatisfied with music and radio, what is your explanation for that? I recall Townsquare Media ditching their own Top-40 station and flipped to Classic rock in order to compete against Cumulus' Classic Rock. So what does that tell you? The only stations getting the ratings on radio these days are the Classic Hits and Classic Rock stations if you do not include Country or Hip Hop. The Top-40 and Hot AC formats are going downhill fast!

Actually, it's the opposite. Hot AC and CHR are growth formats, while Classic Rock and Classic hits are formats that suffer from ageing and, while they look good in 12+ rankers, do not perform as well in the sales demos.

I looked at the top 70 billing stations in the US, and 11 are CHR or CHR variants. 3 are classic hits. 2 are classic rock. 7 are AC. 21 are news, talk or sports, 4 are in Spanish, 3 are alternatve (two of them in the same market), 9 are Urban or Urban AC, and 3 are country.

 

[davideduardo]

Edit: To make a long story short, the Modern music Top-40 stations are the minority these days when it comes to ratings. Which is real ironic - And these Classic Hits/Rock stations are getting the more attention. Even Country and Hip Hop get the most ratings but the Classic stations follow. The CHR stations are doing fairly poor compared to the other aforementioned formats. This shows that most radio listeners these days, are totally bored with modern music. It is pitiful when a Classic Hits station will beat out a CHR or AC station. I live in Louisiana, and this is what happens all over the state. CHR stations are flunking way behind and are no longer the cashcows.

Format changes have to do with revenue, not just ratings.

I know of very few format flips from CHR to older leaning formats like classic rock. The ones I can recall occur when there are too many CHR / Hot AC type formats, and the lowest rated station is just not getting on the buys.

The #1 billers in NY and LA are CHR. CHR has the highest number of top billers nationally of any non-talk format.

 

[CosmicMagician]

I know of very few format flips from CHR to older leaning formats like classic rock. The ones I can recall occur when there are too many CHR / Hot AC type formats, and the lowest rated station is just not getting on the buys.

Funny, the station I was referring to, was the only CHR station in the city of Lake Charles, and still flipped to Classic Rock to compete against Cumulus.


Take a look at the ratings in Lafayette:

http://www.******************/sr_ratings.aspx?market=253

KSMB and KTDY are going downhill fast! Funny that the independently owned station of KYBG is 4th on that list playing Classic Hits. They used to be the AC competitor to KTDY.

And while KYBG changed formats to Classic Hits, KTDY is still receiving poorer ratings even without their former competitor, pretty pitiful.

Edit: I think the only reason KSMB gets so many ratings is because they have a good radio show. But KSMB is and has always been the most famous station in Lafayette, and even still it flunks compared to KYBG. I remember when KSMB and KTDY were the highest listened stations in Lafayette, and now KTDY is down at a pitiful #8 while KYBG is at #4.

 

[davideduardo]

Funny, where is all this money coming from? Last time I checked, Cumulus was almost about to file for bankruptcy? They are in extreme debt. So are you telling me that they are illegally receiving automatic funds? Where are these funds coming from? How do you know all these things? The only thing it can come from are Corporations or our own Government itself? Wait, do you mean corporations like CBS, Disney, AT&T, Liberty Media, and General Electric? Yep, that's right, these corporations are just a few that could be giving Cumulus and iHeartRadio their "corporate welfare".

I don't mean to sound like a Conspiracy theorist; but how in the world are these two big radio industries funding themselves? Some kind of scandal I haven't heard about?

Cumulus and iHeart have debt that can not be paid and amortized from the profits on current operations.

They have financial models that were built based on the economics of radio in the mid-90s, when there was revenue growth adequate to pay the interest and principal over time.

Three things happened:

1. The Great Recession. 40% loss in radio revenue in one year.
2. PPM. Over 30% reduction in PUR upon implementation of the system in 48 of the top 50 markets. That means lower rates on transactional business where CPP is used.
3. The smartphone (2007) and streaming / on demand music availability on a device that is ultra portable and easy to use.

Because of that, the financial model that was working up to the start of the recession failed. No increases in revenue, no way to meet the debt payments.

By the way, both groups have highly profitable station operations. But the debt service is greater than the cash (EBITDA) thrown off by the stations. The fight is with the lenders; if there are no concessions, known as a "haircut", the companies will seek Chapter 11 protection.

 

[davideduardo]

Funny, the station I was referring to, was the only CHR station in the city of Lake Charles, and still flipped to Classic Rock to compete against Cumulus.

In Lake Charles, the 4 top stations (two Country, two Urbans) take 60% of the revenue in the market. The other stations are just minor players, although the next three in revenue, KKGB, KHLA and KTSR all increased reveneu from 2015 to 2016.

Take a look at the ratings in Lafayette:

KSMB and KTDY are going downhill fast! Funny that the independently owned station of KYBG is 4th on that list playing Classic Hits. They used to be the AC competitor to KTDY.

And while KYBG changed formats to Classic Hits, KTDY is still receiving poorer ratings even without their former competitor, pretty pitiful.

Both stations are steady in revenue, even if the market is off 12% in total radio revenue in the last 5 complete years. In small diary markets, it is better to do what agencies do, which is to average the last 2 books. Neither station is a disaster.

KYBG is one of the few stations in the market that is up slightly in revenue over the last few years, despite having a signal that does not cover well all 6 counties of the metro.

Edit: I think the only reason KSMB gets so many ratings is because they have a good radio show. But KSMB is and has always been the most famous station in Lafayette, and even still it flunks compared to KYBG. I remember when KSMB and KTDY were the highest listened stations in Lafayette, and now KTDY is down at a pitiful #8 while KYBG is at #4.

There is onlly a 2 share difference between #1 and #7 in 25-54 in the market. When you are basing evaluations on the results of about 600 diaries, or just 50 a week, you will see wobbles of several share points from book to book based on nothing more than the methodology.

Since the market only gets about 10% of its radio revenue from national, ratings are not the most important revenue driver.

 

[CosmicMagician]

While I appreciate your insight, and I am sorry to go off topic (as this was meant to be, for Cincinnati) but I am quite certain that Cumulus and iHeartRadio will always risk some form of bankruptcy; due to the points that I mentioned above. The only alternative for them would be to simply sell off a few stations. But that would be playing into another Radio competitors' (i.e. Entercom, Townsquare) strong hand.

But selling stations is pretty dangerous for both companies in a very competitive industry like radio, as they could help to enrich the aforementioned competitors I mentioned above. Personally, I cannot understand how Cumulus and iHeartMedia have avoided Bankruptcy for so long. But one explanation is that they are being illegally funded by corporations or our own (Federal government?). These two corporations should be seeing the same things that Citadel was becoming before it eventually folded. I struggle to make sense of how they are doing it, and am wondering if there is a secret scandal going on that is keeping both companies on welfare.

 

[joebtsflk1]

If I were a lender, I'd take no concessions. It seems to me the sum of the iHeart parts is worth far more than the whole.

 

[davideduardo]

If I were a lender, I'd take no concessions. It seems to me the sum of the iHeart parts is worth far more than the whole.

The iHeart assets are, conservatively, worth about 1/3 to 1/2 of the debt. So they are worth more as a whole, producing cash flow, than if broken up.

If the lenders do not bend, then iHeart declares Chapter 11 and the unsecured lenders get nothing as debts could be fully discharged. Better to take a haircut than to be decapitated.

At issue right now is how big will the discount on the debt be. Lenders want less, iHeart wants more. In most cases like this, the lenders negotiate. The only case where there is a problem is when the business itself is not producing cash flow, so there is nothing worth saving. In the case of iHeart, there is significant EBITDA, but not enough to service the debt.