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Groove1670
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There are rumblings that some markets are being shopped. Possibly markets 100 and over? Or underperforming markets.
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Totally believable that Cumulus and iHeart might want to get out of media ownership in places like Topeka, KS and Somerset, KY.
The questions are:
1. Who is buying?
2. Would the prices buyers might be willing to pay satisfy Cumulus and iHeart execs?
The only potential buyer that has a national portfolio of stations in markets like Topeka is Townsquare. And there has been a lot of consternation at Townsquare from shareholders in recent months who want the company split up.
EDIT: And also, whether iHeart or Cumulus would consider simply spinning off these properties as an independent company. That seems very doubtful to me.
The questions are:
1. Who is buying?
2. Would the prices buyers might be willing to pay satisfy Cumulus and iHeart execs?
The only potential buyer that has a national portfolio of stations in markets like Topeka is Townsquare. And there has been a lot of consternation at Townsquare from shareholders in recent months who want the company split up.
EDIT: And also, whether iHeart or Cumulus would consider simply spinning off these properties as an independent company. That seems very doubtful to me.
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As we've discussed in other areas, the big problem local owners would face is getting financing. Radio stations are not viewed as good risks. So the first question is: Where's the money coming from?
The second question is: At what price? The market is glutted right now with stations on the market, with Scripps selling all their stations, and it looks like Cox is about to sell a few. Plus there are stations in various trusts from iHeart, Cumulus, and Entercom. When you drive down the street, and all your neighbors are selling their houses, it's a bad time to put yours on the block.
The second question is: At what price? The market is glutted right now with stations on the market, with Scripps selling all their stations, and it looks like Cox is about to sell a few. Plus there are stations in various trusts from iHeart, Cumulus, and Entercom. When you drive down the street, and all your neighbors are selling their houses, it's a bad time to put yours on the block.
While Townsquare wouldn't be able to buy any stations from iHeartMedia and/or Cumulus, maybe they could buy some stations from Scripps since those stations are being sold and most of those markets seem like a good fit for company like Townsquare.
As for Cox, it seems that they may be selling most of their stations (except for Atlanta and Dayton). Not only Cox is rumored to be selling stations, but it also looks like Urban One could be looking to sell some stations as well, based on what I read in the Tom Taylor newsletter.
Why couldn't Townsquare buy from either of them? Likely they would have to wait until each emerges from bankruptcy, but there is no other reason whey this could not happen.
They want to get into bigger markets.
I would be very surprised (but not shocked) if Cox was to sell its cluster in Houston. The Country and Classic Rock stations (KKBQ, KGLK/KHPT) are doing quite well, and even "Country Legends" KTHT does well for a rimshot. However, Cox may want to focus on other media platforms in the future, so who knows.
Urban One has a three station cluster in Houston. KMJQ and KBXX are solid, but I could easily see them putting ratings dog KROI on the block, though they would probably take a big loss on the $72 million they paid for the C1 signal in 2004.
I meant to say that Townsquare wouldn't be able to buy stations from iHeartMedia and/or Cumulus for now, at least until one of them emerges from bankruptcy.
I think you meant to say that Urban One could sell some clusters in smaller markets, and use the proceeds to expand some of their clusters in bigger markets.
That's what I said. They want to get into bigger markets. They really need to be in NYC, for example.
It looks like Cox isn't planning a sale of radio stations after all. As for Urban One, I'm hearing that they could sell their Charlotte cluster. There are 6 other markets (Houston isn't one of them) facing revenue declines. However, there's no word on if Urban One is looking to sell some stations.
In that case, they could easily acquire Emmis' existing New York cluster, which is almost certainly a good fit for Urban One.
iHeart owns some pretty small markets, some populated well under 50,000. One of the smallest is in Ogalalla, Nebraska, and the only reason I see iHeart keeping them is that Ogalalla is the home of Prophet Systems (NexGen).
Some of the purchases were made in order to facilitate move-ins into big markets. That was a process Randy Michaels began, with the idea of selling off the castaways once the move-ins were completed. Some small markets were divested, most weren't. I even remember Clear Channel having a "departing markets manager". In the grand scheme of things, it probably doesn't cost that much more to keep Somerset, KY running and the proceeds from selling it wouldn't be that much.
They also bought a lot of groups, rather than individual station purchases. When you buy a group (as you can see with the Scripps group) you get some big markets and some small markets. Cumulus and Citadel worked the same way. They were built with group purchases. So while you may get some real prize stations, there are also some dogs. The thought is if you have enough big successes, they will support the dogs. If they were buying on a station-by-station basis, there are a bunch they would have wanted to leave on the table. But that wasn't always possible. It'll be interesting to see if they address that post-bankruptcy. But yes, the problem is that they won't get much back by selling the dogs. Just get their losses off the books.
Not so easy. They would have to get financing and then convince Emmis to sell
iHeart sold Prophet Systems to RCS several years ago. NexGen is still supported by RCS, but it's replacement is RCS Zetta.
Townsquare had a rough Q4, as reported last week: https://seekingalpha.com/article/41...asad-q4-2017-results-earnings-call-transcript
Not terrible mind you, but the company has shown growth in the past mainly for their entertainment and digital initiatives, much less involving their radio properties. Wall Street seems to like, and pay more attention to their non-radio business core. As with what we've talked about the challenges and risk with accumulating debt to buy less-desirable radio properties? I would question their business common sense if they tried to buy more radio.
But that was a purely in-house consolidation of companies. iHeart owns RCS.
https://en.wikipedia.org/wiki/Radio_Computing_Services
(Not that Wikipedia is very accurate, but it does show the date of acquisition)
There has been occasional talk of a management buyout by the principals at RCS.
And that's what I understood was already done, at least partially. Prophet Systems/RCS were never a big contributor to Clear Channel/iHeart's portfolio, so the controlling ownership was sold off to RCS management. iHeart may still have some percentage, but no longer controlling interest.
While there were negotiations, Bob has not wanted to sign off on the deal as the division is quite profitable. And now, with the Chapter 11 issue, that deal (if it to ever happen) is not going forward.
What is interesting is that RCS is not mentioned in any of the discussions of the bankruptcy. I think Pittman does not want to remind their customers in other groups that they are sending money to iHeart.
There are a few similar sub-companies, such as Mediabase, which is part of Premiere. Not sure how profitable it is, or if it's likely to be spun off.
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