Beasley is another family-based company, like Audacy. Except that in Beasley's case the family owns about 50% of the company. The Field family had about 25% of Audacy. Institutional ownership at Beasley is very low. But the stock has been trading under $1, so the warning signs are there.
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Audacy Filed For Bankruptcy
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Beasley is another family-based company, like Audacy. Except that in Beasley's case the family owns about 50% of the company. The Field family had about 25% of Audacy. Institutional ownership at Beasley is very low. But the stock has been trading under $1, so the warning signs are there.
One of the most reliable predictors of bankruptcy is the Altman Z-Score. Beasley currently has a -0.07, which is distressed. Anything under 1.8 has a high likelihood of filing bankruptcy in two years. A 1.8-3 is the gray zone, and companies above a 3 are generally considered safe.
Are there many -- or any -- companies whose main business is radio that carry at 3+ score these days?
Not many, if any, media companies are in that range these days. Even Townsquare, which was trading among the highest of radio stocks, was well-below 1 the last time I checked. It's not just radio either. Nexstar and Sinclair are below 1.8, or at least were the last time I checked. Among radio operations, SBS had the lowest score last time I looked.
Tech is the industry with the highest scores today.
SBS has been in the "endangered" range since just about a year after the IPO in 1999. Prior to that, they skirted bankruptcies, but seem to have escaped by playing the ethnic card.
We’re seeing the fragile state of SBS firsthand here in Houston, where SBS is having to make six installment payments over a period of nine months so it can eventually close on its $7.5M purchase of KROI. This was a deal announced last April, and it won’t close until this coming July…assuming SBS can scape together the money.
I’ve been semi-keeping up with this part, but I don’t remember reading it in this thread if so. Has any kind of deal been agreed on with David Field from the offering that was made to him to stay on? I think he has another month or so to decide if not already.
I have to admit, and agree considering earlier posts made in this thread, Entercom was a dang good radio operator. It’s a shame what happened, but it ended up being pretty unavoidable after the CBS deal.
I have to admit, and agree considering earlier posts made in this thread, Entercom was a dang good radio operator. It’s a shame what happened, but it ended up being pretty unavoidable after the CBS deal.
Not yet. My expectation is that he will not accept it.
From my story on January 8: The Audacy Bankruptcy: What’s Next? - RadioInsight
"Field’s employment filed with the Securities & Exchanges Commission today states that if Field has not agreed to a new employment agreement within 120 days of the Chapter 11 Effective Date (1/7/2024), Field may terminate his employment by providing written notice within the 120th and 150th day, but will continue in his role for 150 days or until a successor is is appointed. But the company may also terminate his employment at any time “in which case Executive shall assist with transition as reasonably requested.”
I have also heard that a new CEO may have already been selected by the banks who will be taking over upon the court approval of the restructuring. If it is who I have heard, they recently left a position at another broadcaster and would be well qualified for the position. There were also a few people who recentlyt left other companies that may be part of a new executive leadership team.
Why would he? He likely doesn't want to transition from Owner to Employee.
It's also like getting hired to drive a car that's already engulfed in flames...
Agreed. Bankruptcy was a defeat for the Field family. They were opposed to it for obvious reasons. They will have no role in the new company, so there's no point staying with it.
In previous posts on this subject, I've said that the banks don't want to own radio stations. I'm starting to change my view on that. I think the lenders knew what they were getting into, they knew where it would lead, and this is where they wanted to end up. They feel these stations are undervalued. The next steps for the company will be very different from where it was going under Field. They will make decisions that Field would never have done, because the lenders have no emotional attachment to the new company.
The lenders/now owners still have to manage cash flow and expenses. The last thing they want to have to do is put more money into Audacy. That means, if anyone thinks they're going to see "legacy" Entercom stations/clusters up for sale at fire sale prices, you would be sorely mistaken.
Yes, that's all part of the pre packaged BK. I mean going forward, beyond what they have already committed to.
What this assumes is that Audacy doesn't have a workable business model long term. If I understand you correctly?
They're going to have to invest because the previous management has done so much cost-cutting, it's hurt the product, and its hurt the ability of the company to make money from its existing assets. So hopefully the lenders and new management can see that, and find ways to use their existing assets to increase the value of the company. It may take some investment to do that. But I think the mistake Field made was buying existing companies, such as podcasting companies, when the assets already exist within.
There's that old business saying: Sometimes it takes money to make money. During bankruptcies, it's usually preferred to reallocate savings or income from somewhere else like property sales, or FTE savings rather than finding outside investment.
I think they already identified the property sales, and it didn't result in a lot of money. That's the problem. They don't need to save money, they need to make money. That's what business is about. They have great assets and they have to use those assets better.
The follow-up article to the above shows what Audacy assets were/are for sale prior to bankruptcy - around $60 million worth:This analyst says no new asset sales after bankruptcy:
Audacy Unlikely To Pursue New Asset Sales Amid Chapter 11, Brokers Say.
Don’t look for a new round of asset sales from Audacy as it works to shave $1.6 billion of debt in bankruptcy court. The company has sold select non-strategic assetswww.insideradio.com
What they really need to do is create and build new assets.
Audacy Lined Up $60 Million In Asset Sales Before Filing For Bankruptcy.
Audacy may be in the early stages of a chapter 11 bankruptcy proceeding but it already has aggressive plans to sell more land and office buildings. Since merging with CBS
It's pretty common, especially out of the gate, for 'new operators' to claim that they don't expect to sell assets or more rounds of cuts. Nobody will ever be held to their word, anyway. It's all about letting the dust settle and enough time to determine where 'right-sizing' needs to occur.
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