Audacy Bankruptcy Goes To FCC

[TheBigA]

But he needs someone with industry knowledge to guide his enterprise.

My take is he has no interest in owning radio stations at all. It's all sport to him.

The bad news is the extension Audacy got expires on the 30th. So they'll need another extension in the next day or two.

Again, the press has little understanding of radio, TV or even the web.

They also don't know when they're being used. The best reporting I've seen on this was in Inside Radio posted earlier in this thread.

 

[TheBigA]

all their top stations are talk

Depends on how you measure. Their most popular stations are Classic Hits, such as WCBS or KRTH.

 

[TheBigA]

Here is reporting on the Brendan Carr testimony.

GOP Commissioner: FCC Approval Of Audacy Bankruptcy Plan Would Be ‘Unprecedented.’

Commissioner Brendan Carr says the Federal Communications Commission appears poised to do something it hasn’t done before with the pending decision clearing Audacy’s path out of bankruptcy. “This decision will

www.insideradio.com

Ted Cruz demanded that this decision be made by the five commissioners. So now Carr is saying granting approval by the commissioners without completion of the foreign ownership review is "unprecedented." Even though several other approvals were granted early by the media bureau.

Apparently, commissioners have the application for foreign ownership waiver, so they know the contents. But this complaint by Carr isn't about what's in the application. It's strictly procedural. It's not based on the facts, but procedure, approving a bankruptcy plan without completing the foreign ownership review. The issue to them isn't foreign ownership, but George Soros, and they're using the foreign ownership review to delay or derail the bankruptcy application. They're complaining about a Soros shortcut, not because of any actual foreign ownership concerns. It's not against the law for any American citizen to own broadcast media. Conservatives created this procedural argument themselves by demanding the decision be made by the commissioners, not the media bureau. That move was also unprecedented. But it led to this, which they claim is unprecedented. It's a circular argument that bypasses the facts because they don't like George Soros. If it was anyone else doing the same exact thing, it would apparently be OK. There is nothing I can see in this testimony that relates to the facts of the application. It's all about one man.

 

[TheBigA]

In re-reading the above Inside Radio story, I saw this:

Audacy set up the transaction in a way that would allow the restructuring to be completed and maintain short-term compliance with the foreign ownership limits until it secures approval from the FCC to have indirect foreign ownership of more than 25% — a process that can take up to a year to complete. Audacy’s alternative plan is to use special warrants that will not convert to equity until the government signs off.

So there is a Plan B in the last sentence. The FCC can approve the alternate plan that doesn't involve Soros or the foreign ownership waiver. Then wait for the ownership waiver to be approved, which will likely happen at the end of the year. Then these same reps can stomp around and claim it was once again politically motivated, even though it wasn't.

The key thing is that Commissioner Carr never said a vote was taken. He didn't confirm the NY Post story. Just that if it was approved, it would be unprecedented. That's what's being used as the basis for this entire thing. That's why I call this Chicken Little investigation. Let's investigate if the sky is falling, because I felt it on my head.

 

[Mediafrog+]

Approved: FCC Approves Audacy’s Post-Bankruptcy Vote In Split Vote | Radio & Television Business Report

 

[K.M. Richards]

Didn't I remember reading that the House Committee on Oversight and Accountability was looking into this as well?

The FCC vote may not be the last word.

 

[Theater of My Mind]

Doesn't this year's Supreme Court decision diluting the power of federal agencies open up the possibility of this approval being appealed to the courts if some conservative group doesn't like it?

 

[TheBigA]

Here's reporting from Inside Radio with quotes from the commissioners:

FCC Approves Audacy Restructuring; Company Plans To Emerge From Bankruptcy In Days.

After a longer-than-expected review, the Federal Communications Commission (FCC) has approved Audacy's proposed restructuring following its bankruptcy. The decision, made along party lines with a 3-2 vote, allows Audacy to

www.insideradio.com

It went as expected, and Soros won't gain an equity position until the foreign ownership review is complete.

Carr wanted public comment on this, but there was no public comment on any of the other bankruptcy agreements. Could you imagine the public comments about iHeart? You don't have to. You could read them on this board.

My take was the reason the repubs made a big deal last week was to get out in front and frame the narrative for political purposes. But its clear that politics played no part in the decision, and the comments from the two commissioners reflects that.

 

[TheBigA]

Doesn't this year's Supreme Court decision diluting the power of federal agencies open up the possibility of this approval being appealed to the courts if some conservative group doesn't like it?

If it did, Symington would have mentioned it in his no vote. He's the one who dissented about pirate radio fines. I think the issue there is the agency's ability to levy fines. Approving these things is clearly in the purview of the commission.

Didn't I remember reading that the House Committee on Oversight and Accountability was looking into this as well? The FCC vote may not be the last word.

Perhaps. They may call the Chairman in to testify. They requested all of the paperwork involved in the decision by the end of the week. The main thing they wanted to stop was Soros getting equity, and he didn't. So there's not much more they can do.

 

[TheBigA]

One other small detail I saw in CNN's reporting of this story. The Foreign Ownership review is required if a company is more than 25%. Apparently the new company will only be 22% foreign owned:

In its request, the radio giant emphasized that it believed about 22% of a new, post-bankruptcy Audacy would be foreign-owned, requesting a review out of an abundance of caution.

So obviously much ado about nothing.

 

[TheBigA]

Now the newly approved company will go private, which means it won't sell stock. Which is great, since any stock they sold would immediately drop in value the minute it went on the market:

Audacy Wastes No Time: Bankruptcy Restructuring Approved. Going Private Is Next.

With approval of its restructuring plan now in hand from the Federal Communications Commission, Audacy has emerged from bankruptcy with 80% of its debt wiped away. The second largest radio

www.insideradio.com

I actually proposed this over a year ago. People were focusing on the declining stock price rather than the operations of the radio stations. But the debt was too much. Now they reduced the debt and have long term financing.

 

[K.M. Richards]

I actually proposed this over a year ago.

I always knew you were smarter than David Field, A.

 

[radiofan2023]

Now the newly approved company will go private, which means it won't sell stock. Which is great, since any stock they sold would immediately drop in value the minute it went on the market:

Audacy Wastes No Time: Bankruptcy Restructuring Approved. Going Private Is Next.

With approval of its restructuring plan now in hand from the Federal Communications Commission, Audacy has emerged from bankruptcy with 80% of its debt wiped away. The second largest radio

www.insideradio.com

I actually proposed this over a year ago. People were focusing on the declining stock price rather than the operations of the radio stations. But the debt was too much. Now they reduced the debt and have long term financing.

Maybe now they can finally fix the app!

 

[101tm]

So Field is staying on? Unfortunately, if so, I predict Audacy will remain in the same old “Entercom mindset.”

 

[davideduardo]

So Field is staying on? Unfortunately, if so, I predict Audacy will remain in the same old “Entercom mindset.”

Remember, the purchase of CBS... which was the primary cause of the Entercom / Audacy debacle... was not just David Field's decision. It was the decision of his father, who had greater Entercom holdings... of the board of directors... of consultants both on the management and financial side. At the time, the Reverse Morris Trust seemed doable and profitable.

The economy changed, the internet usage for audio surged more than expected and then we had about four years of a pandemic. This was what is often labeled "A Perfect Storm" (after the book of that name) because nobody could predict such an event.

All the financial advisers put the CBS transaction through all kinds of models where best and worst situations were created, along with many, many intermediate models. This is the same type of modeling that has worked for more than half a century for everything from buying houses and cars to buying big businesses.

All of those models failed. Again, a perfect storm.

 

[Kent]

So Field is staying on? Unfortunately, if so, I predict Audacy will remain in the same old “Entercom mindset.”

He is staying on for the time being. I had heard, at one point, that the new owners had interviewed a former radio group CEO for the job, but I can't tell you if that might still be in the works. Seems like I read his new employment agreement can be terminated by either party with appropriate notice.

 

[Theater of My Mind]

Remember, the purchase of CBS... which was the primary cause of the Entercom / Audacy debacle... was not just David Field's decision.

That's just a gross oversimplification of the whole situation. There's far more to the company's history of poor management beyond that. Their lack of investment in streaming. Failure to build a syndication arm or create national star personalities in each format. Vastly overpaying to acquire outside podcast networks only to fail at gaining any traction in the field. I'm sure there's more. These things have been discussed at length here.

So Field is staying on?

The whole management team is staying on.

Unfortunately, if so, I predict Audacy will remain in the same old “Entercom mindset.”

What the old saying about doing the same thing over and over again and expecting different results?

 

[TheBigA]

Their lack of investment in streaming. Failure to build a syndication arm or create national star personalities in each format.

There are a lot of people who admire his dedication to local radio. When he bought CBS, those were the people who felt the CBS legacy and the all news stations were in good hands.

TBH I'm not one of those people. I think he and his father are myopic about what radio needs. But he is dedicated to the strength of localism and local radio, and one at least has to admire his dedication to a principle, even if you don't agree with it. He put his money where his mouth was, and then lost it. So when people talk about the investors who lost their money on Audacy, he's one of those investors.

What the old saying about doing the same thing over and over again and expecting different results?

The part of this you don't understand is he may have the title of CEO, but he's not making the decisions anymore. He's working for the people who lost their money. If they think he's doing the same thing, and they'll lose again, they can fire him. Or if he doesn't like what he's being told to do, he can quit. That's a different situation from before.

 

[davideduardo]

That's just a gross oversimplification of the whole situation. There's far more to the company's history of poor management beyond that. Their lack of investment in streaming. Failure to build a syndication arm or create national star personalities in each format. Vastly overpaying to acquire outside podcast networks only to fail at gaining any traction in the field. I'm sure there's more. These things have been discussed at length here.

That is why I said that then CBS acquisition was the major cause.

But there is an issue there. Without CBs they were not in a position to produce major market conten or to develop significant web material. Entercom was mostly a medium market operation, and needed big market presence and success to put together a synergy with new media.

They were too big to use the Townsquare model, and too small to rival iHeart.

But the CBS group was at the downward side of a life cycle chart and could not grow enough to pay for itself. The hope was that the combination would allow a move into new media as well as sales synergies for old radio. But the web grew faster than expected and then the. Pandemic came,

Without CBS they would have had a smaller problem, but nobody saw the pandemic coming so this is a classic case of an unpredictable occurance… like the change in the course of the Mississippi River from the New Madrid quake!

 

[RadioGuy1864]

It's going to be a lot different for David. Before, his family controlled the company, now he's just an employee. I predict it won't last long.