Adios, Nassau?

[Ned Braden]

Surprised that this hasn't been mentioned here yet...from All Access.

NASSAU BROADCASTING faces an involuntary petition for its bankruptcy from creditors owed more than $83.8 million, including GOLDMAN SACHS LENDING PARTNERS LLC and FORTRESS CREDIT OPPORTUNITIES LP, BLOOMBERG reports.

In the Chapter 7 petition, GOLDMAN asserted that it's owed more than $69.8 million, FORTRESS claims to be owed more than $11.2 million, while P.E. CAPITAL LLC. is looking for $2.8 million. Involuntary petitions were also filed for NASSAU BROADCASTING I, NASSAU BROADCASTING II and NASSAU BROADCASTING III, according to the court docket.

I think with Chapter 7 bankruptcy, Nassau has 21 days to repay the debts owed or they have to go silent. And I thought I got nervous when I owe someone $5.00 for lunch...

 

[nd2023]

With a Chapter 7, all of their assets have to be sold to pay off their debt.

 

[TimeIsTight]

Things don't look good for Nassau to continue as one company. For those who don't follow this business stuff, Chapter-7 bankruptcy means liquidation.

In other words, the organizations that Nassau owes money to will ask the Federal bankruptcy courts in Delaware to supervise the sale of all the radio stations and other assets to raise money to pay Nassau's debts. The stations could be sold off individually or in groups, whichever brings the best price. This is NOT a Chapter-11 restructuring or reorganization being asked for, this is sell everything, down to the office furniture and paintings on the walls.

Back in late June Inside Radio reported in an "exclusive" story that Nassau CEO, and former owner, Lou Mercatanti, had made a deal with its major lender Goldman Sachs to buy back the company for $52-million, or about 20 percent of the estimated $258-million owed. Obviously, that deal didn't work out and it does now look like adiós Nassau. Of course, Nassau still has a few weeks to raise the money, or the court could decide to take a different path.

This thread on this board covered that Inside Radio story about Nassau supposedly going back to the previous owners in June:

http://boards.radio-info.com/smf/index.php?topic=193444.0

Bloomberg News apparently had the latest story of the creditors petition for Nassau's involuntary bankruptcy liquidation last Thursday night. Below is a link to that story which includes the case number for anyone who wants to follow up in detail.

http://www.businessweek.com/news/2011-09-15/nassau-broadcasting-faces-involuntary-bankruptcy-in-delaware.html

 

[bigtom101]

Very sad. The company had such great properties here in Jersey, and for some reason went on a buying spree for stations in the middle of nowhere in New England.

Hopefully nobody looses their job with any of this - question is, who is in a position to BUY? Greater Media, Press & Townsquare are the only three I can think of who would be prospective buyers right now.

 

[Ned Braden]

My first...and really ONLY...guess would be Townsquare. They seem to be the only radio company these days in buying mode these days. And it would give them a solid presence throughout every part of New Jersey.

 

[TimeIsTight]

It might make a lot of sense for Townsquare to try to pick up WPST, which would offer it Trenton cluster synergies and efficiencies with WKXW.

It also is a powerful station with high ratings in the Trenton market, a large cume in Central Jersey, and younger demos. It would be the perfect high power business match to run along with NJ-101.5.

WCHR-AM 920 could go to any religious broadcaster, or another religious or ethnic block time station operator.

WNJE 1040-AM in Flemington would likely be picked up by ESPN, since it operates the station under an LMA anyway. Even if ESPN moved to an FM frequency in NYC, WNJE would still offer it more listeners in the Delaware and Lehigh valleys. The forces that attracted ESPN to that particular station are still in place.

No matter what, this forced fire sale won't have that much impact on the New Jersey radio market overall, since the only station Nassau has in the state with any reach is WPST, and it doesn't really reach the beaches, or the real population centers in North or South Jersey.

 

[Bill_W]

WPST covers most of the Philly market pretty well.

 

[trixter]

Things don't look good for Nassau to continue as one company. For those who don't follow this business stuff, Chapter-7 bankruptcy means liquidation.

In other words, the organizations that Nassau owes money to will ask the Federal bankruptcy courts in Delaware to supervise the sale of all the radio stations and other assets to raise money to pay Nassau's debts. The stations could be sold off individually or in groups, whichever brings the best price. This is NOT a Chapter-11 restructuring or reorganization being asked for, this is sell everything, down to the office furniture and paintings on the walls.

Back in late June Inside Radio reported in an "exclusive" story that Nassau CEO, and former owner, Lou Mercatanti, had made a deal with its major lender Goldman Sachs to buy back the company for $52-million, or about 20 percent of the estimated $258-million owed. Obviously, that deal didn't work out and it does now look like adiós Nassau. Of course, Nassau still has a few weeks to raise the money, or the court could decide to take a different path.

This thread on this board covered that Inside Radio story about Nassau supposedly going back to the previous owners in June:

http://boards.radio-info.com/smf/index.php?topic=193444.0

Bloomberg News apparently had the latest story of the creditors petition for Nassau's involuntary bankruptcy liquidation last Thursday night. Below is a link to that story which includes the case number for anyone who wants to follow up in detail.

http://www.businessweek.com/news/2011-09-15/nassau-broadcasting-faces-involuntary-bankruptcy-in-delaware.html

I've seen all the trades and just because Goldman Sachs wants to put Nassau out of business does not mean this will happen! Many Chapter 7 petitions are filed to the court and after a judge hears both sides, a judge would rule Chapter 11 or some other arrangement is made. Judges most often recognize that if there is still good cash flow coming in, they will not rule Chapter 7. This does not say that Nassau will not go through hard times. I believe there is fault to be heard on both sides. Also, Goldman Sachs is not doing as well either. Recently, Sachs had to shut down their Global Alpha Fund after investors pulled out. (Bloomberg http://www.bloomberg.com/news/2011-...bal-alpha-fund-as-clients-withdraw-money.html )

 

[bigtom101]

I believe there is fault to be heard on both sides. Also, Goldman Sachs is not doing as well either. Recently, Sachs had to shut down their Global Alpha Fund after investors pulled out. (Bloomberg http://www.bloomberg.com/news/2011-...bal-alpha-fund-as-clients-withdraw-money.html )

There is blame to go around on both sides - but Nassau better have some solid numbers and arguments on their side for the judge to go with Chapter 11. The margins are razor thin on the properties that Nassau owns up in NH, VT & Maine. The Cape Cod stations, the ones in Maryland, Allentown PA, and PST do ok. I hope the judge encourages Nassau to get rid of the Northern NE stations and just slim down the company to what makes money, like what Verizon did with its services in Northern New England.

 

[nd2023]

Maybe Merlin Media could buy 94.5 PST and change it to FM News 94.5, focusing on the Philly market.

If I win the lottery, 94.5 The Vibe will come to New Jersey!

 

[Ned Braden]

I've heard rumblings that Nassau is looking for one buyer for the whole mess, rather than individual buyers for a cluster here and a cluster there.

 

[trixter]

I've heard rumblings that Nassau is looking for one buyer for the whole mess, rather than individual buyers for a cluster here and a cluster there.

Was that from a reliable source? A sale like that would be a nightmare for management and staff at Nassau. You never know though. Lou may be thinking that he is getting too old for this BS and it is time to take it easy. Nevertheless, I'm sure any serious offer or proposal from a client will be taken into consideration.

 

[TimeIsTight]

I've heard rumblings that Nassau is looking for one buyer for the whole mess, rather than individual buyers for a cluster here and a cluster there.

Finding one buyer for the whole company would certainly simplify things and likely be in the best interests of all, provided all the parties, and the bankruptcy court could agree.

That would likely mean that the sale price would have to exceed the $84-million that the creditors claim Nassau owes them.

There probably are potential buyers around with that kind of cash, but they would expect a steep discount from the current total market value under these circumstances. The demand for radio licenses outside of the major markets is just not that great now, and given that Nassau has been in trouble for years, and that Goldman Sachs actually owned the majority stake for a couple of years, selling off pieces to get down to a manageable and profitable core is something they probably would have done before if they could have. And finding a buyer for the whole ball of wax is probably a lot harder than finding a few buyers who would take a chunk each.

Let's hope it works out as best it can for all concerned, but finding a willing buyer with the money to take the whole company at a price that will work might be more than is possible in this economic climate.

 

[observer2]

Gotta love that expression "whole ball of wax". Sounds like something from Shrek's ear.

Discussed on other boards, Cumulus could be in a buying mood. As already mentioned, Merlin. Entercom is not well represented in all parts of Nassau's area.

Others that may be a bit of a stretch in terms of size and finances, and perhaps interested in individual stations: Press, Times Shamrock, Delmarva, Great Scott, Hall, Verstandig.

As previous posters have suggested, it appears that there are some really appealing individual stations (WPST and WODE come to mind), but Nassau deliberately avoided the centers of large northeast markets and now has holdings in areas as diverse and sparsely populated as Western Maryland and in Northern New England, which might not be part of a "core" of stations suggested in the previous post.

 

[Ned Braden]

I think Merlin is the best candidate to pick up Nassau's bigger market stations, like WPST and WODE, but as far as their other smaller stations in New Hampshire, Vermont and Maine, I couldn't even begin to speculate who would be interested. I think all the ownership groups mentioned above are, for the most part, regional operations. Press is a North Jersey Shore operation, Times Shamrock is pretty spread out all over the country, so they may be a player. Delmarva is more of a southern Mid-Atlantic group with no stations north of Wilmington. Great Scott could possibly be in worse shape than Nassau, so I don't see them buying anything, anytime soon. Hall is a Central Pennsylvania outfit and Verstandig is a South-Central Pennsylvania/Western Maryland group, who could snap up The Eagle in Hagerstown. I think it would all come down to logistics when it comes to who would be interested in any of the stations.

 

[TimeIsTight]

Merlin seems to want to be in the major market all news business especially offering advertisers younger women listeners paying closer attention than they do to music stations.

None of the Nassau stations offer that kind of major market signal. WPST does have a signal that covers much of Philly, but it isn't the true local Philly station that Merlin would want. It also has some very good younger demo numbers, and billing. It's not the kind of station a buyer would want to blow up. The available perfect station in Philly for Merlin is the Family Radio FM that it is reportedly bidding against CBS for. WPST might be a poor second choice, if it looks like nothing else is going to be available for some time.

Still, Merlin would just likely move on to buy stations in other major markets first. Some 30% of all radio ad revenue flows in the top-10 markets, and that is where the cost of running an all news operation could be justified, and also where enough local news would be produced. It wouldn't be surprising if, at some point, Merlin makes some kind of national network all news feed available to stations in smaller markets like the ones Nassau has stations in, but just starting out Merlin likely wants to own really big market stations first.

The most likely scenario for Nassau's stations is that they will be sold off in regional groups, possibly with standouts like WPST and WODE being sold as singles and fetching better prices.

 

[radiophiler]

How about a non-radio investment group buying the stations, and then selling them off in smaller groups? That might be a possibility.

As for WODE in Allentown: It technically has a sister station with The Bone at 107.1 from western New Jersey, and there are two co-owned AM stations that are ESPN. But for reality purposes, WODE is a stand-alone FM in the market.

As for the two existing large owners in the market: Clear Channel is maxed out in the Lehigh Valley market. CC had to sell off WODE to come within government limits. Cumulus could buy it ... it has two FMs.
If someone not already in the Lehigh Valley market were to buy WODE, it would face stiff competition: the two major groups already have two FMs each that are full-market signals. For that reason, even selling WODE might be difficult.

 

[nd2023]

How about a non-radio investment group buying the stations, and then selling them off in smaller groups? That might be a possibility.

As for WODE in Allentown: It technically has a sister station with The Bone at 107.1 from western New Jersey, and there are two co-owned AM stations that are ESPN. But for reality purposes, WODE is a stand-alone FM in the market.

As for the two existing large owners in the market: Clear Channel is maxed out in the Lehigh Valley market. CC had to sell off WODE to come within government limits. Cumulus could buy it ... it has two FMs.
If someone not already in the Lehigh Valley market were to buy WODE, it would face stiff competition: the two major groups already have two FMs each that are full-market signals. For that reason, even selling WODE might be difficult.

If a non-radio investment group thinks it can get more by selling stations one by one, why won't the bankruptcy trustee sell them individually to maximize the amount of money available to repay the debts. Rather than benefit one rich investor, it's better to repay the Nassau investors who got screwed over.

 

[trixter]

At this point, we do not know "who got screwed over" (if any.) I have read Goldman Sachs resume on dealings with partnerships and investors and over the years, they have failed many times. Many of these ventures have been taken to court with an unfavorable outcome. Like I said in an earlier post on the boards, there is fault to blame on both sides. A judge in bankruptcy court in Delaware will have to sort out all this mess. I still think it is highly unlikely an involuntary chapter 7 will be granted.

 

[Ned Braden]

Looks like Goldman Sachs really wants to bring the whole Nassau house of cards down, and they want to do it quickly...seems that they think Lou Mercantanti is going to skip town, with all the cash in his briefcase...I hate to think of all those jobs being at stake, but something tells me that everyone under the Nassau umbrella is trying to get in to a production studio today, to get on updating those demos...

From All Access

GOLDMAN SACHS LENDING PARTNERS LLC, FORTRESS CREDIT OPPORTUNITIES I LP, and P.E. CAPITAL, LLC., the creditors seeking to put NASSAU BROADCASTING PARTNERS into involuntary Chapter 7 bankruptcy, have had their request to move up a hearing on the company's cash disbursements granted by U.S. Bankruptcy Court Judge KEVIN GROSS.

The judge granted a motion to shorten the required 14 day notice and allow a hearing on OCTOBER 6th at 10a, with responses and objections due OCTOBER 5th.

The motion asserted that "there is a genuine concern that assets of the Alleged Debtors’ estates may be used for purposes other than those directly related to the normal course operation of the Alleged Debtors’ businesses and, in particular, to further the personal and parochial interests of (NASSAU principal) Mr. (LOU) MERCANTANTI."