Audacy Filed For Bankruptcy

[MarkW]

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.

I agree that Field will likely depart as CEO very soon and may leave the company altogether before the end of this year. (He will stick around for a number of months as an advisor after he is replaced as CEO.)

The provisions of the RSA and of the proposed Plan clearly telegraph that the owners-to-be are looking for an off-ramp for him.

 

[MarkW]

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.

100 percent agreed.

Trying to unload assets while in bankruptcy is a poor time to do so. Buyers will sense "blood in the water" and will offer low prices as a result.

I would expect some real estate and perhaps a limited number of stations to be sold in the next 12 to 24 months.

 

[lanceventa]

I agree that Field will likely depart as CEO very soon and may leave the company altogether before the end of this year. (He will stick around for a number of months as an advisor after he is replaced as CEO.)

The provisions of the RSA and of the proposed Plan clearly telegraph that the owners-to-be are looking for an off-ramp for him.

The whole setup of the prepackaged bankruptcy was to provide a parachute for Field and in particular so his siblings and father's estate planning to ensure they didn't lose everything. He's basically falling on the sword for them.

 

[Kelly A]

The whole setup of the prepackaged bankruptcy was to provide a parachute for Field and in particular so his siblings and father's estate planning to ensure they didn't lose everything. He's basically falling on the sword for them.

I don't disagree with your statement, but it could be that David feels he either needs to continue in his role as CEO, or he won't accept a lesser role. Nobody knows what that feels like but him.

 

[TheBigA]

I don't disagree with your statement, but it could be that David feels he either needs to continue in his role as CEO, or he won't accept a lesser role. Nobody knows what that feels like but him.

Unless there was a way for him or his father to regain their equity, there's no point in continuing as CEO. This is a very different situation from Cumulus or iHeart. If Beasley goes down the same path, we will see the same thing for the Beasley family.

 

[secondchoice]

IMHO The only positive thing about this bankruptcy is maybe these high leverage reverse trust deals will end for media companies. I have always wondered why ABC / Disney and Viacomm / CBS didn't simply spin off their radio stations with the debt actually from radio operations, and giving their shareholders stock in the "radio company". The cash from the leveraged radio stations has't done much for the Viacom stock price.

 

[TheBigA]

I have always wondered why ABC / Disney and Viacomm / CBS didn't simply spin off their radio stations with the debt actually from radio operations, and giving their shareholders stock in the "radio company".

That was the plan for CBS Radio. It was going to be spun off. CBS Corporation got the $1 billion loan to do it. Then Entercom came along and did the reverse morris trust, with CBS stockholders as part owners in the new company.

CBS Proposes $1.46 Billion Debt Financing For Radio Spinoff

CBS Corporation has announced that as part of its planned divestiture of CBS Radio it will offer $460 million of

radioinsight.com

 

[secondchoice]

That was the plan for CBS Radio. It was going to be spun off. CBS Corporation got the $1 billion loan to do it. Then Entercom came along and did the reverse morris trust, with CBS stockholders as part owners in the new company.

CBS Proposes $1.46 Billion Debt Financing For Radio Spinoff

CBS Corporation has announced that as part of its planned divestiture of CBS Radio it will offer $460 million of

radioinsight.com

That stock in the new radio company really worked out well.

If the radio division had to "replace" revenue to CBS then is was contributing to CBS unencumbered cash. A large percentage of CBS radio should have had no debt. I am pretty sure it was generating positive cash.

IMHO: EBDITA earnings get too much attention. When I worked at Lucent we had good EBDITA but negative cash flow thanks to liberal financial terms with start up communication companies.

I still contend that CBS radio with just the debt from buying the additional stations to form their clusters would have had a good balance sheet for it shareholders.

 

[TheBigA]

That stock in the new radio company really worked out well.

I think within 2 years, everyone sold.

 

[PTBoardOp93]

If the radio division had to "replace" revenue to CBS then is was contributing to CBS unencumbered cash. A large percentage of CBS radio should have had no debt. I am pretty sure it was generating positive cash.

Entercom (now Audacy) ended up acquiring over $1 billion in debt from CBS Radio.

 

[Kent]

IMHO The only positive thing about this bankruptcy is maybe these high leverage reverse trust deals will end for media companies. I have always wondered why ABC / Disney and Viacomm / CBS didn't simply spin off their radio stations with the debt actually from radio operations, and giving their shareholders stock in the "radio company". The cash from the leveraged radio stations has't done much for the Viacom stock price.

Don't bet on it. FTV Live is reporting Apollo is interested in Paramount Global. If that happens, I'm guessing it would be a Reverse Morris Trust with Apollo's Cox Media Group.

Apollo Making a Play for CBS — FTVLive

This could have a huge impact on the Cox stations…

www.ftvlive.com

 

[Kelly A]

Don't bet on it. FTV Live is reporting Apollo is interested in Paramount Global. If that happens, I'm guessing it would be a Reverse Morris Trust with Apollo's Cox Media Group.

This should be interesting, but potentially a sad ending at the same time. Apollo would amount to a car-chasing dog that finally got its teeth into a moving rear wheel.

 

[AlligatorClipz]

Keep in mind the original deal was a reverse morris trust, which meant Entercom was actually partners in CBS Radio with the CBS stockholders. On the surface, that gave Entercom shared risk. What apparently happened is most CBS stockholders promptly sold their stock in the new venture, which is what led to some early problems in the deal (before the pandemic). This may have led to Field buying a lot of stock as CBS sold their shares. By doing that, he hoped he could prevent what eventually happened.



As demonstrated by Cumulus and iHeart. Both have been operating without major issues since leaving bankruptcy.

Why do you thino those legacy CBS people sold their stock? They could see the management differences between Skippy and Dan Mason. One is way over his head and will never fill his daddy's shoes, and the other genuinely cared about radio, and the employees and listeners who made the market possible.

 

[TheBigA]

Why do you thino those legacy CBS people sold their stock? They could see the management differences between Skippy and Dan Mason.

David Field was running a more successful company than CBS Radio. The fact is that CBS Radio was losing money when they sold it. That's why they wanted to sell. It was dragging down the rest company. The CBS stockholders knew that. BTW Dan Mason retired from CBS Radio before it was sold to Entercom.

 

[AlligatorClipz]

My take, from eight years with iHeart (2012-2020)?

They saw it coming.

They thought, with that vast experience, that they were well positioned to lead and profit from this. Yeah, there'd be a (practically) infinite number of new outlets, but most would never gain traction and they figured they'd buy the ones that became a threat.

They intended to ride the tiger.

Tiger showed up hungry and in a bad mood.

They had the internet! It was called Radio.com, and Skippy destroyed any value that or the CBS Radio brand had. When the new name is so dumb you have to keep spelling it out to people three years later, it's pretty stupid. But when you mention CBS radio to randos seven years after that brand was killed, people are familiar and comfortable with what you mean. Absolutely pants on head retarded! Those domain names sit and rot.

 

[Kent]

This should be interesting, but potentially a sad ending at the same time. Apollo would amount to a car-chasing dog that finally got its teeth into a moving rear wheel.

That's the general consensus. Cox used to be one of the best places in the industry to work. It certainly doesn't have that reputation today under Apollo. Most people seem to think, probably justifiably, that Apollo would run CBS like it's been running Cox.

BTW Dan Mason retired from CBS Radio before it was sold to Entercom.

And he was replaced by someone whose specialty was guiding companies through mergers and divestitures.

 

[TheBigA]

And he was replaced by someone whose specialty was guiding companies through mergers and divestitures.

Let me repeat: CBS wanted to get rid of radio. They started in 2005 by selling off smaller markers, like Buffalo and Kansas City. BTW the companies that bought those stations (Regent and Steel City) went bankrupt. In 2015, the plan was to spin off radio into its own company. But if that had happened, that company would have gone bankrupt. So this situation, in my view, was inevitable.

 

[TheBigA]

Let me add that CBS Corporation, the company that sold CBS Radio to Audacy, ending up merging with Viacom to become Paramount Global. Since then, that company has lost over 50% of its value in the last few years and is on the block itself. This is not a pretty picture. It's looking like what was once the Tiffany network will be split up and sold off for its parts like a used car.

 

[secondchoice]

Let me repeat: CBS wanted to get rid of radio. They started in 2005 by selling off smaller markers, like Buffalo and Kansas City. BTW the companies that bought those stations (Regent and Steel City) went bankrupt. In 2015, the plan was to spin off radio into its own company. But if that had happened, that company would have gone bankrupt. So this situation, in my view, was inevitable.

Contrary to what Wall Street thinks, there is money to be made in Radio. There are industries that would love to have the EBDITA profit percentage rate radio has. Any business that is leveraged where everything to go perfect is subjected to failure the next economic downturn.

CBS lined up a Billion to "off set radios revenue". If the radio division was losing money, who would finance a money lossing operation?

BTW some of the streaming operation have negative cash flow, but the OTA networks keep on promoting them, because IMHO: Anything related to "digital" gets a "pass" from Wall Street.

 

[Kelly A]

Contrary to what Wall Street thinks, there is money to be made in Radio. There are industries that would love to have the EBDITA profit percentage rate radio has. Any business that is leveraged where everything to go perfect is subjected to failure the next economic downturn.

You're right, but as history has shown, some don't want to learn, that successful businesses have a certain amount of business diversity. iHeart has streaming, radio, concert promotions, and digital promotions. Similar to Townsquare. If you put all your eggs in one radio basket, expect to be sweating bullets when the economy softens. That, and it has been shown that being a publicly traded radio company is no longer a thing because Wall Street sees no future in radio. I can't say that I disagree with the analysts, at least in radio's current form.

BTW some of the streaming operation have negative cash flow, but the OTA networks keep on promoting them, because IMHO: Anything related to "digital" gets a "pass" from Wall Street.

Not so much anymore. Wall Street has more recently viewed streaming and digital tied to traditional media as a pig in a poke. If a company like Audacy were to try and create the same model today, the concept would land with a thud.