Audacy Filed For Bankruptcy

[boombox4]

That wasn't the record labels. That was Apple iTunes. The record labels hated it. They tried to get Apple to stop. But the real problem wasn't the price. The real problem was that people wanted music for free. Once people found out that could stream every song for free without buying it, that was the end. The record labels don't make money from record sales anymore. It's mostly from streaming. People get music for free, and the streaming companies have to pay the royalties. That's the mistake, because the streaming companies are losing money. So now the whole music business is built around getting people to stream music, and thats drawing listeners away from radio. Why listen to radio when I can hear what I want for free?

If the record companies hated the 99 cent ITunes single, why did they license the music to ITunes? Because isn't that where ITunes ultimately got their music? Where did ITunes get their music, if not from the record labels?

If the Record labels went along with it, I would think the Napster debacle scared them into embracing the new, 99 cent MP3 sale model -- which peaked in 2014 and lasted maybe 8-9 years.

RE: Radio vs. Streaming: But once the streaming fees go up higher, it might keep radio viable longer, though, won't it?

 

[boombox4]

Problem was people didn't want to pay north of $10 to buy an album when they only wanted one song. The labels should've figured that out and gotten in front of the situation before the audio pirates arrived. The pirates probably would've arrived anyway, but giving the consumers what they wanted and being able to control that was always going to work better than trying to ram overpriced media down their throats. The only viable solutions were to let consumers buy a la carte, provide better songs on each album, or make the albums more of an entertaining and interactive experience when put into a CD-ROM drive. The labels chose to stay the course and forge ahead attempting to make the consumer bend to their will. It didn't work.

People had no problem buying CD albums. During the CD era the music industry made the most music it ever made, in its history. And CD singles were always sold in the stores during the CD era. I bought quite a few.

One of the issues I suppose is when the Millennials began to enter the music marketplace full bore, they fully embraced ITunes, because hey -- they had this device called the IPod, which was more convenient to use than a portable CD player, and it didn't have any moving parts, and Apple made it easy to buy the music for the device (there were other MP3 players, but they could only be loaded if you ripped the songs off your own CDs).

If you've got an IPod (and later, the IPhone which replaced it), where are you going to get music to put on it? ITunes. And yeah, it's cheaper to buy one 99 cent single than a whole MP3 album.

I think the labels could have negotiated a different sales model, but ultimately it probably would have ended up the way it did, because technology trumps everything, and technology was heading us towards MP3s and ultimately streaming.

One could look at the present debacle -- major streaming sites that don't make money, record companies losing 40% of their revenues since 2000, increasing numbers of artists bypassing the entire system and going straight to streaming sites, etc. as a perfect storm of semi-thought out decisions.

But it still would have happened the way it did anyway. When MP3's could be easily file shared online and from device to device, and technology for streaming music happened, the die was cut.

 

[TheBigA]

If the record companies hated the 99 cent ITunes single, why did they license the music to ITunes? Because isn't that where ITunes ultimately got their music? Where did ITunes get their music, if not from the record labels?

They had no choice. There was iTunes and illegal downloading like Napster. The record labels still believe streaming rates are too low, but they have no choice because they depend on the streamers to distribute their music. Back in the physical product days there were record stores that wanted to undercut other stores by selling music for less. There was nothing record labels could do.

RE: Radio vs. Streaming: But once the streaming fees go up higher, it might keep radio viable longer, though, won't it?

Radio companies are in the streaming business. They have to be, since fewer people own actual radios. So higher streaming fees mean another cost that is hurting the radio business.

 

[TheBigA]

For mid corporate and large corporate transactions, commercial lenders often aren't willing to take massive write downs on their debt positions without grabbing the equity. Controlling the equity is the only hope of recovering any portion of the loss arising from debt write-down.

So now they control undervalued assets and have the ability to take over what had been a successful family run business, invest some money, and convert those assets into something they can make money with.

 

[Kent]

The labels had 100 years of heritage invested in the entire physical product model. It's how they've been doing business since the victrola! They invested all of that time and energy in making CDs, transporting them on trucks driven by Teamsters to record stores all over the country. Promoted by radio stations. That entire system was thrown out the window. Think of all the jobs and professional relationships that were destroyed by replacing physical product with audio files.

That's been the dynamic in other industries for a long time. Buggy and whip manufacturers lost jobs and relationships, too, when the automobile arrived on the scene. High-pay/low-education jobs have been in a state of contraction most, if not all, of my entire life. The days when you could work in a factory after high school for great pay, benefits, and a pension that would take care of you for life are long gone. People who don't go to college, unfortunately, have a tough road today, and they did when I graduated high school more than 30 years ago. I don't have a solution to the problem, but I know a Luddite approach isn't it. You have to give the consumers what they want. If what they want changes or evolves, you'd better take care of the customer, or someone else will. You yourself have said those companies are businesses, not employment agencies (which I agree).

People had no problem buying CD albums. During the CD era the music industry made the most music it ever made, in its history. And CD singles were always sold in the stores during the CD era. I bought quite a few.

Most of us judge what we want and what we like by what's available. If people wanted to keep buying CD's, nothing was stopping them. People had no problem buying albums until an alternative they liked better became available. With a few exceptions, they now buy one or two songs off those albums, which means they probably didn't want the other 8-10 of them in the first place. Everybody likes cheap, and everybody likes instant gratification. Music downloads and streaming services provide both. Buying physical media offered neither by comparison.

One of the issues I suppose is when the Millennials began to enter the music marketplace full bore, they fully embraced ITunes, because hey -- they had this device called the IPod, which was more convenient to use than a portable CD player, and it didn't have any moving parts, and Apple made it easy to buy the music for the device (there were other MP3 players, but they could only be loaded if you ripped the songs off your own CDs).

iTunes was indeed what made Apple the leading player in an industry it wasn't even in 10 years earlier. It was the first company to come up with a way to easily get music onto its player, even music you didn't buy from Apple. Getting songs from your CD's onto the other MP3 players required at least a basic technical knowledge. Millennials weren't the only ones who fully embraced iTunes. It was pretty much everybody. Boomers, as a whole, had the lowest amount of technical knowledge, and they could use iTunes quite admirably, even if all they knew how to do on a computer was turn it on and browse the web.

I think the labels could have negotiated a different sales model, but ultimately it probably would have ended up the way it did, because technology trumps everything, and technology was heading us towards MP3s and ultimately streaming.

Quite possibly. You can't stop progress. Despite people being frustrated with the current situation, you won't find many who would be willing to give up their smartphones and internet connections to go back to the way things were 30 years ago.

 

[TheBigA]

That's been the dynamic in other industries for a long time. Buggy and whip manufacturers lost jobs and relationships, too, when the automobile arrived on the scene.

However, the issue wasn't the product. So that's a bad analogy. People didn't need buggy whips. They still want music. Some even still want physical product. The issue was means of distribution. The first digital systems were illegal. So you can understand why the manufacturers didn't approve of that system. It took a while to create a system that got musicians paid. Unfortunately it's a system that put all of the cost on distributors and not on the music users. So it's still not just or proper, but the record labels prefer it to not getting paid at all.

High-pay/low-education jobs have been in a state of contraction most, if not all, of my entire life. The days when you could work in a factory after high school for great pay, benefits, and a pension that would take care of you for life are long gone.

The jobs still exist, and the work is still getting done, but a lot of it is done by illegal or newly legal immigrants. Think about that next time you eat a Chicken McNugget. You're correct that there are no benefits or pension, but the immigrants are getting lots of work. Unemployment is low, and that includes unskilled work. The economy had absorbed the change in distribution and retail. The people who might have worked in stores are doing online customer service.

 

[Kelly A]

Think about that next time you eat a Chicken McNugget.

Are you saying that McNuggets are made from immigrants? And here all this time I thought only 'Soylent Green was people'.

 

[secondchoice]

The profitability of the clusters was not the problem. The problem was the debt. Any ad-supported media needs a national platform to compete. Advertisers want big numbers. So having the scale of 400 stations makes buying ads more efficient. On the other side, the people need someone to own these radio stations. The idea of small local owners from 50 years ago doesn't work now. Nobody wants to own radio stations. They're competing with nig tech companies that have no limits.

This is why the Audacy lenders are so happy with this bankruptcy. They get a huge cash cow that will now have little debt, and they're getting rid of the family that built it. It's like they helped you build a big beautiful house, you pay a few years of interest & principle, and then they foreclose and kick you out. You get nothing, and the banks get money & your house.

The fuct

The profitability of the clusters was not the problem. The problem was the debt. Any ad-supported media needs a national platform to compete. Advertisers want big numbers. So having the scale of 400 stations makes buying ads more efficient. On the other side, the people need someone to own these radio stations. The idea of small local owners from 50 years ago doesn't work now. Nobody wants to own radio stations. They're competing with nig tech companies that have no limits.

This is why the Audacy lenders are so happy with this bankruptcy. They get a huge cash cow that will now have little debt, and they're getting rid of the family that built it. It's like they helped you build a big beautiful house, you pay a few years of interest & principle, and then they foreclose and kick you out. You get nothing, and the banks get money & your house.

The function of ad agencies is to create advertising and then spend the client's money to get the best results. With their PCs and ratings they will come up with some kind a impressions or point for dollar in the demo they want. There are no "secrets". Your demos and audience size is available to the buyer. It's be my experience, they know what they will spend before they call or Email you. If the radio station has the incorrect demos, it doesn't matter who owns the station, you will not get the buy.

I guess a national operation could come up with a national "off card" package or promotion at a discount but the audience math has to be in the buyers favor.

IMHO: if the agency is doing "due diligence" for it's client, the order will go to the station whose ratings and demos match what their client wants, it doesn't matter who owns the station.

 

[TheBigA]

IMHO: if the agency is doing "due diligence" for it's client, the order will go to the station whose ratings and demos match what their client wants, it doesn't matter who owns the station.

You're talking about a single station sales plan. That isn't how most major advertisers buy anymore. Home Depot doesn't buy one station. They buy a national platform. They want one-stop shopping. Same with any major retailer or drug company or service provider. Why? Because they operate nationally. They're also looking to combine a digital plan with that. They want it to be interactive. They want it to fit in with their overall marketing strategy. So in this case, size matters. If all you're selling is spots & dots, you won't get the sale.

The lenders now own this sales platform. They don't see it the way the Field family sees it. They see it as a national platform that needs to grow even larger to meet the needs of advertisers and potential investors.

 

[Kelly A]

The fuct

I think you meant to say; 'They're fuct'.

 

[exdjted]

I have criticized David Field on this board for how he handled Audacy after acquiring CBS Radio. I had all the respect in the world for Entercom under Joseph Field. That was the well-run family company. Audacy was a grandiose attempt to become a big dog in a short manner.

Entercom had, and still has, attractive clusters. When the Fields stayed in their lane, they did well. There was no reason whatsoever to go after CBS. Well, except ego. David, even though he grew up in this business, is still a Wall Street product, right down to his Italian loafers, and in my opinion, I believe he thought he wouldn't make the same mistakes iHeart and Cumulus made, and that he was smarter than the average bear. How'd that work out, Yogi?

No one foresaw the pandemic, but that affected everyone. Not just Audacy. The pandemic alone didn't kill Audacy. Massive debt and no clear vision of what to do next did. Sure, David Field will be gone, and someone else will step in and try to right the ship. I think we're going to see huge reductions in people and even more centralization of the facilities. I also don't think they're going to pour in massive amounts of capital to try and right the ship. I do see some clusters being sold off in order to raise capital, as well as to concentrate their resources on what the new board sees as their core assets. Some of their clusters have already been weakened and plundered to the point they're not an attractive target for anyone as a whole, and will have to be sold off in pieces.

Someone new also needs to take a long-range look at Audacy to see if there is any real value in keeping some of these sports contracts they have, especially on AMs with no FM translator or sister station. Sports and News Talk are labor intensive, and I have to wonder if the return on being the voice of a certain team or teams is worth it in today's market. I will admit that this is just my opinion, and you have to remember that even though I grew up loving AM Radio, and used to dream about working at WLS, nowadays, I wouldn't buy an AM unless it's to use it as trade-bait or to sell the tower and build a truck stop of strip mall on the land. Sorry for the honesty. If you love AM, at least you know where I'm coming from.

 

[TheBigA]

I have criticized David Field on this board for how he handled Audacy after acquiring CBS Radio.

My take (and this is just my gut feeling) is that you're going to miss David Field after the new operators take over. Jmho

I don't expect reduction of people or centralization of broadcasting are the biggest issues either. I see a transition of those people and facilities towards a broader view of what media is today. I think Field was trying to keep the company closer to the way it had been run under his father, and the new owners don't have that baggage.

 

[exdjted]

My take (and this is just my gut feeling) is that you're going to miss David Field after the new operators take over. Jmho

How can I miss him if he won't go away? (Sorry, bad joke.)

 

[Kelly A]

Entercom had, and still has, attractive clusters. When the Fields stayed in their lane, they did well. There was no reason whatsoever to go after CBS. Well, except ego. David, even though he grew up in this business, is still a Wall Street product, right down to his Italian loafers, and in my opinion, I believe he thought he wouldn't make the same mistakes iHeart and Cumulus made, and that he was smarter than the average bear. How'd that work out, Yogi?

Having met and spoken with David Field on several occasions, I disagree with the representation that he's some sort of Wall Street fat cat. For as much as I dislike referring to the past, one does realize that Entercom when Joe ran it, probably wouldn't have survived the rampant acquisitions when lending to do big media mergers started opening in in the 90's. Joe handed off what he'd built to the next generation to grow, and David followed the trend of his business peers. Sure, one can argue that over-paying for station groups and finally CBS Radio, including all the debt, didn't work out, but that's what other media companies were doing. As CEO you roll the dice. If the bet works out, you're a hero. If circumstances including global economic conditions cause you to roll snake eyes, you're considered a failure.

Someone new also needs to take a long-range look at Audacy to see if there is any real value in keeping some of these sports contracts they have, especially on AMs with no FM translator or sister station.

You can bet someone will. That's assuming they could get out of unprofitable contracts without massive penalties. If not, then you have no choice but to suck it up.

Sports and News Talk are labor intensive, and I have to wonder if the return on being the voice of a certain team or teams is worth it in today's market. I will admit that this is just my opinion, and you have to remember that even though I grew up loving AM Radio, and used to dream about working at WLS, nowadays, I wouldn't buy an AM unless it's to use it as trade-bait or to sell the tower and build a truck stop of strip mall on the land. Sorry for the honesty. If you love AM, at least you know where I'm coming from.

I was talking with an industry friend of mine about the subject of AM radio the other day. He predicted that there would come a day when smaller groups/owners would be eager to dump their AM stations for ultra bargain basement prices. His business model is to pick up derelict AM's all over the country and put newstalk programming on it nationwide. He thinks the only way to make all these AM stations work, is to completely own and sell all the programming, using the AM's like EMF does as just points of distribution.
Premiere half-heartedly tried something close to this in the late 90's, but they had too many affiliate stations in markets where Clear Channel already had AM's, having their programming arm essentially compete with their stations. But to do it right, we're talking about full-market AM signals with translators in all major markets. No local direct sales, just national. But bringing my friend back to earth I said that sure, he probably had the cash from selling his online dating apps to a bigger 'fish', but could he pull this off without some form of lending that oh, right now doesn't exist? His answer was: Yeah, good point..

 

[gr8oldies]

However, the issue wasn't the product. So that's a bad analogy. People didn't need buggy whips. They still want music. Some even still want physical product. The issue was means of distribution. The first digital systems were illegal. So you can understand why the manufacturers didn't approve of that system. It took a while to create a system that got musicians paid. Unfortunately it's a system that put all of the cost on distributors and not on the music users. So it's still not just or proper, but the record labels prefer it to not getting paid at all.



The jobs still exist, and the work is still getting done, but a lot of it is done by illegal or newly legal immigrants. Think about that next time you eat a Chicken McNugget. You're correct that there are no benefits or pension, but the immigrants are getting lots of work. Unemployment is low, and that includes unskilled work. The economy had absorbed the change in distribution and retail. The people who might have worked in stores are doing online customer service.

Republicans, and the presumptive nominee, claim they are going to deport all of those workers at the rate of 11000 per day.

 

[Kelly A]

Republicans, and the presumptive nominee, claim they are going to deport all of those workers at the rate of 11000 per day.

Better than ending up on the McDonald's Dollar Menu.

 

[TheBigA]

His business model is to pick up derelict AM's all over the country and put newstalk programming on it nationwide. He thinks the only way to make all these AM stations work, is to completely own and sell all the programming, using the AM's like EMF does as just points of distribution.

The difference is that EMF creates and owns its national programming. These AM are depending on syndicators to provide the programming. When you're the fifth conservative talk station in town, as is the case with KYST in Houston, you're getting bottom of the bottom of the barrel. There isn't enough existing quality talk product to fill all of those derelict AMs. Even looking at sports talk to gaming networks, there's not much quality. If someone has this business model, they have to create the content themselves and spread it nationally.

 

[Kelly A]

The difference is that EMF creates and owns its national programming.

And that's the model my friend was proposing. You own all the programming and inventory. All national, no local. AM transmission facilities around the country are just distribution.

 

[TheBigA]

And that's the model my friend was proposing. You own all the programming and inventory. All national, no local. AM transmission facilities around the country are just distribution.

Sounds like BIN for old white men

 

[secondchoice]

You can bet someone will. That's assuming they could get out of unprofitable contracts without massive penalties. If not, then you have no choice but to suck it up.

The beauty or curse of Bankruptcy is the Judge can void any contrast mostly without penalties.