Yeah, 'WIN'.
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Audacy Filed For Bankruptcy
- Thread starter exdjted
- Start date
IIRC Home Depot buys a lot of network stuff. Usually the local stations clearcommercials for "free" to get the network programming. There used to national rep that dealt with the big agencies. IIRC they took 15 percent. I believe at one time Rush made you pay and you had to clear some of his commercials.
There used to be a buyer for an ad agency posting on this site. Since I am retired, an update on the business would handy
Entercom bought a company that used to have a radio network. It was started in 1928 by a guy named Paley.
Missed opportunities.
Does CBS / Paramount own the CBS radio network or do they just provide "content".
In Atlanta WSB (radio) is the local affiliate but seldom do I hear the actual newscasts. But the Home Depot ads play often.
Paramount Global owns CBS Sports Radio and CBS News Radio. They use Cumulus to distribute CBS Sports and SkyView to distribute CBS News because Audacy doesn't have the infrastructure to do it.
However, there was a history of CBS Radio Network that was inherited with the CBS Radio stations. Entercom just saw them as individual stations without any history. But there's no reason why Audacy has to operate as a bunch of individual stations when it's competing against iHeart which owns Premiere and Cumulus which owns Westwood One. When you own stations in just about every major market, that is exactly the foundation that Bill Paley had when he started CBS. The foundation for a business exists, and they're not using it because they don't know how to think that way. All they know about is running stations.
Then maybe someone can start a new network as a separate company, and Audacy can provide the infrastructure to distribute that network's programming, without having to provide their own programming.
I guess they already do something like that, though, don't they?
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Like who? Why someone else? Why not Audacy? Is there some law? No. It's the lack of imagination.
What do you need for a network? You need radio stations. Guess what Audacy already owns.
I think the point is that they had enough cash to operate, but not enough to pay debt. So the issue is that we have a company that has too much debt and can not pay it.
Different situations.
Cumulus had a Dickey problem and bad management. They deserved to be taken over.
Clear Channel had a deal based on an offer the Mays family and "Red" could not refuse.Red and Lowry wanted to prepare for "senior years" and the two sons were in agreement. Then the depression hit and the buyers tried to back out; courts made them do a deal that everyone knew was not sustainable.
Entercom was a well run company that had absorbed quite a few smaller companies and groups. But the bigger CBS deal met all the "best to worst" financial models for them and the lenders. Then we got the pandemic: radio lost 50% of its revenue and did not recuperate even partially until this year (and it is still just barely at 2019 levels and not adjusted for the huge inflation of the last 4 years.
Entercom, as I have said before, was hit by a perfect storm of the pandemic, hyper price-based inflation and four years of limited if any profitability.
If it were not for the pandemic and the resultant economic issues, Entercom would have been fine.
What Depression hurt Clear Channel? Do you mean the 2008 Recession? That was not comparable to 1929.
Even without the Pandemic, Audacy's debt would still have been problematic. Inflation is exaggerated and not an excuse. Inflation was much worse in 1970's compared to the last few years. CBS was getting out of Radio long before the Entercom merge happened. They had sold their stations in many markets. That should have been valuable information that all was not well, especially to someone like David Field with his Wall Street acumen...
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Audacy's ebitda (adjusting to add back impairment charges, restructuring expenses and CBS integration expenses) was somewhere in the low $300 million range in 2018 and 2019.
That is far better than the current run rate of ~$100 million a year, but still mediocre for a company carrying roughly $2 billion of debt in a declining industry. The company had promised the street per annum ebitda well north of $400 million a year back in 2017.
Based on the low $300 million annual ebitda range, I thought a reasonable valuation for the common shares was a couple bucks per share. (There were about 133 million common shares outstanding.)
EV of the company back in 2019 could be reasonably pegged in the low $2 billion range to at most $2.5 billion. Compare that to present day, where PJT has pegged EV at $600 million to $800 million.
That is far better than the current run rate of ~$100 million a year, but still mediocre for a company carrying roughly $2 billion of debt in a declining industry. The company had promised the street per annum ebitda well north of $400 million a year back in 2017.
Based on the low $300 million annual ebitda range, I thought a reasonable valuation for the common shares was a couple bucks per share. (There were about 133 million common shares outstanding.)
EV of the company back in 2019 could be reasonably pegged in the low $2 billion range to at most $2.5 billion. Compare that to present day, where PJT has pegged EV at $600 million to $800 million.
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It was to radio and TV. Most stations lost a minimum of 30% of their value within a year.
There wasn't any competition for radio back in the 70's. Now you have streaming. Combine that with inflation and other world global economic events including the pandemic which spurred inflation. It would have been impossible to predict all the variables coming together which affected broadcasting as a whole.
Just like TV, there's a big difference between being a radio station and a radio network sending content to radio stations. Both sell advertising, but one is a national programming creator, and the other is a local way to distribute that programming.
It was a depression for radio. The trifecta: Huge recession, the introduction of the iPhone (and the start of portable streaming) and the introduction of the PPM (which decreasec PUR by about 35%). Radio lost over a third of its billings between 2007 and 2011.
Remember, the lenders did even deeper due diligence of the viability of the deal, using extensive models. But those models did not contemplate COVID, the resulting inflation based recession and the faster move to streaming due to people being at home and bored during the pandemic.
No, they sold stations in smaller markets... as many as they could. Heck, they even had a station in Palm Springs where the market rank is well outside the tp 100.
Again, people go to lenders all the time with things they can't afford. It is the lender's responsibility to make sure the loans can be afforded before granting them. In this case, both the Entercom people and the lenders thought it was a good deal.
RE: CDs & Albums: the present day method of music 'purchasing' and distribution makes it more difficult to actually buy an album. When an industry abandons a platform (like the 78, the 45, the 33 vinyl LP, the cassette, and the CD), music consumers are going to gravitate to what is available. This, in turn, alters their music consumption habits.
You said 'they now buy one or two songs off albums." In fact, today, no one buys singles anymore, either. Look at the chart on the RIAA. The peak year for unit "sales" was during the MP3 era, 2014. It was hundreds of millions of MP3 download sales, mostly singles. After that, even those music unit sales nosedived. Streaming took over. And along with the rise of streaming, the mechanics of measuring the equivalent of "sales" had to develop.
People do not buy albums, nor do they buy singles. Because they can stream them all very cheaply. The odd album that actually "sells", like Taylor Swift's Midnight, often is not based on actual album purchases, but streamed "album equivalent units".
You can't buy albums like you could in 2005, or even 2015. In the streaming era, it's all free or cheap listening, where the only payment is watching the commercials or subscribing to the streaming platform. It's a completely different music consumption universe. There are some CD and LP sales here and there, but the numbers are microscopic compared to even a decade ago. And part of that is because the industry doesn't support album sales, or even single MP3 sales.
Agreed on your last point, although there are a lot of people in the music business who aren't happy with what the present business model offers: low royalties for musicians and artists compared to the music sales era, and even the streaming platforms can't be happy trudging along and making little, if any profit. Even Apple pays out 53 cents in royalties for every dollar they make on their streaming service. This is why I think that within 15 years or so there may be a shift somewhere in the music business model. The present model isn't making anyone enough money. The big stars make money, and the record co's still make enough to stay solvent. But many in the business are not making money.
From the standpoint of the average music consumer, however, yes, you are entirely correct. I can listen to tons of albums and live concerts for free, on YT. So I get a few commercials. Whatever. The music is there, and I don't have to pay for it directly. My 'payment' is seeing the ads. I miss the CD era. But you go with what you've got. And one can't argue with the vast library of music available, all mostly good quality sound, and cheap cost.
What do you need to run a network? A Director who knows what he is doing.
Compelling content. Good engineering with the proper resources. Management that has trust the content, director and engineer.
This existed under CBS.
Entercom/Audacy chased all those people off.
This is a people problem, not an industry problem. David was in way over his head and really had no practical sense of how the human beings in his company did their jobs/provided the company value. Interacting with him was a hollow and uninspiring experience . He really doesn't have a clue. It really will be good riddance.
But the ineffective middle management will still remain, stuck on stupid power trips and penny pinching bullshit. You can't run a station in a market you've never been to.
You need stations to carry the programming and a national advertising strategy. You need to run it separately from the station business because the strategy is different from local radio. Audacy has the stations.
I don't agree with that. His mistake was putting all of his faith in one revenue stream, which was local advertising. Local advertising has been in a depression as a result of the pandemic. Audacy needs another revenue stream. This is NOT a people problem. It's a revenue problem. They have great content that needs to be repurposed in ways to create additional revenue streams.
I could start and run a radio network from my Macbook and an AWS cloud subscription. All the contributing sources could work from home via their laptops. Don't need engineers either.
As BigA said; what you need is a national sales arm to sell advertising.
The main thing you need to start is a bunch of radio stations in the Top 50 markets. Audacy has that. They need to find a way to merchandize that platform better. iHeart and Cumulus are already doing it. The model is right there for all to see.
Then why haven't they? Are they totally inept?
Entercom was reasonably viable before the CBS merge. Did they suddenly become incompetent after acquiring all the bigger market stations? Something doesn't add up...
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