Audacy Filed For Bankruptcy

[TheBigA]

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...

They're in the local radio station business. They organize around local spot sales and local management. They do it well. The stations are profitable. Unfortunately the company had a lot of debt and couldn't renegotiate it over a longer term. They were doing just fine until the pandemic. Get rid of the pandemic, and you have a different situation.

Once again, it's not a people problem.

 

[MarkW]

They missed their pre-pandemic ebitda projections by about $100 million / yr. That is more than a simple rounding error.

Field made promises to the street that he was unable to fulfill (even pre-pandemic).

 

[Kent]

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...

It wasn't a matter of the Fields suddenly becoming incompetent so much as it was them taking on a lot of debt and thinking they could manage it by doing what they had always done and what they had always been good at. Since they were among the best at generating local ad revenue, they thought they could do it better than CBS had been doing it.

Turns out, that was a bad business strategy.

 

[Kelly A]

It wasn't a matter of the Fields suddenly becoming incompetent so much as it was them taking on a lot of debt and thinking they could manage it by doing what they had always done and what they had always been good at. Since they were among the best at generating local ad revenue, they thought they could do it better than CBS had been doing it.

Turns out, that was a bad business strategy.

Along with: Wall Street losing shunning traditional media and a global pandemic.

 

[TheBigA]

Field made promises to the street that he was unable to fulfill (even pre-pandemic).

What we've seen is there are always hidden costs when you buy radio stations from a company that owns TV stations. So they based their projections based on previous radio-only acquisitions, and then discovered the extra costs. Regent had the same discovery when they bought a bunch of CBS radio stations. Beasley did too. CBS did a good job of creating synergies within their company. Extricating those stations out of those synergies created new expenses.

Since they were among the best at generating local ad revenue, they thought they could do it better than CBS had been doing it.

They were wrong. Their best local sales offices are the ones they inherited from CBS. But then they hit a brick wall when the local ad revenue dried up.

 

[tbolt909]

They're in the local radio station business. They organize around local spot sales and local management. They do it well. The stations are profitable. Unfortunately the company had a lot of debt and couldn't renegotiate it over a longer term. They were doing just fine until the pandemic. Get rid of the pandemic, and you have a different situation.

Once again, it's not a people problem.

You keep saying that they cannot monetize all the great content and multiple platforms. That's gobbledegook.

The debt was going to keep piling up even without the Pandemic. Without revenue growth, the status quo wasn't going to help. That's why CBS abandoned Radio in the first place...

 

[TheBigA]

You keep saying that they cannot monetize all the great content and multiple platforms. That's gobbledegook.

I didn't say they "cannot." That's your word. I'm saying they HAVE not. Different situation.

The debt was going to keep piling up even without the Pandemic. Without revenue growth, the status quo wasn't going to help. That's why CBS abandoned Radio in the first place...

That's not true. That debt didn't grow. It stayed the same from when they got it. They were paying interest, not principle.

Paying down debt was a corporate problem. Revenue was a local market problem.

 

[davideduardo]

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.

The CBS stations were not a "network". For all practical effects, networks died in the U.S. between the early 50's (lift of the TV licensing freeze) and the mid 60's. By 1970, all that was left of the old, traditional webs was mostly news services and a couple of dead or dying shows.

After that, the networks that remained were developed around concepts like a sports team or area / regional agriculture. By the end of the 60's, we had the creation of syndicated shows like American Top 40 and King Biscuit Flower Hour that were on a "station in every market" and lots of sports.

And then we got syndication... Rush, Bobby Bones, Charlemagne and the like. A station could have a different show from a different network in every hour or daypart. Networks were based on shows, not shows based on the network such as in the days of Red, Blue and NBC.

The only really successful full "networks" today are the religious groups that use the K-Love model or NPR. In the case of NPR, all kinds of local stations are built around the NPR offerings, with each one being as different as fingerprints.

Today's successful networks seem to have one thing in common: they are non-commercial.

Yet in much of the rest of the world where commercial radio exists, there are "national services" which are are the same programming carried on dozens or hundreds of transmitters covering a whole nation. That works, and where this is done, stations and station groups are not standing in line to file for bankruptcy.

But nobody owns a station in every one of the top 250 markets or so. They may have 8 station in one, and none in another. The whole concept of a single program format being on transmitters "everywhere" is not part of the American licensing, operations and programming model.

 

[davideduardo]

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.

No, they don't. They are not in all the top 100 to 200 markets. They do not have the same formats in each market.

And advertisers don't buy "network" radio in the same way they buy local. Network is usually way under-priced on CPP metrics. It's often a cheap way to supplement local buys in each market with some very low priced Grips. And many network shows run with shows that can be run live or at any time a station wants during the day.

I don't agree with that. His mistake was putting all of his faith in one revenue stream, which was local advertising.

Advertising, yes. Local advertising, no. Audacy stations, being in mostly very large markets depend and depended on agency accounts for most of the business. The bigger the market, the lower the percentage of local direct business. And within those larger markets, the top stations had and have the highest percentage of agency business (including, of course, buying services used by those agencies).

Local advertising has been in a depression as a result of the pandemic.

The decline in local accounts goes back at least four decades. All over America we saw smaller market local retail start to die when a Walmart, K-Mart or Walco came to town. Then we got the big box stores, ranging from Bed, Bath and Beyond to Office Depot and PetCo. Those used little or no local radio.

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 see that Audacy has some good stations in local markets. But I don't se anything that can be repackaged or adapted to new media.

 

[TheBigA]

The CBS stations were not a "network".

It depends. The CBS Radio Network continued until the mid 90s, primarily as a vehicle for CBS Radio News. They also did sports. But the main thing was as a sales vehicle. There were RADAR rated networks, and CBS was one.

The only really successful full "networks" today are the religious groups that use the K-Love model or NPR.

The concept of the network changed when satellites were introduced in the late 70s. Prior to that, a network was a wired interconnect that was overseen by AT&T. Once wires were replaced by satellites, there was no interconnect anymore. You had ad-hoc networks that were created by affiliation. If you carried CBS News, you were part of that network. If you carried any of the satellite delivered formats, you were part of that network. Once again, they were rated as part of RADAR,

But nobody owns a station in every one of the top 250 markets or so.

Ownership was never required to be part of a network. In fact it was impossible given the FCC's ownership limit. Even today a company doesn't need to own stations to start a network. But it makes it easier to get your programming or spots cleared.

 

[TheBigA]

No, they don't. They are not in all the top 100 to 200 markets. They do not have the same formats in each market.

As I said, you don't need to own stations to have them be part of a network. But its a good foundation. iHeart has managed to clear its spots in most of the Top 100 even though they don't own stations in all of them. Today I was listening to Fox Sports on a station not owned by iHeart. But iHeart distributes the Fox Sports Radio Network.

I see that Audacy has some good stations in local markets. But I don't se anything that can be repackaged or adapted to new media.

Anything can be repackaged or adapted to new media. WTOP has done a great job adapting what they do to new media. So has Townsquare.

 

[davideduardo]

It depends. The CBS Radio Network continued until the mid 90s, primarily as a vehicle for CBS Radio News. They also did sports. But the main thing was as a sales vehicle. There were RADAR rated networks, and CBS was one.

But the radio network as a source of a large percentage of any local station's content died in the 50's.

The news affiliation could include absolutely zero percent carriage of network newscasts at stations that used bits and pieces of CBS news in their own programming.

And sales was notoriously and predominantly based on low rates as a fill-in for local buys.

The concept of the network changed when satellites were introduced in the late 70s. Prior to that, a network was a wired interconnect that was overseen by AT&T. Once wires were replaced by satellites, there was no interconnect anymore. You had ad-hoc networks that were created by affiliation. If you carried CBS News, you were part of that network. If you carried any of the satellite delivered formats, you were part of that network. Once again, they were rated as part of RADAR,

The satellite delivered formats were not part of RADAR. That is because each station made different uses of the services and RADAR did not cover the mostly smaller markets that satellite formats were used in.

Ownership was never required to be part of a network. In fact it was impossible given the FCC's ownership limit. Even today a company doesn't need to own stations to start a network. But it makes it easier to get your programming or spots cleared.

The successful concept of networking today is the world model of one format and multiple transmitters. No local content, or precisely inserted local content. But the local station does only sales and nothing else.

 

[TheBigA]

But the radio network as a source of a large percentage of any local station's content died in the 50's.

It depends. If you carry iHeart's or Salem's conservative talk shows, it's very similar to what existed in the 30s & 40s. Same thing with the 24/7 music formats syndicated by Westwood One and LRN. In those cases, the network provides 100% of the station content.

The news affiliation could include absolutely zero percent carriage of network newscasts at stations that used bits and pieces of CBS news in their own programming.

As I said, the spots were the main content, and the reason for RADAR.

The satellite delivered formats were not part of RADAR. That is because each station made different uses of the services and RADAR did not cover the mostly smaller markets that satellite formats were used in.

The networks played a lot of games grouping various things together in order to get RADAR numbers.

 

[AlligatorClipz]

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...

"Did they suddenly become incompetent?" YES! THEY DID! Anyone worth a damn gave up or left. CBS was the ones with the managerial and engineering talent to do stuff like that.

 

[AlligatorClipz]

They're in the local radio station business. They organize around local spot sales and local management. They do it well. The stations are profitable. Unfortunately the company had a lot of debt and couldn't renegotiate it over a longer term. They were doing just fine until the pandemic. Get rid of the pandemic, and you have a different situation.

Once again, it's not a people problem.

I am not going to say it would be all sunshine and roses if the reverse morris merger didnt happen, but this is most definitely a people problem. The people who could fix the problem don't realize there is a problem, which means THEY ARE THE PROBLEM! The amount of brain drain and the boneheaded decisions they made in regards to branding, technology, and human resources did them in.

 

[TheBigA]

The people who could fix the problem don't realize there is a problem, which means THEY ARE THE PROBLEM!

Huh? The company is going through bankruptcy. The CEO and the company founder had their personal equity in the company wiped out. The CEO is now a figurehead of the company his father founded.

You think he doesn't realize there's a problem???? It sounds like you don't understand what bankruptcy means.

 

[AlligatorClipz]

Huh? The company is going through bankruptcy. The CEO and the company founder had their personal equity in the company wiped out. The CEO is now a figurehead of the company his father founded.

You think he doesn't realize there's a problem???? It sounds like you don't understand what bankruptcy means.

Sorry, I am referencing what happened in the time between the merger and bankruptcy. I agree that it seems the right steps are being taken now

 

[TheBigA]

Sorry, I am referencing what happened in the time between the merger and bankruptcy.

OK, let's address that. Did they make bonehead moves? Yes. Did it contribute to the debt? No. The consistent thing I see in the iHeart bankruptcy, the Cumulus bankruptcy, and now the Audacy bankruptcy was that the debt was the sole problem. That's what caused the bankruptcy.

That's the thing about business. I read all these posts demonizing the CEO. They made a lot of bonehead moves. But when you take on debt, you open the door to REAL criticism. It's not just from outside armchair quarterbacks who say 'If they'd just hire more local talent,' or 'if they'd just enlarge the playlist.' They instead heard from the people who own the debt. Those re the people who can make fundamental changes. So now we'll see who they bring in, and what bonehead decisions they make. I'm sure there will be a few.

 

[RadioGuy1864]

So now we'll see who they bring in, and what bonehead decisions they make. I'm sure there will be a few.

No doubt there will be some bone-head decisions, we all make some, whether we want to admit it or not. What will be interesting is how they operate the company now that most of the debt is gone. Most of the stations are still very profitable, certainly not like back in the good old days, but the margins are still very good for what is essentially a business model over 100 years old. Can they navigate the company through the new reality of the marketplace and set the company up to prosper for the long term, or will they just add some window dressing and sell off the clusters to whoever shows up with a check?

 

[Kelly A]

No doubt there will be some bone-head decisions, we all make some, whether we want to admit it or not. What will be interesting is how they operate the company now that most of the debt is gone. Most of the stations are still very profitable, certainly not like back in the good old days, but the margins are still very good for what is essentially a business model over 100 years old.

Since the pandemic, advertising has been way down. Profits for commercial radio and TV have been declining since 2020.