Exactly. Corporate finance isn't binary, where you either do well in the market or you're dead.
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Audacy granted a 30 day extension to make its missed bond payment
- Thread starter MarkW
- Start date
The latest (article was not paywalled for me): Audacy Quietly Releases Q3 Results As Restructuring Is Considered | Radio & Television Business Report
Audacy stock trading around 36 cents when checked just now. Had they not done the 1 for 30 reverse split it would literally be a penny stock.šš¤Æ
Audacy stock trading around 36 cents when checked just now. Had they not done the 1 for 30 reverse split it would literally be a penny stock.šš¤Æ
Doesn't matter in the scheme of things. They're already on the cusp of being delisted. I'm sure behind the scenes they and their lawyers are working on alternatives going forward.
Once again, the stock market is irrelevant to the restructuring discussions. It's a side show. If they solve the restructuring without blowing things up, that doesn't mean the stock will go back to $12. The stock isn't going to improve because they kicked the can down the road. Unless there's a buyer, the stock will stay a penny stock.
Based on other media stocks, it likely will never make it back to $4 a share.
Yep.
The company has about $57 million in cash left as of 9-30-23, virtually no credit facility borrowing availability, and managed to burn through about $46 million in cash in the first 9 months of 2023 despite borrowing $39 million in new debt and raising about $33 million in proceeds from asset divestitures.
Yikes.
Unless additional near term significant asset divestitures are in the cards (to replenish cash and to allow for performance of interest payments), this company is skating on very, very thin ice.
Yikes.
Unless additional near term significant asset divestitures are in the cards (to replenish cash and to allow for performance of interest payments), this company is skating on very, very thin ice.
Groups are worth much more together than broken up. Audacy's stations are profitable, just not enough to pay the current debt.
And, today, breaking up market clusters reduces horribly the value of the stations. Clusters sell with combined audience and ratings numbers; broken up they are worth vastly less.
Advertising is not "drying up". We are in a new form of recession, mostly driven by high interest rates and much more of family budgets going for housing. So there is less discretionary advertising, and more places to put the dollars available.
Half of all stations have not been profitable going back to the 50's. There is always someone who thinks they can do with a dog station what the prior six owners have been unable to do!
Here in the Palm Springs market, a single Hispanic market operator has done an LMA on a pair of translators. They are going to try to compete with two groups that are top rated and associated with the two TV clusters in the market and have long established relationships with all the big clients. Yet that person somehow thinks that a standalone single radio station with no new media hook can succeed in a market where only clusters succeed. Hope springs eternal, and 18 months from now, they will be cancelling the LMA.
There are $14 billion dollars in radio per the RAB. There is money for strong groups in well positioned market by market clusters, particularly where the Internet strategy is complimentary and of value to accounts. And let's remember that radio is not AM and FM, it is ad-supported one-for-many audio, delivered in whatever current technology mandates. AM and FM may disappear, but ad supported free audio and video services likely will have a profitable market segment for decades to come.
But lenders know that the best option is to keep it alive, as broken into pieces the pay-off would be about $0.20 to $0.30 on the dollar. So granting extensions and, maybe, exchanging some debt for equity is the better solution.
The key issue is that the operations are profitable. But the debt is overwhelming and the company has no growth prospects and a very poor new media position. The ones who suffer are shareholders, but the stations are making money.
Which could be said for most traditional radio groups that are publicly traded.
And stock analysts can't stand traditional media-anything, so companies like Audacy with all their collective eggs in one OG radio basket are tossed to the side like a used Kleenex(tm).
Unlevered net cash flow from recurring sources after maintenance capex is running maybe $10 million per quarter on average in the current advertising climate. The Q3 2023 result appears to be even worse. Bear in mind this is *after* I add back non-recurring / non-cash losses to income.
That is an extremely underwhelming result when compared to invested capital. Any suggestion this company's operating cash flow is somehow decent is at complete odds with financial reality.
The 2027 and 2029 Notes are "out of the money" by a country mile, and I'm now of the opinion a big chunk of the 1st lien debt will need to be equitized. I don't see how this company in the current economic environment can possibly sustain more than a $300 million total debt load. The sustainable number might even be closer to $200 million. Those numbers are significantly lower than I had previously assumed. The current interest rate environment contributes to that range being so low, of course.
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What I see are expenses are up, and revenues are down. That tells me the debt isn't the only problem:
Audacy Forms Committee Focused On Restructuring; Revenue Declines 5.6% In Q3.
Audacy CEO David Field says the company remains in āconstructive conversationsā with its lenders as it works to recapitalize the company and chart a path through what have become choppy
Ratings are up, so it's not a programing problem. They haven't figured out how to make more money with better assets. I haven't seen any attempt in changing their business model in the past 18 months. All the emphasis is on local ad sales. That's using 20th century solutions to fix 21st century problems.
Spot on, BigA.
While Audacy generates enough cash flow to cover payroll and pay vendors, after capex, there is not much left for debt service, if anything at all.
The company is producing nowhere near the ~$450 million (or more) in per annum adjusted EBITDA it was promising the street when the Reverse Morris Trust transaction involving CBS Radio was completed. The "miss" relative to that benchmark seems to be getting progressively worse over time.
We'll see if the 2024 campaign season helps give revenue and overall cash flow a nice lift.
While Audacy generates enough cash flow to cover payroll and pay vendors, after capex, there is not much left for debt service, if anything at all.
The company is producing nowhere near the ~$450 million (or more) in per annum adjusted EBITDA it was promising the street when the Reverse Morris Trust transaction involving CBS Radio was completed. The "miss" relative to that benchmark seems to be getting progressively worse over time.
We'll see if the 2024 campaign season helps give revenue and overall cash flow a nice lift.
I don't see how they will solve this using conventional advertising. They need something else. The fact that event revenue held steady after the investment they made in it two years ago seems to be a problem. The competition is doing better in this sector.
Audacy reported Adjusted EBITDA of $41 million year to date. CapEx has been $36 million. Yeah, not much wiggle room there.
Their investments in digital products (i.e. podcasts) has similarly been anemic. They grew digital revenue only 3% year-over-year, and +2% in the same quarter last year. In other words they got beaten by inflation two years in a row.
Given what we know now, media companies who either purchased or built up podcasting divisions have suffered significant losses for mostly the same reasons traditional radio suffers; lack of sufficient advertising support. Fortunately, diversification and cuts have helped other media companies get through it, but when you have lots of debt from traditional media purchases is where the problem comes in for Audacy.
As I mentioned prior; the only podcaster that's making money is Joe Rogan.
I agree. And unlike TV, radio doesn't see anywhere near the level of political buys during a presidential year and depending on the market. Whatever political dollars from PAC's or political campaigns are a fleeting bonus. Once election day rolls around, stations are back to pounding the pavement hat in hand.
Exactly. If you are in a "swing State" and/or important Primary State, and your station is in a large market in that State, the presidential campaign ads are there. If you are not, then radio primarily gets the state and local contests. You have to look at that revenue as a bonus, not core.
They are clearly in a very tight credit box. My guess is they have some station sales in the works that are better pricing than sales thru Chapt 11. It wouldn't surprise me if EMF is in the mix on many of their FMs in fill-in opps for EMF that are not strong sports markets for Audacy. Audacy will still need reorg thru Chap 11, like Cumulus and IHeart did. Stock value is zero, bonds would be lucking to get 40% value. It will be interesting to see how flagship sports deals get handled, many MLB teams got burned on Diamond Sports/Bally Chapt 11. Audacy stations are flagship for Red Sox, Cubs, Yankees, Phillies, Nationals and Tigers.
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