Audacy Stock today

[TheBigA]

There are companies that give local managers (even programmers, sales managers) options to purchase shares in DRIPs, or as an option to purchase within a 401(k) plan. Some companies "encourage" their employees to make company stock part of the 401(k) investment choices.

From what I can see, at one time there was a company match in the 401K, but it was withdrawn in 2021.

 

[TheBigA]

Here's some analyst reactions to the Audacy earnings report on Wednesday:

Can Audacy Avoid A Financial Restructuring?

Questions about whether Audacy can avoid a financial restructuring are being raised after the company missed its earnings target during the fourth quarter. However, Audacy is selling off “non-core” assets

www.insideradio.com

Is there a half-billion dollar non-core asset they can sell in the next year or so? I still haven't seen anything that addresses the stock price situation.

 

[Theater of My Mind]

I still haven't seen anything that addresses the stock price situation.

"Subject to receipt of shareholder approval at the Company's annual meeting of shareholders to be held on May 24, 2023, the Company intends to implement a reverse stock split of its common stock, effective after the annual meeting, to regain compliance."

AUDACY, INC. : Stock Market News and Information | AUD| US05070N1037 | MarketScreener

AUDACY, INC. : News, information and stories for AUDACY, INC. | Nyse: AUD | Nyse

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[CTListener]

Here's some analyst reactions to the Audacy earnings report on Wednesday:

Can Audacy Avoid A Financial Restructuring?

Questions about whether Audacy can avoid a financial restructuring are being raised after the company missed its earnings target during the fourth quarter. However, Audacy is selling off “non-core” assets

www.insideradio.com

Is there a half-billion dollar non-core asset they can sell in the next year or so? I still haven't seen anything that addresses the stock price situation.

Maybe they can get lucky and become a "meme stock" and have pasty-faced tech nerds in mom's basement pump up their stock price the way they did with GameStop last year.

 

[Deleted User]

they would need a 20 to 1 reverse split to even come close to the share value they need to be listed on the NYSE, and there is no guarantee that even if they do 20:1 so the stock is now say $2.60 to $3.00 a share that it won't tank back to "penny stock" levels in short order, as in right about the time they have a big note due and can't pay it.

 

[davideduardo]

Let's just hope that the 401Ks of a lot of current and former Audacy employees weren't tied up in Audacy stock, and that those who received stock options as performance bonuses cashed out a long time ago. There are still a lot of shareholders who now own worthless stock certificates.

I know that back when I was at HBC, our 401-k did not even offer our own shares as an option. Our management felt that employees should not put both their job and their retirement future in the same "basket". Of course, we were given options as part of the incentives for corporate management and the station managers, but that was different.

 

[davideduardo]

they would need a 20 to 1 reverse split to even come close to the share value they need to be listed on the NYSE, and there is no guarantee that even if they do 20:1 so the stock is now say $2.60 to $3.00 a share that it won't tank back to "penny stock" levels in short order, as in right about the time they have a big note due and can't pay it.

The thing about due dates on "big notes" is that they are always re-doable. Lenders can see that there is over $100 million a year in pre-ITDA operational results and they would prefer getting interest only rather than forcing divestment or bankruptcy.

 

[davideduardo]

In most companies, an employee needs to be VP or greater to receive stock options as a bonus. Those options can be immediately sold, and if you look at the inside sales reports that have been posted in this thread, you'll see some of those bonus shares have been sold. However, the most recent reports indicate that David & Joseph Field still retain 18% of Audacy stock, and a few months ago, David Field purchased more.

Most companies require time for options to vest. Mine at HBC had variable vesting periods, from 3 to 5 years. However, when the company went private, all shares vested and those that were above water were paid out. The idea of a vesting term is to encourage loyalty.

And, yes, top corporate executives and GMs were the only ones getting grants.

 

[Mediafrog+]

I know that back when I was at HBC, our 401-k did not even offer our own shares as an option. Our management felt that employees should not put both their job and their retirement future in the same "basket".

The Enron debacle, in which employees lost their retirement savings (which were in Enron shares) convinced a lot of companies to stop using stock for 401k matches and start paying those with cash. That was the case at the large broadcast group where I worked at the time.

 

[MarkW]

The Form 10K was posted within the past 24 hours. They were able to avoid a Going Concern qualification on the audit opinion and were in compliance with the sole financial covenant at 12-31-22 on the Term B-2 Loan.

However, digging into the risk factors section of the report, the following somewhat ominous (and appropriate, in my view) commentary was provided:

The Term B-2 Loan requires mandatory prepayments equal to a percentage of Excess Cash Flow, subject to incremental step-downs, depending on the Consolidated Net Secured Leverage Ratio. The Excess Cash Flow payment is based on the Excess Cash Flow and the Consolidated Net Secured Leverage Ratio for the prior year. We made our first Excess Cash Flow payment in the first quarter of 2020.

As of December 31, 2022, we were in compliance with the financial covenant then applicable and all other terms of the Credit Facility in all material respects. Our ability to maintain compliance with our financial covenant under the Credit Facility is highly dependent on our results of operations. Currently, given the impact of COVID-19, the outlook is highly uncertain.

Failure to comply with our financial covenant or other terms of our Credit Facility and any subsequent failure to negotiate and obtain any required relief from our lenders could result in a default under the Credit Facility. We will continue to monitor our liquidity position and covenant obligations and assess the impact of the COVID-19 pandemic on our ability to comply with the covenants under the Credit Facility.

 

[MarkW]

By the way, because Audacy Atlas was not meaningfully capitalized until first quarter of this year, the held-for-sale asset balance reported on the consolidated 12-31-22 balance sheet is puny.

It will be interesting to see how large or small that number is when 3-31-23 financials are posted (presumably, that will happen in May).

 

[TheBigA]

However, digging into the risk factors section of the report, the following somewhat ominous (and appropriate, in my view) commentary was provided:

Isn't it a standard legal disclaimer?

 

[MarkW]

I would not consider usage of the phrase "highly uncertain" a standard disclaimer.

I will say I am surprised its annual audited financial statements did not receive a Going Concern qualification. Its auditor, who I believe is Grant Thornton, must believe enough levers are at the company's disposal to raise liquidity to reasonably assure future compliance with the net leverage ratio covenant ("net" means outstanding debt net of cash on hand; sometimes cash netting is subject to a ceiling depending on the specific terms a borrower negotiates with its creditors). I suspect the topic was discussed at length with Grant Thornton prior to issuance of the earnings release and 10K.

 

[Larry]

https://www.bizjournals.com/philadelphia/news/2023/03/17/analyst-audacy-need-more-aggressive-cost-cuts.html

The stock split doesn't do a darn thing,” Huber told the Business Journal on Thursday. “And this whole refinancing that they're talking about doing, that doesn't matter. What matters is to cut costs in order to prop up a deal as best they can, given the huge debt load that they have in a worsening economic backdrop. And they're talking flat [costs or] going down slightly. They need to be down a good 5% to 10% and they may not get through the next six to 12 months if they're not careful here on the cost side. There's no future if they can't get through this very difficult period here."

Huber said the company will need to cut "into the bone and muscle," targeting reductions in areas like its real estate footprint, professional fees and salaries, as well as undertaking layoffs. It's not a good time to sell stations due to the macroeconomic environment, and Audacy is committed to maintaining its investments in its burgeoning podcasting, streaming and advertising technology initiatives.
Huber asked Audacy CEO David Field on Wednesday’s earnings call if the company might need to enact more cuts if economic conditions worsened this year.
Field ticked off three components that are hurting the company:

• Audacy has a number of sports play-by-play agreements that Field described as “margin killers.” For example, he said Audacy elected not to renew the Chicago Bears play-by-play agreement this year, which will save the company between $2 million and $3 million. He expects the company “to be really disciplined going forward on some of those contracts.” In Philadelphia, Audacy's SportsRadio 94 WIP has play-by-play deals with the Eagles and Phillies.
• Audacy's strategic investments in the digital space is something Field believes will help in the long term, with new technology cutting costs, but in the short term the costs have yet to yield their full potential benefits.
• Market composition is also a hindrance. Audacy has been focused on expanding in its largest metro markets, which Field said are growing 6% slower than smaller and mid-size markets.

On the revenue side, Field said there were good signs with local advertising as the company’s largest category, auto, is showing signs of life after what Field termed a period of hibernation, increasing by 8% in the fourth quarter. The second largest category, hospitals and clinics, was down 10%. Its third largest segment is banks and mortgage lenders, which was down 6%, better than the nearly 40% decline in the third quarter.

 

[TheBigA]

What matters is to cut costs in order to prop up a deal as best they can, given the huge debt load that they have in a worsening economic backdrop. And they're talking flat [costs or] going down slightly. They need to be down a good 5% to 10% and they may not get through the next six to 12 months if they're not careful here on the cost side. There's no future if they can't get through this very difficult period here."

There aren't $2 billion in cost cuts. They've already cut costs, and the revenue has continued to fall. So the cost cuts will only deal with revenue shortfall, and not even begin to deal with the debt. That's what happened at iHeart for years. They would do their annual RIF routine, and the debt stayed the same. This went on for ten years before they filed. Cutting sports contracts will hurt revenue. If they sell small markets, it will hurt revenue. Pretty much anything they do will hurt revenue. Then they have to cut to make up for a revenue shortfall. It's a never ending cycle when you only have one revenue stream and it's declining.

The only solution is to sell the company to someone bigger with deep pockets that can absorb the losses and the debt. The bad news is TV companies know that radio is a black hole. Technology companies don't see towers & transmitters as something worth owning. That leaves vulture capitalists, and we know where that will go.

 

[Johnburrows]

As a poster not living in Buffalo, I am hearing things from other areas.

I heard this from a management level person in a fairly large media group in northern Penn and the southern tier of NYS.

This is not confirmed at all. Just sayin what I heard regarding 1025 Buffalo and 1077 Weathersfield.

My pretty reliable source says she heard Cumulus is not in any position to buy anything. She said K LOVE radio is working on something regarding 1025. Also, Mr Shula is trying to get both. Apparently, these are currently happening.

She had no information on price or specifics. Pure speculation. She did say that a Mr Tomasulo was made GM at WECK Buffalo, and that he was at Audacy for 22 years in sales management

All speculation.

 

[RadioGuy1864]

My pretty reliable source says she heard Cumulus is not in any position to buy anything. She said K LOVE radio is working on something regarding 1025. Also, Mr Shula is trying to get both. Apparently, these are currently happening.

She had no information on price or specifics. Pure speculation. She did say that a Mr Tomasulo was made GM at WECK Buffalo, and that he was at Audacy for 22 years in sales management

All speculation.

As much as I would dislike to see 102.5 go to EMF, it makes sense. Audacy puts some cash in their bank account, and a commercial station is taken out of the ad market, leaving more dollars for the remaining stations, including the Audacy stations. Buddy has wanted 107.7 for years, he may finally get his wish.

 

[tbolt909]

There aren't $2 billion in cost cuts. They've already cut costs, and the revenue has continued to fall. So the cost cuts will only deal with revenue shortfall, and not even begin to deal with the debt. That's what happened at iHeart for years. They would do their annual RIF routine, and the debt stayed the same. This went on for ten years before they filed. Cutting sports contracts will hurt revenue. If they sell small markets, it will hurt revenue. Pretty much anything they do will hurt revenue. Then they have to cut to make up for a revenue shortfall. It's a never ending cycle when you only have one revenue stream and it's declining.

The only solution is to sell the company to someone bigger with deep pockets that can absorb the losses and the debt. The bad news is TV companies know that radio is a black hole. Technology companies don't see towers & transmitters as something worth owning. That leaves vulture capitalists, and we know where that will go.

So much for the idea "Too big to fail". Look at the all examples you mentioned of Radio companies going bankrupt. The buying frenzy of the 90s helped dig this grave. The running joke back then was "Who owns my station today?".

Companies tried to crush the competition by buying the competition. Greed, Hubris, and Stupidity are huge factors in this mess. Of course, technology has made Radio less relevant as well. As you said, you can't cut your way to prosperity. They've tried to do that for 30 years with disastrous results. Trying to put a quality product on the air and make a fair profit was no longer enough. They tried the Tony Montana "Scarface" approach and we know how that ended...

 

[MarkW]

If 102.5 were to be divested to a non-commercial broadcaster, I wonder if Audacy would scrap WKSE's current format in order to allow it to move WTSS's intellectual property to 98.5?

I have no idea which of these two stations (WTSS vs. WKSE) is a better cash flow performer. The fact WTSS is the station being put on the block - and not WKSE - suggests to me WKSE must be the better cash flow performer of the two?

I wonder how many folks reside within the 60 dBu of WKSE as compared to WTSS?

 

[Mediafrog+]

As much as I would dislike to see 102.5 go to EMF, it makes sense. Audacy puts some cash in their bank account, and a commercial station is taken out of the ad market, leaving more dollars for the remaining stations, including the Audacy stations.

That also feeds into the speculation in DFW about EMF purchasing the local K-Love branding rights from Audacy, as well as EMF acquiring one of the Audacy signals in that market. That would pump a very nice eight figures into Audacy’s financial pot.

Buddy has wanted 107.7 for years, he may finally get his wish.

Would he keep or sell 1230 AM?