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Citadel #1?

S

SirRoxalot

From Jerry Del Colliano:

"This is a formal notice directed to Citadel employees with 401k retirement plans. The retirement plan administrators have chosen to cut off Citadel employees from putting their 401k money into Citadel common stock. Any funds currently being contributed to purchase Citadel stock will be automatically re-directed to a less risky alternative investment."

Add the engagement of Lazard Freres LLC, and it looks like the light at the end of the tunnel is indeed the Bankruptcy Express, bearing down at breakneck speed.
 
That's if you believe Jerry. His information hasn't been very good lately, and his reporting has never been unbiased.

My bet is that something is about to happen. But it's not going to be just a simple bankruptcy. It may be a bankruptcy of a subsidiary, or it could be a total privatization by Forstmann. There are many approaches that leave the company more options than bankruptcy.
 
You buy a house for $500,000 during a bubble, then the market busts and your house is only worth $100,000
You still owe the bank $400,000 and your income has been reduced by 30%.

What to do? You could sell the house for $100,000 but you'd still owe the bank $300,000.

Nobody will buy your house for $400,000 and the sharks are hungry.

Going bankrupt is the only solution..
 
pocket-radio said:
Going bankrupt is the only solution..
Click to expand...
For you personally, whose only asset is a home, probably. For corporations who have various assets and responsibilities, there are several other options.

Asset sales, debt/equity issuance, "restructuring", and so on. I'm not familiar with Citadel Media's specific situation, so I'm unsure what they may consider.
 
Going bankrupt, doesn't mean they pull the plug, it means restructuring for survival. Selling stations, restructuring debt and so on. Revenues are down, as much as 30%.. The sharks are waiting on the sidelines before going in for the final kill. The stations aren't worth what they once were.. Equipment is worth nothing, the only asset is cash flow and the cash flow is way off. Taking stations private means nothing, it's all about cash flow, profits and nothing else! I'm sorry to disillusion you..
 
pocket-radio said:
Going bankrupt, doesn't mean they pull the plug, it means restructuring for survival. Selling stations, restructuring debt and so on. Revenues are down, as much as 30%.. The sharks are waiting on the sidelines before going in for the final kill. The stations aren't worth what they once were.. Equipment is worth nothing, the only asset is cash flow and the cash flow is way off. Taking stations private means nothing, it's all about cash flow, profits and nothing else! I'm sorry to disillusion you..
Click to expand...

There are no illusions in my world. I've been through companies that have gone Chap 11. They won't be selling stations, because no one is buying. They won't be pulling the plug because that shuts off the flow of money. The only way to survive is to cut cut cut. Cut costs, cut salaries, cut employees, cut facilities. Strict p/l analysis. That's the way a bankruptcy judge would look at it. If they can cut all the costs, and keep the stations on the air, they'll do it. The sharks aren't on the sidelines. They hold most of the debt. They are in the board room.
 
Buyers will come to the party when the XXXXX hits the wall. Buyers came to General Motors meltdown as they discharged complete car lines. Trust me the price was right for the buyers, not what General Motors wanted.

A judge will order stations sold at fire sale prices, just pay back some debt..
 
pocket-radio said:
A judge will order stations sold at fire sale prices, just pay back some debt..
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But first, they will order additional staff cuts, and salary & benefit cuts for those that remain. Trust me.
 
TheBigA said:
pocket-radio said:
A judge will order stations sold at fire sale prices, just pay back some debt..
Click to expand...

But first, they will order additional staff cuts, and salary & benefit cuts for those that remain. Trust me.
Click to expand...

A judge is not likely to order anything unless it's proposed by the creditors committee - the 7 creditors owed the most money. The creditors will force bankruptcy when it becomes clear that the current management team is costing them money, not earning them money. Cuts being forced on local stations by corporate edict are adversely affecting revenue.
 
SirRoxalot said:
Cuts being forced on local stations by corporate edict are adversely affecting revenue.
Click to expand...

That's your opinion. Any impartial judge looking at a situation where a station is spending more on staff and operations than it takes in will simply say that costs need to be cut so that it can operate profitably. Either staff cuts or salary cuts, or both. I've been in that situation, and that's what happened. No outside administrator will recommend increasing spending after a bankruptcy. There are stations in these portfolios that are financial drags on company resources. Those stations will need to be shut down and their staffs fired. Also, the benefits packages need to be reworked. Insurance costs have skyrocketed, and employees will need to be charged for benefits. That is what employees at these companies have to look forward to. Not more money for programming and staff.
 
What about the stations where money is being siphoned off to support money-losers in other markets? There are many markets that are making money, but are being punished for the sins of their corporate fathers. Citadel is a perfect example. They overextended themselves so badly to purchase the former ABC stations that the original Citadel stations are being decimated in an attempt to avoid bankruptcy.

Once again, judges generally act on the recommendations of the creditors committee. What's killing Citadel -and others - is the debt service, not the cost of talent. Reduce or eliminate the debt, and radio becomes viable again. The shareholders have already been screwed, and several of the largest creditors have been bailed out by the feds. The recent profit announcements from Goldman Sachs, JP Morgan and others indicates that they can afford to take a loss along with the others who fronted the money to radio's current owners.
 
SirRoxalot said:
They overextended themselves so badly to purchase the former ABC stations that the original Citadel stations are being decimated in an attempt to avoid bankruptcy.
Click to expand...

That's not exactly true. Talk to people at the former ABC stations (those who are left) and you'll find out that life ain't grand there either. They're working under very different circumstances than they're used to.

They would tell you that the huge revenues they're collecting in major markets are being siphoned off to the small markets like Muncie Indiana.

SirRoxalot said:
What's killing Citadel -and others - is the debt service, not the cost of talent. Reduce or eliminate the debt, and radio becomes viable again.
Click to expand...

Sorry but that is simply not true. Because as I've said before companies without that level of debt are also on the verge of collapse, and they're a lot closer to it (as I pointed out in two examples in another thread) than Citadel.

And it's not just cost of talent. It's the cost of everything, which has risen by 10%, while advertising has dropped by 20%. Radio will not become viable again until it gets its costs in line with its revenues. And until it recognizes that the audience has changed and no longer values the product they've been delivering for the last 50 years.

Also, you don't just walk away from debt. They make sure it hurts, and not just the people at the top. They can't sell assets, so they have to cut costs. If all they had to do was sell assets at fire sale prices, they'd have done it by now. They can't, because no one is buying. The best deal they can make is turn over the assets to their creditors for equity, and then watch as the new owners slice 30% off everyone's budgets. That's the BEST deal. The other ones involve shutting down stations.
 
SirRoxalot said:
. The recent profit announcements from Goldman Sachs, JP Morgan and others indicates that they can afford to take a loss along with the others who fronted the money to radio's current owners.
Click to expand...

It's hard to find any credibility in any of your "financial analysis" statements if you don't even know that Chase owns JP Morgan... since 2000 when they bought it.
 
DavidEduardo said:
SirRoxalot said:
. The recent profit announcements from Goldman Sachs, JP Morgan and others indicates that they can afford to take a loss along with the others who fronted the money to radio's current owners.
Click to expand...

It's hard to find any credibility in any of your "financial analysis" statements if you don't even know that Chase owns JP Morgan... since 2000 when they bought it.
Click to expand...

Uh, the company is known as JP Morgan Chase, and is commonly shortcutted as JP Morgan by sources like Bloomberg.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYyNep1no8fw

Now go back to trying to sell us your version of "how radio's doing" and "corporate is always right". I'm afraid your Kool-Aid stand ain't doin' such good business these days.
 
SirRoxalot said:
Now go back to trying to sell us your version of "how radio's doing" and "corporate is always right". I'm afraid your Kool-Aid stand ain't doin' such good business these days.
Click to expand...

Considering the economy, our stand is doing just fine. Only an entity that believes in radio would make the year's biggest single station acquisition...
 
Apparently you didn't read to the end of the article. But, just to make sure we're on the same page, how about this story:

http://www.reuters.com/article/internetNews/idUSTRE56H03N20090718

The "court decision announced yesterday" merely protects existing rights to programming. The question is about delivery. Viewers who opt for Internet delivery are likely to opt out of cable delivery, so the impact will be lessened. And then there's the problem of monetizing on-line streaming.

But, of course, you're ALWAYS right, blah, blah, blah. I wish you, and Univision well. Your challenges are significant. Meanwhile, all this is simply a diversion from the real question, regarding the health of Citadel. They don't have a TV cable network to back up their radio holdings, and certainly are not seeing growth in their primary audience.
 
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