Bob1370 said:
We're more likely to see the whole Citadel group either bought out of bankruptcy by multiple buyers, or gobbled by a large company which has a ton of cash in the kitty. In the latter event, don't be surprised if it's a company whose management has often expressed regret that it ever got out of radio to begin with--namely the NBC/Universal divsion of GE. Yes, TalkRadio 77, WNBC, could be in our future.
Wish it was true, wish you were right, Bob. But you know what they say about wishing in one hand and spitting in the other. Investors look at radio as poison these days, more troubled than banking and investments, which seem to have made a slight rebound thanks to the revision of accounting rules and other smoke and mirror nuances. TARP could easily be an acrynym for Troubled Asset Radio Properties. GE has had major problems with its finance division, otherwise, it's a good company. But GE makes powerplants, submarine electronics and jet engines and it's highly doubtful the company wants to get (back) into radio that badly, unless they can buy at multiples of 5 or 6. Do you think the companies that are underwater want to sell out at 5 or 6? They'd rather drown.
I talked to two Buffalo sources who (perhaps wishfully) think former WGRF-WEDG-WHTT owner Charlie Banta is waiting on the sidelines to re-purchase the Citadel or Regent cluster. Banta is a shrewd investor and isn't going to buy anything unless the terms are exactly to his liking. Frankly, even he may not want to get back in the game. What's the upside? What's the exit strategy? When Citadel and Regent bought into the radio roulette game, their exit strategy was to buy and sell. Instead, they got caught holding a net full of chum in the middle of the shark tank.
There's word that a group of investors are lurking around the Cumulus properties, but again, at what cost? Now may be the perfect time for shrewd investors to dangle a carrot in front of desperate owners-groups and buy in low, but shrewd investors aren't dummies and they don't throw cash around just to make posters on message boards say nice things. Investing isn't bean bag. There are better (and some would argue, easier) ways to make money and to "grow" money.
Some radio people seem to think new owners will bring back the golden days of personality jocks 24-7, but it's just as likely to be "meet the new boss, same as the old boss." Certainly, there is merit in being live 24-7 in all formats, but budgets will be just as tight and the big money days for jocks are over. There's a new economy and an understanding that a station doesn't have to pay thick six figures for a morning show. General Motors yesterday announced nine week furloughs for employees and potential plant closings, which will trickle down and adversely affect radio, TV and newspapers. Laid off workers don't buy cars, houses, refrigerators, stoves and HDTVs.
Citadel doesn't have many options and from all reports, it could get worse in June. Additionally, there's word (unconfirmed, but from reliable sources) that the Citadel-ABC deal with Disney has a covenant that specifies Disney can reclaim the ABC stations if Citadel doesn't meet certain terms and obligations; worse, Citadel would retain the debt associated with the purchase of the ABC stations. In other words, Disney would get the ABC stations back, but Citadel would have to carry the debt. IF this is the case (and who knows what's true, given the BS that swirls around the business), it's a double whammy that would further cripple Citadel, a company with good people, but in bad, perhaps terminal, financial condition. It appears to be running a marathon on one leg, a broken ankle and a short crutch.
;D