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Citadel: It's official
- Thread starter TheBigA
- Start date
OK...here's what I don't understand: How an investment company like Forstmann Little, which owns 29% of a company, allows that company to go bankrupt and its investment drop to zero. How does that happen? What am I missing? It's not like they don't have the resources to pay off a couple creditors, or even vouch for the company in meeting its covenant. But it apparently is doing nothing, leaving the management there no choice.
What does this mean? That Citadel is going to sell all it's stations and stop streaming online?
No. It changes nothing in terms of stations or operations.
Here's the quote from the New York Times:
“We are pleased with the support from the majority of our senior lenders, and we look forward to working with the remaining senior lenders and other stakeholders to ensure a complete and expeditious restructuring,” Farid Suleman, Citadel’s chief executive, said in a statement. “Our business will continue as usual and the Company will work to emerge from the restructuring process as quickly as possible.”
Here's the quote from the New York Times:
“We are pleased with the support from the majority of our senior lenders, and we look forward to working with the remaining senior lenders and other stakeholders to ensure a complete and expeditious restructuring,” Farid Suleman, Citadel’s chief executive, said in a statement. “Our business will continue as usual and the Company will work to emerge from the restructuring process as quickly as possible.”
First of all, it will be business as usual for Citadel/ABC. No stations will be sold (for now) and in "reorganization" -- especially in a pre-packaged bankruptcy under the terms of Chapter 11, over 60% of its "senior lenders" (Morgan/Chase, Wilmington Trust and others) will receive, as an agreement to forego over a billion dollars in debt, will receive "equity for debt" worth about 95% of the company.
Secondly, operations will continue as normal, salaries will be paid (There is $36-million and cash flow from the combined operation of 224 stations to provide this,) and a reorganization plan is to be provided by April 19, 2010.
Thirdly, Farid Suleman will remain as CEO of the company, as banks don't run radio stations and Suleman is the closest they know of to the immediate operation of the company who does, so, he stays.
Fourth, there is a BIG difference between a "senior lender" and "private equity lender" like Forstmann Little, which holds (and loses) 29% of the "stakeholder value" of Citadel, after investing through stock purchase by private investors (not commercial lenders) over $2-billion back in 2001 to make the deal between Citadel and Disney possible.
That "stock" they owned in the company takes the same beating as it did for over 1.1 million "everyday" stockholders -- they lost everything, as did regular "shareholders." Why? Because like everyone else listening to Suleman's B.S. -- they thought there would be no way in hell that the third largest radio operator and the best known radio network would ever get to penny stock status and end up filing bankruptcy. They did and just like stockholders, their holdings proved worthless.
With the investor banks, they held contracts to pay back the heavy debt load, leveraged from when the deal was made with Disney and that they lent on, knowing full well that the company would have to work miracles for the loans to be paid back. In the Forstmann deal, there was no such contract to pay the lendor back (private equity doesn't do that, their return comes on how well the stock does -- and in this case, it dropped from $24 a share to $.01 a share as of Friday.)
Because the loss of equity is equal to what the senior lenders think is "fair" for the "write down" they must take to keep the stations and the firm operating, Citadel will get another "loan" of $760-million to be paid back at high interest -- a much better deal than owing $2-billion plus.
In time, if Citadel doesn't keep up with it's debt "covenants," the senior lenders -- as "new" owners of Citadel, can force the company to sell certain assets -- meaning stations. LONG before that happens, there will be more cuts by Citadel to appease the banks, and then, slowly, clusters will be sold as ad revenues pick up and Citadel finds them unneeded or not profitable enough. It will use those proceeds to further pay down its "new" debt.
Citadel is NOT about to fire-sale anything (and nor did Clear Channel, also in a similar situation, along with Cumulus,) and that includes heritage major market stations like WABC, WLS, KGO, WPLJ, and others. It may, in my opinion, shop the ABC Radio Networks (which heavily hurt the bottom line with the death of Paul Harvey, the loss of Sean Hannity and other syndicated program losses, including some of its 24/7 music formats.) I think that's where it will begin if there is a "sell-off."
Because Suleman is the second largest "stockholder" of the company with 3% of the "stock" -- he loses, but retains the title and operations name as the "CEO" of the company. Others, like Wells Fargo (at 5% of the original stock,) lose, just like Forstmann Little.
In order to see their investments become "worthy" if not "whole," the new contract will be at a higher interest rate, a 1/3 principle ($750-million) and the banks are betting on a rebound of advertising. Since they now own 95% of the company, after operational expenses, the remaining also goes to the banks, so, they get interest, principal and 95% of the profits. Not a bad deal IF the economy gets fixed.
Those hoping for a fire-sale are sadly mistaken. Only when the banks say that certain assets -- and at the price THEY believe the sale can fetch -- will they sell. Right now, it's a betting like a craps game. If someone offered to buy the whole enchilada and the radio network, (for, say, $20 billion or more,) then the banks may sell. But to do piecemeal deals, except in the case of very underperforming stations or clusters, won't happen for a while.
So, hold off the thought of "firing" Imus before his five year contract is up. Won't happen (it would cost Citadel too much to pay off that $5-million a year deal,) and for owning the WLS microphone collection.
And that's the way it is.
Secondly, operations will continue as normal, salaries will be paid (There is $36-million and cash flow from the combined operation of 224 stations to provide this,) and a reorganization plan is to be provided by April 19, 2010.
Thirdly, Farid Suleman will remain as CEO of the company, as banks don't run radio stations and Suleman is the closest they know of to the immediate operation of the company who does, so, he stays.
Fourth, there is a BIG difference between a "senior lender" and "private equity lender" like Forstmann Little, which holds (and loses) 29% of the "stakeholder value" of Citadel, after investing through stock purchase by private investors (not commercial lenders) over $2-billion back in 2001 to make the deal between Citadel and Disney possible.
That "stock" they owned in the company takes the same beating as it did for over 1.1 million "everyday" stockholders -- they lost everything, as did regular "shareholders." Why? Because like everyone else listening to Suleman's B.S. -- they thought there would be no way in hell that the third largest radio operator and the best known radio network would ever get to penny stock status and end up filing bankruptcy. They did and just like stockholders, their holdings proved worthless.
With the investor banks, they held contracts to pay back the heavy debt load, leveraged from when the deal was made with Disney and that they lent on, knowing full well that the company would have to work miracles for the loans to be paid back. In the Forstmann deal, there was no such contract to pay the lendor back (private equity doesn't do that, their return comes on how well the stock does -- and in this case, it dropped from $24 a share to $.01 a share as of Friday.)
Because the loss of equity is equal to what the senior lenders think is "fair" for the "write down" they must take to keep the stations and the firm operating, Citadel will get another "loan" of $760-million to be paid back at high interest -- a much better deal than owing $2-billion plus.
In time, if Citadel doesn't keep up with it's debt "covenants," the senior lenders -- as "new" owners of Citadel, can force the company to sell certain assets -- meaning stations. LONG before that happens, there will be more cuts by Citadel to appease the banks, and then, slowly, clusters will be sold as ad revenues pick up and Citadel finds them unneeded or not profitable enough. It will use those proceeds to further pay down its "new" debt.
Citadel is NOT about to fire-sale anything (and nor did Clear Channel, also in a similar situation, along with Cumulus,) and that includes heritage major market stations like WABC, WLS, KGO, WPLJ, and others. It may, in my opinion, shop the ABC Radio Networks (which heavily hurt the bottom line with the death of Paul Harvey, the loss of Sean Hannity and other syndicated program losses, including some of its 24/7 music formats.) I think that's where it will begin if there is a "sell-off."
Because Suleman is the second largest "stockholder" of the company with 3% of the "stock" -- he loses, but retains the title and operations name as the "CEO" of the company. Others, like Wells Fargo (at 5% of the original stock,) lose, just like Forstmann Little.
In order to see their investments become "worthy" if not "whole," the new contract will be at a higher interest rate, a 1/3 principle ($750-million) and the banks are betting on a rebound of advertising. Since they now own 95% of the company, after operational expenses, the remaining also goes to the banks, so, they get interest, principal and 95% of the profits. Not a bad deal IF the economy gets fixed.
Those hoping for a fire-sale are sadly mistaken. Only when the banks say that certain assets -- and at the price THEY believe the sale can fetch -- will they sell. Right now, it's a betting like a craps game. If someone offered to buy the whole enchilada and the radio network, (for, say, $20 billion or more,) then the banks may sell. But to do piecemeal deals, except in the case of very underperforming stations or clusters, won't happen for a while.
So, hold off the thought of "firing" Imus before his five year contract is up. Won't happen (it would cost Citadel too much to pay off that $5-million a year deal,) and for owning the WLS microphone collection.
And that's the way it is.
One more note ...
What happens to an investor bank that wants "out" of the deal?
Let's take a bank that I am very familiar with -- Wilmington Trust -- that is into Citadel for $50-million.
If it wants out, instead of taking "equity" in the "new" company -- it is able only to get 5% cash on its total lending investment UP to a total of $2 million in cash -- losing the rest with no equity. A $48 million loss. That's some haircut.
Or - it can take up to 10% of "stock" in the new company, or, $5-million worth -- in the hope that the new company can turn enough of a profit or encourage new stockholders to "start all over" to where that original $50 million can be earned over time. Still, a $45-million write-down from the beginning.
Or, it takes its part of the "equity share" of 95% which, in the scheme of things, will be less than 10% and things start all over again.
There will be some water-cooler talk around Market Street in Wilmington, DE tomorow, you can be sure.
What happens to an investor bank that wants "out" of the deal?
Let's take a bank that I am very familiar with -- Wilmington Trust -- that is into Citadel for $50-million.
If it wants out, instead of taking "equity" in the "new" company -- it is able only to get 5% cash on its total lending investment UP to a total of $2 million in cash -- losing the rest with no equity. A $48 million loss. That's some haircut.
Or - it can take up to 10% of "stock" in the new company, or, $5-million worth -- in the hope that the new company can turn enough of a profit or encourage new stockholders to "start all over" to where that original $50 million can be earned over time. Still, a $45-million write-down from the beginning.
Or, it takes its part of the "equity share" of 95% which, in the scheme of things, will be less than 10% and things start all over again.
There will be some water-cooler talk around Market Street in Wilmington, DE tomorow, you can be sure.
FOR IMMEDIATE RELEASE
CITADEL MEDIA ANNOUNCES LONG-TERM AGREEMENTS
WITH ABC NEWS RADIO AND ESPN AUDIO
NEW YORK (Dec. 20, 2009) – Citadel Media announced today that it has signed
a long-term agreement with ABC News Radio and a multi-year extension with ESPN Audio. Under the terms of the agreements, the network will continue to provide advertising sales support and affiliate relations for ABC News Radio and will maintain its relationship with ESPN Audio to sell advertising across its portfolio of properties.
“Extending these partnerships allows our network to maintain its position as a leader in the industry,” said John Rosso, President of Citadel Media. “Our goal remains the same – connecting advertisers with the audiences they are targeting and delivering content that drives listenership for our affiliates. ESPN Audio and ABC News Radio are the perfect broadcast partners to help us meet that goal.”
“ABC News Radio and ESPN Audio represent the best-in-class offerings we strive to provide to our affiliates and advertising partners,” said Farid Suleman, CEO of Citadel Broadcasting Corporation, the parent company of Citadel Media. “The opportunity to grow our relationships with each of these organizations is a key component to the future success of our network and demonstrates the strength of our business. We’re proud to be associated with the outstanding teams behind each of these respected industry brands.”
ABC News Radio is the country’s largest commercial radio news operation and delivers daily newscasts and breaking news coverage to more than 2,400 affiliates nationwide and reaches approximately 74 million listeners each week. In addition to ABC News, the company offers a wide variety of programming such as ABC Sports Radio and entertainment news for music formats under the ABC ePrep brand.
“We’re pleased that Citadel Media will remain our partner in growing our wide affiliate base while also delivering opportunities for advertisers to connect with our highly attractive audiences,” said Steve Jones, Vice President and General Manager of ABC News Radio. “We look forward to working with John and his team in the years ahead and know we can rely on them to enhance the success of our business.”
# # #
CITADEL MEDIA ANNOUNCES LONG-TERM AGREEMENTS
WITH ABC NEWS RADIO AND ESPN AUDIO
NEW YORK (Dec. 20, 2009) – Citadel Media announced today that it has signed
a long-term agreement with ABC News Radio and a multi-year extension with ESPN Audio. Under the terms of the agreements, the network will continue to provide advertising sales support and affiliate relations for ABC News Radio and will maintain its relationship with ESPN Audio to sell advertising across its portfolio of properties.
“Extending these partnerships allows our network to maintain its position as a leader in the industry,” said John Rosso, President of Citadel Media. “Our goal remains the same – connecting advertisers with the audiences they are targeting and delivering content that drives listenership for our affiliates. ESPN Audio and ABC News Radio are the perfect broadcast partners to help us meet that goal.”
“ABC News Radio and ESPN Audio represent the best-in-class offerings we strive to provide to our affiliates and advertising partners,” said Farid Suleman, CEO of Citadel Broadcasting Corporation, the parent company of Citadel Media. “The opportunity to grow our relationships with each of these organizations is a key component to the future success of our network and demonstrates the strength of our business. We’re proud to be associated with the outstanding teams behind each of these respected industry brands.”
ABC News Radio is the country’s largest commercial radio news operation and delivers daily newscasts and breaking news coverage to more than 2,400 affiliates nationwide and reaches approximately 74 million listeners each week. In addition to ABC News, the company offers a wide variety of programming such as ABC Sports Radio and entertainment news for music formats under the ABC ePrep brand.
“We’re pleased that Citadel Media will remain our partner in growing our wide affiliate base while also delivering opportunities for advertisers to connect with our highly attractive audiences,” said Steve Jones, Vice President and General Manager of ABC News Radio. “We look forward to working with John and his team in the years ahead and know we can rely on them to enhance the success of our business.”
# # #
BigA -
The "private investors" of an equity company, be it Citadel or Clear Channel (or whomever) do not take the responsibililty to "bail" a company out. They are in the business to "invest" -- which Teddy Forstmann did (with his and investors money) to the tune of $2.1 Billion in 2001.
From then on, it's strictly a "stock deal." The investors in a private equity deal depend on the stock growing and know that losses are "liquid" over the short term and, quite possibily, in the long term.
The situation with Forstmann is that they had "owned" $2-billion worth of stock that they invested with NO guaranteed return on the Citadel merger.
As a result, it wasn't up to the private investors to come up $150-million in covenants to "save" the company, because it would have wiped out their "investment" in the stock, by a long shot, anyway.
Better to either sell it -- which many (including me) did or "let it ride" to see if the stock would go up. After a point of "no return", the stock value was not enough to pay back with any worth what the private investors (the large ones) had invested through Forstmann, so, they lost the stock value and, hence, the money that they as "private equity partners" had invested.
Forstmann owned stock (29%) of the company and was not an "equity" player like Morgan/Chase, Wilmington Trust or the other 99 other "instutional LENDERS" who gave Citadel the money to make the deal. Forstmann invested in the stock value, hoping it would climb above $24 a share and when it started to go south, there was nothing to retrieve that would pay back the investors their share, so, they took a loss -- many to the last day.
Again, Forstmann was not a "lender" -- it was a "shareholder." The investors lost their money -- of their own volition. They had the right to sell and get out when they wanted, but hung on, thinking that the economy would turn, that Paul Harvey would still be around and that a lot of other things would happen.
Unfortunately, a Perfect Storm ensued and Forstmann was left holding the bag of 29% of worthless stock. It wouldn't take profits from the investors who bought other stocks in the Forstmann portfolio for obvious reasons. One, it's illegal. Second, those who invested in other corporations under the company would have diluted their shares anyway.
Big banks never lose. Look what they have -- 95% of ABC & Citadel, now. They will get their $750-million in due time.
The "private investors" of an equity company, be it Citadel or Clear Channel (or whomever) do not take the responsibililty to "bail" a company out. They are in the business to "invest" -- which Teddy Forstmann did (with his and investors money) to the tune of $2.1 Billion in 2001.
From then on, it's strictly a "stock deal." The investors in a private equity deal depend on the stock growing and know that losses are "liquid" over the short term and, quite possibily, in the long term.
The situation with Forstmann is that they had "owned" $2-billion worth of stock that they invested with NO guaranteed return on the Citadel merger.
As a result, it wasn't up to the private investors to come up $150-million in covenants to "save" the company, because it would have wiped out their "investment" in the stock, by a long shot, anyway.
Better to either sell it -- which many (including me) did or "let it ride" to see if the stock would go up. After a point of "no return", the stock value was not enough to pay back with any worth what the private investors (the large ones) had invested through Forstmann, so, they lost the stock value and, hence, the money that they as "private equity partners" had invested.
Forstmann owned stock (29%) of the company and was not an "equity" player like Morgan/Chase, Wilmington Trust or the other 99 other "instutional LENDERS" who gave Citadel the money to make the deal. Forstmann invested in the stock value, hoping it would climb above $24 a share and when it started to go south, there was nothing to retrieve that would pay back the investors their share, so, they took a loss -- many to the last day.
Again, Forstmann was not a "lender" -- it was a "shareholder." The investors lost their money -- of their own volition. They had the right to sell and get out when they wanted, but hung on, thinking that the economy would turn, that Paul Harvey would still be around and that a lot of other things would happen.
Unfortunately, a Perfect Storm ensued and Forstmann was left holding the bag of 29% of worthless stock. It wouldn't take profits from the investors who bought other stocks in the Forstmann portfolio for obvious reasons. One, it's illegal. Second, those who invested in other corporations under the company would have diluted their shares anyway.
Big banks never lose. Look what they have -- 95% of ABC & Citadel, now. They will get their $750-million in due time.
oaktree said:In addition to ABC News, the company offers a wide variety of programming such as ABC Sports Radio and entertainment news for music formats under the ABC ePrep brand.
Some busy little bees for a Sunday. Although I'm sure all this was prepared before COB Friday. Now they they're a new company, and the previous contracts were voided, time to come up with new contracts.
There's a lot of talk about radio being a content medium. In this case, ABC Disney is the content company. Citadel pays for that content, and then sells it, hopefully at a profit. So Citadel takes the risk, and Disney gets paid. That helps to understand which side of the business is less volitile. Citadel does well in the short term, and makes money if ad rates are high enough to cover the cost of the content. But if ad rates drop, then Citadel loses. Perhaps Disney's $11 million equity will be in content fees, which would be a good deal for Citadel.
oaktree said:The "private investors" of an equity company, be it Citadel or Clear Channel (or whomever) do not take the responsibililty to "bail" a company out.
Forstmann and his brother were on the board, as were two other Forstmann employees. If you sit on the board, you take personal responsibility for the company. That's what being on the board is all about. Not just voting proxies. And I'm led to believe that a stockholder lawsuit could involve the board of directors.
But you're right...they didn't have to. There are many ways to lose $2 billion, and most are more fun than just watching it disappear.
It's like playing at the craps tables: When you're on a winning streak, it's hard not to play that "Hard 8" or dump a lot on that "Pass Line" bet. But no one knows when it's gonna turn and bite you, either. When you have that much riding, and you're on the board which, in my opinion, should have LONG AGO booted Suleman (3%) and wife Judy Ellis from their vaunted positions -- but the board wanted someone close who, as a bean counter, could navigate them through the maze.
Teddy's hands were tied. He could only watch the Big Board over this fiasco. He couldn't just bail on the company that he had almost single handedly put together in a saved merger with a piece of Disney that at the time seemed like a good deal.
Obviously, it wasn't.
And incidentally, Disney shareholders of the small part ($11-million) lost their share - or most of it - with this announcement today. Again, they were stockholders, not lenders.
And as for Disney being "content providers" -- I don't think so. Disney retained Radio Disney and ESPN, ABC/Citadel was an audio source provider (along with Clear Channel) in the satellite system. (At one time, CC owned 40% of the distribution network. I don't know if that has changed under the Bain-Lee agreement or not.) The content was provided under the Citadel Media banner.
Teddy's hands were tied. He could only watch the Big Board over this fiasco. He couldn't just bail on the company that he had almost single handedly put together in a saved merger with a piece of Disney that at the time seemed like a good deal.
Obviously, it wasn't.
And incidentally, Disney shareholders of the small part ($11-million) lost their share - or most of it - with this announcement today. Again, they were stockholders, not lenders.
And as for Disney being "content providers" -- I don't think so. Disney retained Radio Disney and ESPN, ABC/Citadel was an audio source provider (along with Clear Channel) in the satellite system. (At one time, CC owned 40% of the distribution network. I don't know if that has changed under the Bain-Lee agreement or not.) The content was provided under the Citadel Media banner.
oaktree said:but the board wanted someone close who, as a bean counter, could navigate them through the maze.
Which is exactly what he did.
My experience with accountants (and I've known a lot of them) is that they tell you what you want to hear, whatever that is. But the client is the one who drives the boat. You say "That's tax deductable, isn't it?" They reply, "Could be." And then they make it so. But when the IRS calls, it's still your name on the line.
This (and the CC experience) may cure investment companies of their love for broadcasting. The bad news is that broadcasting is still an expensive business to be in. If companies with lots of cash aren't interested in it, then the whole industry could be in for extremely lean times. Mom & pop may be nice and warm, but they don't have deep pockets, and that's what you need (as we see here today) to get through tough times.
The New York Times printed the whole filing, and the Disney $11 million is listed among the debts, along with all the banks, not as shareholders. I imagine that covers a couple years of licensing ABC News Radio and the other content.
"The bad news is that broadcasting is still an expensive business to be in."
Only if
1. The station you own/run is really really really hopeless. A 500 watt daytimer with crappy (in need of replacement) in a town of 25....yeah, you got problems.
Or...
2. If you overpay and have a huge debt to pay off.
Everything is relative. Is a house in Beverly Hills expensive if you get it for free? Is WLS expensive if I buy it for 10 million dollars and can reasonably pay off the debt in a year or two or three? If I am not being killed by my bankers I don't have to do stupid things like cut marketing, research and talent and sales training.
The vast majority of stations in the USA are operationally profitable. It's the debt that's killing them because the owners of many overpaid for them.
Only if
1. The station you own/run is really really really hopeless. A 500 watt daytimer with crappy (in need of replacement) in a town of 25....yeah, you got problems.
Or...
2. If you overpay and have a huge debt to pay off.
Everything is relative. Is a house in Beverly Hills expensive if you get it for free? Is WLS expensive if I buy it for 10 million dollars and can reasonably pay off the debt in a year or two or three? If I am not being killed by my bankers I don't have to do stupid things like cut marketing, research and talent and sales training.
The vast majority of stations in the USA are operationally profitable. It's the debt that's killing them because the owners of many overpaid for them.
radioray said:It's the debt that's killing them because the owners of many overpaid for them.
Overpaying for something doesn't necessarily incur debt. I just bought a new car. I wanted certain things, so I essentially overpaid for it. I could have gotten the same car cheaper by taking what they had. But in any case, I paid cash, so I didn't incur debt. The price they paid for their stations didn't cause debt. The amount they financed caused debt. Two very different things. Put a big down payment, or take on equity partners, and you don't have a lot of debt. Charge the whole thing on your Visa card, and you have a lot of debt. That's the difference.
I stand by the view that broadcasting is expensive. It costs money to run transmitters, towers, and studios. Lot of capitol expense. Lots of insurance payments. If you have employees, there are lots of benefits to fund. Then there are the lawyers, accountants, and engineers. And the government regulation. Most of this isn't involved if you have a McDonald's franchise or a plumbing company.
"Overpaying for something doesn't necessarily incur debt. I just bought a new car. I wanted certain things, so I essentially overpaid for it. I could have gotten the same car cheaper by taking what they had. But in any case, I paid cash, so I didn't incur debt. The price they paid doesn't cause debt. The amount they financed causes debt."
Technically you are correct. If I am a billionaire and I have a billion in the bank and pay a million for a house/car/business/anything that is probably worth (based upon what anyone else would pay) only ten thousand dollars, then yes, you are correct, I have overpaid but I am not in debt. These extremely rare cases are of course theoretically possible since I suppose there are some people out there who are super wealthy and either like or a too dumb to know better about how much some things are worth -- in the real world. And in any event, this doesn't appear to have applied to Citadel, they apparently WEREN'T wealthy enough to overpay for something without incurring debt. If they were wealthy enough to pay cash they would not have to file for bankrupcy now and no, it is not a case of losing money operationally over seven years. Operationally they are still making 35 million of free cash flow per quarter PRE INTEREST PAYMENTS. It's that which is killing them.
"I stand by the view that broadcasting is expensive. It costs money to run transmitters, towers, and studios. Lot of capitol expense. Lots of insurance payments. If you have employees, there are lots of benefits to fund. Then there are the lawyers, accountants, and engineers. And the government regulation. Most of this isn't involved if you have a McDonald's franchise or a plumbing company.|
HA! My brother owns a restaurant franchise. You won't believe his expenses. You think a transmitter is expensive? Try a new huge refrigarator or griddle (industrail strength mind you...cooks thousand of burgers and chicken patties DAILY....that is WAY more expensive than a transmitter). You think the FCC is a trouble? Try the health inspectors. You think only radio stations have employees? Run a McD, BurgerKing, Dennys or any other place. You think there aren't engineers in a kitchen? Sure are, they are just called plumbers, electricians and the like. And how many radio stations have to deal with dumpsters (and dumpsters and more dumpsters) full of garbage per day, lost kids, fights, hold-ups, drunks (not on a request line but two feet away from your face smelling of vodka and looking for a free meal?), people running up to you saying "there is a hair in my burger!" (hmmm...is it YOURS perhaps madamme?), etc. Are you insured for damages if she sues, or if someone sues you if the coffee is "too hot"? Lawyers? You don't think restaurant owners/franchisers have lawyers? Accountants? You think only radio stations and no other business use them? The things you make out to be some great burden on radio owners are the same thing ANY small or large business owner has to deal with. I dunno a single business owner without payroll taxes and an attorney for example.
Radio has its problems, expenses, capital expenses, insurance, etc. So does any other business.
Technically you are correct. If I am a billionaire and I have a billion in the bank and pay a million for a house/car/business/anything that is probably worth (based upon what anyone else would pay) only ten thousand dollars, then yes, you are correct, I have overpaid but I am not in debt. These extremely rare cases are of course theoretically possible since I suppose there are some people out there who are super wealthy and either like or a too dumb to know better about how much some things are worth -- in the real world. And in any event, this doesn't appear to have applied to Citadel, they apparently WEREN'T wealthy enough to overpay for something without incurring debt. If they were wealthy enough to pay cash they would not have to file for bankrupcy now and no, it is not a case of losing money operationally over seven years. Operationally they are still making 35 million of free cash flow per quarter PRE INTEREST PAYMENTS. It's that which is killing them.
"I stand by the view that broadcasting is expensive. It costs money to run transmitters, towers, and studios. Lot of capitol expense. Lots of insurance payments. If you have employees, there are lots of benefits to fund. Then there are the lawyers, accountants, and engineers. And the government regulation. Most of this isn't involved if you have a McDonald's franchise or a plumbing company.|
HA! My brother owns a restaurant franchise. You won't believe his expenses. You think a transmitter is expensive? Try a new huge refrigarator or griddle (industrail strength mind you...cooks thousand of burgers and chicken patties DAILY....that is WAY more expensive than a transmitter). You think the FCC is a trouble? Try the health inspectors. You think only radio stations have employees? Run a McD, BurgerKing, Dennys or any other place. You think there aren't engineers in a kitchen? Sure are, they are just called plumbers, electricians and the like. And how many radio stations have to deal with dumpsters (and dumpsters and more dumpsters) full of garbage per day, lost kids, fights, hold-ups, drunks (not on a request line but two feet away from your face smelling of vodka and looking for a free meal?), people running up to you saying "there is a hair in my burger!" (hmmm...is it YOURS perhaps madamme?), etc. Are you insured for damages if she sues, or if someone sues you if the coffee is "too hot"? Lawyers? You don't think restaurant owners/franchisers have lawyers? Accountants? You think only radio stations and no other business use them? The things you make out to be some great burden on radio owners are the same thing ANY small or large business owner has to deal with. I dunno a single business owner without payroll taxes and an attorney for example.
Radio has its problems, expenses, capital expenses, insurance, etc. So does any other business.
radioray said:And how many radio stations have to deal with dumpsters (and dumpsters and more dumpsters) full of garbage per day, lost kids, fights, hold-ups, drunks (not on a request line but two feet away from your face smelling of vodka and looking for a free meal?), people running up to you saying "there is a hair in my burger!" (hmmm...is it YOURS perhaps madamme?), etc.
ALL of those things could happen on a regular basis with air talent. I was at a station where two DJs got into a fist fight, another one was a drunk, the morning guy complained about hairs on the mic wind screen (I'm not kidding), and husband of the GM's secretary shot the chief engineer. Who needs soap opera. As The Turntables Turn. And dumpsters...the station itself was full of garbage. And sewage in the basement.
"ALL of those things could happen on a regular basis with air talent. I was at a station where two DJs got into a fist fight, another one was a drunk, the morning guy complained about hairs on the mic wind screen (I'm not kidding), and husband of the GM's secretary shot the chief engineer. Who needs soap opera. As The Turntables Turn. And dumpsters...the station itself was full of garbage. And sewage in the basement."
Nice tales. I believe them. But you are adeptly deflecting (though not enough for me to not notice) my reply to your issue which is that the things you maintain are such burdens to radio stations (attorneys, accountants, capital expenses) are inherent to any business and that expenses are comparable though often greater for other industries (a big deep-freezer costs much more than a transmitter as does a 1000 patty a day griddle). Hell man, I know what my bro goes through. He runs his franchise, I run my group of stations and I am convinced I have the better and easier deal by a mile and he knows enough to agree, heck he does part time on my Classic Rock on Sundays for minimum wage and the fun of it.
And without soap opera radio would be just a bank or something. That is what makes radio...and life...fun. I will go into work to the stations I run tommorow and bitch and moan about the s**t I have to deal with, the kindergarten crap. A year from now I will laugh about it all and it will remind me why dealing with radio talent (both on-air talent, and sales talent) is the best fun you can have in life. I didn't get into the entertainment industry to have it easy with talent.
Nice tales. I believe them. But you are adeptly deflecting (though not enough for me to not notice) my reply to your issue which is that the things you maintain are such burdens to radio stations (attorneys, accountants, capital expenses) are inherent to any business and that expenses are comparable though often greater for other industries (a big deep-freezer costs much more than a transmitter as does a 1000 patty a day griddle). Hell man, I know what my bro goes through. He runs his franchise, I run my group of stations and I am convinced I have the better and easier deal by a mile and he knows enough to agree, heck he does part time on my Classic Rock on Sundays for minimum wage and the fun of it.
And without soap opera radio would be just a bank or something. That is what makes radio...and life...fun. I will go into work to the stations I run tommorow and bitch and moan about the s**t I have to deal with, the kindergarten crap. A year from now I will laugh about it all and it will remind me why dealing with radio talent (both on-air talent, and sales talent) is the best fun you can have in life. I didn't get into the entertainment industry to have it easy with talent.
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