Citadel Update

[Element9]

From Taylor On Radio, 2010-02-02

The agenda for the 10am hearing in a New York federal bankruptcy court is mainly so that Citadel can keep paying its ordinary expenses - wages, medical benefits, taxes, insurance, utilities, and talent fees and obligations due to affiliates.

Then come the professional names that will be involved with this matter for months, as Citadel grinds through its Chapter 11 re-org. Kirkland and Ellis will be the attorneys for the debtors and debtors in possession. Alvarez and Marsal will be the re-structuring advisors. Deloitte & Touche will be the auditors and accountants.

A more critical court date is a month away – March 3. That’s when they’ll discuss the debtors’ motions regarding the cash collateral, protecting the "pre-petition secured parties”, and how owners of common stock will be treated. Another professional-services name will be on the March 3 roster – Lazard & Freres, which the debtors want certified as financial advisor and investment banker.

I haven't heard anything to suggest that Farid Suleman will be leaving. He's still steering the ship and is likely to remain CEO after Citadel emerges from Chapter 11.

 

[Debaser]

I haven't heard anything to suggest that Farid Suleman will be leaving. He's still steering the ship and is likely to remain CEO after Citadel emerges from Chapter 11.[/size]

How can the problem be solved when the man who caused it is still at the helm? Ridiculous.

 

[The Voice of Reason]

It all boils down to one word: Greed!

The top CEO's of many corporations are only interested in their golden parachutes, stock options, bonuses, and other perks they get.

The correct thing to happen is let these companies fail. I know that it would result in a large number of employees losing their jobs, but this corporate greed in America has to stop!

Why bother to make a company work if a CEO is guarenteed a huge paycheck even if he or she fails?

The right thing would be let those CEO's walk out the door with nothing, and split his salery with employees who actually contributed something to the company. I know this isn't going to happen; but it sure as hell would be nice if it did.

 

[JustPastBuffalo]

Ironic.

Today the mail brought a letter from Kurtzman Carson Consultants, 2335 Alaska Avenie, El Segundo, Califormia 90245

United States Bankruptcy Court Southern District of New York
In re: Citadel Broadcasting Corporation, et al, Debtors,
NOTICE OF COMMENCEMENT OF CHAPTER 11 CASES AND MEETING OF CREDITORS​

On its face, it appears to be a procedural notification sent to all employees and former employees. As if we didn't know.

 

[aaronread]

On its face, it appears to be a procedural notification sent to all employees and former employees. As if we didn't know.

Not to make a pun, but I'd guess that's a legal thing. : As in, they have to do it because bankruptcy law requires it.

I know we're not going to see firesale prices, but any indication that the debtors are planning on demanding Citadel sell off broadcast properties in order to get more pennies on the dollar for their claims?

 

[heydaybegone]

With all this board activity...do ya think there's enough players on this board to create a new entity (board members only, of course) to acquire this sinking ship... and operate it correctly? Just a thought.
That's all.

 

[JustPastBuffalo]

Heyday... I can contribute the proceeds from a large bag of empties destined for Wegman's. A few months ago, that would've bought a couple hundred shares of Citadel. (Rimshot, gray Fidelipac with Dymo label, new pads and tension bar.) BTW, how many colors did those old Fidelipacs come in? I've seen gray, green and a weird light blue. I think Fidelipac made carts for 4 tracks (the Munz era) and they were white and black.

 

[heydaybegone]

large bag of empties destined for Wegman's

Hmmm. Favoring the Rochester based stronghold, not the WNY based Tops (ok, prior to the buyout, before the other buyout, after the sell off)...ok I see your point. ;D

 

[Element9]

From Taylor On Radio 2010-02-04

Citadel's Chapter 11 filing shows the revenue problem. It looks like Citadel was down another 15% for 2009 on the topline. This week’s bankruptcy court documents yield our first look at the almost-full-year revenue for 2009, and you see the revenue drag Farid Suleman has been facing. Let’s go back two years to 2007, where total revenues were about $418 million. Full-year 2008 - about $382 million. But for the first 11 months of 2009 – just $294 million. Citadel can't yet supply the December revenues but let’s extrapolate from January-November and say they’re about $26-32 million. That puts 2009 around $320-325 million. That’s a $60 million drop from ’08 and a nearly $100 million decline from 2007.

The really big number in this week’s “Debtor’s schedules of assets and liabilities” is $2,144,387,150. That’s more than $2.1 billion, and it’s the amount Citadel owes its main secured creditor, JP Morgan Chase. Citadel’s also got about $695 million in unsecured claims, for a total of $2.8 billion in liabilities. Who does Citadel owe? Music rights organizations, to single out one category. Unsecured creditors include ASCAP and BMI, each for about $1.1 million. And SoundExchange for about $280,000.

 

[SirRoxalot]

Farid's response to "Citadel Update"

Obviously, they need to cut more talent. They should add more syndication to help build an audience for content that's available elsewhere, and give up more ad avails.

Next, they need to fire more of those pesky sales people and hire more "order takers".

Maybe if they spend more on IBOC, they'll be able to add revenue from those extra channels. And they should add more syndicated programming on some HD2 channels. Yeah, it costs money, but eventually the return will be worth it, right?

[/sarcasm]

OK, cue "TheBigA"....

 

[TheBigA]

How can the problem be solved when the man who caused it is still at the helm? Ridiculous.

The fact is that no one person "caused" Citadel's bankruptcy. And no one else wants the gig.

 

[TheBigA]

Re: Farid's response to "Citadel Update"

OK, cue "TheBigA"....

OK...here we go.

I don't think they need to cut more talent. They need to make better use of the talent they have. They need to figure out who, out of the thousands of people they have on the air, has the ability to communicate and who just warms up the chair. They need to determine which formats benefit from talent, and which ones consider talent an interruption. I think a lot of this has been going on.

If you're an on-air talent, and you have name recognition in your community, it's time to get out of the studio and shake some hands. No politician ever got elected sitting in City Hall, and no radio station is going to make any impact on its community when the talent sits closeted in the studio. Get out, join the sales people in the field, close some deals, and get a portion of the commission.

Also, management needs to assess which stations are going to fade to black. Because there are a bunch of stations in the portfolio that aren't pulling their weight. They have some great assets and some big losers. Time to cut and run from the losers.

 

[TheBigA]

The correct thing to happen is let these companies fail. I know that it would result in a large number of employees losing their jobs, but this corporate greed in America has to stop!

Here are the choices:

Corporate greed...

Government welfare and socialism...

Or everyone start their own business, grow gardens their their backyards, and we go back to the agrarian economy of the 1800s.

We went through the anti-corporate populism in the early 1900s. The big railroads and other companies that employed millions went under, and lots of average people were out of work with no government welfare to bail them out.

Before you rush to kill all the corporations, take a look at your own financial situation and see how it will affect you. Where is your IRA? Who pays your salary? What's your plan B if the corporations that pay the community taxes go away? There's a domino effect that could hurt you in ways you don't expect.

 

[TheBigA]

This week’s bankruptcy court documents yield our first look at the almost-full-year revenue for 2009, and you see the revenue drag Farid Suleman has been facing.

I was trying to figure out how much Citadel must pay, on a monthly basis, for a $2 billion loan at 6.5% interest. It comes out to about $15 million a month.

 

[Element9]

From Taylor On Radio 2010-02-05

Citadel’s lenders take 90%. This week’s Chapter 11 filing, as expected, trims the more than $2 billion in debt and gives the senior lenders 90% of the equity in Citadel. That lending group - led by JP Morgan Chase - is currently owed $2,144,387,150. The filing puts the value of Citadel’s assets at around $1.6 billion, way below the value of the Disney deal just a few short years ago.

Unsecured creditors can choose either a slice of the other 10% of Citadel’s equity or cash of up to 5% of the claim – but no more than $2 million. (Ouch.)

The amount of debt under the re-org would be $762 million, or about one-third of the current level. Several T-R-I readers have asked about this next point - the Walt Disney Company itself has no interest in Citadel, after the June 2007 deal where it pocketed lots of cash from Citadel and spun off the remaining interest to its shareholders.

 

[aaronread]

Well, that ought to end any speculation about a massive facility sell-off. Or even a minor one. Oh, it's possible...likely, even...that they'll get rid of the most underperforming stations in the smallest markets, not unlike what Clear Channel did a few years ago.

But figure the unsecured creditors are owed about $200 million, and the most they could possibly claim of that is $10 million (5%)...and realistically I doubt it'll be that much, especially with the $2mil cap. ("Ouch?" That's an understatement.) Hell, they could sell a half-dozen small-market stations and pay that off. Or even just one medium-market station might be enough. At that point, Citadel's probably better off financing the payoffs and keeping the facilities to make money off them.

 

[TheBigA]

At that point, Citadel's probably better off financing the payoffs and keeping the facilities to make money off them.

This is why you need an accountant as CEO. To make those kinds of mundane decisions. Am I better off with VD or the plague? The bad news is this company owns a lot of dog AMs that no one will ever buy. Because the cost of running them, even fully automated, is more than they can make. That, ladies and gentlement, is the problem with radio today. You can get a frequency for free, and still go broke running the place.

 

[aaronread]

The bad news is this company owns a lot of dog AMs that no one will ever buy. Because the cost of running them, even fully automated, is more than they can make.

How "dog" are we talking here? To the point where they'd be better off taking them dark because it'll improve the viability of their remaining AM properties? Or perhaps a form of "protection money" could be done with other companies that own AM properties: pay us a little cash and we'll take all these annoying graveyarders off the air, thus improving your signal.

Even with the real estate bubble, one wonders if several of those facilities, if they're as weak as you say, would be worth more if taken dark and the land sold off.

Of course, keeping this in line with the correct R-I board, I don't think any of the properties that Citadel owns in CNY/WNY are really "dogs". Maybe the Binghamton AM's are a little pricey to run with three-tower DA's at night, but only in comparison to the small size of the market; Binghamton's a lot smaller than it was 30-odd years ago.

 

[TheBigA]

How "dog" are we talking here? To the point where they'd be better off taking them dark because it'll improve the viability of their remaining AM properties? Or perhaps a form of "protection money" could be done with other companies that own AM properties: pay us a little cash and we'll take all these annoying graveyarders off the air, thus improving your signal.

I remember that's what killed WOWO in Ft. Wayne. WLIB in NYC bought it, and powered it down, so they could increase power in the bigger city. I don't see that happening now. No one has that kind of money. I believe what the industry is hoping for is a decision from the FCC that allows them a special tax benefit for donating a radio station to a minority owner.

The Wilkes Barre Scranton board was talking about a Citadel station over the summer that was off the air because it cost more to fix the transmitter than the ad revenue it could make. Ultimately, they found the money somewhere...probably cost someone's job. But in reading the comments, it was clear that this was a station that had no audience, and was a drain on the company's finances. What's the point?

Are there stations like that in CNY? I'm sure there are a couple.

 

[Penrod Rightout]

Heyday... I can contribute the proceeds from a large bag of empties destined for Wegman's. A few months ago, that would've bought a couple hundred shares of Citadel. (Rimshot, gray Fidelipac with Dymo label, new pads and tension bar.) BTW, how many colors did those old Fidelipacs come in? I've seen gray, green and a weird light blue. I think Fidelipac made carts for 4 tracks (the Munz era) and they were white and black.

Rusty Red was also one of the colors of the old Fidelipacs. Cost-cutting measure of the 1970s was buying pancakes and a reloading machine so we could reload our own carts. Even empty shells are handy in the cost-conscious radio plant, six carts stacked three high, clipboard on top and bingo! You've got a monitor stand.