If Citadel Files Bankruptcy.........

[abccbsnbcfox]

Citadel Broadcasting has until Tuesday, 12/15 to shore up its finances. The company is $2 billion dollars in debt, and if the creditors agree, all debt except for 760 million would be wiped out.

The company will have to take a Chapter 11 bankruptcy to do this.

In the past, what this method done to broadcasting groups, is:

1) Gotten the creditors off their back (that's the main thing)
2) Made the lenders (the banks and the investment groups) part owners in the company that emerges from the bankruptcy (that's the second main thing).
3) Wipe out the shareholders.. their shares in the company will be reduce to $0 value.
4) Made the individual stations separate properties that can be sold immediately to satisfy the remaining 760 million dollars of debt.

Will this change what you hear on WIVK-FM, WKDF-FM, WQUT-FM and WSKZ-FM?
Lordy, what could you possibly hear instead of country on the first two, and the tired-rock-they-play-too-much-of, on the last two?

The formats won't change at all... people don't stop listening just because your parent company is bankrupt.
But it does have an immediate impact on station operations.

What you will see less of, is contests, live remotes, money-giveaways, and less community-sponsored events by the radio station. Most of them will go away entirely, although a small few may linger. If a radio personality leaves, that position will most likely not be filled, and if the station can save money by purchasing a cheap syndicated show in place of that radio personality, you'll be hearing the cheap program. All station credit cards are cancelled, all bank accounts are frozen, and employee pay will come through the company, but approved through the bankruptcy court. Bills to the power company, the landlords, and the FCC are also paid through the bankruptcy court. If equipment breaks down, you'd better fix it. New purchases can only be done with the bankruptcy court's approval, and that includes transmitter, transmission lines, microwaves, boards, guy wires, antennas, waveform monitors, equalizers, towers, tower lights and anything mechanical.


Most bankrupt broadcasting companies seem to be operating adequately, especially TV stations. Radio stations generally are more involved in giving money away, and most of that will stop in bankruptcy.

 

[boogiecheck]

It's going to be very interesting to see what happens with their local holdings if and when this all plays out.

I can't imagine them not being able to sell off their Nashville and Knoxville clusters.

 

[BRice16]

Knoxville has been, in several quarters over the last two years, been Citadel's ONLY profitable market.

 

[abccbsnbcfox]

It's good that Knoxville is profitable.. the station cluster in K-town should draw a pretty good price.

 

[boogiecheck]

It's good that Knoxville is profitable.. the station cluster in K-town should draw a pretty good price.

What do you think the Knox cluster would bring?

Two Knoxville stations (WIVK, WNML-AM) and three small "A" stations, (WNML [Loudon], WNRX [Jeff City], WOKI [Oliver Springs]).

 

[RMarino]

What do you think the Knox cluster would bring?

Two Knoxville stations (WIVK, WNML-AM) and three small "A" stations, (WNML [Loudon], WNRX [Jeff City], WOKI [Oliver Springs]).

No WNOX?

 

[boogiecheck]

What do you think the Knox cluster would bring?

Two Knoxville stations (WIVK, WNML-AM) and three small "A" stations, (WNML [Loudon], WNRX [Jeff City], WOKI [Oliver Springs]).

No WNOX?

They don't own that station, it's under an LMA.

And that begs the question, will it stay in the fold? Or will it go back to the owner?

 

[BRice16]

What do you think the Knox cluster would bring?

Two Knoxville stations (WIVK, WNML-AM) and three small "A" stations, (WNML [Loudon], WNRX [Jeff City], WOKI [Oliver Springs]).

No WNOX?

They don't own that station, it's under an LMA.

And that begs the question, will it stay in the fold? Or will it go back to the owner?

I think that depends on who the new owner is. If the LMA is folded, the WOKI calls have to revert to the 100.3 frequency, per the agreement with Pirkle.

 

[Mid West Clubber]

Will true oldies move to 100.3 as well?

 

[boogiecheck]

What do you think the Knox cluster would bring?

Two Knoxville stations (WIVK, WNML-AM) and three small "A" stations, (WNML [Loudon], WNRX [Jeff City], WOKI [Oliver Springs]).

No WNOX?

They don't own that station, it's under an LMA.

And that begs the question, will it stay in the fold? Or will it go back to the owner?

I think that depends on who the new owner is. If the LMA is folded, the WOKI calls have to revert to the 100.3 frequency, per the agreement with Pirkle.

Last I checked the WNOX call letters would stay with 100.3 unless Pirkle gave them up. Not sure he would do that given his history with the actual WNOX radio station.

 

[Mid West Clubber]

What would he really gain from getting the woki calls back on 100.3 other than getting his heritage back. I dont think he really cares, he just wants to collect his paycheck,,, but can you blame him,, he is an older man, and has run radio stations since the 60s, so he deserves a break.

 

[BRice16]

What do you think the Knox cluster would bring?

Two Knoxville stations (WIVK, WNML-AM) and three small "A" stations, (WNML [Loudon], WNRX [Jeff City], WOKI [Oliver Springs]).

No WNOX?

They don't own that station, it's under an LMA.

And that begs the question, will it stay in the fold? Or will it go back to the owner?

I think that depends on who the new owner is. If the LMA is folded, the WOKI calls have to revert to the 100.3 frequency, per the agreement with Pirkle.

Last I checked the WNOX call letters would stay with 100.3 unless Pirkle gave them up. Not sure he would do that given his history with the actual WNOX radio station.

No. Pirkle owns the 100.3 frequency, which had the WOKI calls when Dick first set up an LMA. When Citadel bought out the LMA, 100.3 still had WOKI.

Pirkle allowed Citadel to move the WNOX calls to 100.3 when they moved the format from 99.1. However, the LMA states that 1) Citadel must park the WOKI call letters on a station in their cluster and 2) If the LMA is terminated or expires, they must return the WOKI calls to the 100.3 frequency.

 

[boogiecheck]

What do you think the Knox cluster would bring?

Two Knoxville stations (WIVK, WNML-AM) and three small "A" stations, (WNML [Loudon], WNRX [Jeff City], WOKI [Oliver Springs]).

No WNOX?

They don't own that station, it's under an LMA.

And that begs the question, will it stay in the fold? Or will it go back to the owner?

I think that depends on who the new owner is. If the LMA is folded, the WOKI calls have to revert to the 100.3 frequency, per the agreement with Pirkle.

Last I checked the WNOX call letters would stay with 100.3 unless Pirkle gave them up. Not sure he would do that given his history with the actual WNOX radio station.

No. Pirkle owns the 100.3 frequency, which had the WOKI calls when Dick first set up an LMA. When Citadel bought out the LMA, 100.3 still had WOKI.

Pirkle allowed Citadel to move the WNOX calls to 100.3 when they moved the format from 99.1. However, the LMA states that 1) Citadel must park the WOKI call letters on a station in their cluster and 2) If the LMA is terminated or expires, they must return the WOKI calls to the 100.3 frequency.

Just read the document on the FCC website and from what I gather it isn't as simple as that. It is at the licensee's discretion to change the call letters back... or not.

Either way, Citadel does not own the station therefore it could not be part of any sale unless Pirkle was amiable to some sort of renegotiation and possibly a larger payday.

 

[DelanoBoy]

The Citadel cluster in Knoxville is worth what someone is willing to pay for it, and get financing. Both of those are hard to find right now - willing buyers and financing. Educated guesswork is all you can count on right now. The cluster would probably fetch between $ 25 million and $ 40 million if a capable buyer could be located - probably closer to $ 30 million. WIVK alone would probably go for a fair market price (not a fire sale price) of about $ 15 to $ 25 million. WIVK might have gone for closer to $ 100 million in the go-go days. The other stations will be more difficult to move, especially at today's top dollar, if WIVK isn't a mandatory part of the deal. All of this will affect purchase price.

WIVK is probably more valuable than ever as a facility because they haven't cut to the bone and chased their on-air and sales talent into other industries. They're primed to stay dominant in the market. But the purchase dollars aren't there. The huge groups that drove up the prices - Clear Channel, Citadel and Cumulus - are all in various stages of free fall toward bankruptcy. They can't buy more stations. As a result, station prices can't stay at their previous artificial highs. I know some local (Knoxville) folks are scrambling to put together one or more purchase groups for WIVK alone, if they can finance, but the other stations in the cluster are equal work for less profit.

WIVK may also be trapped in bankruptcy court because they're so profitable (now there's a paradox). Without WIVK's operating profit, keeping Citadel's lesser performing stations operating in the interim may be difficult. As a result, WIVK might be one of the last to be sold off.

 

[kd4rnc1964]

They must be sweating bullets in Gray. That would give Don Raines to at least buy WQUT and stick it to the company for letting him go as GM. Probably have to sell the whole Tri cluster to the highest bidder if it happens. John Patrick probably has a headache these days. Oh, guys/gals. I still say 102.7 won't last and you'll be hearing country from Kingsport by next year. Smoke that one. It would be nice to hear some oldies out of Knoxville but not on a 100kw stick.

 

[boogiecheck]

They must be sweating bullets in Gray. That would give Don Raines to at least buy WQUT and stick it to the company for letting him go as GM. Probably have to sell the whole Tri cluster to the highest bidder if it happens. John Patrick probably has a headache these days. Oh, guys/gals. I still say 102.7 won't last and you'll be hearing country from Kingsport by next year. Smoke that one. It would be nice to hear some oldies out of Knoxville but not on a 100kw stick.

The Johnson City cluster will move fast, if put up for sale. I don't know if it will move as a cluster or broken up, but it will be no problem divesting it.

Oldies on 100.3? I don't see that ever happening. They would most likely try to keep the current programming and if that could not be accomplished they would go back to either CHR or country.

 

[abccbsnbcfox]

Having been through a radio and TV station group bankruptcy, it's probably good to know the Knoxville cluster is valued what it is. It will never fetch that much. Unfortunately, a bankruptcy sale is a fire sale, and it's worse if the creditors want their money right this minute. If stations fetched what they were worth, there would have been no reason for the bankruptcy.

The one I witnessed firsthand, was where our creditors drew the line on when and how much they'd get back on their dollar. When it was shown how it couldn't be met, they demanded our group move from Chapter 11 to Chapter 7. After months of haggling and no agreement, the bankruptcy judge ordered Chapter 7, the immediate liquidation of the company. One of our group's TV station network affiliates valued at 155 million dollars, went for 97 million.. another net affiliate valued at 121 million, went for 83 million. Both those stations were in a 3 VHF-TV market, both low on the channel dial, money-making cash cows, and worst of all, both were established Number 1 stations in their markets. One of our group's radio stations in Los Angeles was undercut almost 38 per cent of its value.

This happened several years ago, and of course back then, the prices include analog antennas, transmitters and equipment (which used tremendous electricity), the licensing fees (back then, network affiliates did not have to pay the network to carry its programs like they do now, networks paid them) and cable TV wasn't your biggest competitor.

Frankly, if the Cit had to dump the Knox cluster in a Chapter 7, I'd knock several million dollars off that assessed value, probably up to about 10 million. And from what I saw, it doesn't matter how high the stations are rated. Creditors, especially banks and investment groups, do not listen or watch the stations they've invested in. They're too busy bean-counting. The prices could even go lower, if there's a prolonged period with no buyer, and the creditors are screaming. I have seen this.

If the Cit files Chapter 11, keep an ear to what the creditors are saying. The tone of how quickly they want their money, will determine the selling prices of stations or station clusters, if there are any planned sales.

As for good ole Johnny P, don't count on much involvement from him, although it does make for good speculation. John's out for good. The tone of the industry has long passed him by, and he could never compete in today's radio marketplace. There's no sense living in the past, and in his case "only a fool fights in a burning house," as I heard on Star Trek once. I can guarantee he'd LMA 100.3 to somebody else, and continue cashing the checks.

 

[jmtillery]

Having been through a radio and TV station group bankruptcy, it's probably good to know the Knoxville cluster is valued what it is. It will never fetch that much. Unfortunately, a bankruptcy sale is a fire sale, and it's worse if the creditors want their money right this minute. If stations fetched what they were worth, there would have been no reason for the bankruptcy.

The one I witnessed firsthand, was where our creditors drew the line on when and how much they'd get back on their dollar. When it was shown how it couldn't be met, they demanded our group move from Chapter 11 to Chapter 7. After months of haggling and no agreement, the bankruptcy judge ordered Chapter 7, the immediate liquidation of the company. One of our group's TV station network affiliates valued at 155 million dollars, went for 97 million.. another net affiliate valued at 121 million, went for 83 million. Both those stations were in a 3 VHF-TV market, both low on the channel dial, money-making cash cows, and worst of all, both were established Number 1 stations in their markets. One of our group's radio stations in Los Angeles was undercut almost 38 per cent of its value.

This happened several years ago, and of course back then, the prices include analog antennas, transmitters and equipment (which used tremendous electricity), the licensing fees (back then, network affiliates did not have to pay the network to carry its programs like they do now, networks paid them) and cable TV wasn't your biggest competitor.

Frankly, if the Cit had to dump the Knox cluster in a Chapter 7, I'd knock several million dollars off that assessed value, probably up to about 10 million. And from what I saw, it doesn't matter how high the stations are rated. Creditors, especially banks and investment groups, do not listen or watch the stations they've invested in. They're too busy bean-counting. The prices could even go lower, if there's a prolonged period with no buyer, and the creditors are screaming. I have seen this.

If the Cit files Chapter 11, keep an ear to what the creditors are saying. The tone of how quickly they want their money, will determine the selling prices of stations or station clusters, if there are any planned sales.

As for good ole Johnny P, don't count on much involvement from him, although it does make for good speculation. John's out for good. The tone of the industry has long passed him by, and he could never compete in today's radio marketplace. There's no sense living in the past, and in his case "only a fool fights in a burning house," as I heard on Star Trek once. I can guarantee he'd LMA 100.3 to somebody else, and continue cashing the checks.

Would you mind disclosing which company you were associated with that went Chapter 7? You may contact me off-list at [email protected] if you prefer. I'm curious considering re-organization and liquidation seem to be the norm among the larger radio groups today, and I'd like to compare and contrast what is happening today with what has already happened in the past.

 

[kd4rnc1964]

CHR sucks these days. 100.3 if it becomes something else, cant' ever be what it was. Brother John is long gone and the music is not the same. From the days of Culture Club and Frankie Goes to Hollywood,Go Go's, Bananarama,it doesn't sound like that today. Even the hair bands don't sound like it. The closest to come to those guys are Nickleback etc. Coldplay resembles U2. Some AC stations sound like the eighties now but not much. Does this sound like I'm getting old? ok, where's my walker. Bring me some Ensure nurse!

 

[Mid West Clubber]

I feel ya, it will never be the woki we all remember... Id rather see them go Dance, but that wont happen, especially in the smokies. Although Know had 95.3 TNZ, but the times and music have changed, its not in the mainstream right now,, but I would like the WOKI calls back, but with a dance format.