Latest CC rumor

[Bug on the rug]

ANOTHER round of layoffs in July coinciding with a $2 bil. loan payment. (Like if CC layed off virtually every employee they'd be able to pay off the $20 bil. loan!).

CC employees, you've got two months to take cover to dodge the bullets!

 

[GenXRadio]

Jeez! How much more can they cut?
How much more can they ask employees to do?
Why don't they get on with selling some of it's smaller market stations, get some capital, shed some weight that way instead of laying staff off.
Even in this down economy they would get good value by some of the small market stations especially if they can have some of their syndicated shows on the stations but not have the operating overhead.
I am sure local buyers would keep some of the syndicated shows - AM & PM drive, or at least AM drive while filling in with some local shows.
Makes a lot more sense to me then bad press from more lay offs and you make yourself leaner without having to be the bad guy laying people off.

 

[SimiRadioListener26]

Jeez! How much more can they cut?
How much more can they ask employees to do?
Why don't they get on with selling some of it's smaller market stations, get some capital, shed some weight that way instead of laying staff off.
Even in this down economy they would get good value by some of the small market stations especially if they can have some of their syndicated shows on the stations but not have the operating overhead.
I am sure local buyers would keep some of the syndicated shows - AM & PM drive, or at least AM drive while filling in with some local shows.
Makes a lot more sense to me then bad press from more lay offs and you make yourself leaner without having to be the bad guy laying people off.

What if there aren't enough buyers to justify selling stations, or they won't pay enough?

 

[wpb1999]

My question is, Many individual CC stations are great (KJR, KFI, KOST, ect.), but the company as a whole is terrible. I don't remember, how exactly did they get into so much debt?

 

[recto101]

My question is, Many individual CC stations are great (KJR, KFI, KOST, ect.), but the company as a whole is terrible. I don't remember, how exactly did they get into so much debt?

Don't forget KIIS-FM they provide most of the revenue for CC Los Angeles and 2nd highest revenue in the country. Hey if CC wants to raise revenue and with cuts they should consider putting a monthly fee for using the Iheartradio app but I doubt the audience would permit this to happen.

 

[TheBigA]

ANOTHER round of layoffs in July coinciding with a $2 bil. loan payment.

Can you post a reference that shows this due date? They did a refinance on their debt so the $2 billion is now due in 2014.

That's not to say they won't lay more people off. They're still absorbing staff from the Metro Traffic merger. And they were hit hard by the Rush advertiser boycott. If it cost Cumulus $2-4 million, the cost to CC was greater.

Regarding selling smaller markets, there's a glut of stations right now, caused by the Cumulus-Citadel merger. And a shortage of buyers, caused by the bank crisis. Have you tried to apply for a loan lately?

CC got into this situation by going private. Rather than remain a public company, subject to the whims of Wall Street, they bought up all their stock and went private. The likely solution will be to go public again. But not until their reposition the company as one that's worthy of investment. That's going to take a while.

 

[robnokshus06]

Jeez! How much more can they cut?
How much more can they ask employees to do?
Why don't they get on with selling some of it's smaller market stations, get some capital, shed some weight that way instead of laying staff off.

You are presuming that Bain is operating as if they were in the media business. That is NOT their model:

http://www.phoenixnewtimes.com/2012...parasite-mitt-romney-s-years-at-bain-capital/

There is a lot more money for the principles at Bain to bleed from the company before the bill is due, and when it does come due, they will all flutter away under their golden parachutes and leave the smoldering ash heap of Clear Channel in their wake.

 

[TheBigA]

You are presuming that Bain is operating as if they were in the media business.

Bain isn't running CC. They're just supplying the money. The people running CC are in the media business, and they know they have a limited time to turn the company around before the money people move on. That's why Bob Pittman is using the radio assets to reinvent the company so it can compete in a new media world.

 

[robnokshus06]

You are presuming that Bain is operating as if they were in the media business.

Bain isn't running CC. They're just supplying the money. The people running CC are in the media business, and they know they have a limited time to turn the company around before the money people move on. That's why Bob Pittman is using the radio assets to reinvent the company so it can compete in a new media world.

Riiight... Remind me again, who does Bob Pittman answer to again?

 

[davideduardo]

Don't forget KIIS-FM they provide most of the revenue for CC Los Angeles and 2nd highest revenue in the country.

KIIS bills around $57 million, while the LA cluster bills around $225 million. So KIIS does not provide anywhere close to "most" of the revenue for CC in LA.

 

[davideduardo]

Riiight... Remind me again, who does Bob Pittman answer to again?

He reports to the Board of Directors, which includes some... but not all... representatives from Bain Capital, as well as folks from THL and independent members.

As Big A says, the hope for CC is to transform its business model into new media while acquiring an image of being positioned for the future so that Bain and Lee can recover as much of the investment as possible in an IPO.

Bain's interests are no different than those of any other investor: try to get a good return on capital. If you can't do that, then try to recover as much principal as possible.

 

[davideduardo]

My question is, Many individual CC stations are great (KJR, KFI, KOST, ect.), but the company as a whole is terrible. I don't remember, how exactly did they get into so much debt?

Simple: they bought stations at the peak in prices in the late 90's and early 00's before the recession and new media hit. The assets are worth much less now and revenue is off, in real, inflation adjusted, dollars, about 40% from the 2004-2006 peak revenue years.

Example: The allocated price Radio One paid for 100.3 in LA is about $400 million. Emmis just adjusted downwards the price of 93.9 FM to around $80 million; that is a reduction of 80% in stick value!

 

[TheBigA]

Riiight... Remind me again, who does Bob Pittman answer to again?

Bob Pittman isn't a Bain guy. He's a well respected broadcaster who put some of his own personal money into CC. As Romney himself has pointed out, there are several different approaches that Bain uses in its investments. The cut & run approach is when a company is dead and Bain is trying to recoup on its investment. They will point to successes like Dominos or Home Depot, where management used the Bain money to fix the company. That's what CC is doing now. No question that towers & transmitters radio companies are a thing of the past. If CC sticks to that model, it will be dead in a few years. Pittman has bought the company some time, and he intends to show Bain that if they stick with the company, he can transform it into something that will bring them a better return than if they simply cut & run. That's why they're delaying a lot of these due dates on debt. But no doubt the clock it ticking.

 

[michael hagerty]

No question that towers & transmitters radio companies are a thing of the past. If CC sticks to that model, it will be dead in a few years.

There's the takeaway that shouldn't get lost in this conversation: Whether CC succeeds or fails, the thing you've always thought of as radio is dead. The only difference will be the amount of money Bain (and CC, if it succeeds and can pay Bain to go away) makes or (if they fail) loses.

 

[radio-darn]

He's a well respected broadcaster ....

Until he went to CC he hadn't really been in broadcasting something like 20 years and much of that "respect" hinges on who you believe actually created MTV.

 

[radio-darn]

I recall that after CC bought Jacor, AMFM, and the billboard company (remember "synergies"?) they had a market cap of about $60 million - now the combined market cap for CC media and CC outdoor is under $20 billion. They also lost huge amounts in asset values as Dave notes, and they have close to $20 billion in long-term debt. Yet somehow, you just know, Bain will make money on this - certainly the Mays haven't gone to the poorhouse because of these lost billions: ordinary stockholders and former workers have born the brunt of the losses.

My question is, Many individual CC stations are great (KJR, KFI, KOST, ect.), but the company as a whole is terrible. I don't remember, how exactly did they get into so much debt?

Simple: they bought stations at the peak in prices in the late 90's and early 00's before the recession and new media hit. The assets are worth much less now and revenue is off, in real, inflation adjusted, dollars, about 40% from the 2004-2006 peak revenue years.

Example: The allocated price Radio One paid for 100.3 in LA is about $400 million. Emmis just adjusted downwards the price of 93.9 FM to around $80 million; that is a reduction of 80% in stick value!

 

[michael hagerty]

He's a well respected broadcaster ....

Until he went to CC he hadn't really been in broadcasting something like 20 years and much of that "respect" hinges on who you believe actually created MTV.

Let's just say that I'd buy Mike Nesmith and Les Garland lunch first.

 

[davideduardo]

Until he went to CC he hadn't really been in broadcasting something like 20 years and much of that "respect" hinges on who you believe actually created MTV.

But he had been in various aspects of media. Radio is a medium in decline, and if the investors who own CC want to recover any significant part of their investment, they have to transform the company into a new media operation.

As Big A has stated, the business has to move from towers and transmitters to sessions and streams.

Pittman is as likely as anyone on the planet to make this happen.

 

[davideduardo]

I recall that after CC bought Jacor, AMFM, and the billboard company (remember "synergies"?) they had a market cap of about $60 million - now the combined market cap for CC media and CC outdoor is under $20 billion.

I think you mean "had a market cap of about $60 billion..."

Remember that CC spun off Live Nation and gave shares to the CC stockholders; you have to add Live Nation to any before-and-after comparison.

And some of the "purchases" were actually mergers in the form of stock trades... AM/FM was folded into CC via an equity transaction.

In any case, the "enterprise" of CC today has suffered no more than and sometimes less than other pure radio plays. Whether you look at SBS or Cumulus or Emmis, all radio companies are trading at just a few percent of their peak values in the mid to late 90's.

They also lost huge amounts in asset values as Dave notes, and they have close to $20 billion in long-term debt. Yet somehow, you just know, Bain will make money on this - certainly the Mays haven't gone to the poorhouse because of these lost billions: ordinary stockholders and former workers have born the brunt of the losses.

Bain and TJL will likely take a haircut on this. They made a deal before the economy started to crash, and had to go through with what was fundamentally the same deal. The Mays got their share of the proceeds, and the shareholders got, in my opinion, a lot more from the deal than they would have gotten if the deal had cratered and they sold the shares on the market.

Radio One popped at $20 a share, and got up to $90 per split adjusted share. Today, ROIA and ROIAK are trading at about $1.05 a share... less than 2% of their peak. Emmis peaked at around $30, and is now at less than $1.40, below 5% of the pre-recession peak.

As to workers, between the active unemployed and those who have given up, we have a real unemployment rate of about 15% so laying the blame on the Mays family, Bain and TJL or Clear is disingenuous. The real issues are old media, radio and the economy.

 

[LA_Guy]

Riiight... Remind me again, who does Bob Pittman answer to again?

Bob Pittman isn't a Bain guy. He's a well respected broadcaster who put some of his own personal money into CC. As Romney himself has pointed out, there are several different approaches that Bain uses in its investments. The cut & run approach is when a company is dead and Bain is trying to recoup on its investment. They will point to successes like Dominos or Home Depot, where management used the Bain money to fix the company. That's what CC is doing now. No question that towers & transmitters radio companies are a thing of the past. If CC sticks to that model, it will be dead in a few years. Pittman has bought the company some time, and he intends to show Bain that if they stick with the company, he can transform it into something that will bring them a better return than if they simply cut & run. That's why they're delaying a lot of these due dates on debt. But no doubt the clock it ticking.

Bob Pittman is a hack whose last big score was MTV - over 30 years ago---and I 'm beginning to believe that it was LUCK more then skill there--he was in the right place at the right time!