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Now What

T

T_Magoo

Hey kids...here's something to chew on while your chestnuts overheat. We've already seen how the mismanagement of some of America's great radio stations by these monstrous companies has sent some of these stations into a tailspin of sorts. Buildings more than half empty. Remember how cramped it was on Franklin Street before the move. Three radio stations and all of their support teams in a building that was designed just for GR. When you consider the loss of nights, overnights, weekends and some daytime dayparts...your staff has gone from maybe 10 or 12 down to what 3 or 4...maybe less. Promo teams...almost non-existent. Sales.

As you have been hearing for weeks, Citadel finally declared bankruptcy this Sunday, about three weeks before defaulting. Clear Channel...and yes I know, there are no CC stations in Buffalo...but it will affect everyone in some way...is having trouble. A group of their bondholders claimed a plan to raise $750 million in debt without their permission effectively put the company in default. There will be a fight for control of that company.

Now with all of that said. Where does this leave us? Budgets...talent...rates? Clear Channel has been puking on their own rate cards lately, and offering 10's and 15's just to get the money in the door. So the financials could change everything, and at the end of the day I don't believe that the suits will have either the listeners' or the talent's best interests at heart. Man, I long for the suits from the old days...they might have been doing us like prom night in Alden Correctional...but at least we were still in the building with a chance to get even.

Thoughts. Maybe a visit by 3 radio ghosts.

PS...Merry Christmas and Happy New Year to all my old friends. And best of luck to all who are sweating their livelihoods every freakin' day because of this.
 
Read and form your own opinions. Note that Disney as a creditor holds an $11.2 million claim against Citadel. The Forstmann-Little equity holding is essentially wiped out.

JP Morgan-Chase and GE Capital are the major creditors (two of 70 according to previously published reports.) JPM-Chase these days holds a lot of shaky paper, including that of the Tribune Company.

Rather than having to service $2.1 billion in debt, Citadel now has a revised term loan of $762.5 million. Approximately $1,337,500,000 (63%) of debt is relieved.

Given the positive cash flow of the radio stations, happy days are here again. According to Suleman, nothing changes.

However, if just one of the wiped out shareholders files a lawsuit against Suleman and/or the board of directors, the procedings could take a different course.

Inside Radio

Yahoo Finance

Reuters

The Wall Street Journal reports, "The filing is a blow to private-equity firm Forstmann Little & Co., which owns 28.7% of Citadel, according to the company's bankruptcy filing. A person familiar with the investment said the firm had invested $1.5 billion in Citadel but sold off a substantial portion of the stake over the years, leaving an exposure of about $250 million."

One might ask if Citadel's filing will create a domino effect causing Regent and Cumulus to follow suit.
 
Keep these things in mind:

1. What did Forstmann-Little pay for Citadel when they bought it from Larry Wilson?

2. How much did Teddy Forstmann put in his pocket when he took the company public and sold a bunch of stock? How much of that cash went into his pocket?

I'm not so sure that the "blow to private-equity firm Forstmann Little & Co." is as big as reported if you take that into account.
 
SirRoxalot said:
I'm not so sure that the "blow to private-equity firm Forstmann Little & Co." is as big as reported if you take that into account.
Click to expand...

No one willingly loses money. One assumes that Ted or his proxy was at the board meeting Monday when the vote was taken. He knew the consequences. That's a big pill to swallow, even if at some point you got your original investment back. If he can eat that kind of money, then he could have laid out the cash so they met their covenant in January. There's something here that doesn't fit.
 
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