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Silent AM 860

There is a pattern that has developed. BBGI (the publicly traded entity) acquires the radio station. They then sell the real estate to Beasley Family Towers (the family owned private entity) at a seriously low ball price. Then Beasley Family Towers eithers rents the site to BBGI or shuts down the station and sells the real estate. The family benefits and the stock holders take the loss.

Is this illegal, immoral or just fattening?
 
bigdonho said:
There is a pattern that has developed. BBGI (the publicly traded entity) acquires the radio station. They then sell the real estate to Beasley Family Towers (the family owned private entity) at a seriously low ball price. Then Beasley Family Towers eithers rents the site to BBGI or shuts down the station and sells the real estate. The family benefits and the stock holders take the loss.

Is this illegal, immoral or just fattening?
Click to expand...
They call it stripping tangible assets. Radio in itself isn't a profitable venture anymore, and venture capital firms are looking for a quick dollar. Buying transmitter site property and then leasing it back to the radio or TV station gives the parent company a quick cash infusion, potentially buying the radio station some time. Eventually, if the property is sought after by a developer, the radio or TV station is given notice they need to vacate the land. You're seeing more and more of those examples as licenses get turned in, or silent STA's are issued while financing is pursued to pay for moving expenses. Many times either the funding isn't available, or the cost of moving the station exceeds the value over an estimated ten years.
 
It depends on the terms and timing of the original purchase of the station(s). When BBGI was formed did they get the land and stations from the family or just the stations? It's a publicly held company so they should be following "generally accepted accounting standards". If the Family land deal happened after the company went public did it violate the conditions of the Corporate debt? Was the land "sold" at a fair price? Would America Tower (or whoever) paid more? If not the shareholders have a case. The debt holders should look at the terms of the loans too. Was the land part of the collateral?

If you have less than hundred dollars (to lose), you could easily buy 100 of shares go to shareholder services and ask to look at the terms of the Family land deal, if the land was ever part of the company.

I suspect they never transferred any land to the Corporation. When you buy stock you should always check the assets.
 
secondchoice said:
It depends on the terms and timing of the original purchase of the station(s). When BBGI was formed did they get the land and stations from the family or just the stations? It's a publicly held company so they should be following "generally accepted accounting standards". If the Family land deal happened after the company went public did it violate the conditions of the Corporate debt? Was the land "sold" at a fair price? Would America Tower (or whoever) paid more? If not the shareholders have a case. The debt holders should look at the terms of the loans too. Was the land part of the collateral?

If you have less than hundred dollars (to lose), you could easily buy 100 of shares go to shareholder services and ask to look at the terms of the Family land deal, if the land was ever part of the company.

I suspect they never transferred any land to the Corporation. When you buy stock you should always check the assets.
Click to expand...
As long as we're discussing accounting, a new accounting standard of about 5 years ago (ASC 842) now requires companies to consider leases as debt in the amount of the total contracted lease payments, and not just a monthly expense. This was to prevent companies from hiding large amounts of potentially crippling debt in their books as a lease with nothing more than a recurring monthly expense, and as a result many companies have been incented to restructure their obligations.
 


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