-
Get involved.
We want your input!
Apply for Membership and join the conversations about everything related to broadcasting.
After we receive your registration, a moderator will review it. After your registration is approved, you will be permitted to post.
If you use a disposable or false email address, your registration will be rejected.
After your membership is approved, please take a minute to tell us a little bit about yourself.
https://www.radiodiscussions.com/forums/introduce-yourself.1088/
Thanks in advance and have fun!
RadioDiscussions Administrators
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
The Coming Cumulus Massacre of Citadel
- Thread starter BJC
- Start date
Anybody got $9.99 so I can read the real story?
SirRoxalot said:Anybody got $9.99 so I can read the real story?
I've got 5 shares of Sirius/XM I could loan you.
I'll take the $9.99. And a "Whip Inflation Now" button.
So when the best salespeople go to Entercom and Townsquare, what is Cumlulus going to do? What's up with this new breed of companies? They don't want people to make money for them. Odd.
I'll take the plunge this weekend. Buy your own you cheap bas*ards! ;D
I'll take the plunge this weekend. Buy your own you cheap bas*ards! ;D
I
imyourfatherluke
Guest
For anyone that thought Citadel couldn't be a worse operator of radio clusters, comes Lew Dickey. I feel sorry for the people left at that group. The only positive will be that we'll get another country station in the market and this will cut down the clutter. I'm ready for 103.3 Continuous Country!
Let's just say that I sense big changes coming, and big names falling before the end of the year. Lew Dickey is promising $50-million in "synergies". He's also promising significant investment in "digital". And it will likely happen quickly.
“The vast majority of it will occur in the first six months,” Dickey said when asked about the pace of those synergies during Q&A. “I would say you’re looking at 75-80% of it in the first year, but two-thirds or more of it in the first six months, and the rest would sort of tail-in in the next six months after that." - RBR, 3/15/2011
Citadel Buffalo has issues. 97-Rock's audience is aging out of the prime demos. Their morning show isn't what it once was. The timing is off with Larry in Florida, and the energy is lacking. Maybe even they're tired of the "hot moms" and other tired "morning zoo" type crap.
WHTT is a shadow of the powerhouse it once was, and once again heavy in 45+ demos. They may be able to re-tune a la CBS-FM in NY, which has considerably more '80s content, but that may do more to maintain the current demos than invite younger ones into the fold.
The Edge has one killer daypart - Shredd & Ragan. Cumulus is likely to look at the rest of the station as a prime target for syndication if they keep the format. "Darth" sees a move to country - and likely syndicated country at that. That could do two things - allow 97-Rock to expand their audience toward a younger demo, and give Shredd & Ragan a reason to move back to mornings, replacing Norton & Co.
Then there's the "legendary" Cumulus sales structure and practices, "deployment of CMI’s proprietary technology platform throughout the Citadel stations", and next attempt at "hubbing" for operations, production, etc.
Don't think that I'm advocating ANY of this. I'm just trying to look at the current situation from the standpoint of a cold, calculating corporate overseer with no history in the market. Cumulus cleary means to cut a staff that's already been picked clean by Farid and his vultures. I also expect that they'll "create new opportunities for (existing) employees to advance and for the company to recruit new sales, programming and management talent." That's not good news for the existing employees, sales, programming, and management talent.
I believe that we'll see the end of an era in Buffalo radio. I also believe that Town Square and Entercom are going to like competing against Cumulus. They'll seem like "enlightened" companies compared to "The Cloud" - or is that "The Borg".
“The vast majority of it will occur in the first six months,” Dickey said when asked about the pace of those synergies during Q&A. “I would say you’re looking at 75-80% of it in the first year, but two-thirds or more of it in the first six months, and the rest would sort of tail-in in the next six months after that." - RBR, 3/15/2011
Citadel Buffalo has issues. 97-Rock's audience is aging out of the prime demos. Their morning show isn't what it once was. The timing is off with Larry in Florida, and the energy is lacking. Maybe even they're tired of the "hot moms" and other tired "morning zoo" type crap.
WHTT is a shadow of the powerhouse it once was, and once again heavy in 45+ demos. They may be able to re-tune a la CBS-FM in NY, which has considerably more '80s content, but that may do more to maintain the current demos than invite younger ones into the fold.
The Edge has one killer daypart - Shredd & Ragan. Cumulus is likely to look at the rest of the station as a prime target for syndication if they keep the format. "Darth" sees a move to country - and likely syndicated country at that. That could do two things - allow 97-Rock to expand their audience toward a younger demo, and give Shredd & Ragan a reason to move back to mornings, replacing Norton & Co.
Then there's the "legendary" Cumulus sales structure and practices, "deployment of CMI’s proprietary technology platform throughout the Citadel stations", and next attempt at "hubbing" for operations, production, etc.
Don't think that I'm advocating ANY of this. I'm just trying to look at the current situation from the standpoint of a cold, calculating corporate overseer with no history in the market. Cumulus cleary means to cut a staff that's already been picked clean by Farid and his vultures. I also expect that they'll "create new opportunities for (existing) employees to advance and for the company to recruit new sales, programming and management talent." That's not good news for the existing employees, sales, programming, and management talent.
I believe that we'll see the end of an era in Buffalo radio. I also believe that Town Square and Entercom are going to like competing against Cumulus. They'll seem like "enlightened" companies compared to "The Cloud" - or is that "The Borg".
B
Bob1370
Guest
"Let's just say that I sense big changes coming, and big names falling before the end of the year. Lew Dickey is promising $50-million in "synergies". He's also promising significant investment in "digital". And it will likely happen quickly."
Same strategy that almost killed Clear Channel, and put Citadel into Chapter 11. Didn't they learn a thing from the very events that dropped Citadel into their hands? Cut program quality and you cut audiences, then revenue, and your cost cutting is never enough to make up for lost revenue and lost profit.
If you don't learn from the bitter lessons of history you're going to relive them.
Same strategy that almost killed Clear Channel, and put Citadel into Chapter 11. Didn't they learn a thing from the very events that dropped Citadel into their hands? Cut program quality and you cut audiences, then revenue, and your cost cutting is never enough to make up for lost revenue and lost profit.
If you don't learn from the bitter lessons of history you're going to relive them.
Bob1370 said:Same strategy that almost killed Clear Channel, and put Citadel into Chapter 11. Didn't they learn a thing from the very events that dropped Citadel into their hands?
Huh? What put Citadel into Chap 11 was too much debt. Not program quality. The debt was killing them before the cutbacks.
Cumulus feels they can control this debt. They now have twice as much inventory to cover the same amount of debt.
TheBigA said:What put Citadel into Chap 11 was too much debt. Not program quality. The debt was killing them before the cutbacks.
Cumulus feels they can control this debt. They now have twice as much inventory to cover the same amount of debt.
No, they have twice as much debt. Do you mean to say that they're getting Citadel for free?
Cumulus was up to their ears in debt, facing bankruptcy when they got in bed with the venture capitalists to finance this whole thing. The only "deal" Cumulus gets out of this is they get the same debt that Citadel had before they went under - essentially the $2.4-BILLION that they paid for the ABC stations. Yeah, they get the "original" Citadel stations as a "bonus". And they get to refinance their existing debt, avoiding bankruptcy. In return, the Dickey's own a tiny piece of the action, and are paid to manage the properties for the lender.
This is an old story. The Dickeys are telling the banks that they can create enough "synergies" and reduce costs enough to pay for the absurd amount of debt that they're taking on. Well, at this point, cutting costs means cutting the quality of the on-air product. Since Citadel had already cut personnel to the bone, this means more cuts in program quality. More syndication. More voice-tracking. Less live and local. More "hubbing". More back-office cuts. More cuts in sales commissions. More reasons for anybody with another alternative to go elsewhere.
SirRoxalot said:No, they have twice as much debt. Do you mean to say that they're getting Citadel for free?
No, they have twice as much inventory (combining Cumulus and Citadel stations) to cover the new Citadel debt. Cumulus was NOT facing bankruptcy. If anything, they had the ability to buy back their company, had they wanted to. That's what I would have suggested, given the current economy. But interest rates are much lower now than they were five years ago, so debt is less costly.
SirRoxalot said:Well, at this point, cutting costs means cutting the quality of the on-air product.
Not necessarily. And history has shown that cutting costs by itself hasn't led to a loss in audience. Then again, there aren't any media choices right now that don't have financial problems, especially now that Pandora has gone public. Even public broadcasting, once immune from debt problems, is looking at cuts in funding from government agencies.
TheBigA said:No, they have twice as much inventory (combining Cumulus and Citadel stations) to cover the new Citadel debt. Cumulus was NOT facing bankruptcy. If anything, they had the ability to buy back their company, had they wanted to. That's what I would have suggested, given the current economy. But interest rates are much lower now than they were five years ago, so debt is less costly.
You'd better cite your sources. Here's what's in the news:
http://www.radio-info.com/news/cumulus-to-sell-610-million-in-new-debt-leading-up-its-merger-with-citadel
Cumulus sold $610-million in NEW debt on an enterprise valued at $725-Million. And they were facing covenant problems in the next year that could have forced them into bankruptcy. That hardly sounds like "they had the ability to buy back their company". Lew Dickey was trying to borrow enough to take the company private so he wouldn't have to deal with pesky stockholders and the SEC's public filing requirements.
The reality is that the Dickey's have a little over 5-million shares out of over 42-million shares outstanding, or about 10% of the current public company. They own less of the private Cumulus, and they'll own nearly none of Citadel once the purchase is done.
SirRoxalot said:You'd better cite your sources.
OK...let's go back about a year:
http://dealbook.nytimes.com/2010/04/08/cumulus-media-and-crestview-form-venture/
The financing I mentioned was covered in this announcement.
If you study the purchase announcement, Crestview is also partners with Cumulus on Citadel. So they are sharing in the risk.
The new company will create over $100 million in cash flow a year. That should handle the covenants just fine.
It would be more realistic to say "the company (Cumulus) is expected to create over $100 million in cash flow a year. Unless... the economy takes another bowl-busting dump. If that happens, we're SOL." More synergies, dammit!TheBigA said:The new company will create over $100 million in cash flow a year. That should handle the covenants just fine.
Remember, that's $100-million in cash flow from a company valued at over $4-Billion dollars. That's $4,000-Million, most of it in the form of DEBT. In real-world terms, you've got a $400K house that's mostly mortgage, and you're making $10K per year. You like those odds?
The reality is that Cumulus owns diddly, and they're hired to manage the properties according to the whims of the bankers. The bankers will set targets, and Cumulus will be expected to meet them. Considering how often bankers have been sold unrealistic goals by consolidators in the past, I doubt that they'll suddenly become "enlightened" and look at the long term health of the enterprise. It looks like Citadel Part II to me, with the Dickey's taking up where Farid "radio sells itself" and Judy "that's right, Farid" left off.
No one has ever said they're "enlightened." Just that they won't be facing bankruptcy as Citadel did. My point is that all media, and almost all enterprise in this country is overleveraged. Just like federal and state governments, and about a third of the population. No one is looking at the "overall health of the enterprise," and that goes for the quality of roads, bridges, and other infrastructure. So Cumulus has no competition to fear, especially now that Pandora has to meet quarterly numbers. Everyone has to satisfy the bankers. Including a lot of the listeners. It's the American way. Just look around Buffalo. Less real manufacturing, less product creation, more managing. That's why Buffalo and the rest of the rust belt is in trouble. Why should radio be any different? It simply reflects the rest of society.
As my momma said, "If everybody else jumped off a cliff, would you jump too?" Isn't that precisely what led to the dot-com bubble, Enron, the housing bubble, and the evolving foreclosure crisis? Isn't that precisely what put Citadel and Regent over the edge, and has Clear Channel sweating out covenants?
Some operators get it. Some don't. Guess which category Cumulus falls into. Entercom & Town Square will be the beneficiaries in Buffalo, and radio as an industry will take it in the shorts one more time.
Maybe we'll get lucky and Cumulus will sell off Buffalo. I suspect that anybody interested will wait until they crash & burn so they can get those properties at the right price. In the meantime, a lot of very talented people will put "former" onto their resume, and move on. We'll all be poorer because of that.
Some operators get it. Some don't. Guess which category Cumulus falls into. Entercom & Town Square will be the beneficiaries in Buffalo, and radio as an industry will take it in the shorts one more time.
Maybe we'll get lucky and Cumulus will sell off Buffalo. I suspect that anybody interested will wait until they crash & burn so they can get those properties at the right price. In the meantime, a lot of very talented people will put "former" onto their resume, and move on. We'll all be poorer because of that.
- Status
- This thread has been closed due to inactivity. You can create a new thread to discuss this topic.