What Drives Clear Channel & Cumulus

[JustPastBuffalo]

Excellent reporting and detail in this lengthy analysis from The Deal Magazine. Informative and well-worth reading.

 

[SirRoxalot]

Very interesting analysis. Anybody else smell a Clear Channel IPO coming in 2013 - right after the inflated profits from the 2012 Presidential election hit the P&L statement? It's either that, or bankruptcy in 2016. Or both.

If they can sucker in another bunch of stockholders, the private equity guys can take their cash & dash to another industry with more upside. They might even skim off a little profit. Otherwise, they end up with Clear Channel in 2016, similar to the Citadel bankruptcy. Then they either have to run it, or find a new bunch of suckers -er investors.

 

[TheBigA]

Not a lot of real information in the article. Just a lot of repetition of previously reported stuff. The one bit that caught my eye is that CC is sitting on $1.5 billion in cash. They just bought Metro Networks, which will add another $100 million in revenues a year. Once they merge it with Total Traffic, it will be a cash cow.

Very interesting analysis. Anybody else smell a Clear Channel IPO coming in 2013

I don't think it will be that simple. I've been expecting the company to split for a while. Like CBS and Viacom. Perhaps form a separate company that Pittman would run, and do an IPO on that. So you'd be investing in Pittman, not CC. That would be attractive for investors, because Pittman is a very charismatic leader. He and Dan Mason are the kinds of people the radio industry needs representing it instead of John Hogan.

I get tired of analysts focusing on these same two companies for the future of radio, when the real future is taking place at places like Radio Disney and CBS. But I like Bob Pittman. Don't bet against him.

 

[Element9]

The one bit that caught my eye is that CC is sitting on $1.5 billion in cash.

So it wasn't totally without merit, eh Big? That $1.5B cash is substantial, but the debt looks, well, how does Wall Street say it... "pressing?" Cumulus actually looks reasonably stable, although Citadel staffers might consider picking up some empty boxes next trip to the liquor store, "$50 million in synergies" coming just after Labor Day.

 

[TheBigA]

So it wasn't totally without merit, eh Big? That $1.5B cash is substantial, but the debt looks, well, how does Wall Street say it... "pressing?"

Doesn't matter. CC isn't a public company any more. The cash flow is enough to take care of the debt. The US is $14 trillion in debt, and no one's talking bankruptcy. Debt is only a problem when you don't have enough income to cover your payments. Ask anyone who has a 30 year mortgage.

 

[SirRoxalot]

You could also ask the millions who are staring default in the face because they bought more house than they could afford, have a balloon payment coming up, and can't sell the place for anywhere near what they borrowed. That might be closer the CC situation. The difference is that CC may be able to sell off enough assets to remain solvent. Or, they may choose the Citadel route, go bankrupt, and end up with the company in the hands of the banks.

You have to wonder if Citadel would have survived if Farid hadn't tried to extract $40-million for him & his friends. The banks may not have considered the Cumulus deal if Farid hadn't peed in the punchbowl.

 

[TheBigA]

The difference is that CC may be able to sell off enough assets to remain solvent.

They don't seem to be interested in selling. They're buying things (like Metro Networks) and giving away dog AMs. They just donated two more last week. As I said, the cash flow is sufficient right now. Unless the economy tanks even further, they seem comfortable with where they're at. Plus, Pittman is focused on building new digital revenue platforms.

You have to wonder if Citadel would have survived if Farid hadn't tried to extract $40-million for him & his friends. The banks may not have considered the Cumulus deal if Farid hadn't peed in the punchbowl.

Well, the $40 mil was a mistake, but wasn't the biggest problem. The ABC network he bought was in total collapse. They lost several of their biggest names, particularly Paul Harvey, hadn't replaced them, and were still paying lots of overhead. He really needed the bankruptcy to get out of all the terrible contracts they had bought.