IHeart files for Chapter 11

Clear Channel Outdoor is now 100% owned by the banks. It won't be going through bankruptcy.

The offer that's on the table from Liberty Media is they buy $1.16 Billion of remaining debt for 40% of the newly re-organized company. They will combine it with their cable business, Sirius XM, and Pandora. That combination will be a formidable ad platform.

But, there are many channels of communication, delivered by RF, print, smoke signals, etc. No, I think the change to iHeart came in a moment of rare clarity when, after the catchphrase "Fair and Balanced" was heard through their many facilities for the bazillionth time, the corporate decision was made that "Clear Channel" had been reduced to an oxymoron.

See, there are good people on the dark side with a Heart, and a Conscience too.

SirRoxalot said:

Let me get this straight. iHeart is restructuring to shed half of its $20-billion in debt, making a $10-billion company. Liberty wants 40% of the company for $1.16-billion?

Click to expand...

That offer was when the plan was to reduce the debt down to $5 billion. Now that it's $10 Billion, obviously Liberty needs to reassess. But even then, a lot of folks thought they were low-balling. Who knows...maybe with the debt at $10 billion, they're not as interested.

One of the aspects I've been wondering about is the status of the Broader Media LLC subsidiary that got some attention a couple years ago. Some lenders objected to iHeart moving some Outdoor holdings into this company. Broader Media is mentioned in this article:

https://www.newsmax.com/Finance/Companies/iheart-bond-radio-debt/2016/02/04/id/712672/

TheBigA said:

You try to run a company with $20 billion of debt.

Click to expand...

Exactly. There are a fairly large and vocal amount of people that do or have previously worked for iHeart and Cumulus throwing some major stones at the management. Most of the damage was done so long ago, in a different age and stage of the business. Bad, horrific decisions and short-sighted for sure. You and David have probably said at least 1,000 times that these companies cannot find their way out of these disasters through sales. And the ones running the ship now are trying to fix the unfixable. This may be a break in the dam.

I have had successful businesses and a few disasters. I have always felt like communication was the key to reaching agreements that help straighten out the business. Sometimes it was a reduction in rent, or restructuring a payment schedule for a while. I almost had to walk away from one business because the tower rent was misrepresented by the seller (fake documents/my mistake on trusting the clown) and six months before I did, the company knew we were trying and gave us a free year and then a 25% reduction in the monthly payments for five years. I took the year away from the payments to get things together and paid 100% of the payment price until we sold the station. Since then, they have had 40 stations having problems and I have helped them reach settlements and refused to buy 40 of the stations, regardless of their asking price. Sometimes its best to just narrow your focus. Times are a bit more favorable to buy right now, so that may change.

The folks who invested the capital in these stations, such as Clear Channel, knew they were needing more money to survive. They knew full well of the debt ratio to profits. It is a gamble and they took it. Or they took the sales pitch. Remember venture capitalists use other people money most of the time. I know lots of money was just flushed down the toilet here. I don't like it or think it is right or wrong. It just is what has happened. I am sure they could have sold these stations to smaller mom and pop operators and gotten a lot more money. They will need to invest more in maximizing their ratings, formats and sales to not let things go in the same downward spiral. This time should be the last time they should ever get behind the 8-ball. Time will tell on that. I have not seen this said today in many forums: A lot of people are still going to get a paycheck in radio, while a toy company just had to let thousands go with barely a thank you and not much hope. This could have been SO much worse. If things turn around even more and they work a solid plan, maybe the losses will become gains for the investors (banks) still in the plan. Maybe I am way off on this. I have made money from CC buying one station from us in the 90's and they helped us out of a bad situation and paid way too much and I had to ask them if I was reading the offer right. I was happy to run like hell. I have been in similar spots (a milli-fraction of the dollar amounts) and seen that there is usually a way to create a win-win. Just have to really focus. I hope lots of folks are relieved that they have a job still and time will tell if this was an iHeart slam dunk or just another bag of rubbish. Sadly, I confess, I do put the odds on latter. Am I right or wrong?

Tibbs4 said:

I am sure they could have sold these stations to smaller mom and pop operators and gotten a lot more money.

Click to expand...

I agree with pretty much all your points except this one. Since the 2008 'Great Recession' mom pop's aren't able to get financing, let alone to purchase radio properties. It used to be that lenders and PE firms bit on the whole station value= X-times BCF model. As you know, BCF has since tanked from prior-to-2008 numbers, and probably won't recover anytime soon. It's hard for any start up to make a convincing business plan that could reasonably assume percentages of growth that would support financing to even .50 on the dollar that Clear Channel/iHeart would need to get if forced to liquidate stations. All that, combined with the precipitous drop in the values of AM radio properties, which one could argue, Clear Channel WAY overpaid in the first place, because now they're worth about ten cents on the dollar.

Kelly A said:

I agree with pretty much all your points except this one. Since the 2008 'Great Recession' mom pop's aren't able to get financing, let alone to purchase radio properties.

Click to expand...

Not only that, but the government doesn't make small business loans for radio stations. It's not bad enough that they can't get money from banks, but they can't get it from the government either. The FCC sits in their plush offices, and can't understand why there are more minority owners. Meanwhile, another government agency won't lend money to minority companies who wish to own radio stations. The simple solution to the minority ownership problem is for the FCC to get into the station financing business. But that will never happen.

So much for those rumors I've read about iHeartMedia filing for Chapter 7 bankruptcy. I'm glad that iHeart filed for Chapter 11 as expected, just like what Cumulus did last November.

miketheradioguy said:

So much for those rumors I've read about iHeartMedia filing for Chapter 7 bankruptcy. I'm glad that iHeart filed for Chapter 11 as expected, just like what Cumulus did last November.

Click to expand...

Don't know where you read those rumors because Chap 7 was never discussed. The only people talking about Chap 7 were wishful thinkers, hoping the stations would be sold to small local owners for pennies. Not a realistic wish, given the business environment now.

Forbes believes there will be a massive sell-off of iHeart stations "many at rock bottom prices." Further in the article, it says Cumulus will likely be selling off some, too.

https://www.forbes.com/sites/geneel...ptcy-expect-a-major-selloff-of-radio-stations

AMRocks said:

Forbes believes there will be a massive sell-off of iHeart stations "many at rock bottom prices." Further in the article, it says Cumulus will likely be selling off some, too.

Click to expand...

Keep in mind that's not an article by Forbes, but an opinion by an anti-iHeart commenter. So Forbes doesn't necessarily believe it. There was a more in depth analysis of the sell-off potential done by RBR:

https://www.radiodiscussions.com/sh...y-Expect-‘A-Major-Selloff’-Of-iHeart-Stations

RadioPatrol said:

https://news.radio-online.com/cgi-bin/rol.exe/headline_id=b15387

Here is an Update on Iheart Radio

Click to expand...

That's quoting the same opinion piece linked in post #33. As RBR reports, that story is not the opinion of Forbes, and they explain why it's wrong. The link to the RBR article is in post #34.

It appears radio is about to give the retail industry a run for its money
for the title of Kings of Chapter 11.

Just got my letter in the mail from the Bankruptcy court today telling me to consult my attorney.

I would be curios how many other contract engineers or otherwise have or are going to lose money in the iHeart bankruptcy. I'm going to lose close to $2k, I most likely will not have the resources to throw at this.

xmtrland said:

Just got my letter in the mail from the Bankruptcy court today telling me to consult my attorney.

Click to expand...

Keep in mind they are required to send those letters out, and they're sent out to everybody...all of the contractors.

But it's no guarantee that you'll lose the money. Not yet, anyway.

There's no guarantee that I will get the money. And if I want my questions answered it will cost me money. Its a no win situation for small contractors only owed a few bucks. Taking the time to shop an attorney and all, you will lose more than what's owed if you get nothing. Or even if I get something, if its less than what I spent on legal fees I will have lost more. The only ones making money are the attorneys. I would guess I'm not the only individual in this situation.