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Clear Channel Wants to Push Debt Back

R

Radio Ink Buzz Stream

With over $20 Billion in debt, Clear Channel looks for more time. Last night Clear Channel announced it wants to extend $1.0 billion in outstanding term loans due January 2016 until July 2019. CCU also announced that it has commenced a private offer to holders of outstanding 10.75% Senior Notes due 2016 and 11.00%/11.75% notes due 2016 to exchange any and all outstanding notes for its newly issued senior notes due 2021.

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$20 BILLION? CC owns 850 radio stations and has other interests in outdoor advertising and iHeart Radio. If you discount the other interests as secondary (which they are) CC owes well over $20 million PER STATION. How is that ever going to work out is beyond me - buying time is just pushing the debt into the future where radio's continued profitability is less than certain.
 
I wish these creeps would just be forced into the bankruptcy they so richly deserve, and have ALL of their assets auctioned off.
 
ok walters said:
$20 BILLION? CC owns 850 radio stations and has other interests in outdoor advertising and iHeart Radio. If you discount the other interests as secondary (which they are) CC owes well over $20 million PER STATION. How is that ever going to work out is beyond me - buying time is just pushing the debt into the future where radio's continued profitability is less than certain.
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The outdoor division is definitely not secondary. It is a major component of the company.
 
flybynight said:
I wish these creeps would just be forced into the bankruptcy they so richly deserve, and have ALL of their assets auctioned off.
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If you really knew what that would be like, you'd change your opinion. Former owners never really suffer in a bankruptcy. Everyone else does.

Just study the Citadel bankruptcy. Tell me who won in that one.
 
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flybynight said:
I wish these creeps would just be forced into the bankruptcy they so richly deserve, and have ALL of their assets auctioned off.
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A Chapter 7 (liquidation) bankruptcy is very unlikely in most radio debt situations. The secured creditors stand a better chance of recovering part of their capital with a reorganization and sale of an ongoing business.

Still more likely, and already seen in multiple occasions is the exchange of debt for equity, where the borrowers give up much of their ownership percentage and the lender or creditor gets equity.

Free-for-all Chapter 7's are the least likely. Generally, we see them with single dog stations or dog-laden small groups where the chance for reorganization is limited and there is little underlying equity.
 
The FCC isn't about to let hundreds of stations go silent. By the time the process was finished even if it started tomorrow, no one reading this would be in a position to care
 
If they did file bankruptcy that doesn't mean any station would ever go dark, I think just about ever major airline (except Southwest) has been through bankruptcy at least once, along with GM, etc etc.

What would happen is the creditors would take a 'haircut" on what is owed, the stock holders would take a "haircut' by dilution of shares (creditors would probable end up with a % of the company),,,but Clear Channel would still be Clear Channel.

As David said, the outdoor division isn't small change, its worth a LOT of money (its amazing the cash flow an outdoor company can make)

The problem with most of the larger groups today is simply they bought stations at crazy prices, the multiples being paid were too high, and now it becomes hard to impossible to service debt.

Clear channel and Cumulus don't fire people because they enjoy it, they are trying to cut cost in an effort to service debt,,,if you overpay for any business, you have to find ways to increase revenue and/or cut cost,,,unfortunately but true
 
TheBigA said:
If you really knew what that would be like, you'd change your opinion. Former owners never really suffer in a bankruptcy. Everyone else does.

Just study the Citadel bankruptcy. Tell me who won in that one.
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I don't care whether CC brass suffers. That's not the point. I never expected them to suffer, as those at the top rarely do. Just ask Farid.

I would just like to see hundreds of radio stations freed from their miserable control, to compete fairly in the marketplace without all the corporate cluster manipulation.
 
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flybynight said:
I would just like to see hundreds of radio stations freed from their miserable control, to compete fairly in the marketplace without all the corporate cluster manipulation.
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Once again, look at the Citadel example. They went from being owned by one big group to another. Corporate clusters are a fact of life, especially in Top 100 markets.
 
http://news.radio-online.com/cgi-bin/rol.exe/headline_id=n28037

http://www.bloomberg.com/news/2013-...ash-to-delay-reckoning-corporate-finance.html

Burning Cash is not a good Long Term Solution they will have either split up into multiple companies in able to lessen the Burdens. Such as Split Clear Channel into 2 companies. 1 the Iheart division and Clear Channel. Lets examine other Companies that did this CBS Split from Viacom in 2005-2006 era, AOL/Time Warner split sometime around the 2009 era and Fox and Newscorp in 2013. This shows that you can't have a big media empire forever.
 
billrecto said:
This shows that you can't have a big media empire forever.
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The AOL split was because AOL was dragging down the rest of the company. Viacom was mainly to milk more money for stockholders. The Fox split was because of the Newscorp scandal in UK, and concern it would affect FCC licenses here.

Because CC is not a public company, there is no real pressure on the stock price. Broadcasting is helping to fund IHeart right now. They really can't split one from the other. I'm sure they hope they're building value in the online radio division, but it won't be a profit center. The folks in Pandora have demonstrated that.
 
TheBigA said:
If you really knew what that would be like, you'd change your opinion. Former owners never really suffer in a bankruptcy. Everyone else does.

Just study the Citadel bankruptcy. Tell me who won in that one.
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Re: "Former owners never really suffer". It depends on how far back you go. As a Citadel shareholder, I lost my entire investment.
 
flybynight said:
Irrespective to whether or not HE sells, common mathematical sense should tell you that shareholder/owners, whoever they may be, lost their money.
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Not if you sold early enough. Pigs get slaughtered. I was a Citadel stockholder who had the sense to get out early. I could see where the train was going. No need to crash just to be sure.
 
Splitting IHeart from Clear Channel would be a mistake. They have sunk an incredible amount of money into it already and have built a fairly extensive platform. Long-term Clear Channel is betting the internet is the future of radio and IHeart delivers not only their regular stations, but internet-only stations too and it provides them an avenue to sell premium services in the future. The ToS already have the legal wording in place for it. Plus they have already signed a direct deal with a major label to lower their royalty costs and have begun experimenting with on-demand talk shows.
 
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