After spending several years shuffling money between subsidiaries (including creating new ones to raise/preserve capital) and playing footsie with creditors holding more than $20 billion dollars of its debt, iHeartMedia, the nation’s largest radio conglomerate, skipped a scheduled $106 million interest payment on some of its loans earlier this month, triggering a 30-day default-clock. iHeart is portraying this move as something done to increase its leverage over creditors, who might be compelled to agree to new terms and avoid restructuring – but this is precisely what tripped Cumulus Media into Chapter 11 bankruptcy late least year.
None other than the Wall Street Journal calls what’s likely to happen between now and March 3 a “costly reckoning.” If iHeart follows the Cumulus bankruptcy model, preferred (institutional) investors will get a greater share of the restructured company, while others will lose everything. The firms who took iHeart private last decade may not be compensated at all in restructuring, but the WSJ reports that they’ve already “managed to offset virtually all of the potential loss of iHeart’s equity,” and will generally be able to walk away after more than doubling the company’s debt in the buyout process. Continue reading “iHeartMedia Bankruptcy Reorganization Imminent”
Bloated with more than $2 billion dollars in debt racked up in the wake of the late 90s-early 00s radio station consolidation orgy, Cumulus Media has finally taken the plunge into Chapter 11 bankruptcy reorganization. The path from there to here began when Cumulus hired Mary Berner as the CEO in 2015 – primarily for her prowess in shepherding Reader’s Digest through the Chapter 11 process back in 2009, when that company carried a nearly identical amount of debt.
Things got real back in September, when the Wall Street Journal reported that the company had begun negotiations with creditors who hold “big chunks” of the company’s debt. This was prompted in part by the company’s pending delisting from the NASDAQ stock exchange after CMLS shares trended below $1 and stayed there; the company’s net equity had previously fallen below the NASDAQ minimum, which is also a delistable event.
Then Cumulus intentionally skipped a $23 million interest-payment on its debt that was due November 1. It told the Securities and Exchange Commission it did this “in support of the Company’s efforts to develop and implement a restructuring that will allow the Company to continue its operational and financial momentum,” and noted that the missed payment would trigger a default after 30 days.
In a memo to staff, CEO Berner was frank about the fact that “we can’t fully turn the company around until we reduce our excessive debt-load,” and that skipping the payment would incentivize creditors to compromise to avoid default. Continue reading “Cumulus Goes Chapter 11; How Long for iHeart?”
Believe it or not, there are still some U.S. broadcasters tinkering with the HD Radio protocol. One of the latest is Rick Sewell, the manager of engineering for Crawford Broadcasting’s stations in Chicago.
His latest project involved implementing HD’s “Artist Experience” feature – this is a fancy name for what is basically radio with pictures. AE allows HD-compatible stations to send album artwork and advertiser-images to digital radio receivers along with the audio programming; these are things that digital-native audio streaming services such as Pandora and Spotify mastered years ago.
There’s no coordinated drive from the broadcast industry to implement Artist Experience, and HD’s proprietor, Xperi Corporation, isn’t actively marketing the technology to broadcasters much anymore. Apparently, one of Sewell’s colleagues was down in Atlanta and got a rental-car with an HD-compatible receiver. This guy stumbled across a station that had implemented AE and thought, “we should do this too.”
Thus began Sewell’s saga. He’d initially hoped that he would have time to explore the HD system in more detail, but station management had already started pitching the Artist Experience opportunity to advertisters. The first step was to make sure that the HD airchain of the station on which AE would be deployed was totally up to date. That got figured out after Sewell got over his own “ignorance as well as some misinformation along the way.” Continue reading “Radio With Pictures Still A Hard Sell”
Successive rounds of hurricanes battering the U.S. mainland and Puerto Rico are the latest fodder in a radio industry campaign designed to pressure smartphone manufacturers to include radio reception capability in their devices.
Many Android-compatible smarphones are capable of receiving FM signals. The radio industry, led by Emmis Communications, has designed an app called NextRadio that functions as an onboard tuner.
Prior elements of this campaign involved running public service announcements letting people know this functionality existed, and low-key advocacy for a possible mandate for FM in smartphones both at the FCC and Congress. Following Hurricane Irma’s destruction, particularly in Florida, broadcasters amped it up.
They took their cue from FCC Chairman Ajit Pai, who explicitly called out Apple on September 28th to enable FM reception in their phones “to promote public safety.” The next day, the National Association of Broadcasters issued a statement that claimed Apple’s iPhone hardware does indeed contain a chip capable of FM reception, but the company has chosen to disable it; “we encourage Apple to activate this feature on their future handsets so Americans can have access to lifesaving information during emergency situations, something that many local radio stations provide.” Continue reading “FM vs. iPhone: A Battle of Shaded Truths”
The second fiscal quarter’s come and gone, so it’s worth reviewing how the first half of the year’s played out for radio’s big-fish investment-games:
Clear Channel iHeartMedia: The #1 radio conglomerate in the country just extended its long-term debt refinancing offer to reluctant bondholders for the twelfth time. While going through those motions a key coalition of creditors — who hold more than 10% of iHeart’s $20+ billion debt – have been mulling over the implications of tipping the company into Chapter 11 bankruptcy.
Apparently, they’ve devised a plan by which if they’re given 49% of the company’s equity and more favorable debt-repayment terms, they’ll keep the debt-refinance shuffle going. After missing a full payment in 2016 the company ponied up on schedule this summer toward debt due in 2021. More than $8 billion comes due in 2019. Continue reading “Big-Fish Radio Capital Shaky in 2017”
Looks like the time is nigh for
Clear Channel iHeartMedia to pay the piper.
Those who hold a significant portion of iHeart’s $20+ billion in debt are balking at the company’s attempt to kick the can down the road. This spring, iHeart floated proposals to creditors to extend the time the company gets to pay back on its debt while pegging a higher interest rate and some equity to the revised payback-plan. The offers were roundly rejected – fewer than 1% of existing note-holders accepted the terms, and now the company’s repeatedly extending the deadline to creditors hoping they will accept it. Continue reading “iHeartMedia At Debt Wall”
It’s not a long line of dominos – just three in particular – but if they begin to fall you can bet there’ll be collateral damage throughout the radio industry.
The most wobbly of the three is Cumulus Media. The #2 radio station conglomerate in the country by stations owned, the company just can’t get a break with its turnaround endeavors. After an 8-to-1 reverse stock split last year which temporarily raised its share-price above the critical $1 floor for listing on NASDAQ, the company’s gone underwater again. Thursday’s trading-close saw CMLS shares at just under 27 cents, making for a total market capitalization just above $8 million. That’s about half of what it was just a month ago. Earlier this month, NASDAQ started the delisting-clock again, which means Cumulus has six months to implement a revival-plan and stick to it.
Of course, the aggregate value of Cumulus’ hundreds of radio station licenses is multiples higher than the market value of its stock, but most definitely not enough to cover the $2+ billion in debt it carries. A refinancing proposal using stock imploded last month, prompting Bill Cunningham in Media Life (just before it shut down) to observe that “Unless some white knight comes along, Cumulus has no choice but to file for bankruptcy protection. It could come in a matter of weeks.” Continue reading “Radio Finance Capital: Dominos Aligning”
The money-shuffle has intensified in the radio industry as of late:
Clear Channel iHeartMedia: Still saddled with more than $20 billion in debt – of which more than $8 billion comes due in 2019 – the company’s going to great lengths to shuffle revenue between its subsidiaries to keep on top of its obligations. The latest move involves iHeart’s outdoor billboard division, one of the more financially solvent of the bunch, turning over nearly 90% of its latest quarterly dividends to the parent company.
In addition, iHeart filed papers with the Securities and Exchange Commission recently regarding the potential for its outdoor division to acquire the intellectual property to the words “Clear” and “Channel.” This sounds like the corporate version of scrounging for change in couch cushions; no word on how much those two words, separately or in conjunction, might actually fetch.
iHeart’s recent debt-exchange, for which it traded notes due in 2018 for paper payable in 2021, was classified by Moody’s Investor Services as a combination “distressed exchange (DE) and a Default due, in part, to the extension of the maturity date beyond its initial terms and the company’s very high leverage levels,” further observing that “the company will remain poorly positioned to withstand an economic recession or any material weakness in terrestrial radio in the future.” Continue reading “Radio Industry's Money-Flings”
17 years ago(!), I left a budding career in radio journalism out of disgust with the trajectory the industry was taking. The break-point came when the National Association of Broadcasters and National Public Radio teamed up in Congress to conduct a disinformation campaign designed to eviscerate the FCC’s then-newly proposed LPFM radio service.
However, A few months before I actually quit my job, I acquired all the components necessary to start an unlicensed microbroadcast station. “System P” was a 40-watt frequency-agile FM rig that used a portable military surplus antenna mast to conduct tactical broadcasts from a wide variety of locations. You could often hear the station in Madison, Wisconsin, primarily on evenings and weekends; but since the station was mobile much fun was had taking it to peoples’ homes and public events around the country to give the public a more substantive appreciation of the ease by which it could make “the public airwaves” very real.
Another key element of System P was to provide a last-mile node for what was then quite an experiemental webcast-activism scene (today commonly known as “livestreaming”). These often manifested in Independent Media Centers during times of protest, most notably against corporate global trade deals. Activists would converge on a city to fill the streets in order to disrupt the negotiation of these agreements, and the media coverage would invariably skew toward painting the activists as violent thugs and police/other security forces as the guardians of order. But when activists gained the ability to counteract this narrative – oftentimes by live reports from the streets directly – the discursive dynamic around these events changed. Continue reading “Nodes of Resistance: Sampling the Haitian Diaspora via FM+Internet”
How many ways can you keep debt at bay? Does non-payment sound like a viable option? Perhaps not if you’re just a mere flesh-and-blood human, but the corporate beast’s a special class.
Over at iHeartMedia, $250 million of the company’s $20+ billion debt came due last Thursday (December 15). In a surprise move, the company announced two days before that it would only be paying back just $192.9 million of these notes and foregoing the rest.
The reason? This debt constitutes money that various subsidiaries of iHeartMedia owe to each other. In addition, these particular debt instruments contain a provision that, should the total debt held between these entities fall below $500 million, it would trigger a “springing lien.” This is a fancy term for extra payments owed to debtors as an incentive for giving the conglomerate a nice line of credit.
By witholding $57.1 million of these payments, iHeartMedia’s total debt in this instance doesn’t fall below the threshold, and thus the company can avoid making the bonus-payments to creditors. To stymie any objection to this ploy, iHeart went to the friendly Bexar County, Texas courts and filed a flurry of paperwork last Monday (to give you an idea of how complex its debt structure is, there 11 petitions in all, involving six
Clear Channel iHeart subsidiaries), asking a judge to declare this practice kosher. Continue reading “iHeartMedia, Cumulus Go Debt-Offensive”