3/15 Update: Today iHeartMedia filed for Chapter 11 bankruptcy protection, after coming to a deal with a viable cross-section of its creditors to wipe some $10 billion in debt off of its balance-sheets…leaving the “restructured” company with about $10 billion left to pay down. Some creditors, who hold eight to nine figures of this debt, will be wiped out, but it’s too early in the process to tell just who will get screwed the most. Just today, iHeart tendered nearly 20 filings with the U.S. Bankruptcy Court in Texas’ Southern District – and those to whom the company owes money, as well as other interested players looking to intervene, have filed another 70+, suggesting this process will not be smooth nor speedy. [Original post follows below.]
What a strange way to go bust. After spending years telling the public that all was well – consolidation, automation/syndication, and cost-cutting was “good for radio” and tens of billions of dollars of debt was of little to no concern – Clear Channel iHeartMedia is finally preparing to pay the piper.
On February 1, the nation’s largest radio broadcast conglomerate welshed on a $106 million dollar interest-payment, triggering a 30-day countdown to default. As the clock ran down, on March 1 the company also skipped an additional $138 million in interest-payments, all in the hopes of forcing its creditors to the table to hammer out a soft landing in Chapter 11 bankruptcy, similar to what Cumulus Media did late last year (though Cumulus was only in one-tenth the debt that iHeart is, and Cumulus’ reorg-timetable has also hit some snags).
In between skipping these payments, iHeart tendered a restructuring offer to its lenders that seeked to reduce the company’s total debt from nearly $21 billion to $5.5 billion, all of which would be expected to be repaid over five to seven years. In exchange, “senior lenders” would receive an 89.5% equity share in the company, including 100% ownership of Clear Channel Outdoor – the most healthy division in the iHeartMedia constellation, and the one that iHeart itself’s been drawing money from over the last few years in order to juggle its crippling debt. Bain Capital – the private-equity firm which more than doubled iHeart’s debt when it took the company private in 2008, setting it up on the crash-trajectory it faces now – would walk away with less than 2% of the restructured company. Continue reading “iHeartMedia Beyond Borrowed Time”
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AT&T Lightly Chastised for Airwave Piracy
Late last week the Federal Communications Commission released a Notice of Apparent Liability against AT&T for running microwave radio links without the proper licenses. These links are often used as point-to-point backhauls to move data long distances, and sometimes they are used to connect cell nodes in remote locations to the larger network.
The shenanigans first came to light in 2011, when the FCC found an AT&T microwave link in Puerto Rico that was operating on the wrong frequency. The company subsequently conducted a review and found that hundreds of its microwave links were operating outside of licensed parameters and, in some cases, were not licensed at all. AT&T claims these links were part of acquisitions it made from 2009-2012, and in simple terms neglected to file the right paperwork to adequately license them. But the scale of the problem isn’t minor: at least 240 point-to-point microwave licenses in all require either major modifications or minor modifications to be brought into compliance. All have been operating outside license parameters (or without licenses at all) for three to four years. Continue reading “AT&T Lightly Chastised for Airwave Piracy”
Wrath of Interns Reaches Clear Channel
The nation’s largest radio conglomerate is the newest target in a growing crusade against internship exploitation. Plaintiff Liane Arias alleges her internship at Clear Channel consisted of menial administrative tasks and staffing promotional events—things other employees would have done had her free labor not been available, and a far cry from the educational experience her internship promised. More importantly, she’s asking for class-action status for her case.
Arias is represented by an NYC-based law firm that specializes in labor and employment law and is making a name for itself in unpaid internship litigation, spearheading a similar complaint against SiriusXM satellite radio. This is just the latest in a series of lawsuits filed by former interns against media companies in the last few years: the floodgates opened in 2012 when unpaid interns for PBS’ Charlie Rose Show settled a class-action lawsuit. Then, in June of 2013, a judge ruled that the Fox Searchlight movie studio violated labor law in its use of unpaid interns. Continue reading “Wrath of Interns Reaches Clear Channel”