iHeartMedia Bankruptcy Reorganization Imminent

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. Read More

HD Radio Still in Stasis, But Has New Friend at FCC

2017 came and went with no great movement in the HD Radio space. According to FCC records, fewer than 2,000 FM stations have received authorization to broadcast in HD, which represents an adoption rate of 15% – a number that has not changed significantly during this decade.

On the AM side, although some 240 stations (5%) are authorized to broadcast in HD, this curated list shows that about half of them have abandoned the protocol. Penetration of HD receivers into the automotive space remains at just under half of all new cars sold in the United States and there’s still no meaningful market for non-automative portable receivers.

Yet the broadcast industry would rather you believe that HD is thriving. A new “e-book” from the folks at Radio World, New Directions for HD Radio, contains useful information about ways to optimize the system, including making sure that the analog and digital signals are properly time-aligned, the necessity of seamless audio processing across the airchain, and National Association of Broadcasters effort to standardize the broadcast of metadata on HD signals. One would think those core operational principles would’ve been hammered out nearly twenty years ago when the technology was first authorized for deployment, but it was more important to the industry to make a digital beachhead on the airwaves than it was to deploy something that worked out of the box. Read More

Coloradans Push Back Against Anti-Pirate Bullying

FCC Commissioner Mike O’Rielly doesn’t seem to be getting the kind of publicity he hoped for after taking a hyperlocal news outlet in a suburb of Boulder, Colorado to task for reporting on the existence of a pirate radio station there. The Longmont Observer ran a short piece back in December noting the existence of Green Light Radio, the FCC’s protocol for shutting such stations down, and ending with the statement, “In the meantime, enjoy Longmont’s pirate station while it lasts.”

This stuck in O’Rielly’s craw so badly that he penned a letter to the editor of the Observer admonishing it for providing “tacit support” to an unlicensed broadcaster. In O’Rielly’s mind, the Observer’s journalists should have acted as freelance FCC agents and not only reported the station to the agency’s field office in Denver, but encouraged readers to not listen to “KGLR,” due to the supposed “harm” it would cause.

A follow-up article in the Boulder Daily Camera newspaper (and its Longmont affiliate, the Times-Call) seems to suggest that Coloradans don’t appreciate O’Rielly’s scolding. According to Brooke Ericson, O’Rielly’s chief of staff (who, incidentally, has been in the job for less than four months and most likely ghost-wrote the letter to the Observer to score points with her new boss), this was “the first article (he) has come across that appeared to actively promote this illegal activity,” and thus justified a response. Read More

Paper Tiger Roars in 2017 – To What End?

There are still a few pirate radio enforcement-cases from 2017 that the FCC has yet to release, but by and large the numbers from last year are in and they most definitely show an uptick in the number of enforcement actions against unlicensed broadcasters. As of today, there were 383 enforcement-actions across 18 states, compared to 207 actions in 2016 covering just nine states. For the second year running, Florida tops the list of states with the most anti-pirate enforcement, followed by Massachusetts and New York.

FCC Anti-Pirate Enforcement Actions Enforcement Actions by Year, 1997-20182017 ranks as the fifth-busiest year for enforcement activity in the 20-year history of the Enforcement Action Database, eclipsed only by a tear the FCC’s Enforcement Bureau went on during the end of President Bush II’s second term and Obama’s first term, when a proposed expansion of LPFM was being debated. Of the activity logged last year, the vast majority were station-visits (201, or 52%) or Notices of Unlicensed Operation (aka warning letters, 168, or 44%). The remaining 4% of enforcement actions included Notices of Apparent Liability (aka pre-fines, of which there were four) and Forfeiture Orders (nine).

In 2016, the FCC’s Enforcement Bureau issued nine NALs and five Forfeiture Orders, so on balance there’s no real movement or improvement in the agency’s escalation-protocol beyond initial contact(s). Read More

Cumulus Goes Chapter 11; How Long for iHeart?

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. Read More