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

Radio With Pictures Still A Hard Sell

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.” Read More

FM vs. iPhone: A Battle of Shaded Truths

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.” Read More

Big-Fish Radio Capital Shaky in 2017

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. Read More

iHeartMedia At Debt Wall

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. Read More