The FCC’s Trumpian Shift is On

The governing paradigm in contemporary U.S. communications policy is genuflection to principles that invoke the “free market,” especially post-1980 when economics captured the policymaking process. As such, all Federal Communications Commissioners, regardless of party, will couch their positions and rationales in this language, though nearly all also make the effort to connect their rationales to something akin to “the public interest,” which has been the principal ideal as mandated by the agency’s own authorizing statute.

But the FCC’s also been a safe space for the occasional ideologue who worships capitalism as the human condition most worthy of emulation. It is not a radical notion to believe that an economic theory may not be an appropriate paradigm by which to organize all of the workings of an entire society. Folks who do believe that are market-fundamentalists; and whether it comes in economic, political, or religious flavors, fundamentalism is an extreme that the act of being civilized tends to temper. Read More

iHeartMedia, Cumulus Go Debt-Offensive

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. Read More

Radio Stocks Spice Books for Year’s End

Borrow $1,000 from the bank, and the bank owns you. Borrow $100 million, and you own the bank. This seems to be the mantra for end-of-year finance-maneuverings in the U.S. radio sector. Three companies in particular are making plays:

1. Clear Channel iHeartMedia: After beating back a default-notice earlier this year by some creditors to whom the company owes more than $20 billion in debt, run up in the post-1996 consolidation and acquisition-frenzy, another lawsuit filed in Delaware accusing iHeart of playing fast-and-loose with debt-swapping between subsidiaries has been dismissed.

This has emboldened the company to seek a further renegotiation of a portion of its debt-payments. In a statement released late last month, iHeart announced that it’s asked some investors for the flexibility to “amend their terms,” according to the Tom Taylor Now newsletter. If iHeart gets consent, it may attempt to revise the interest rates on these debt-notes, or swap the notes down the road for other debt instruments at more manageable terms. One anonymous watcher tells Tom that if the company is successful, iHeart’s “debt wall,” or the point where the company ceases to be able to make adequate payments on what it owes, might be pushed back “until at least 2018, maybe 2019.” Read More

iHeartMedia’s Thin Skin on Corporate Finances

A funny thing happened just hours after I posted last week’s update on iHeartMedia’s dance with bankruptcy earlier this year: I got an e-mail from a PR flack contesting my analysis. But it wasn’t just any flack — it was Wendy Goldberg, iHeart’s chief communications officer. She was displeased with several points I made.

To begin, Goldberg asserted that I had misconstrued the timeline of events surrounding the company’s near-default. Instead, iHeart conducted a pre-emptive strike against “a small group of lenders” who planned to call in some $6 billion of the company’s $20+ billion outstanding debt burden within 60 days. (This would indeed have immediately tipped the company into default.) Secondly, my she called my assertion that this close call, in my words, worried “the market that the conglomerate is just steps away from bankruptcy” was seemingly, in her words, “confused at best, and speculation at worst.”

Finally, Goldberg took umbrage with my contention that iHeartMedia remains near the precipice: “I am assuming this is your own opinion or speculation, and if so you should either couch it as such or remove it.” Read More