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

Thanks to Translator-Mongering, AM Broadcasters Now Openly Advocating Band’s Abandonment

It’s still more than two months away, but in late November Americans will sit down with their families/friends and gorge themselves on food, then satedly lounge around giving thanks for their bounty. The U.S. radio industry’s going through that process presently, having spent most of the year scarfing up and then trading around FM translator stations.

In quick summary: FM translators are a class of radio station limited to a broadcast power of 250 watts but unlimited in antenna height (the key factor for good FM coverage). They are considered secondary services, in that they must rebroadcast another radio station. For decades, translators have been used as stand-in broadcast nodes by interests who wanted to build out radio networks on the cheap — by and large, these have been religious and public broadcasters who pipe in programming via satellite to air on a translator. Translators don’t require any staff and since they don’t originate their own programming all they need is a shack for the RF-boxes and a tower nearby.

This all began to change last decade when, after a multi-year freeze on new translator stations in order to implement the LPFM radio service, the FCC opened a filing window for new translators in 2003. Several cunning parties were well-prepared for this opportunity, flooding the agency with tens of thousands of translator applications — a 250-watt FM spectrum gold rush. Out of these came thousands of new translator stations, which in the intervening years have been fodder for speculative development of the FM dial around the country. Read More

More Radio Industry Market-Maneuvering Afoot

Although iHeartMedia’s dance with bankruptcy is widely seen as a key indicator of the health of the radio industry more broadly, that company is not alone in reconfiguring its approach to finance capital. Two other conglomerates are also making moves — one trying to leave the stock-trade behind while another wants to jump back into those waters.

First up is Emmis Communications: the Indianapolis-based company has been hammered in the stock market over the last few years, threatened with delisting by NASDAQ after its stock dropped below $1 per share in 2015. After conducting a reverse-stock split earlier this year (reducing the number of shares in circulation, thereby inflating the price of remaining shares) which brought the company back into compliance, company founder and CEO Jeff Smulyan has announced a $46 million bid to take the company private. Read More

NAB Show Leaves Radio in Shadows

According to reportbacks from the just-concluded NAB Show in Las Vegas, it was a lopsided affair in favor of the future of television. And why not: broadcasters stand to make billions over the next year selling off their spectrum, and those who stay on the air will be rolling out a new digital television standard with new content and datacasting potential.

Meanwhile, the radio industry’s been rocked back on its heels by a slew of bad fiscal news. iHeartMedia, for now, has managed to stave off several billion dollars’ worth of its debt being called in early by angry bond-holders, but the company’s effectively now engaged in increasingly nasty legal maneuvering to decide its debt end-game sooner rather than later. #2 conglomerate Cumulus Media’s still squeezing its broadcast properties also in hopes of keeping bankruptcy at bay. Emmis faces delisting by NASDAQ in early June. Even the relatively fiscally-sound CBS has announced its intent to spin off its entire radio division into a separate company, selling it also seems to be an open option. Read More