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

LPFM Expands…But Translators Still Dominate FM Crumbs

Last month the Pew Research Center published a short report on the growth of the LPFM radio service, following the conclusion of a 10-year legislative battle to expand it back to near the scope originally hoped by the FCC when it was first proposed in 1999-2000.

According to the report, since the passage of the Local Community Radio Act in 2011 and subequent filing windows for new LPFM construction permits, the number of licensed stations has nearly doubled, to more than 1,500 nationwide (including U.S territories and protectorates). Most states have more than 20 LPFM licensees, while California, Florida, and Texas clock in with the most (100+). Read More

iHeartMedia Seeks Pounds of Flesh for Bankruptcy Pressure

After fending off one legal challenge that would’ve sent the company into default, the nation’s largest radio conglomerate now seeks a spot of revenge.

iHeartMedia is heading back to a Texas courtroom in hopes of getting mega-damages out of a consortium of investors who went after the company, serving a notice of default for playing fast and loose with its $20+ billion worth of debt — a strategy which involves iHeart setting up shell companies to repurchase some of the debt it already owes at lower interest rates, while also working to shield some assets from potential creditors. The conglomerate filed suit to stop the default process, and the Bexar County judge sided with iHeart in May. Read More

iHeartMedia Dodges Bankruptcy, Option Remains

iHeartMedia’s lawyers are probably very happy to see May in their rearview mirrors, after dodging a bullet in a Texas courtroom last week. A friendly judge barred the company’s creditors from seeking notices of default on some $6 billion of iHeart’s $21 billion in corporate debt, racked up primarily from pillaging the radio industry over the last 20 years.

iHeart’s creditors were attempting to call out the company for constructing a shell game in an attempt to keep its debt from crushing it. They noticed last year that the company had begun transferring hundreds of millions of dollars in assets to two “independent” subsidiaries named Broader Media and CC Finco. In simple terms, having already borrowed tens of billions against hundreds of stations, thousands of billboards, and countless other media ventures, iHeart moved some of those assets to “new” corporate parents, thereby creating “new” value against which to borrow even more money. Even better, this shuffle protected those assets against existing debt claims. Read More

Radio in Times of Crises

When flooding rains pounded Texas earlier this summer, many communities found themselves in crisis. With wired network infrastructures flooded and unusable and power a sometimes-thing draining the battery-packs at cell tower-sites, many Texans found themselves reaching for their radio to find out what was going on.

One area that was hit very hard by the rains was Austin and surrounding towns, including Wimberley, Texas: flash-flooding sent a wall of water down the Blanco River in the Wimberley Valley on Memorial Day weekend that swept away entire structures, killing several people and doing millions of dollars in damage. Just a couple of years earlier, folks there had founded a non-profit organization to apply for an LPFM license. Construction permit in hand, when the rains came and wiped out most other community communications they did not stand idly by. Read More