Tom Taylor led his newsletter with this SEC filing
Coinciding with their court date and attempt to convince the judge in Texas that they are negotiating in good faith, the board of Directors added two new members, both with recent experience in companies with financial problems.
Iheart has been complaining to the judge that the lenders circulating rumors of bankruptcy is hurting its ability to hire DJs, imperiling the viability of the company. For now, free pizza on Fridays is still working, but that might not last forever. The $150 million a month in interest on the debt pile might mean no more breakfast bagels for the troops.
In the midst of the existential threat, you don’t change the board of directors without a reason. The two Private Equity firms Thomas H Lee and Bain (“Mitt Romney”) Capital “own” the company, but only in the sense that they represent interests of the $20B in debt, the real “owners”.
There is one group of debt holders who directly moved to put IHeart in default, and the secondary group that would be crushed indirectly in the event the company is declared in default and entire chunks of debt become immediately due on demand.
The way involuntary bankruptcy works today, having negative owner equity of $6 billion and little other that intangible assets isn’t enough to force bankruptcy – as long as you are paying your bills and meeting your current interest obligations. A company can initiate voluntary bankruptcy, usually in the form of a “prepackaged” bankruptcy where enough creditors sign off on the plan. That avoids a more arbitrary resolution imposed by the bankruptcy judge who perhaps doesn’t understand the business.
Adding two new board members suggests the PE firms were given an “or else”. It is in everyone’s best interest to avoid a chaotic bloodbath. After 7 years, the company has as much debt and a lot fewer assets. Everyone realizes haircuts are coming. Two outsiders can perhaps satisfy creditors that deals being proposed are not just defending prior bad deals.
Worry within the industry is some drastic restructuring of Iheart will spread to other radio companies like Cumulus and derail CBS’s plan to spin off its radio business. Any lender who doesn’t know the radio business is in trouble isn’t paying attention.
Interesting stuff to be sure. It appears that the debt is what is crushing iHeart. One of my local stations, WTAM is an iHeart station. They remain atop the ratings in their demographics (if ratings are even accurate) and have well paid staff. I will be interested in the proceedings from here.
Last weekend I drove the full distance between northern NJ and Boston. On the round trip, I listened to iHeart radio streaming over T-Mobile. (T-Mobile does not count iHeart radio bytes or bytes from several other apps against my 20 GB per month per phone plan.)
During the trip, there was only a period of about 30 seconds on I-95 south of Boston where I lost the signal and it restarted automatically once my phone found the next cell phone tower.
The iHeart radio app will live on. It is more valuable than the AM and FM transmitters that I passed along the way.
So how many products did you buy – things you heard listening to iheartradio?
The myopic people in radio become so focused on ratings that they lose track of the value of the advertising being the people who are listening being people with money to actually spend on the product. Unrated markets are very different in how the relate to advertisers.
I poked my head in the app in the past few days and it now seems to demand registration. It used to let you in even if you declined to register.
Here is the rub – just like Drudge, if the aggregator becomes bigger than the aggregated, what does the aggregator aggregate once the aggregatees are out of business? (Newspapers in the case of Drudge)
Judging by content I see on many of our major “news” sites these days Drudge (and others) will just become aggregators of social media trends. Our dying newspapers and TV news services engage in this regularly.
There are many ‘news stories’ now generated because someone tweeted something or made a post on facebook or instagram. One example this week was the “uproar” about CBS’ “white male” fall schedule. The source of this “uproar” was described as “some people on twitter were upset”, therefore CBS bent over backwards to apologize for (paraphrasing here) casting any straight white males as lead roles.
We are being run by a social media ‘mafia’ with the mentality of a 4 year old who throws themselves on the floor and screams until they get what they want. Until society learns to say the word ‘no’ they will continue their tactics.
There was a story a day or two ago of some woman claiming that she had another woman saying to her that she shouldn’t be in the women’s bathroom. The implication was the other woman thought she was a man.
There were no corroborating witnesses, nobody called the police, store security didn’t tazer her. It was a story with no proof. Even if it was true, the woman never said she should leave for being transgender. We don’t know if the “victim” did anything to bait the situation to trick the other woman into a conclusion.
I begrudedly have to admit the NY Times is a good paper. Despite its biases and “New York values”, they still have editors and do basic journalism. They seem to still have stringers to get details on stories, not just rewriting AP wire copy and splicing in Lexis Nexis search results to make the story longer. Multiple sources, tell me who, what, when, where. Factual errors are infrequent. Bloomberg is bad and getting worse. There is not even a pretense that it is anything more than Mike Bloomberg’s personal soap box.
Here is another much more dangerous story
http://wjla.com/news/crime/security-guard-arrested-for-assault-after-pushing-transgender-woman-from-womens-restroom
The “victim” is a black transgender person who was using a bathroom in a grocery store in Washington DC. Ebony is black. The first account of the story I read said (s)he went into the store to use the bathroom (implying she was not a customer). The TV report doesn’t investigate that angle. The female security guard was arrested for pushing Ebony out of the store.
Near the end, they try to connect this incident to North Carolina… They talked to “a person from North Carolina”… Uh-oh, here it comes. The black womam says she supports the NC law – “if you have a penis, you need to stay out of the lady’s room”
Video of the “victim”. They carefully avoid mentioning the security guard is a woman…
http://baltimore.cbslocal.com/2016/05/19/transgender-woman-claims-assault-in-bathroom-of-d-c-giant/
Or that she is black
http://www.fox5dc.com/news/local-news/143108774-story
It is actually slightly more interesting than that – iHeart radio app includes a couple dozen noncommercial college stations and I listened to one of them for part of the trip.
The app has its issues, but is really not much more than embedded links to audio streams that most stations refuse to display prominently. In the past, they did and I’d bookmark my favorites in a browser. Now they all have their own players with ads and/or pre-streams. It is called shooting yourself in the foot.
I am listening this morning to the Laura Ingraham show on KIXW 960, “The Talk of the High Desert” and their commercial break was interesting. They played a commercial telling me that this year we will have extra time to prepare our income taxes. Rather than the normal April 15th deadline, we will have until April 18.
I see we are already two days past May 18. lol
This is not an iHeart station…. my point is that while iHeart has issues, there are worse issues in the radio business.
Thank AFTRA for that (member?)
During the early days of streaming, AFTRA (the union representing many radio people) insisted on unreasonable royalties for voiceover work of national ads played on the streams. That’s why streams have so many PSAs – the “over the air” signal doesn’t have the PSAs. It’s also common to hear weather reports from days ago. Generally, your “local” radio station gets its weather from a company 1000 miles away – they dial into an unattended device that records the report, which is then played by the computer.
Another part of losing my media virginity involved traffic reports in Detroit. At the time, I had a “police scanner” and happened to discover the signal from the traffic helicopter. What I learned was the reporter made reports to different radio stations, using different fake names. Some of it was not live at all, but recorded and played later. Nothing like a 10 minute old traffic report.
After I learned that, I was driving into work at Chrysler in Highland Park. My memory is it was MLK day, but it might have been some other government holiday. Most of the people using I-75 are government workers and related employers (Blue Cross, etc). There is a curve where traffic ALWAYS backs up. Literally as I was going around the curve at 65 mph, the traffic helicopter was telling me traffic on the curve was hitting the brakes and crawling. They were just making up the report. I don’t know if they were using Johnny Fever’s WKRP copter sound effect
That’s an interesting group of stations. The road from Los Angeles to Las Vegas goes through the desert. I remember riding on a bus in the 1970s – I think my parents hoped I ran away – I got a a Greyhound Bus pass for some reason – maybe high school graduation. The bus overheated in the desert and he had to pull over, raise the engine cover and let it cool down. I had the sense this was a regular feature of the trip.
So this group of “Highway” stations covers the road with a group of stations where nobody actually lives. It entertains the women going to Vegas for the weekend to be prostitutes. If you ever saw the movie “Vanishing Point”, a radio station plays a key part in the story. Each time I visit their web site, I think of that movie
Ol’ Kowalski, my wife has a uncle that has a new Dodge Charger (White) and on his license plates ‘Kowalski’,
Virginia tags. Ha Ha !
I remember watching that movie when I was kid on TV at my grandparents house in West Virginia, when NBC used to show a movie on Friday nights, like mid 70’s.
My Grandma made some popcorn, and my Granddad would ask me why I watched this ( beep) ! LOL
Had to use a LOL there Fred (sorry)
I had it made and didn’t even know it.
parrott
Since someone actually has seen the movie, I went with my mother – we were trying out the brand new drive in theater in Statesville. I’m pretty sure she had no idea what the movie was about, and I sure didn’t even after seeing it. Near the end of the movie, in the theater version to spice up the ratings, they spliced in a totally gratuitous scene having nothing to do with the story, where a naked woman rides up on a motorcycle. My mother’s reaction was “my, that looks uncomfortable”
When I was about 12, the TV news showed the old clip of Marilyn Monroe singing Happy Birthday to President Kennedy. My father’s reaction was “I don’t see why people thought she was a good singer” lol
Not shockingly, the Texas judge in iHeart’s back yard ruled to protect the company. For now, that leaves Iheart free to try to repurchase its own almost worthless debt at a steep discount, which normally would be considered a default trigger. The ball is now back in the lender’s court. Their main option is to file an involuntary bankruptcy petition if three lenders agree. If the petition is thrown out, the petitioners can be hit with lawyer fees and punitive damages. Chapter 11 is not designed to be abused as a negotiating tactic by lenders. As long as bills are being paid and foolish people keep stepping forward to buy their bonds, Chapter 11 won’t work – unless the company invokes it voluntarily
One of the lenders has decided to file suit in Delaware, where Clear Channel is incorporated, where the judge may be less influenced by the politics of San Antonio
IHeart broke off negotiations again
http://bloom.bg/29lpAtN