Alpha is next

A man named Larry Wilson got into radio in the 1980s in Montana owning tiny stations. In 1990, he formed a company called Citadel. He continued buying up small failing radio owners at a bargain, hoping to turn them around with better management.

He was in the right place at the right time when the Telecom Reform act of 1996 was passed. He quickly acquired a total of over 200 stations in unrated or tiny markets, doing essentially the same thing Cumulus was doing – staying out of the way of competing with Clear Channel’s almost unlimited credit line.

When the radio bubble burst around 2000, Mr Wilson turned the company over to a private equity firm Forstmann Little for a reported $2.1 Billion – most people assumed it was a voluntary transaction from which Mr Wilson profited handsomely. He stopped working for Citadel and was no longer present when Citadel tried to consume ABC Radio (from Disney) and almost immediately dived into Chapter 11, and was quickly combined into Cumulus.

With the bankruptcy of Cumulus and iHeart / Clear Channel, Moody’s has decided the downturn in radio is permanent and debt from radio owners is high risk, deserving of higher interest rates.

Alpha Media, the company that Larry Wilson formed a few years ago to repeat his prior success failed to file its financial reports on time this quarter, which triggers a default – if a lender chooses to push the issue – which hasn’t happened yet, but Moody’s downgraded the debt and is threatening more downgrades soon if they don’t get clarity from the parties.

If you are interested in seeing their station portfolio

Alpha Media stations

70 are AM stations and most are in places you have never heard of or visited. If you measure bigness by license counts, they are a big player – if you look at revenue and national audience, they are tiny.

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7 Responses to Alpha is next

  1. TheChairman says:

    So, do you think we’ll be seeing the FCC sell radio spectrum at fire sale prices?

    • Fred Stiening says:

      No – the entire FM band is only 20 MHz of spectrum and would not be available internationally.

      One unexpected cost of the TV spectrum sale is FM stations are demanding cash. The reason is that the repacking of the TV band is moving or ending the ability of FM stations to keep their transmitters at the site they didn’t own because the tower owner is ending their lease – so they want cash and are getting it

      • CC1s121LrBGT says:

        It is amazing that the US was able to shut down the old analog TV and replace it with digital when you consider there has been no movement with doing the same with radio in the US. We are way behind Europe in that regard.

        In Europe, broadcasters in a region combine their audio streams into one digital signal that has many different stations, much the same as the Sirius and XM satellites do.

        It will come to the US, but will we be alive it see hear it?

        https://en.wikipedia.org/wiki/Digital_radio_in_the_United_Kingdom

        • Fred Stiening says:

          Not so amazing when you consider that much of the world considered radio and TV to be government functions.

          In a digital world where stations are multiplexed over a single stream, the entire notion of issuing licenses changes to only which voices are allowed on the stream – but IP wireless makes that even irrelevant

          • CC1s121LrBGT says:

            Good point about the radio and TV being government functions in most of the rest of the world… but that could be a counter argument to our more rapid adoption of digital TV than the rest of the world.

            Re the multiplexed signals, there doe not have to be one per city, it is a bit more like cable TV, wirless carriers or ISPs – there can be several and each could compete to carry popular streams.

            100% agree that IP wireless is the future… but it is good for the country to have a broadcast means that goes beyond the local few wireless towers that cover any given location. Perhaps future cell phones will include hardware for “roaming” to a satellite in the event of a natural disaster- at least for receiving information and perhaps for making emergency calls.

      • TheChairman says:

        I was thinking more in terms of alternate uses in local markets. The old TV video signal was AM, but the audio was FM, so just pondering future usage scenarios other than audio or analog.

  2. Fred Stiening says:

    A correction – it was S&P, not Moody’s

    Behind free registration
    https://www.standardandpoors.com/en_US/web/guest/article/-/view/type/HTML/id/2033501

    April 30th was the due date for their audited financials and S&P believes the numbers would reveal that they have exceeded their cash flow to debt ratio which would trigger changes to their debt agreement

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