Sarah McBride of the WSJ (along with Mike Spector) write in this article about a problem which has taken some of the lenders by surprise, but people who follow this site closely have known about for months.
Citadel Broadcasting (which owns the former ABC radio network and a bunch of small market stations) failed to make an interest payment on August 15th and failed to come up with the money by September 15th, so they are in default for a 3rd time this year.
The problem is that if the lenders take any actions to sieze the company – either by bankruptcy or via a debt for equity swap, they immediately run into the FCC ownership caps. The same lenders have interests in too many radio stations already, and are not allowed to “own” any more stations. Some of the lenders are not allowed to own radio stations at all because they are non-US companies. Most of the existing radio companies that could buy ABC radio stations at a fire sale can’t because they already are at the limits in ther major market ownerships.
So we’re stuck with a handful of “too big to fail” radio owners in limbo – everyone wants to take their losses and move on, but the process is frozen by the limits – and long term relaxing those limits would just reinvite the same problem down the road with even bigger “too big to fail” radio networks.
Anyone out there with a billion or two to invest want to buy a radio network cheap?