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
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.