It’s clear many people in and around the radio business believe the debt issues both iHeartMedia ($20 Billion) and Cumulus ($2 Billion) are facing is a drag on the entire industry. At the Broadcast Finance Forecast panel at the Radio Show Wednesday morning, the issues facing those two companies came up several times during the 90 minute session.
Capital One’s Ray Shu said, “Two of radio’s largest operators are over-levereged (10-11X). They need to correct that soon because it affects the entire industry.” Garret Komjathy of U.S. Bank added, “You cannot outgrow your capital structure. When you have modest leverage, you have flexibility.” He said at some point there will need to be a restructuring. He also said the companies are just too big to manage.” That was a sentiment echoed by several radio CEO’s who appeared on the panel as well.
Alpha Media CEO Larry Wilson said, “We have two companies terribly underwater—that’s really what’s bogging down this business because I think a lot of broadcasters are doing well. Wilson also said the firing of former Cumulus CEO Lew Dickey one year ago sent “a shockwave through the banking community.” Wilson said Dickey’s firing was the reason it took his $264 million deal with Dean Goodman’s Digity so long to close.
Cumulus firing Dickey was there best thing to happen to that company. Absolutely no other industry would have anywhere near the tolerance for Cumulus and iheart/clear channels abysmal failures for the last several years. It is amazing that the Board of Directors at Cleat Channel, have not held Bob Pittman accountable. Pittman has been in charge of Clear Channel for 8 years now, and he hasn’t delivered one dollar in profit.
While other ownership principals who are well away from any immediate blast radius (understandably) snort with righteous indignation at the Two Big Blunders, they still pull away from their pulpits while continuing to accept, if not embrace, the same programming strategies.
These strategies are doing nothing to enhance the position of either Cumulus or iHeart – or, it can be argued, anybody else. But, for some reason, they (the approaches) go unchallenged. I would hope that some others, somewhere, would also notice the disconnect – and the irony.
I would agree that the programming strategies have not changed, and have only gotten worse with the lack of local talent.
Cumulus has a chance to bounce back from its debt. But what’s next for iHeartradio? The restructuring already seems to be happening. Less experienced PD’s have already stepped into vacated roles previously held by very experienced PD’s with sometimes more then 1 stations to watch over. Regional areas have been created and run by 1 or 2 managers or sales directors, or both. Will they really focus on this new music app they will introduce in 2017? What will the iHeart do with the Outdoor part of the company?
With iHearts $20+ Billion debt, why do they continue putting on Music Festivals and Award Shows… Trying to legitimize the company as a music giant under the label “iHeart” instead of “Clear Channel”, wont change the fact that the company has to pay a huge chunk of debt back by 2019.