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.