As Bob Pittman Continues To Champion Radio, Clear Channel's Debt Looms Large
June 9, 2014 at 3:58 AM (PT)
THE FINANCIAL TIMES recently discussed debt -- and more -- with CLEAR CHANNEL CEO BOB PITTMAN, and noted PITTMAN is making progress in paying down the company's debt -- but slowly. CLEAR CHANNEL's "radio revenue was up just 4% in 2013, adjusting for political ad cycles. Just over half of group revenue comes from radio with the rest from a more stable multinational billboard business, CLEAR CHANNEL OUTDOOR."
PITTMAN has been championing radio in numerous settings, and continued as a cheerleader, telling FT, “Radio is AMERICA’s companion.”
The paper explains, "PITTMAN’s challenge is to persuade advertisers not only that radio can withstand the digital competition, but that they should pay more to reach its listeners. According to NIELSEN, the ratings group, radio can generate a sales lift of $6 for every ad dollar spent. Yet radio pricing is a third cheaper than television, Mr PITTMAN says."
PITTMAN said “every investment banker in the world” has suggested he spin-off iHEARTRADIO, but feels the company's assets are worth more together.
But what about the debt hanging over CLEAR CHANNEL? The company refinanced $850 million in APRIL, allowing 2014 and 2015 payments to be made in 2018. FT points out that refi, "came with 10% interest rate, double the rate on the debt it replaced. CLEAR CHANNEL’s expected interest expense of about $1.6 billion in 2014 is about equal to its free cash flow.
“Six months ago, if you’d have told me I could refinance $850 million of subordinated debt at 10%, I’d have looked at you like you were crazy,” CFO RICHARD BRESSLER added, noting, "the demand for its debt is a sign of confidence."