Interep Writes Final Chapter (7)
October 24, 2008 at 5:14 PM (PT)
ALL ACCESS has learned that INTEREP Vice Chairman and CEO DAVID KENNEDY told the rep firm's management on a conference call this morning that the company plans to close in the "near term" after converting its bankruptcy from Chapter 11 to Chapter 7 liquidation.
A motion by INTEREP to convert its bankruptcy into Chapter 7 was on the docket for Judge ROBERT D DRAIN in U.S. Bankruptcy Court for the Southern District of NEW YORK TODAY (10/24).
Reaction And Comments
The demise of INTEREP affects not only CBS RADIO, but other notable names like BEASLEY, ENTERCOM, ESPN, NEXT MEDIA, RADIO DISNEY, and more. For a complete list, just click here.
And, now what happens to their clients?
A CBS RADIO official released the following statement: "We are looking at alternative national sales representation strategies. We'll have something to announce in the near future." CBS declined comment regarding the recovery of commissions owed by INTEREP.
CBS is also complaining to the court that INTEREP may have spent money collected for ads sold on CBS RADIO for other purposes and has asked for an emergency hearing on the matter.
ENTERCOM Dir./Communications & Environmental Affairs EMILY DiTOMO told ALL ACCESS, "We are very sorry to see this happen to INTEREP. Having said that, we are extremely excited about where we are going and have plans in place to create an even stronger national sales effort. We will be making some announcements within the next week. In the meantime, we plan to work closely with our customers to ensure that nothing falls through the cracks."
ALL ACCESS contacted KATZ MEDIA, which now becomes the 1000 pound gorilla in the national sales rep world, for comment. SVP/Corporate Commmunications MICHAEL SHERMAN said, "We decline to comment."
How Did Interep Get Into Trouble?
OAKTREE CAPITAL and SILVER POINT CAPITAL are the bondholders for INTEREP as of a few years back. Several attempts were made to restructure the company's balance sheet get it profitable. OAKTREE even offered to buy INTEREP at one point but a deal was never consummated and the offer was rejected by then Chairman RALPH GUILD.
By the time DAVID KENNEDY came aboard last year, INTEREP had lost such major companies as CUMULUS, SUSQUEHANNA, CITADEL, RADIO ONE and many others went to KATZ MEDIA, and when it became clear that it's $99 million in bonds, due this coming JULY 2009, were not going to be satisfied, INTEREP filed for Chapter 11.
Three things have lead to the "perfect storm for INTEREP's Chapter 7 filing:
1. The falling revenues outweighed the the fixed costs of running the business
2. The state of the economy over the last 60 days crashed a recovery plan
3. INTEREP had no access to debt financing and neither OAKTREE or SILVER POINT could put together a structure for a clear path to profitability.
For a history of INTEREP, just click here.