Two Radio Companies On 'Likely To Declare Bankruptcy' List
April 20, 2009 at 5:58 AM (PT)
MONEY CENTRAL at MSN.COM writes "The B-word is in the headlines like never before. There were 7,843 commercial bankruptcy filings in MARCH, according to AACER, a bankruptcy data management company. That's up 23% from the previous month and a staggering 65% from a year earlier. And the number of filings is accelerating."
"Bankruptcy typically has a lag behind what is going on in the marketplace," said AACER Pres. MIKE BICKFORD. "So I think you are going to see increases in bankruptcy. . . at least over the next 12 to 18 months."
It's not a pretty picture for Radio companies, with two making the list.
"The main business of CC MEDIA, the parent company of CLEAR CHANNEL COMMUNICATIONS, is selling ads, and that's a tough one in this market. The company posted a $3 billion loss in the fourth quarter of last year.
"As the largest radio company in the U.S., CLEAR CHANNEL needs to put a lot of ads on the airwaves. So the steady decline in radio advertising -- the market is projected to shrink 11% this year -- has hammered the company. In the fourth quarter of 2008, its radio broadcasting unit's revenue was down 13% from a year ago.
"Many media companies are facing similar problems. Worse for CLEAR CHANNEL is that it recently borrowed the remaining $1.6 billion of the $2 billion in lines of credit it had available. That has some worried that CC MEDIA, owned by private-equity firms THOMAS H. LEE PARTNERS and BAIN CAPITAL, is struggling to keep up with payments on the $17 billion-plus it has in outstanding debts.
"UNIVISION COMMUNICATION also partly owned by BAIN and THOMAS H. LEE, is looking malo.
"In addition to suffering from the advertising slump hitting media companies, it also has large debts and is losing money. The company has about $10 billion in debts and posted a net loss of $5.1 billion for 2008, partly because it lowered the book value of several radio and TV properties.
"Company executives insist UNIVISION will be able to pay its debts. But investors are nervous. Even CEO JOE UVA acknowledged, in a MARCH 30th statement, that its fourth-quarter results 'reflect an operating environment that was among the most difficult we have seen across most industries.'"