Las Vegas-based Citadel Broadcasting Corp., which owns 223 AM/FM stations around the country, has filed for bankruptcy protection. Bloomberg has more:
The company, which syndicates Don Imus’s morning talk show through its U.S. radio network, listed assets of $1.4 billion and debt of $2.5 billion in its Chapter 11 filing yesterday in U.S. Bankruptcy Court. Forstmann Little & Co., a New York-based private-equity firm that bought Citadel in 2001 for $2 billion, owns 29 percent of its common stock, according to court papers. The filing covers about 50 units of the Las Vegas-based company.
Citadel sought bankruptcy to implement a pre-negotiated plan under which it has the support of 60 percent of its secured lenders, the company said in statement. The plan will convert a $2.1 billion loan into a new $762.5 million term loan, giving senior lenders a pro rata stake, and 90 percent of the shares in the reorganized company.
“The ongoing weakness in the economy and advertising spending, compounded by rising debt and leverage” have left Citadel with an “unsustainable capital structure,” Neil Begley, an analyst at Moody’s Investors Service, said Dec. 11 in a report.
BloggingStocks analyzes the problem with radio in general:
The problem facing terrestrial radio (as many call it) is dwindling advertising as a result of the weakened economy. But this trend really started long before the economic slowdown and will probably continue after the economy is back to hitting on all cylinders. With satellite radio and the advent of online radio stations (like Pandora), as well as the ever increasing popularity of portable music devices, watch for the pain to continue in the radio world.