Big Radio Companies Facing Bankruptcy - WPRO and WHJY’s Parent Co’s in Financial Turmoil
Thursday, December 17, 2015
Most of Rhode Island's favorite radio stations may be impacted by a building Wall Street financial meltdown in the radio industry.
The two biggest radio companies in the United States are on the verge of massive restructuring or bankruptcy, as they each have billions of dollars in debt and little chance of managing the building financial obligations.
How bad is the situation? According to one leading radio analyst, the problem is catastrophic. “$20.5 billion in debt for iHeart — billions more than the city of Detroit when it went bankrupt. As I have been reporting, the venture capitalists are circling the carcass for a 2017 bankruptcy. At Cumulus, new CEO Mary Berner has done nothing new except hire another person from outside the industry…They want to go bankrupt and her experience taking Readers Digest into Chapter 11 is her qualification to be CEO,” said Jerry Del Colliano, Publisher, Inside Music Media.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTiHeart radio (formerly Clear Channel) and Cumulus are both facing in economic turmoil and those two groups combined own and operate seven of the top ten most listened to stations in the Providence market.
RADIO IN RI: SEE THE TOP TEN STATIONS BELOW
“iHeart has more debt — unplayable, at double digit interest rates and the junk bond markets just crashed. Cumulus has about $3 billion of debt that will have to be refinanced. Both are in an industry that is trending down. Break even is the new growth in radio. They’re both done,” said Del Colliano.
While iHeart Radio, which owns WHJY, WSNE and B101 in the Providence market, may be upside down by billions, its CEO Bob Pittman is still enjoying the fruits of his office. The former head of MTV's perks are significant. "SEC filings show Pittman, a perennial at the Burning Man festival, will get a $7.5 million golden parachute when he exits. The documents also show that his corporate perks include $900,000 in aircraft usage (Pittman is an accomplished pilot), $160,000 for security and $140,000 in car services," according to the New York Post.
In the past year, Cumulus has lost 90%+ of its stock value and is now trading at $0.25 per share. iHeart's stock has dropped from a 52-week high of $8 per share to $1.01.
The chaos is not limited to financial meltdowns. Investigative reporter Geraldo Rivera is suing Cumulus radio. Inside Radio sourcing Bloomberg reports, "Amid tabloid-worthy rumors that Geraldo Rivera and Cumulus Media were feuding, things have gotten all too real, via a lawsuit filed Wednesday by the radio host with the New York State Supreme Court. In Rivera v. Cumulus Media Inc., he claims that Cumulus’ new top management reneged on a $600,000 deal for him to continue hosting his daily radio show in New York and—here’s the tabloid smackdown—locked him out of his studio.”
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Closer to home, the group “For Our Daughters” is claiming that it is upping the ante on its boycott of Cumulus’s WPRO station because the station continues to air John DePetro. The boycott group, which includes many union leaders in Rhode Island, has had a running dispute with DePetro for two years. He is a conservative talk show host and was the Associated Press top talk show host in New England last year.
"We are calling on elected officials, candidates, and other state leaders to stand strong on their WPRO AM advertising and talk radio show boycott while John DePetro remains on the air. We will be launching an education campaign to remove John DePetro from the airwaves, with the focus being on WPRO’s advertisers," said the group For Our Daughters last week.
As GoLocal reported, DePetro in turn fired right back at the group that launched the campaign two years ago, “I host a very popular, successful, daily talk show where I allow the public to speak out on current events in the news. The content of my show is family friendly, and I speak with people of all ages and backgrounds. Once again, a group of union supporters and other ultra liberal individuals, have targeted me...in an attempt to silence me.”
The Providence radio market is the #44 largest radio market in the United States and includes portions of Southeastern Mass.
Related Slideshow: The Top 10 Ranked Radio Stations in Prov DMA - Nov. 2015
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