|Did iHeart just tip its hand?
iHeart adds two board members – and one just led his company into Chapter 11.
Frederic “Jake” Brace is the CEO of Oklahoma-based Midstates Petroleum, which three weeks ago said it intends to file a “pre-arranged re-structuring of the company’s balance sheet through a reorganization plan.” In radio, PSAs are public service announcements, but at distressed firms like Midstates, PSA is shorthand for “Plan Support Agreement” with the lenders. Does any of this sound a tad relevant to $21 billion-in-debt iHeart? It’s expanding the board from 10 to 12 at a delicate time. The other newly-designated board member of iHeart Communications is Charles Cremens. He’s a veteran of various boards and corporate executive – and he was president/CEO of Spirit Finance Corp. when it did a re-structuring. iHeart tells the SEC that Jake Brace and Charles Cremens will also serve on the boards of iHeartMedia Capital I LLC, the direct parent of iHeart Communications, and iHeartMedia Inc., its indirect parent. While we await the outcome of the San Antonio courtroom tussle between iHeart and those pesky priority-guarantee note-holders, read yesterday’s SEC filing about iHeart’s intriguing choices for new board members here.
“Pandora has been for sale, and there are no buyers.”
That’s what one unidentified “high-ranking media banker” tells the New York Post. So it seems that former Pandora CEO Brian McAndrews was indeed involved with seeking a buyer, before he was abruptly replaced by co-founder Tim Westergren. Now we’ve got Keith Meister’s Corvex Capital hedge fund trying to press Pandora into a sale – and again, the Post has some backstory. It says that “according to Meister, Pandora tricked him into withdrawing from a proxy fight.” That’s where he would’ve nominated his own slate of directors. What Pandora did was to usher former veteran CBS, Hearst-Argyle and Fox exec Tony Vinciquerra onto its board. That supposedly “pleased Keith Meister.” But less than a week later, it bade farewell to McAndrews, whom Meister supposedly liked. The Post says “Meister said he had not been informed about the upcoming [change in CEOs] when he withdrew from the proxy contest.” Though Corvex would’ve been in a position to know Pandora was searching for a buyer, and it’s odd for it to press for a sale if there truly are no buyers. But are there truly “no buyers?” Maybe none at a price that would be acceptable to Corvex Capital, which quietly accumulated a 9.9% ownership position in Pandora, to become its largest single owner. Corvex isn’t happy.
Viacom’s board cuts off Sumner Redstone’s $2 million salary.
The board’s aware of the embarrassing video and transcript showing the state of its controlling shareholder, in the May 6 trial over who will be his health-care guardian. Based on his very limited involvement in the company’s operations, last year the board trimmed Redstone’s compensation back to just his $2 million salary. (He made $13.2 million the previous year.) Then at yesterday’s board meeting, they voted to eliminate that. (Don’t worry about Sumner being able to pay next month’s light bill – he’s a multi-billionaire.) The L.A. Times says the judge in the recent trial “stopped short of declaring Redstone mentally competent,” especially since he had trouble answering questions such as his original name (Sumner Murray Rothstein). But the judge did rule that the man who controls Viacom and CBS does have enough wit to know who he wants making his healthcare decisions. That will be his once-estranged daughter Shari. She seems to be very comfortable with Les Moonves running CBS as Executive Chair/CEO. But with Viacom Executive Chair/CEO Philippe Dauman? Not so much.
What if the TV spectrum auction that begins May 31 doesn’t end ’til Christmas?
Analysts on yesterday’s Spanish Broadcasting System call were curious about something the company can’t comment about, under FCC auction rules – when might the “forward auction” of turned-in TV spectrum that begins in two weeks come to its final round? We know that SBS has submitted TV spectrum in Miami, Houston and Puerto Rico in the just-completed “reverse auction,” and we also know that it doesn’t have to accept any of the eventual offers. (Though as one TV executive tells NOW, “It’s scary, because if you don’t participate in the end, they might just take your spectrum and re-pack you anyway, and you get nothing.”) So it’s all a waiting game – for Spanish Broadcasting System and everybody else. At least for SBS, it says it has about $262 million worth of “NOLs” (tax carry-forwards) to shield potential big profits from selling TV spectrum. It assures analysts it’s “working on a number of alternatives” for what to do with any potential proceeds. But who knows when or if they’ll be coming in from the FCC?
“The Latino vote is more important than ever,” says SBS.
Management predicts on yesterday’s quarterly call that “We’re going to see a huge impact [from political ads] in the third quarter and in November.” COO Albert Rodriguez is “highly enthusiastic” about the prospects of candidates eager to reach Hispanic voters. How is this second quarter looking, then? Spanish Broadcasting System doesn’t offer forward-looking guidance, in Wall Street parlance. But Rodriguez does say that for April, they’re up mid-single digits in Audio (radio plus AIRE Networks), up low double digits on digital, and up double digits on Video (MegaTV). And SBS predicts that Audio division margins will improve from about 32% in the first quarter to the mid-30s. They also hint about “a number of strategies around our real estate assets.” Last year there was speculation from outside the company about the future of its Manhattan office, a plum building that houses Spanish tropical “Mega 97.9” WSKQ. That wasn’t mentioned, but you also wonder about tower real estate, and possibly other options to help lower SBS leverage. At 7.1-times – it’s not low.
SBS says it’s fixed the “disappointing” results from AIRE Radio Networks.
COO Albert Rodriguez is frank about what happened – last Summer, they installed new sales management at AIRE (“EYE-ruh”), that didn’t work out, and now they’ve replaced them with new folks. Those are Senior VP of Network Sales Michelle Marino and new VP/Network Sales Erika Marrero. Albert tells his call “we had an amazing ride” most of the first two years of AIRE, then “we had a bump” due to sales management – and now “we hired some of the top people in the network space.” Rodriguez conducts a mini-seminar about network ad sales for the analysts – it’s “probably going to take 60 to 90 days” for the new management’s effort to be seen in revenue numbers. But the COO predicts they’ll “have a huge impact on the 2017 upfronts, which will take place in June.” Albert’s confident about his 11 million-person weekly cume platform at AIRE. Interesting how Miami-based Spanish Broadcasting System now views its major business segments – Audio, Video (MegaTV) and Digital. AIRE, a part of Audio, and a smaller number of live events caused the company’s total revenue to dip 2%, to $31.6 million. What the company calls “core audio revenues,” would’ve been up 3% if you exclude special events and barter. Cash flow (OIBDA) slipped 11% at the Audio division to $9 million – but 29% company-wide, to $5 million.
American Urban Radio Networks is now 100% owned by Access.1
The accusations and legal actions between the long-time partners now melt into this press-release quote from Access.1 CEO Chesley Maddox-Dorsey – “Sheridan has passed the baton to us.” Access.1 sued Pittsburgh-based Sheridan Broadcasting Networks for breach of fiduciary duty, alleging “looting” of AURN (March 7 NOW Newsletter). Sheridan sought the haven of Chapter 11 bankruptcy protection (reorganization), while they dueled out their differences. Sheridan had 51% of American Urban Radio Network, and four years ago Access.1’s National Black Network Broadcasting (“NBN”) sued over the way Sheridan was conducting the business. The suit alleged that Sheridan was “forcing” the jointly-owned AURN to pay invoices six to eight weeks before they were even rendered. Now Access.1 says “Sheridan turned over its majority partnership interest, in addition to making certain financial payments.” That resolves the litigation, and presumably Sheridan will be looking to exit Chapter 11 – and everybody’s ready to move on. Chesley Maddox-Dorsey says “It’s been almost 25 years since Sid Small and Ron Davenport Sr. had the vision of creating AURN.”
SiriusXM has no trouble finding buyers for $1 billion in new debt.
In fact, the original plan was to sell $750 million worth of notes due in 2026, but the underwriters upped the offering to $1 billion. Even that didn’t faze the analysts at Moody’s Investors Service, who’d earlier in the day said issuance of the notes wouldn’t impact its various credit ratings for the satcaster. (Another group that had no trouble with the new notes was shareholders – “SIRI” stock closed unchanged yesterday at $3.89 a share.) Pricing for the $1 billion in debt was at 5.375%, and note that this was a “Rule 144A” sale, meaning only “qualified institutional buyers” were allowed to buy. Not us ordinary folks. What’s the money for? Part of the proceeds will re-pay the outstanding borrowings from the company’s “revolver,” or revolving credit facility. Some will help American-based SiriusXM fund the “re-cap” (re-capitalization) of its cousin SiriusXM Canada, which hopes to go private. Some of the money will go toward the usual vague “general corporate purposes.” SiriusXM CEO Jim Meyer’s been consistent when asked about acquisitions – no big targets appear on his deal-screen, and he definitely doesn’t like the business model of streaming radio. Don’t expect him (or John Malone and Greg Maffei at controlling shareholder Liberty Media) to be sniffing around Pandora. One thing SiriusXM might do with the money from the debt offering – stock buybacks.
The FCC will indeed vote to go further toward eliminating the rule about stations retaining copies of letters and emails in the public file. That requirement was one thing in the days when all listener and viewer comments came in the daily mail. Now they can flood in via email, and the FCC places a Notice of Proposed Rulemaking to end the rule on the agenda for its May 25 Open Meeting. Meanwhile, radio stations in top 50 markets with at least five employees must start uploading documents to the online public file as of June 24. David Oxenford explains it on BroadcastLawBlog here.
“If a song reaches Shazam’s top ten, there’s a 94% chance it will be a hit,” says one data-point from a new study about Shazam’s track record and usefulness to programmers. It’s from the new Integr8 Research, led by Matt Bailey. Another way to slice the new Shazam info is that “On average, Shazam is two weeks early at predicting top 10 hits.” Integr8 says it’s “the successor to Core Callout Research,” and identifies clients like CBS, Emmis, SummitMedia, Scripps, and Canada’s Newcap radio. Read Part 1 of the info Integr8 is releasing on Shazam here.
“Fly MCO” radio will guide visitors to Orlando – if they’re tuned to the HD2 channel of CBS Radio’s hot AC “Mix” WOMX/105.1. This is a new offering from Orlando International Airport. Its three-letter airport code is “MCO,” a hangover from the field’s origins as McCoy Air Force Base. “Fly MCO” debuted yesterday, and the Orlando Sentinel says the station is “one of several tech avenues the Airport is using to get information in front of travelers, as passenger numbers are setting records.” Using local radio for travelers information is nothing new. But the Mix signal that “Fly MCO” piggybacks on covers 11 counties in central Florida – quite a reach. Presumably CBS is getting some lease income from the Airport. They’re streaming it, here. The slogan – “Keeping you up to date from our gate to your gate.”
South Africa’s state broadcasting authority stations must become “90% local,” under a new quota system introduced by the South African Broadcasting Corporation. PRI says it’s “meant to promote local artists and celebrate South Africa’s culture, including the country’s 11 different languages.” But PRI asks “What exactly is ‘local?’” That’s just one of the questions, and ratings scholar Chris Huff tells this NOW Newsletter that “while this shouldn’t have much of an adverse impact on most of the SABC native-language outlets, it is sure to affect urban-formatted Metro FM. It scored a 16-share in the latest Johannesburg area ratings, and has dominated that market for most of the last decade.” Countries like Canada and France have long laid down local-content requirements for music stations.
A proposed Santa Barbara move-in sells for $1.175 million cash, and it’s a onetime Clear Channel-owned station, “Real Rock for the Central Coast” KXFM. It’s currently a full Class B at 99.1 licensed to Santa Maria, but last November it applied to move into Santa Barbara. It would still be at 99.1, but drop in class to a B1 licensed to Montecito. Two things about that – its proposed antenna site would be at one of the facilities commonly used for the Oxnard-Ventura market, and Oxnard-Ventura is a larger market than Santa Barbara. (Nice potential gain there.) But second, it’s been six months since current licensee El Dorado Broadcasters filed that application, and the FCC hasn’t approved it. That’s longer than usual, and you wonder if the Commission’s trying to balance out priorities between full-power signals and potential Low Power FM moves. Buyer is John Q. Hearne’s Point Ten LLC. It’s already in the Santa Barbara market (as Rincon) with stations like talk KTMS/990 and “Quality Rock” KTYD/99.9. Overall, the Hearne family has well over two dozen stations in California, including Oxnard-market CHR “Q104.7” KCAQ. The just-filed sale of rock music/Free Beer & Hot Wings-mornings KXFM continues El Dorado’s recent pattern of station sales.
In San Luis Obispo, local contemporary Christian non-com “Life 89.3” KLFF sells to a buyer whose name already includes the “Life” name.” Arizona-based Family Life is doing this deal with local seller Logos Broadcasting, and it expands the Arizona part of Family Life’s radio empire to an even dozen stations. (An affiliate, Family Life Broadcasting System in Michigan, has more than a half-dozen stations.) Expect the “Life 89.3” format in San Luis Obispo to be replaced by the buyer’s contemporary Christian “Family Life Radio” feed. (Family Life operates a separate Christian teaching/music service, but that’s probably not what they’re thinking for San Luis Obispo.) Technically, KLFF is a full Class B, and it’s selling for $400,000 cash. Brokers – Jody McCoy of McCoy Media Enterprises and Mark Jorgenson of Jorgenson Broadcast Brokerage.
“The diminishing ROI impact of spending too much on digital” is one of the lessons from a new study out of the Advertising Research Foundation called “How Advertising works.” Bob McCurdy of UppingTheVolume writes with Cumulus Chief Insights Officer Pierre Bouvard that “the chart shows...the more digital spend, the lower the return on investment. Too much digital investment can actually cause sales to decline.” They say “This is good news for the radio industry, showing that it’s important to continue to have radio in the media mix.” The ARF study’s worth spending time with (and sharing), during this week’s Upfront sales frenzy in New York. More from McCurdy and Bouvard here.
Watch Kurt Hanson’s “State of the Industry” address at last month’s RAIN Summit in Las Vegas, where Hanson employed a wide array of graphics to talk about smartphones, online radio, the number of radios per household and his own recent health scare. (Kurt worked in his trademark 1960s TV reference when he said his surgeon was named Dr. Zachary Smith – same name as the villain from “Lost In Space.”) Lots to follow and learn in Kurt’s video here.
Casey Rae adds another credit to a C.V. that includes being a musician, music journalist, producer, audio engineer, label owner, teacher, and (most recently) CEO of the D.C.-based not-for-profit Future of Music Coalition. He’s jumping to SiriusXM as “Director of Music Licensing.” That’s definitely the other side of the fence, and Casey brings plenty of contacts to the new gig. He says “It’s been an honor and a privilege to serve for a decade at FMC,” where the interim CEO will be board president Dick Huey. The Coalition says it “works with musicians, composers and industry stakeholders to identify solutions to shared challenges.” Casey’s been a frequent commenter in various forums – and we’ll see if he stays as visible, when he starts at SiriusXM next month. One of his media appearances last Fall was on the Business Radio channel of SiriusXM, discussing “artists and an evolving music industry.”
Jennifer Turec LaMontagne is Radio One’s new Regional Director of National and Corporate Sales, based in New York. (That’s where Radio One would love to own a station, but doesn’t.) Jennifer goes by “Jen,” and her radio experience has been with station owners CBS, Inner City and Emmis, and reps Katz and the former Interep. For the last dozen years, she’s been at New York City’s urban WBLS/107.5 and gospel WLIB/1190, and she’ll report to Radio One’s VP/National Sales John Rahmani.
Amy Lewis Schachter put in 20 years with CBS in sales at its radio stations and digital properties. Her next gig is with Norm Pattiz-founded PodcastOne, as its New York-based VP/East Coast Sales. Amy’s West Coast counterpart is the just-promoted Dana Senit, who worked with TargetSpot, XM and Carat Media Services before signing on last year with PodcastOne.
Improvising on the spot – Darrell Anderson, now co-owner of Minnesota-based North Shore Productions, says “Reading the last couple of days of You Can’t Make This Up reminds me of when I was news director and talk show host at KDLM in Detroit Lakes, Minnesota. Equipment budget limitations and the technology at the time led to a lot of improvisation. I remember attending a concert by country singer Charley Pride and having a chance to meet him after the event. When I told him I was in radio, he offered to do an interview. We were standing in the parking lot halfway between the outdoor concert venue and his trailer, and I didn’t have my tape recorder with me. I’d traveled to the concert with my parents, and my mother remembered having a boom-box in the car with a built-in cassette recorder. Somewhere, there’s still a picture of me holding a boom-box in front of Charley Pride’s face for 20 minutes - enough material to fill my half-hour talk show.” Darrell adds “I’m sure that Charley was tuckered out after an evening concert and probably much of the day on the road to get there, but he acted like it was a privilege to grant a lengthy interview for a 1,000-watt AM in rural Minnesota.” Got your own memory of something special, in radio? Email “You Can’t Make This Up” – Tom@RTK-Media.com.
What’s the future of iHeart, or the fate of Pandora? Lots of high-stakes drama around radio. Thanks for letting this NOW Newsletter narrate some of those stories for you. Like what you’re seeing here? Tell a friend, and help us keep growing. Use us to reach our slightly-addicted daily readership with your company’s marketing message (or your Classified ad). Contact our Kristy Scott - Kristy@RTK-media.com or phone 818-591-6815. See you back first thing tomorrow - Tom