Friday, February 27, 2009

Citadel Broadcasting to be kicked off NYSE on March 6

Check out this story from Erik Sass writing for MediaDailyNews on Media Post.

After a steep decline in its stock price, Citadel Broadcasting will be de-listed by the New York Stock Exchange on March 6 -- the nadir for public companies. Citadel's stock price plummeted along with the broadcaster's revenues over the last couple years, losing 99% of its value since 2004, as investors bail on what looks more and more like a medium in distress.

Companies are liable to be de-listed when their stock price falls below $1 per share; last week's Citadel's hovered around $0.14 per share. De-listing isn't automatic, and only occurs at the discretion of NYSE officials, who may choose not to de-list a company if it demonstrates future viability and presents a plan to boost its stock price.

However, on Thursday, Feb. 26 the NYSE rejected Citadel's proposal, indicating that stock-market officials don't believe the revenue trends will turn around any time soon. Citadel's failure to convince the NYSE is especially ominous; officials are usually fairly generous in their financial assessments, trying to avoid de-listing a company if at all possible.

Read the rest here (btw, as far as I'm concerned the journalists from MediaDailyNews are the best, most insightful folks in the business.)

In the financial biz companies sometimes do things that are considered "material events", actions that are so big that they can impact the stock price. Sometimes the events are company or industry specific other times they are nation wide.

When things are going great people say, "Do more of this, it's the pathway to success." When things are going poorly people say, "Do less of this, it's the pathway to doom."

So when a company and an industry is not doing well the falling stock price often is the trigger that forces them to do something different. But not always.

In the conservative media world their first step is to look for help from the sugar daddies, rich people who will pay them for the privilege of losing money every year as long as their ideas get pushed.

This method is used by The Washington Times which is funded by Rev. Moon. It has been shown that the Washington Times loses 20-30 million a year.

If you have secure funding you don't have to change much, "We're going to do the same thing, only louder. And this time with hats!"
Above: The Rev. Sun Myung Moon(shown here with pointy white hat) is the backer of the money losing Washington Times and the backer of Louis Farrakhan's Million Family March that took place on Oct 16, 2000, check out the Fredrick Clarklson article here)

The conservative corporations may have folks that say "Government bad!" on broadcast radio, but when it comes to getting help from the government, they are the first in line to get special breaks. For years they have been crying that they need more stations to survive.

"As their hard-luck story goes, only the elimination or drastic reduction of ownership limits can save major media conglomerates and, by extension, the public good they offer."
- p. 35 Fighting for Air, Eric Klineberg

They got what they wanted so now what? Citadel is the largest pure play radio corporation. What will they do? They won't be asking for a bail out, that's for sure, not when their hosts Rush and Hannity and their buddies screamed at the Automakers and bankers for taking government money.

If things don't work out Citadel will just have to go into bankruptcy. I say that because that is what their radio hosts want to happen to the Automakers, so I'm sure they will be fine when it happens to them.

I want the execs at Citadel to reflect on the words of Brian Sussman during the time the Automakers were in trouble.

"Now the urgency of GM's request has stirred up all sorts of worries that GM may have to file for bankruptcy protection. I say bring it on. [...] GM needs fewer dealerships, it be would a much more efficient way to do business."
–Brian Sussman, evening host 12-02-2008 (audio link: one. two.) transcript 2.
When things are going poorly people say, "Do less of this, it's the pathway to doom."


Blogger Jim said...

I hae no problems with any giant broadcasting company going belly up. I'd prefer to see local ownership of local radio stations. Citadel was stupid to buy ABC and they should lose their shirt for it. However it will be interesting to see if anyone picks up the assets and for how much, with the whole radio ownership diversity nonsense getting passed

10:38 PM  
Blogger spocko said...

Jim. I agree that local ownership would be nice (see why below)

When I was following the ABC/Citadel deal I noticed something that is interesting. Disney now owns a majority of Citadel. 57 percent last I checked. Selling Citadel the assets was a win win. If CDL made money Disney would make money, if CDL lost money, Disney still would have the cash as well as the opportunity to re-purchase the assets for pennies on the dollar. Or, as majority stock holder they could direct management to break themselves up to service the debt.

Disney gave the stations a lot of deep pocket support and branding muscle that people don't see or understand. Yes there is a down turn in advertising, but based on my contact with advertisers they thought that they were buying ads on a Disney "family friendly" channel when they were buying ads on "hot talk" KSFO. But they weren't. That is the power of a numbers based brand buy.

The deal with diversity that bothers me is that too often people figure out how to game the system, and it's usually poorly managed.

If they do try and put something in place if they aren't committed to the idea it can fall apart and some minority group is seen as nothing more than a front.

This comes back to the question I asked the acting FCC commissioner are these stations serving the public interest? Are they serving the public good? If you don't care about the public good then let's just say that and charge more money, but if the stations are given licenses by us (because of a limited bandwidth) then they should pay for that bandwidth in a way that is not just in money.

I direct you to Eric Klinenberg's book Fighting for Air.
People DIED because the big broadcasting companies didn't serve the public good in local communities. Ask the residents of Minot North Dakota how important a radio station with some local control is. They would have loved to have one when 240,000 gallons of anhydrous ammonia spilled just outside the city.
There was no local radio station to alert people, all six of them were controlled out by Clear Channel and while the toxic cloud spread of the town they kept playing easy listening music.

That is an extreme example, but local control can make a difference.

11:55 PM  
Blogger Abel Undercity said...

First Pajamas Media, now this... Gosh, could it be... the wingnut welfare model... isn't VIABLE?

I'm shocked. Shocked, I say.

4:34 PM  
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12:25 AM  

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