WSRS and WXLO Parent Companies On the Verge of Bankruptcy

Monday, December 21, 2015

GoLocalWorcester News Team

Worcester's favorite radio stations' parent companies are likely to see big changes as they 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.

Worcester is the 117th largest radio market in the U.S. and according to Radio-Online the total audience for age 12+ population is 441,900 (Black: 24,200) (Hispanic: 41,700).

iHeart radio (formerly Clear Channel) and Cumulus are both facing in economic turmoil and those two groups combined own and operate six of the top seven most listened to stations in the Worcester market.

Massive Debt

“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 WSRS and WTAG in the Worcester 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 $0.35 per share. iHeart's stock has dropped from a 52-week high of $8 per share to $1.10 (as of closing on Friday).

iHeart's Bob Pittman

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.”