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Thread: Bain Capital Wins Again: $20-Billion Leveraged-Buyout Queen Topples, Biggest in Years

  1. #1
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    Bain Capital Wins Again: $20-Billion Leveraged-Buyout Queen Topples, Biggest in Years

    by Wolf Richter • Mar 15, 2018

    iHeartMedia finally files for bankruptcy, whole sector under pressure.
    The biggest radio broadcaster in the US with nearly 850 radio stations, iHeartMedia, formerly called Clear Channel Communications – which was acquired by private equity firms Bain Capital and Thomas H. Lee Partners in a leveraged buyout at the apex of the LBO boom just before the Financial Crisis – has finally filed for Chapter 11 bankruptcy, after threatening to do so since 2010.

    The company has been buckling under more than $20 billion in debt, up from $8 billion before the PE firms got their hands on it. About $10 billion of debt was loaded on the company as a result of the leveraged buyout – where the company leverages up its own balance sheet to fund its own buyout and to compensate the PE firms. And this surge in indebtedness has occurred despite large-scale asset sales, corporate shrinkage, and radical cost cutting after the buyout.

    https://wolfstreet.com/2018/03/15/ba...or-bankruptcy/
    Thanks from BitterPill and Friday13

  2. #2
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    Some background:

    KGO was the #1 radio station in San Francisco for 3 decades; it was a 50,000 watt powerhouse whose signal went from the Pacific coast to the Rocky Mountains – from Mexico to Canada and on up to Alaska. It was the West Coast Flagship station for ABC News. It was where you went to stay informed, and on any given afternoon at least half-a-million people were listening.

    KGO was responsible for the News Talk format, and it employed the absolute greats in the field. I could not even begin to estimate how many journalism awards KGO Radio won – it would be in the hundreds. The Afternoon News won those awards – but, Bret Burkhart was a force unto himself. More awards than I know. And Ravi Peruman won awards for his work, especially the piece he did on the Harvey Milk assassination.

    snip

    That all changed when Citadel bought the ABC-owned radio stations for an obscenely high price in 2007. That’s when everything changed. The Vulture Capitalists that bought KGO weren’t interested in radio – they were interested in nothing but money. They weren’t interested in making money off of radio – they were simply interested in what the next quarter would mean for their profit statement.

    Citadel, along with Cumulus, Entercom and Clear Channel (a.k.a. iHeart Radio) destroyed radio as we knew it. If you can’t stand to listen to radio anymore you can thank these companies. The Telecommunications Act of 1996 allowed them to consolidate thousands of Mom-and-Pop radio stations into just a handful of owners. What was once a thriving marketplace of ideas and new music became a moribund feedback loop of homogeneity and satellite programs.

    1163965243In a feeding frenzy of buying these few companies overpaid for stations, borrowing 4 and 5 times more than what they were worth – starting out hopelessly in debt. They would buy 10 stations in a market, shove them all into one building that was owned by a subsidy, to whom they would pay rent, and then sell all of the physical assets of those stations (buildings, radio equipment and everything inside down to the last paperclip). The Grinch left more at Cindy Lou Who’s house than these vultures did. Next, they cleared out 80% of the staff – such a savings on labor! – and forced the remaining 20% to pick up the slack.

    They took all that gooey, gooey money they got from the sale of EVERYTHING and instead of paying off their obscene loans, the Vultures gave themselves 8 figure bonuses annually on top of their obscene pay. My favorite was the $27 million bonus (on top of $3 million annual pay) Farid Suliman, the CEO at Citadel, took the week the company declared bankruptcy, which was the year they cleared out half the newsroom, which had been cut in half the year before.

    snip

    KGO was making a $5 million a year profit on top of paying its full staff *very well* (and that was in the Bay Area) when Citadel bought it and killed it in 10 quarters.

    snip

    The day I had a knock down drag ‘em out fight over whether we should run the story on the ‘Singing Dog’ in New York City or go with the rapidly unfolding events of the Egyptian Revolution and the Arab Spring, I knew I had lost. There was no point in trying to push that rock up the hill anymore.

    snip

    We weren’t producers and reporters and anchors and engineers – we were a unit that leaned in and skipped dinner or going home and worked hour after hour because our job was News. We were dedicated professionals who all had go-bags in our car just in case, and followed the story where it took us. We were the most dedicated people you will ever find in a news room anywhere, and it reflected in the superior news we produced for decades.

    To all my friends who were laid off today: I am so sorry for your loss. I wish you the best of luck in finding a place to use your talents. Never forget that News is a noble profession and can make a difference in the world, and you worked in a place that set the standard for it in Radio. It was an honor to have worked with you, and to have called KGO my home.

    http://soundwavestv.com/2016/03/31/k...eath-of-radio/
    Vulture capitalism is why we cant have nice things in the US.
    Thanks from BitterPill and Friday13

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