by Richard Skelly » Sun Mar 18, 2018 10:00 am
I would hope iHeart Media owns the actual US stations.
But that fact isn’t the only reason the company owes many billions of dollars to creditors. It would be interesting to know how many of those stations remain at least marginally profitable. And how many in the red are only marginally so. I suspect the real elephant crushing iHeart Media is the crushing debt quite likely taken on to pay huge dividends to the vulture funds and insiders who took the company public.
It’s a frequent occurrence in the so-called ‘mergers and acquisitions’ racket. What almost inevitably results is the new entity—now listed on one or more stock exchanges—cuts staff and services to the bone in hopes of paying interest to funds and/or the debt racked up in order to toss special dividends the funds’ and insiders’ way when shares are listed.
Here in Canada, that explains PostMedia’s dilemna. Thanks to vulture fund debt, the newspaper operator rose to take on the assets of bankrupt CanWest. (Of course CanWest imploded largely due to loading up on debt to “buy high” the National Post, old Southam dailies and assorted community papers from Conrad Black.)
I’ll bet most of the ever shrinking—in physical size and content—PostMedia newspapers still eke out profits. But those profits would have to be astronomical to significantly reduce the debt load. In an Internet age, which decimated print classified and regular ads, astronomical newspaper profits are generally modest at best.
Watch for PostMedia to seek creditor protecting, wiping out shareholders. Meanwhile, PostMedia executives have done just fine with salaries and bonuses for cutting the newspapers so deeply that even Conrad Black has bemoaned their diminished state.