The CBS Radio IPO

If you think that this is going to be a simple transfer of currently owned stations to an IPO that Les Moonves slapped $1.5 billion of debt on recently, that’s not what I’m hearing.

Mergers and acquisitions specialist Andre Fernandez wasn’t brought in to replace Dan Mason for nothing.

But the most significant thing about the CBS Radio IPO to be known as CBSR is being overlooked.

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How New Part-time Laws Will Affect iHeart, Cumulus

If there has been a boom in radio hiring, it has been by making formerly full-time employees part-time.

And hiring part-timers instead of full-timers after layoffs.

All employers will be subject to the new rules that may act as an incentive to either raise unlivable salaries or get someone else fired.

And all radio companies will be affected however iHeart and Cumulus being the largest employers will potentially be the most destabilizing because of the sheer numbers alone.

And all the other radio groups wind up doing what they do.

For example, the backbone of iHeart are employees making between $23,000 and $51,000 a year and most newsrooms and board ops work well over 40 hours a week.

Could radio employers be adding bodies?

Or find some way around it off the clock?

One of the unintended consequences of conducting so many layoffs was that hourly radio workers racked up too much overtime to pick up the workload.

What to do – fire them, pay a few and fire the others, cut benefits or worse? There are six major changes based on the new law.

The effective date of the part-time employee law is coming up quickly – December 1st.

That’s why it’s urgent to know what radio groups have to do to comply and what they are likely to do because it affects so many of their employees.

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Alpha Revolt

Larry Wilson used to be the bomb.

Bought up all those stations and put them into his Alpha-male company.

Went out of his way to remind us that they are all live and local with autonomy that could only be hoped for at other groups.

And then … well, the wheels came off.

Alpha is no longer the quintessential live and local radio outlet touted.

Suddenly, orders were coming down from on high at corporate.

No choice – just yes, sir!

The natives were getting restless.

All of this because Larry Wilson was hell bent on buying that crappy little radio company known as Digity with only one or two markets that could enhance the company.

But the debt made him act funny.

He dreamed of going public but that ship has sailed.

Now we learn that heavy-handed corporate decisions are being met with such resistance in places that it is tantamount to open revolt.

And then the unthinkable happened.

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The Cumulus/Dickey CBS Radio Merger May Be Back On

CBS Radio’s move to Nashville (home of “Nash”) is very suspicious.

Yesterday it was revealed that this anonymous company has negotiated a favorable new tax deal to move 200 employees to Nashville.

The Nashville Business Journal outed that company as none other than CBS Radio.

Huh?

CBS – the Tiffany Network people are doing a deal to up and move out of the Big Town for the rolling hills of Tennessee.

Oh boy, would I love to drink that Kool-Aid.

But it all tastes like B.S. to me.

Blah, blah, blah – I know Nashville isn’t New York even if it is a great city.

But CBS Radio isn’t your father’s CBS radio anymore, either.

200 jobs.

An average salary of $48,000 per employee – at least that’s what this secret new entity told the state of Tennessee during tax abatement negotiations.

Who could be THAT cheap?

How about Lew Dickey?

And/or Cumulus.

Who is synonymous with Nashville, none other than the creator of “Nash” itself, Lewis Dickey, Jr and his brother Fredo.

You think I’m kidding?

CBS is ready to launch an IPO or so they want everyone to think.

But they blew their best opportunity to sell the entire group to the one company that needs and wants them – Cumulus (with or without Dickey).  Lew has lost a reported $200 million as his Cumulus shares have declined.

So either CBS has gone nuts or they are setting the table for a December surprise the likes of which will have their employees heading to CVS to buy Depends and shaking up an unstable radio industry.

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Cumulus — Time Running Out

Mary Berner is the best thing that ever happened to Cumulus Media.

Too bad it wasn’t five years ago when she took over from Lew Dickey.

Now, Cumulus is in a bad way – worse than they are letting on and worse than Wall Street cares to admit.

There is a reason why Cumulus is selling for $1.15 a share even after a recent reverse buyback. 

The future is catching up with the present and debt, poor revenue results and middling programming success does not leave the second largest radio group much room to avoid bankruptcy.

Earnings are disappointing with no fix in sight.

And its $2.4 billion debt (second to iHeart’s whopping $20.8 billion) is hardly manageable under current conditions.

Over 50% of their larger PPM markets deliver about 50% of their revenue.

Even an optimist recognizes that impairment charges taken by Cumulus last year that adversely affected their performance are good comps for this year.

Even with Berner firmly in charge after a year, there is one thing that could push the company into bankruptcy.

Only one way to avoid it.

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