Not looking good for Clear Channel........
Clear Channel Radio Appoints Goldstein CFO
by Erik Sass, Yesterday, 5:24 PM
Faced with big drops in ad revenue that are now endemic to the radio business, Clear Channel Radio is seeking to stabilize its balance sheets with the appointment of Mitchell P. Goldstein as chief financial and administrative officer.
Goldstein, who has also served in executive positions with A&P, Campbell Soup Company and Nice-Pak Products, a baby and health-care products company, will be responsible for "financial, administrative and strategic change activities," according to Clear Channel, suggesting that the nation's biggest radio group is in for more restructuring.
Goldstein will work with John Hogan, the president and CEO of Clear Channel radio, and other senior executives from different areas of the company. Acknowledging that the radio broadcaster is "facing an unprecedented situation," he still lauded it as "an outstanding business" that can succeed despite the steep economic downturn.
Reading between the lines, Goldstein's primary task will likely be cost-cutting, entailing further layoffs and cutbacks at the radio giant.
In January, corporate parent CC Media Holdings -- which bought Clear Channel Radio and Clear Channel Outdoor in an acquisition funded by private equity last year -- laid off 1,850 employees, or about 9% of a total workforce of 20,500. Of these, about 1,500 were in the radio division, historically the larger of the two operating units.
Private-equity owners Thomas H. Lee Partners and Bain Capital Partners were said to be seeking a $400 million reduction in costs.
Then in February, CC Media Holding's credit rating was downgraded by Standard and Poor's from B to B-, the lowest rung above junk bonds. The decision was motivated by growing concern that the holding company might not be able to keep up with payments on nearly $18 billion in debt assumed in the deal to take the company private last year.
Others in the radio world -- Citadel, Cumulus, Emmis, Radio One and Salem -- are said to be at risk of defaulting on their debts, according to Moody's Investor Services, which recently released a "Bottom Rung" list of companies it considers likely to default or declare bankruptcy in the next year.
Clear Channel is not the only media company saddled with relatively new debts that are looking more and more onerous.
In December of last year, Tribune Co. filed for Chapter 11 bankruptcy protection, finding itself unable to service a nearly $13 billion debt -- most of which was assumed in a highly leveraged deal engineered by billionaire Sam Zell to take the company private as an employee-owned business. In February, Philadelphia Newspapers LLC and the Journal Register Co. both declared bankruptcy after finding themselves unable to service large debts assumed in mergers and acquisitions in recent years.