Before the Christmas weekend RBR-TVBR provided a list of the debt maturities facing CC Media Holdings, parent of Clear Channel Communications, over the coming years. But before any of those bonds and loans come due the company has to service the debt and, to the extent that free cash flow is available, pay it down.
Coverage of CC Media by equity analysts on Wall Street is virtually non-existent, since its small public float trades only on the pink sheets. (Although some are on the quarterly calls because they cover NYSE-traded Clear Channel Outdoor or just want to hear about the biggest radio company to be able to compare it to other broadcasters.) But there’s still some analyst commentary available.
Bishop Cheen and Davis Hebert at Wells Fargo Securities cover CC Media not from the equity side, but from their perspective as high-yield bond analysts. After all, the company does have more than $20 billion of debt outstanding (including the CC Outdoor subsidiary). Here is some of what they had to say after studying the Q3 results that the company reported and management’s outlook for Q4 (which is soon to be completed).
“Although total revenue was up 7.2% year-over-year to $1.583 billion, total operating expenses grew 9.9% to $1.053 billion. OIBDAN (operating income before depreciation and amortization, or a very close equivalent of EBITDA) still managed to grow 8.1% to $479 million. Radio revenue and OIBDAN totaled $798.5 million (+7.5%) and $302.7 million (0.4%) respectively, while Outdoor revenue and OIBDAN were up 7.7% and 4.4% respectively,” the analysts wrote.
Of course, as bond analysts Cheen and Hebert are primarily concerned with looking at how well the financial results cover debt service and covenant requirements. “LTM [last 12 months] OIBDAN and covenant EBITDA totaled $1.8 billion and $1.917 billion, respectively, supporting covenant leverage of 7.0x, which was well inside the covenant of 9.5x. Total debt leverage on OIBDAN stood at 11.2x on $20.2 billion, including the debt of 89% owned subsidiary Clear Channel Outdoor. Secured debt totaled $14.55 billion and cash stood at $1.165 billion at Sept. 30, 2011,” the bond analysts told clients.
“For Q4, management said radio pacings were overall flat, but core nonpolitical revenue was pacing up 4%. In Q4 2010, radio political revenue totaled $32 million,” Cheen and Hebert reported on the current quarter guidance.