Citing “on-going weakness in the company’s operating performance,” Moody’s Investors Service has downgraded its rating of radio group Citadel Broadcasting. Its Corporate Family rating, Probability of Default rating and senior secured credit facility all received shaves. Moody’s says, “…the company’s revenue and EBITDA have been pressured by internal operating challenges (including at the acquired ABC radio business) and an increasingly difficult economic and radio advertising environment.” It says that even though the company has been using free cash flow to buy back debt, the poor EBITDA performance is preventing any improvement in the leverage situation. Moody’s said it will continue to monitor the company for any signs of improvement, but it also said, “All ratings remain under review for further possible downgrade.”
RBR/TVBR observation: Citadel has become the industry’s unofficial poster child for how not to run a company, begging the question whether radio’s problems are coming primarily from a horrific business climate or from less than brilliant leadership from corporate HQ’s corner offices. The economic challenges are certainly for real, but it would be nice to see at least one group with a large market orientation burst through the wall and show the way out. But Citadel, who last we heard is thinking about shedding sales professionals in favor of account clerks, doesn’t seem likely to be the one.