CC Media Holdings, the parent company of Clear Channel Radio and Clear Channel Outdoor, reported that Q3 revenues declined 17% to $1.39 billion. Radio revenues were also down 17%, with domestic outdoor a bit better and international outdoor worse.
Clear Channel hasn’t conducted analyst conference calls since the overwhelming majority of its equity was acquired in a leveraged buyout (LBO) by Bain Capital and Thomas H. Lee Partners, so we only have the information made available by the company in its quarterly press release and SEC filing.
Radio revenues were down 17% to $703.2 million. Operating income before depreciation, amortization and non-cash compensation expense (OIBDAN) declined 18% to $267.6 million. “Local and national revenues were down as a result of an overall weakness in advertising. Our radio revenue experienced declines across all markets of variable sizes and advertising categories including automotive, retail and telecommunications. During the third quarter of 2009, our total minutes sold and our yield per minute decreased compared to the third quarter of 2008,” the company said in an SEC filing.
Q3 brought an improvement in radio ad sales compared to previous quarters this year. Q2 had been down 20% and Q1 22%.
Outdoor ad revenues were down 19% in Q3 to 660.6 million, with US revenues down 15% to $312.5 million and international off 22% to $348.1 million. OIBDAN fro Clear Channel Outdoor declined 26% to %155.3 million.
OIBDAN for the entire company was down 29% to $353.6 million.
Having done its LBO as the advertising recession was kicking in, CC Media has been the subject of ongoing speculation about whether the company will be able to manage its huge debt load, stay in compliance with its covenants and avoid a visit to bankruptcy court – where some of its debt holders are believed to be hoping to pick up valuable assets on the cheap. Bain and TH Lee may have the last laugh, since the company says it appears to be on track to meet its obligations for the next 12 months.
“In January 2009, the Company announced that it commenced a restructuring program targeting a reduction of fixed costs. The Company recognized approximately $23.1 million and $113.3 million of expenses related to its restructuring program during the three and nine months ended September 30, 2009, respectively.
Based on the Company’s current and anticipated levels of operations and conditions in its markets, the Company believes that cash flow from operations as well as cash on hand (including amounts drawn or available under the senior secured credit facilities) will enable the Company to meet its working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.
The Company expects to be in compliance with the covenants under Clear Channel’s senior secured credit facilities in 2009. However, the Company’s anticipated results are subject to significant uncertainty and there can be no assurance that actual results will be in compliance with the covenants. In addition, the Company’s ability to comply with the covenants in Clear Channel’s financing agreements may be affected by events beyond its control, including prevailing economic, financial and industry conditions. The breach of any covenants set forth in the financing agreements would result in a default thereunder. An event of default would permit the lenders under a defaulted financing agreement to declare all indebtedness thereunder to be due and payable prior to maturity. Moreover, the lenders under Clear Channel’s revolving credit facility under the senior secured credit facilities would have the option to terminate their commitments to make further extensions of revolving credit thereunder. If the Company is unable to repay Clear Channel’s obligations under any senior secured credit facilities or the receivables based credit facility, the lenders under such senior secured credit facilities or receivables based credit facility could proceed against any assets that were pledged to secure such senior secured credit facilities or receivables based credit facility. In addition, a default or acceleration under any of Clear Channel’s financing agreements could cause a default under other obligations that are subject to cross-default and cross-acceleration provisions,” CC Media stated in the SEC filing.
Net debt at the end of Q3 was $21.1 billion, down slightly from $21.5 billion at the end of Q2.
RBR-TVBR observation: Clear Channel continues to execute a complicated dance with its creditors, trying to stay in compliance with its covenants so the vulture funds who now own a large portion of its debt can’t force the company into bankruptcy court. So far, the company is still dancing – and an improving ad market may keep the music playing.