WW1 in talks to refinance 2009 debt


Ongoing fallout from the credit crisis could mean tough times ahead for media companies carrying heavy debt loads. Westwood One, according to Bloomberg, is in talks with banks and bondholders about refinancing or extending the maturities of $85 million in debt due next year.

“We’re talking first to banks about getting some room to move there, maybe some extension or a total refinancing,” CEO Thomas Beusse told Bloomberg. “We’d like to remove the entire ’09 overhang.”

Westwood is talking with Bank of America and JPMorgan Chase. Its 2009 debt payments include $35 million in bank loans expiring in February and $50 million in senior secured notes that mature in November, the company said.

Advertising declines at the local and national levels have caused WW1’s YOY revenue to fall for 12 consecutive quarters. In August, NYSE notified the company it faces delisting after shares dropped below $1.
“The market has largely bet that we wouldn’t be able to refinance, which is why our stock price has fallen, we think,” Beusse told Bloomberg. Beusse, CFO Roderick Sherwood and COO Steven Kalin bought 1.875 million shares in the week ended 10/3, after financial presentations to current and potential investors.

“They said they’d like to see two things,” said Beusse. “One is remove the debt overhang, and two is, we’d like to see you guys put up some of your own money.”

The biggest plan in place to reduce debt is through cuts in its traffic operations. Westwood expects $20-$25 million in cost savings next year from restructuring its traffic reporting operations to help pay down debt, the article said. A formal plan will be submitted next month. The company will release quarterly results next month.

Buesse tells RBR: "Traffic restructuring is designed to create a better product by utilizing more digital data sources and integrating technology. There is too much parity in the traffic bysiness and we plan to creat dramatic differentiation by evolving the product rapidly.

The move to a much smaller regional office footprint will enable us to improve product quality control as we evolve the product.

Upfront advertisers are responding very well to our strategy for the company amd to our more solutions oriented approach to their business. We are bringing all of Westwood One’s assets to market much more effectively than ever before.

Marketers have been asking radio to evolve for some time. We are answering that call."

RBR/TVBR observation: The timing couldn’t be worse for Westwood with the current credit crunch. The helicopter tragedy in Houston doesn’t help things, either. Although things may look brighter after the $850 billion bailout passed and the global banking system banding together as of late, it will still take time to get the gears of credit turning again. WW1 will have to present a compelling case for growth if it expects its own bailout. The advertising community is going to be far more cautious this upfront before committing dollars for 2009. As well, WW1 will need to provide greater transparency regarding the status of its future business operations.