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Radio One, Citadel Outlooks Look Grim, Clear Channel Eases Closer to Bankruptcy

Moody’s Investor Services has raised Citadel’s probability to default, while Standard & Poor’s has downgraded its rating of Radio One, saying the radio group is borrowing more money than allowed under its various lending covenants.

Meanwhile, Clear Channel’s creditors are still determined to force the company into bankruptcy in the hopes of gaining equity at a discount by blocking the company’s plans for an internal debt swap between the parent company and the company’s billboard business, according to the San Antonio Express News.

Clear Channel, which has about $22 billion in debts and suffered a $428 million loss in the first quarter of this year, is expected by analysts to have trouble making payments later this year. It will either have to begin selling stations - the company is already down to about 800, from a former total of about 1,200 stations - or enter bankruptcy, at which point the lenders would begin selling stations.

Author and radio industry forecaster Alec Foege believes that several companies, including CBS Radio, Citadel Broadcasting and Emmis Communications, would be happy to enter a bidding war for some of Clear Channel’s stations.

In good news for the radio sector, Cumulus Media has reached an amendment to its lending agreements, allowing it to not be declared in default if it violates the terms of its financial covenants before the end of March 2011, writes MediaPost.

PricewaterhouseCoopers expects that terrestrial radio will decline by a 4.7% compound annual rate over the next several years, to $13.6 billion in 2013. Radio advertising is expected to drop 14.2% this year to $14.8 billion, but will begin to turn around in 2010 and 2011; positive growth will once again be seen in 2012.