Citadel Broadcasting could be forced to file for Chapter 11 bankruptcy protection early next year, unless it can form a deal with creditors by mid-January. The owner of more than 200 radio stations -- including four in Syracuse -- admitted that possibility in a quarterly filing with the U.S. Securities and Exchange Commission on Friday.
A tip of the hat to Tom Taylor, who made mention of the quarterly report in his Taylor-on-Radio-Info column this morning.
In the report, Citadel says it has a $150 million payment due to its lenders on January 15, 2010, but "the Company does not expect to meet its covenant requirements," or in plain English, it doesn't expect it will have enough money to cover that loan payment. Hoping to avoid bankruptcy, the company says it's working towards a relief deal, but nothing's set in stone yet:
The Company is currently in discussions with its lenders regarding this matter, including the possibility of seeking relief through a Chapter 11 filing under the U.S. Bankruptcy Code; however, there can be no assurance that any definitive agreement shall be reached. As of September 30, 2009, discussions with lenders were ongoing, and they remain ongoing as of the filing of the report in which these financial statements appear. Should the Company default under our Senior Credit and Term Facility and under the terms of our convertible subordinated notes, our indebtedness may be accelerated, we would not be able to satisfy these obligations, and the Company would likely need to seek relief through a Chapter 11 filing under the U.S. Bankruptcy Code.
Also noted in the report, Citadel says third-quarter radio revenues were $17.1 million below last year's numbers, and revenue from Citadel Media (the former ABC Radio Networks) was off by $13.5 million -- with more than half of that decline blamed on "the loss of the Sean Hannity and Paul Harvey network programs."
Last year, Hannity struck a new deal where Clear Channel-owned Premiere Radio Networks took over most of his syndication -- with Citadel only handling the syndication deals with its own stations. And you'll recall Paul Harvey passed away earlier this year at the age of 90.
Locally, Citadel owns CHR 93Q (WNTQ), rocker 95X (WAQX), AC Lite Rock 105.9 (WLTI) and sports talk ESPN Radio 1260 (WNSS). The company is the third-largest radio station owner in the United States.
Citadel stock (CTDB.OB) opened at 10 cents a share today; as of 1:00pm, it's down to 7 cents a share.