WBLS Sale Appears Likely

[badjef]

Chances are very likely WBLS and 'LIB are not going to stay as they are. If they were as profitable as they need to be, Innercity probably would not be in the shape it's in.

I'd be curious, in the PPM world, if 'BLS and 'LIB are still "weighted".

Jeff in Sa-ra-so-ta!

[DavidEduardo]

Chances are very likely WBLS and 'LIB are not going to stay as they are. If they were as profitable as they need to be, Innercity probably would not be in the shape it's in.

I'd be curious, in the PPM world, if 'BLS and 'LIB are still "weighted".

A panel survey has no weighting in theory. In practice, as not every panelist participates every single day, there is very slight weighting.

Individual stations are not weighted. Never have been, never are today.

Weighting is simply a process of making a statistical sample proportional to the actual population. If the population is 52% women and 48% men, but the sample is exactly 50-50, then men will be weighted down roughly 4% and women weighted up. Thus the sample exactly reflects the universe.

When we speak about "Black weighting" or "Hispanic weighting" what we are really saying is that African Americans and Hispanics are among the stratification variables in a sample... the sample must match the actual population. Similarly, yet somehow not frequently mentioned, there is geographical weighting. If a county or borough is, for example, 8% of the total market, but gets 10% of the sample, it will be weighted down; geography is also a stratification variable as are age, gender, income levels, etc.

In the end, with each subset being forced, by weighting, into proportionality, the total sample better reflects the actual market on all counts.

Oh, and Inner City's issues were debt service. Were the debt not so onerous, they would be throwing off nice cash flows in NY.

[badjef]

Chances are very likely WBLS and 'LIB are not going to stay as they are. If they were as profitable as they need to be, Innercity probably would not be in the shape it's in.

I'd be curious, in the PPM world, if 'BLS and 'LIB are still "weighted".

Oh, and Inner City's issues were debt service. Were the debt not so onerous, they would be throwing off nice cash flows in NY.

Did that "debt service" occur as a result of the purchase and deflowering of WOWO. And the subsequent upgrade to WLIB? Or was it another problem?

Jeff in Sa-ra-so-ta?

[Barry]

The Radio-Info home page is reporting that WBLS & WLIB MD/Production Director Brown HornHit "is no longer handling those duties."
I wonder whether his leaving those positions is a cost cutting measure related to the expected sale of the Inner City radio stations.

[DavidEduardo]

Did that "debt service" occur as a result of the purchase and deflowering of WOWO. And the subsequent upgrade to WLIB? Or was it another problem?

Inner City bought WOWO and WOWO-FM for $2.3 million in '94. They changed the technical facilty, and sold the AM and FM separately the same year for $1.9 million.

The $400 k loss is pocket change, if you consider WBLS grosses that much a week. 

[badjef]

Did that "debt service" occur as a result of the purchase and deflowering of WOWO. And the subsequent upgrade to WLIB? Or was it another problem?

Inner City bought WOWO and WOWO-FM for $2.3 million in '94. They changed the technical facilty, and sold the AM and FM separately the same year for $1.9 million.

The $400 k loss is pocket change, if you consider WBLS grosses that much a week.

I was thinking of the engineering logistics, along with the downgrade of one facility and upgrade of the other facility. Each step of the way, they had to dish out the cash and the attorneys fee to make it all look pretty to our friends at the appointed place in D.C.

P.s. I wouldn't mind carrying around that pocket change...

Jeff in Sa-ra-so-ta!

[DavidEduardo]

I was thinking of the engineering logistics, along with the downgrade of one facility and upgrade of the other facility. Each step of the way, they had to dish out the cash and the attorneys fee to make it all look pretty to our friends at the appointed place in D.C.

The costs were probably in a very manageable zone considering what at the time a fulltimer in NY was worth, and in any case was probably paid off nearly immediately. Even at 4 or 5 million with land, directional proofs, towers, engineering, it's not a lot compared to the debt Inner City was defaulting on.

[badjef]

I was thinking of the engineering logistics, along with the downgrade of one facility and upgrade of the other facility. Each step of the way, they had to dish out the cash and the attorneys fee to make it all look pretty to our friends at the appointed place in D.C.

The costs were probably in a very manageable zone considering what at the time a fulltimer in NY was worth, and in any case was probably paid off nearly immediately. Even at 4 or 5 million with land, directional proofs, towers, engineering, it's not a lot compared to the debt Inner City was defaulting on.

Then if it wasn't radio-related, what was Innercity's other business that took down the profitability of their radio stations to a point that they had to liquidate the profitable arm of the company?

Jeff in Sa-ra-so-ta!

[TimeIsTight]

Then if it wasn't radio-related, what was Innercity's other business that took down the profitability of their radio stations to a point that they had to liquidate the profitable arm of the company?

It had to be radio related since Inner City has been in only the radio business since 2006 when it sold most of its investments outside of radio.  It still owns a total of 17 radio stations.

What happened appears to be the equivalent of somebody going out and living high on the hog on their credit card, and then not being able to pay the bill, or switch the balance to another card when the payment is overdue.

According to press reports, the lenders say Inner City didn't make any payments on its debt for two years.  Like with a credit card, when the bills weren't paid on time the fees and interest started to add up. The debt started at $197-million and is now around $250-million.

The lenders say they made a deal for a pre-packaged Chapter-11 reorganization, but that Inner City Chairman Pepe Sutton, who controlled 49% of the voting power at the company, backed out of that deal.  The lenders then filed with the court to force the company into bankruptcy.  There are too many details after that to get into here, but, as has been well noted above, the cost of the WOWO deal was long ago pocket change that probably had no impact on the bankruptcy situation. 

[DavidEduardo]

Then if it wasn't radio-related, what was Innercity's other business that took down the profitability of their radio stations to a point that they had to liquidate the profitable arm of the company?

All I said was that the current issues have to do, as has been explained, with other debt. The approximately $250 million in debt does not come from some minor technical costs nearly 20 years ago.

The root cause of the problem is that Inner City expanded via debt-financed station purchases, couldn't make enough to pay for them, did not cut expenses enough, and then kept trying to refinance, sometimes capitalizing the missed interest payments.

The debt comes from radio... I don't know why you think it is not radio related... and it is probably 100 times what the minor matter of upgrading WLIB cost. Further, the WLIB upgrade was likely, even if capitalized, amortized before we were more than a few years into the 21st Century. Many stations have to make transmitter moves or are faced with a major rebuild of a transmitter site, and it does not bankrupt them. All we are talking about with WOWO is a purchase, followed by a downgrade of the signal, and then a resale at almost the same price plus some relatively simple re-engineering costs.

You say "the part that was profitable" but the issue is that while there may have been some decent cash flows from operations, there was not enough to pay down the debt. Sort of like having the money to pay the water and electric, but not the mortgage.