Something I Don´t Get About CC

[radiofan11]

If CC is supposedly $16 billion plus in debt, how and why does it makes sense for them to host the Radio Festival in Vegas? It certainly can´t be dirt cheap to fly everyone in, house them at the MGM Grand, pay talent, etc. It seems to me if I was running CC, the Festival would be first on the chopping block. It´s a move that wouldn´t cost jobs (Lord knows they´ve done enough of that).

[ProducerGuy]

It's advertising and promotions. In lean times, you need that.

[TheBigA]

This is where a course in accounting comes in handy.  There are several forms of debt.  Long term debt, which is what Bain and the lenders are holding, is different from operating debt.  Their radio stations create a lot of cash flow, and they've reorganized their operations in such a way that allows them to invest in new media.  The layoffs had to do with changing their operational structure, and didn't do anything to their long term debt.  When looking at big companies, finances are far more complicated than a small business.

[TimeIsTight]

I don't know anything about CC's business policies, but possibly it is paying for much of this festival with something other than actual "money."

Clear certainly still has lots of empty air spots, and it could be that they have done trade deals to barter those spots for some "otherwise" empty hotel rooms and airline seats.

I saw many trade deals done for these same kinds of promotional activities over the years.  It's a win-win for all concerned if they have service opportunities that would otherwise go to waste.

[TheBigA]

I agree, and the folks in Las Vegas love to make deals.  Anything that brings tourists into town is considered money well spent.  That's why it's being done there rather than any other place.

[DavidEduardo]

If CC is supposedly $16 billion plus in debt, how and why does it makes sense for them to host the Radio Festival in Vegas?

Why does it make sense for hotels to offer a free breakfast in the lobby? Why do airlines have frequent flier clubs and give away free flights? Why do bars have bands?

These are all ways to improve the overall performance of a business.

It does not matter how much overall debt that the company has; if a business practice creates immediate and future revenue, then it is a wise move.

Think of it this way: you buy a house with an 80% 30-year mortgage. You will pay for the house more than two times over by the time you pay off the debt. But that does not stop you from building a deck or a pool... those things enhance the value of the property. Nor does it stop you from having a party on your deck or around your pool, where you spend money on refreshments and food and maybe even a DJ. The long term debt does not prevent you from doing the appropriate and "necessary" things in the short term.

[chrocket87]

Because it SELLS OUT, therefore it probably covers the costs and then some for CC.