Republican Media Firm - BANKRUPTED!
Sanders Kaufman
With assets of about $1.5B and debts totaling nearly twice that much,
Citadel Broadcasting has declared that it cannot pay its bills and is filing
for Chapter 11 bankruptcy protection from its creditors and shareholders.
The Growth of Citadel
Citadel Broadcasting started out as an already medium-sized business through
mergers of like-minded religious and anti-government extremists. They each
had their own small media firm and was frustrated by the lack of respect
that they got from their peers in mainstream media. Through mergers, they
hoped to become loud enough to gain respect and instill fear... and it
half-worked.
Driving Down Profits
Beginning with their own, small networks, they added various popular
products from the legitimate media such as ABC and a number of radio
stations throughout the country - especially ones that had no competition.
Then they'd begin airing religious and anti-government programming (such as
Lou Dobbs and Rush Limbaugh). Finally, the new asset would begin losing
money.
This pattern repeated itself with minor variations over and over again with
each unit bought by Citadel. Whenever they changed the format to right-wing
extremism, shows and advertisers would flee.
In the end, the new unit would aire little more than infomercials,
pay-to-pray shows, and syndicated reruns of 50-year-old sitcoms. At this
time, Trinity and Fox were both funding charities to promote development of
right-wing screenplays and shows, but since such people eschew creativity,
no such programming came forth.
Racking up Debt
That's when Republican fund-raiser Teddy Forstmann got involved. He made
his money in the 1980's by working in the LBO industry - buying up companies
and then selling them off at inflated prices. Recognizing the value of a
media power-house like Citadel to the Republican party's extremist
anti-government and religious message, he bailed out Citadel's owners - and
becoming yet another of their many creditors.
Because the units were highly valued before Citadel acquired them, Citadel
was able to stave off bankruptcy for a while longer by borrowing against
estimates of future profitability - estimates that failed to consider the
fanatical nature of Citadel's management style, and the long history of
failures by Citadel's founders.
The Bottom Line
In the end, the billions of dollars of debt they racked up is twice what the
break-up value is of Citadel. The stockholders and US banks may have been
cheated by Citadel, but the founders got what they wanted - a forum for
expressing their extremist religious and anti-government message.
It's like I always say - when dealing with the devil there are no bargains
to be had.
The GOOD NEWS is that, although the stations will still be operating, now
that the courts are involved the Republicans who administer the company are
going to have to either change the way they do business or go find other
jobs.