• by Erik Sass  @eriksass1, November 12, 2008

Katz Media Group, the national radio sales rep firm owned by Clear Channel Radio, has made preliminary moves to pick up clients and employees from its soon-to-be-defunct competitor Interep.

The sally was disclosed in a legal filing by Interep's bankruptcy Trustee, Kenneth Silverman, in the U.S. bankruptcy court of the Southern District of New York, where Interep earlier initiated Chapter 11 and then Chapter 7 bankruptcy proceedings.

As Trustee, Silverman is charged with managing the liquidation of Interep to generate as much cash as possible to settle its debts. Silverman filed the motion to allow Katz to enter into negotiations with its employees and clients; in return for this privilege, Katz will pay an undisclosed sum to the Trustee, which will go toward satisfying its creditors. The largest of Interep's remaining clients is CBS Radio, which recently said that it is exploring other national sales representation options.

The bankruptcy court judge would also have to approve any planned deals between Katz and Interep's current clients or employees. This is a common part of bankruptcy proceedings, which effectively turn over the final say on many decisions to the bankruptcy Trustee and court together.

Thus, the judge could technically refuse to allow the negotiations-- or later, to approve any deals that are made. At first glance, there doesn't seem to be any reason for such actions, especially as any Katz hires would minimize the overall impact of Interep's failure on its employees.

Bankruptcy courts tend to follow the recommendations of Trustees, who are appointed by the court or receive its approval.

With the final demise of Interep expected some time by the end of this year, Katz will be the only national radio sales rep firm left in the U.S. Radio sales reps tend to be adaptable, but Interep's employees may prefer to continue working in a national rep environment.

There will be no small irony if Katz ends up hiring any of Interep's employees, considering the companies' history of antagonism. In 2003, Interep basically tried to poach most of Katz's staff as well as key managers and executives--over 100 employees in total. It failed when Katz produced winning counter-offers. Radio insiders say the failed raid heightened tension between the national rep firms, although executives claimed it was purely business as usual.