NBG Radio Shuts Down

The trouble for the NBG Radio Network has been building since it began layoffs last July. NBG had lost $3.9 million through August 31, 2002 according to the most recent filing, and its debt has swelled to more than $13 million, including $5.3 million for its 2001 purchase of Fisher Entertainment. Last August, it defaulted on loan payments to MCG Capital, which had loaned it millions. Since then, the two have been trying to find ways to repay the debt.

Last week, NBG’s board of directors handed over “substantially all of its assets as well as substantially all of the assets of its subsidiary” to repay its loan. NBG president/CEO John Holmes also resigned. The future of Portland, OR-based NBG is unclear, although MCG apparently has big plans for the shows it used to distribute to hundreds of radio stations across the U.S.

It may be a capital firm, but it’s now in the content business, as MCG launches Crystal Media Networks, including a radio network called “Crystal Net.” Its products include Hollywood Hamilton’s countdown shows, Wireless Flash, and Dave Koz’s radio show, among others.

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MCG’s Nick Krawczyk will act as Crystal Media’s CEO for the foreseeable future. Krawczyk tells MediaPost that the transitions for affiliates will be “seamless,” and says advertisers will get “everything they bought and then some.” Krawczyk says they have been working for months to put the network together, and already have production and distribution in place. NBG’s ad selling rep firm, True Measure, will handle ad sales for Crystal Net as well. Krawczyk says MCG has big plans for Crystal Media too. “Our objective is to create a media company, and crystal is the foundation for that.” On its advisory board is former AMFM CEO David Kantor and Empire Media founder Peter Bordes.

Arlington, VA-based MCG Capital is the money behind a number of media companies, having invested more than $2 billion in broadcasting, media, and tech companies since launching in 1997. While not widely known to most in the media, it is already a member of the National Association of Broadcasters. If the name does sound familiar – it may be because it made news last November when its CEO resigned after he revealed he lied about getting a degree from Syracuse University. Beside its loan to NBG, it also has done business with New Northwest Broadcasters, among others.

NBG Radio Network had a deficit that totaled $13,248,224 by last August, and it apparently was not able to overcome the lop-sided balance sheet. NBG did not return calls seeking comment, but its SEC filing made last Fall says a lot. While it said the ad market has been tough in the past few years, it said a lot of its troubles are tied to consolidation. “We are competing against much larger companies with significantly more resources,” says the filing, pointing the finger at Clear Channel, ABC, and Infinity. “We currently air many of our programs on the radio stations owned and operated by these companies. Our future financial success will depend on our ability to continue airing our programs on these stations.”

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