As 2013 winds
down, big broadcast radio groups are restructuring their debts to free up cash and gain more time for repayment.
In the latest such deal, Cumulus Media announced that it has negotiated a
new credit agreement that will pay off its existing debt with a new $2 billion loan, extending repayments through 2020. The company also negotiated a $200 million revolving credit facility through
Most of Cumulus’ debt was assumed during its acquisition of Citadel Broadcasting in 2007, a deal which made it the second-largest broadcast radio group in the country
after Clear Channel. More recently, the $260 million acquisition of Westwood One this fall was financed through station sales, avoiding the necessity for more borrowing.
At the same
time, Cumulus has managed to lower interest payments from $150.2 million in the first nine months of 2012 to $138.2 million in the first nine months of 2013. According to Cumulus CEO Lew Dickey, the
amended credit agreement will increase the company’s cash flow by over $30 million per year.
Earlier this month, Clear Channel proposed a plan to push back repayments for some
of its debt in exchange for agreeing to higher interest rates. Under the terms proposed by Clear Channel Communications to lenders, the media giant would extend the repayment deadline for two chunks
of debt totaling $1.8 billion from 2016 to 2019 and 2021, raising its interest payments by $55 million per year over that period.
In 2012-2013, the company managed to refinance around
$7 billion worth of loans. Over the same period, the company's interest expense increased 7% from $1.15 billion in the first nine months of 2012 to $1.23 billion in the first nine months of 2013