The news that CBS and Entercom were moving to Katz is not surprising. It comes about two weeks after Interep's bankruptcy trustee, Kenneth Silverman, filed a motion with the bankruptcy court that would allow Katz to solicit Interep's clients and employees in return for a $3.6 million fee that will go to paying off Interep's debts. There were said to be other bidders looking to pick up the defunct rep firm's former clients, but they apparently failed to materialize.
Katz Radio was dealing from a position of strength, at least with respect to market dominance.
Before this week's announcement, its client roster already included Clear Channel Radio (which owns parent company Katz Media Group) as well as Emmis Communications, Cox Radio, Cumulus, Citadel and Radio One. Katz said it will create a new division based in New York to represent CBS and Entercom, with offices around the country.
In late October, Interep elected to have a court convert its Chapter 11 bankruptcy declaration from late March into a Chapter 7 filing, which calls for the liquidation of the firm's assets and breakup of the company.
With the approval of the U.S. Bankruptcy Court for the Southern District of New York, Kenneth Silverman was appointed trustee, assuming responsibility for selling off properties to generate cash for the company's creditors.
The closing of Interep is the denouement of years of bitter rivalry for clients and employees. Interep's woes can be traced, at least in part, to an ill-advised poaching expedition against Katz Media Group in 2003. In an unusually overt bid to undermine Katz, Interep tried and failed to lure away Katz's senior executives and over 100 staffers, who would presumably bring many of their clients with them. Instead, clients moved in the other direction, with Cumulus, Citadel, and Radio One all deserting Interep for Katz in the following years.
Per the terms of the filing with the bankruptcy court, Katz may also hire some of Interep's 340 employees, since they are already familiar with CBS and Entercom ad sales.