Peter Cavanaugh

“Money, Honey”

“I finally got my baby about half past three, She said I’d like to know what you want with me. I said, “Money, Honey. Money, Honey. Money Honey. If you want to get along with me.” “Money Honey” – The third song recorded at Elvis Presley’s first RCA session. (1956)

It’s a fast, wild hustle.

“We’re here for three reasons –the money, the money, the money” - Rich Bressler, President, Chief Operating Officer and Chief Financial Officer of iHeart Media – Speaking with Morgan Stanley investors in New York just last week.

iHeart Media (formerly Clear Channel) is the largest mass media group in America with over 800 radio stations coast to coast, including eight facilities in Fresno – KALZ, KBOS, KCBL, KFBT, KHGE, KRDU, KRZR and KSOF.

In 2014, iHeart paid near $2 billion dollars in interest alone on a growing debt now totaling $21 billion, an amount no one with the brains God gave geese believe they can possibly repay. One out of every three dollars coming in the front door goes out the back in interest payments to banks - forget the principal.

Similarly, our nation’s second largest radio group is Cumulus Media with 460 stations in 90 cities, including Fresno, where they own and operate KMJ-AM/FM, KMGU, KSKS and KYWE. Cumulus is on the hook for almost $3 billion. Last year Cumulus stock was worth eight bucks a share. Now it’s struggling to stay above two.

Combined employee dismissals at iHeart/Cumulus over the last decade add up to well over ten thousand jobs eliminated with more hatchets swinging every dawn to keep the game going. More than 90% of these positions were zapped at facilities generating superlative profit levels of 20% to 25%. Those are the kind of numbers your average small business owner would find nothing short of a triumph. But that’s not the 40% margins and higher demanded by Wall Street’s fee-feeding lenders.

Top-level broadcast management knows the ability to borrow more at ridiculous rates is all that matters. This sets the tone for increasing termination tally. When revenue stalls out as it has, slashing critical expenses becomes the last hype of the hopeless – prioritizing personal success over personnel survival.

Just down the hill we recently saw what’s becoming uncomfortably common.

A newly formed group called Peak Broadcasting paid over $120 million for stations in Fresno and Boise in late 2006. When P&L projections crashed by 2012, the corporation filed for bankruptcy under Chapter Eleven Reorganization. A Federal Judge sprinkled financial fairy dust and granted relief under a plan that reduced debt load by about half ($45 million) and a brand new outfit stepped forward with an almost identical name. But that was to be expected, since this emerging entity was created and controlled by the same individual who started things off in the first place and won – by losing.

A subsequent shell game saw ownership shift to yet another company, then quickly to a third outfit on the same day, Aug. 30, 2013 when Cumulus picked up its current Fresno holdings – becoming less hometown radio stations than pawns on a churning chessboard with an actual worth that’s anyone’s guess, surely far less than current theoretical values based more on wishful fantasy than real world fact.

None other than Ron Paul has been lately gracing our TV flat screens with an invitation to stop by his website and see why the American dollar is doomed to destruction, dragging our personal savings and national security down with it. I took him up on his offer. Sadly, an extensive and accurate description of current concerns directly relating to the disappearance of American middle class wealth are accompanied by an astounding, however endearing naïveté in terms of causation.

Dr. Paul believes a potential currency collapse will be derived from too much government regulation, whereas I humbly submit exactly the opposite seems true. Those same 2008 foxes of finance are still guarding our hapless hen house, having recruited Dr. Paul as a sincere, yet specious spokesperson. He’s a nice man with the wrong plan. Along with Elizabeth Warren, Bernie Sanders is measurably more on target.

You’ll be there too when you get as much information from as many sources as possible and trust your own common sense. Thinking can be scary. But more dangerous when you don’t.

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