Saturday, April 16, 2016

Another Fine Example of the Conservative Way of Doing Business

Poor i-heart radio, formerly Clear Channel, the force behind Rush Limbaugh, Sean Hannity and most of the other right wing liars that have polluted our nation's politics for the last couple of decades.  And it may mark the end of the obscene $40 million a year paychecks that Limbaugh has gotten as a reward for lying the American people into disaster.  It seems you should be careful which of your fellow right wingers you get involved with, because they are not always dedicated solely to the best interests of your company.  From a very good article at Media Matters, the following excerpts, then of course my own cranky take on the whole thing:

"During the late 1990s and early 2000s the company, feasting on the fruits of media deregulation, gorged itself with profits. (It also bullied the music business for years.) 
Since then, not so much. And what a brutal ride it’s been for investors:
Clear Channel stock price, January 2000: $90.
Clear Channel stock value, April 2007: $39.
iHeartMedia stock price, July 2011: $8.30.
iHeartMedia stock price at close of yesterday: $1.15.
The company hasn’t reported a profit since 2007. 
How bad was the deal? Monumentally bad: 
In 2007, the company, then called Clear Channel, reported a net income of $939 million. In the years since the LBO, the company has reported losses of between $220 million and $4 billion per year. For 2015, it reported a loss of $738 million. 
Today, the interest paid on iHeartMedia’s massive debt gobbles up earnings. “Revenue last year was $6.5 billion. A $1.74 billion interest expense drove a net loss of $661 million”
Can you spot the glaring error in the above?  Here it is:

"How bad was the deal? Monumentally bad"

Bad for i-heart, maybe, and bad for Rush (I know we are all going to be crying over that,) but the important thing is that it was a monumentally good deal for Bain Capital, its creator (Mitt Romney-remember him?) and all of the other corporate vampires riding the Bain express train to riches.  For, this deal represents exactly the way that Bain Capital, and all companies like it, do business, which is to forcibly take over management of a company, and then use their position to take out huge loans in the company's name, the largest part of which they transfer to themselves, leaving the company a shattered, broken remnant of its former self.

In the process, tens of thousands of hard working Americans lose their jobs, and monsters like Romney use their privileged position in society to end up worth hundreds of millions of dollars.

Don't believe me?  During the 2012 election, I wrote a couple of fairly long analyses of several companies, and what happened to them when they ran into Bain Capital.  You can find these posts here and here, where you will discover that what is happening to i-heart is not a "bad deal," but the deliberate despoiling of a large, successful company, an act which should be a major crime.

So in brief, Ronald Reagan, in one of the most corrupt acts in U.S. history, used the swan song of deregulation to play a gigantic trick on the American people, allowing practically all of our mainstream media to be bought up by large corporations.  Then, through even more deregulation, he allowed financial parasites like Bain Capital to plunder the wealth of these corporations.  In this case, it leaves us with one more corporate basket case, who knows how many people who have lost jobs that they were doing well, and a couple more billions in the hands of monsters like Mitt Romney.

In case you have not figured it out yet, people, that is not a "bad deal."  It is exactly the way the economy is supposed to work, when Republicans and the rich sociopaths that own them control the country.


Paul said...

still, there's a ton of schadenfreude to having Rush Limbaugh face the possibility of losing his radio contract due to Reaganomic deregulation and venture capitalism's avarice.

If the stock's that cheap, by the by, any way we can get a million liberals to buy shares at $1 a person and seize control of the board? :)

Green Eagle said...

The only sad thing is that the bastard probably made $600 million during his run, and doesn't really give a damn at this point.

And remember that the ownership of radio or TV stations still has to be approved by the FCC, which let these Conservative bastards own Clear Channel, but would probably never let liberals within a thousand miles of its assets.

Marc said...

If you look at the timeline, the hit on iheart happened while Romney was running as a candidate for president in 2008. Would have been nice to have his own (non-Fox) media empire to boost his voice, if he'd won the (R) nomination and gone on to beat Obama. Bain still made out like a bandit, and the current default/bankruptcy wouldn't have hit the news radar now had the stock transfer by management not been contested by the bondholders.

Marc said...

Green Eagle, you stated "...never let liberals wishing a thousand miles of it's assets." I think at this point, iheart is so leveraged, that there are no assets to speak of - once default on the bonds is declared, the feeding frenzy of any hard property will reduce it to just the brand name which will be sold off (aka 'goodwill') to whomever wants it for their own enterprise.

Green Eagle said...

The assets that I am referring to are those 650 radio station licenses. Those are in the hands of right wingers, and I am afraid that nothing will change that.

Jerry Critter said...

Just another example of why republicans are bad for business and bad for the country.

Marc said...

Yeah, the FCC has been a bit in the pocket of interests other than the general public for a while. Powell was the most recent example, but ditching the fairness doctrine during the Regan Presidency was what surely gave broadcasters a push towards the right. I'm surprised the equal time rule still exists, but with Citizens United it doesn't matter - money equals speech, and the more money that can be pumped down broadcasters throats, the more speech you have. It is no wonder we have 7/24/365 campaigns for national office - the folks who carry the message get a fairly steady income from it.