Private equity left major music conglomerates debt-saddled and unprofitable while investors exited

Evidence

The second largest radio operator in the country, Cumulus, has experienced a similar decade of private equity, consolidation, debt, streamlining, and homogenization. Again, Bain Capital and THL play a role, along with Blackstone, the country’s largest PE firm. Entering a partnership with Cumulus in 2005 to acquire Susquehanna Radio, these three firms extracted capital and exited their involvement in 2011; Cumulus then brought on new PE firms, Crestview Partners and Macquarie Group, as well as 3 billion in debt financing from banks that helped Cumulus finance a deal to buy Citadel for 2.5 billion. Following a troubled merger with Disney’s ABC Radio, Citadel had recently emerged from bankruptcy, its shares ending up in the hands of debtholders, PE firm TPG Capital, JPMorgan Chase, and hedge fund R2 investments. Similar to iHeartMedia, private equity financed the radio group’s massive scale but left it with a heavy debt load and declining profitability. Terrestrial radio continues to reach 93 percent of adult consumers, a pool of 240 million people that remains attractive to advertisers, but the large radio companies have become so highly leveraged by a decade of financialization that profit and growth seem unlikely. All in all, the private equity experiences of WMG, EMI, iHeartMedia, and Cumulus—four of the largest conglomerates in the music industries—demonstrate that the story of private equity is not just the rapid looting of profit in its successes, but also the debt-saddled wreckage it leaves in its failures. Wealthy investors escape; struggling musicians suffer. — Andrew deWaard, Derivative Media, 196

Similar to iHeartMedia, private equity financed the radio group’s massive scale but left it with a heavy debt load and declining profitability. … All in all, the private equity experiences of WMG, EMI, iHeartMedia, and Cumulus—four of the largest conglomerates in the music industries—demonstrate that the story of private equity is not just the rapid looting of profit in its successes, but also the debt-saddled wreckage it leaves in its failures. Wealthy investors escape; struggling musicians suffer. — Andrew deWaard, Derivative Media, 196

Categorization

• XREF: Extends the PE-rollup theme from iHeartMedia’s chapter; Cumulus, Citadel, and debt-financed acquisitions form the same pattern reader is tracing.
• corroborated: 2 independent passages support this claim — Andrew deWaard, Derivative Media: How Wall Street…, 196