Citadel Broadcasting files for Chapter 11 bankruptcy

Citadel Broadcasting Corp., the nation's third-largest radio broadcasting company, filed for Chapter 11 bankruptcy protection on Sunday in an effort to restructure its hefty debt load as it continues to face declining advertising revenue.

In Salt Lake City, Citadel owns or manages nine stations — KBEE (FM-98.7), KBER (FM-101.1), KENZ (FM-101.9), KUBL (FM-93.3), KKAT-AM (860), KKAT-FM (107.5), KHTB (FM-94.9); KJQS (AM-1230); and KFNZ (AM-1320, programmed by the Utah Jazz).

Nationally, Citadel owns and operates 224 radio stations, including KABC-AM in Los Angeles, WLS-AM in Chicago, WABC-AM and WPLJ-FM in New York and KGO-AM in San Francisco. Citadel's WABC is home to several syndicated hosts, including Don Imus, Rush Limbaugh, Joe Scarborough and Mark Levin.

In documents filed in U.S. Bankruptcy Court for the Southern District of New York, Las Vegas-based Citadel listed total assets at Oct. 30 of $1.4 billion and total debt of $2.46 billion. The company said in a statement it has reached an agreement with more than 60 percent of its lenders on a deal that would erase about $1.4 billion of debt in exchange for control of the company.

"Our business will continue as usual and the company will work to emerge from the restructuring process as quickly as possible," CEO Farid Suleman said in a statement. Citadel has retained turnaround specialist Alvarez & Marsal North America LLC as its restructuring adviser.

Such deals usually wipe out shareholders completely. That hits private equity firm Forstmann Little & Co. — who holds a nearly 29 percent stake — the hardest. The company's largest shareholder acquired a $2 billion stake in Citadel in January 2001 through a leveraged buyout. Documents show New York-based Forstmann Little currently owns about 76 million shares of Citadel's 265.8 million shares outstanding.

Forstmann Little could not be reached for comment Sunday.

Much of Citadel's debt burden stems from its $2.7 billion purchase of ABC Radio from Walt Disney Co. in 2007. Citadel also has been hurt over the past couple of years by declines in advertising revenue in nearly all major markets as many listeners abandoned the format for prerecorded music and the commercial-free satellite radio offerings of Sirius XM. The economic slump further cut ad spending across all media, including newspapers and television, and has also affected rivals including No. 1 U.S. radio broadcaster Clear Channel.

In May, Citadel hired a financial adviser to help it assess its options including refinancing or restructuring its debt.