Citadel Broadcasting has filed for Chapter 11 bankruptcy as part of a prearranged restructuring plan. The radio broadcaster's lenders will swap a large portion of their $2 billion of debt for about a 90% stake in the reorganized company, thus cutting Citadel's debt to about $760 million. Forstmann Little & Company acquired Citadel in 2001 and has slowly sold off its stake after taking the company public in 2003. At the time of bankruptcy, Forstmann was Citadel's largest shareholder with a 28.7% stake, and reportedly lost $250 million in the bankruptcy.
In the past five years, 108 broadcast radio-related companies and assets have been acquired by private equity firms and PE-backed companies, according to the PitchBook Platform. Private equity firms appear to have identified the decline in the radio industry that began in later part of 2007, but were largely unable to foresee, or weren't worried about, this decline before 2007. This is shown by 95 PE-related transactions in the industry from 2005 until the middle of 2007 compared to only 14 since then. The largest deal in the industry was Thomas H. Lee Partners and Bain Capital's $24 billion deal for Clear Channel Communications, which was announced in November 2006 and closed July 30, 2008. Like Citadel, it was highly leveraged and has long been nagged by bankruptcy rumors.