An Australian company threw in the towel on the U.S. radio and television market by selling the money-losing United States Traffic Network in Malvern to the subsidiary's top executives.
The deal is a quick and dramatic reversal for Sydney-based GTN, which entered the U.S. traffic-data market in 2016 by acquiring United States Traffic Network, formerly Radiate Media.
The United States Traffic Network provides traffic updates — and on-air traffic personalities such as Bob Kelly at Fox29 — for 1,000 radio stations and 50 television stations, reaching 160 million Americans. It employs 250 full- and part-timers, including 85 at the Malvern headquarters.
Though advertising revenues at the traffic network grew over the last year, they weren't growing fast enough. And so the network ran up millions of dollars in losses.
GTN top executives warned Australian investors on Feb. 28 that it was exploring options that included "renegotiation or cancellation of station contracts, reorganization or liquidation" of the traffic network. GTN added that it "may cease operations in the United States."
GTN CEO William L. Yde III said this week in a statement in Australia "we are extremely disappointed that our effort in the United States market was unsuccessful. While there were affiliate and revenue successes along the way, revenue was not increasing quickly enough to make USTN a viable business in the near future."
Exact terms of the management buyout were not disclosed. But GTN's statement said that the consideration for the network was "nominal." GTN also said that it forgave a $47 million internal company loan that had been used to fund the network's operations.
Ivan "Fly'n Ivan" Shulman, who launched his career as an on-the-road and in-the-air traffic reporter at an Atlanta classic rock station, is leading the buyout and called traffic the "beachfront property" of radio.
The traffic network would not become roadkill in the traffic-update business, Shulman said. He had a plan to turn around the company, which he declined to disclose for competitive reasons.
United States Traffic Network skipped a $4 million payment to its largest customer, Bala Cynwyd-based Entercom Communications Corp., the nation's second-largest radio operator, as part of a revenue-sharing agreement in late 2017.