City Paper is not for tourists
Maybe Dan Snyder has too much time on his hands now that football people at Redskins Park are making some football decisions. In any case, there are reports Snyder’s back to making Gekkoesque business deals away from the NFL operation.
The Wall Street Journal wrote yesterday that Snyder recently sold “Junk” bonds for Dick Clark Productions, a company he owns. From the Journal (subscription required):
In August, Dick Clark Productions, which produces television shows such as “Dick Clark’s New Year’s Rockin’ Eve” sold $165 million in notes in a deal that originally was supposed to be $150 million. Of that, the company will pay $105 million to shareholders including Six Flags Inc. and private-equity firm RedZone Capital Management LLC, whose chief is Daniel Snyder, owner of the Washington Redskins football team. Moody’s Investors Service gave the notes a B2 “junk” rating and noted the company’s reliance on three music awards shows, including the American Music Awards, plus the New Year’s Eve special and the reality show “So You Think You Can Dance.”
A spokesman for Snyder’s DCP told the Journal that B2 was a “solid rating.”
As I recall from reading studious kids’ report cards, “B” meant “above average” back in high school. But I’ve learned it stands for something entirely different on Wall Street. Moody’s guidebook says bonds with a B rating are “considered speculative and are subject to high credit risk.” And B2 bonds, as the Journal says, are junk.
This isn’t the first questionable deal Snyder’s made with the L.A. production company. In fact, Snyder’s acquisition of DCP in 2007 seemed unethical from the start, since Snyder bought DCP for $175 million by mingling funds from his private investment kitty, Red Zone, and money from shareholders of Six Flags, a public company he controlled as chairman of the board. He spent all that Six Flags money even while the company was billions of dollars in debt, and, under Snyder’s hand, on the fast track to bankruptcy. Snyder’s protege, Mark Shapiro, had been installed by Snyder to be both CEO of Six Flags and president of DCP.
During the bankruptcy proceedings, the DCP purchase and subsequent transactions between the theme park chain and Red Zone that Snyder hammered out while negotiating with himself were cited in a lawsuit filed by a hedge fund that lost millions.
That suit, which spelled out Snyder’s conflicts of interest in a way that to the lay observer (ok, me) sure made his actions seem criminal, collapsed when a Federal judge approved a reorganization plan that threw Snyder out of the company. Shapiro was likewise tossed to the curb as soon as the new board of directors came in.
But, from the sound of “junk,” the high-profile comeuppances humbled neither of them. Then again, after Six Flags’ spectacular failure, who would invest a dime with Snyder, anyway?
There’s gotta be a photo of Snyder with a shoebox-sized mobile phone to his ear out there somewhere.