iHM To Now Focus On Operations Vs. Debt

iHeartMedia paid $1.4 billion last year in interest on its debts. Its media division, which includes the broadcast stations, a popular music app and Premiere Networks that syndicates shows by Rush Limbaugh, Sean Hannity and others, had $3.6 billion in revenue and $735 million in operating income.

Counting its global business in outdoor billboards, which is not part of the bankruptcy, the company had $6.2 billion in revenue over all.

The bankruptcy is the culmination of iHeartMedia’s yearslong dance with its creditors, reports The NYTimes.

It is also the latest and most high-profile shift in the tumultuous radio business, which has struggled to retain advertising dollars and compete with streaming services like Spotify and Pandora.  Cumulus Media, iHeart’s closest competitor, with 445 stations, declared bankruptcy four months ago.

Annual advertising, radio’s chief revenue source, has hovered around $16 billion for years, according to a report last year by the accounting firm PwC. By 2021, the report projected, that figure, for terrestrial broadcast stations, would reach only $16.6 billion, with a 10-year compounded annual growth rate of just 0.425 percent.

Bob Pittman

iHeartMedia has maintained that its radio stations remain popular and vital even as it has introduced apps and negotiated new licensing deals intended to control its royalty payments online.

“We have transformed a traditional broadcast radio company into a true 21st-century multiplatform, data-driven, digitally focused media and entertainment powerhouse with unparalleled reach, products and services now available on more than 200 platforms,” Robert W. Pittman, the company’s chief executive, said in a statement announcing the bankruptcy filing.

Lance Vitanza, an analyst at Cowen, said that iHeartMedia had done better than most radio companies in expanding its audience and adapting to new technologies, but that debt had weighed it down — a burden that could find relief through the bankruptcy process.

“Ultimately, when they come out of bankruptcy, they will be in a much better position,” Vitanza said. “We expect them to be able to focus their resources on growing their business rather than on debt service, which is what they’ve had to do for the last 10 years.”