Report: An IPO Next For iHeartMedia

iHeartMedia has used bankruptcy laws to wipe out debt, to the tune of $10 billion, leaving $5.75 billion of debt still on the books. And now with an expected IPO announcement, the company turns its radio dial from sad ballads for creditors to sunny jingles for new investors, according to Attorney Bill Hochberg, writing for Forbes.

Bill Hochberg

According to Hochberg, the company would not comment on whether its heart longs for a public offering or more for private investment from the likes of Liberty Media Corporation, which has been buying up the company’s distressed debt at a fast clip.

Liberty Media is not only a front-runner to gain control of iHeartMedia, but also is eyeing a 50% interest in Universal Music Group, the world’s largest record distributor, promising new synergies between radio and records.

But the tables are turning and the turntables are overtaking the tuners in the streaming era.

“Radio is on the way out,” says Jerry Del Colliano, a professor at NYU Steinhardt and publisher of InsideMusicMedia.com. “People under 45 don’t want to know where the radio is in their new car. They want to have their phone connected to the car audio.”  He adds that although iHeartMedia has moved into the online audio world, “their business is primarily terrestrial radio.”

Jerry Del Colliano

Yet rumors of radio’s death may be premature, according to Hochberg. AM/FM radio remains a buoyant business at least in terms of its main income source: local and regional advertising.

iHM estimates it has 275M listeners per month, compared to Spotify’s 207M monthly active users worldwide as of the end of last year, of which about 62 million are in North America.

In its bankruptcy filing, iHeartMedia says it can compete with Spotify and Apple Music, because it provides “companionship” to listeners, like a friend by their side in real time, commenting on songs, news and trivia, something streaming playlists and podcasts can’t do.

However, Del Colliano says cost cutting at iHM and its competitors has cut the heart out of radio’s strongest suit: local flavor and personality.