Report: Audacy Addresses Bankruptcy Speculation

After another disappointing quarterly earnings report, Audacy saw its stock drop to below 30 cents per share Tuesday and its chief financial officer addressed speculation that it might need to file for Chapter 11 bankruptcy protection, according to the Philadelphia Business Journal.

Audacy Chairman and CEO David Field said that market conditions were “worse than our expectations,” as the Philadelphia-based company reported an operating loss of $152 million in the third quarter, a swing from a $29 million operating profit in the same period of 2021. The company suffered a $141 million net loss, compared to a $4.7 million loss in the same period of 2021. Adjusted EBITDA was down to $36 million from $49 million.

David Field

As he did in the second quarter, Field noted that the macroeconomic issues plaguing the company have come during a period of transition, as Audacy has been attempting to morph from a radio company into one focused on broader audio products and services. That has taken significant investment through the acquisition of podcast studios, advertising technology and new talent. Even though Audacy has built those new capabilities, Field said it is still not reaping a large portion of the revenue benefits.

Field described the quarter as challenging, “with market conditions worse than our expectations impacting performance across our various channels.” Revenues were down 4% compared to the same period of 2021. Radio revenue was down 6% and digital revenue up 2%. While the company cited double-digit growth in revenue for streaming audio and digital marketing solutions, podcasting revenue declined in 3Q by 23%. Field said the podcasting business was adversely impacted by the departure of Crooked Media, which left Audacy's podcast platform in May.

Rich Schmaeling

CFO Rich Schmaeling, during a call with investors, addressed speculation that Audacy may be forced to file for bankruptcy protection. Schmaeling told analysts that the majority of the company’s debt maturities are first lien debt that doesn’t mature until 2024. And its second lien bonds don’t mature until 2027. He said the company hopes to refinance the 2024 maturities well in advance of their due dates and that Audacy has already had discussions with debt holders.

“We have had a number of conversations with groups representing our first lien lenders and with groups representing those second lien lenders. I would say those conversations are in their early stages and they have been quite constructive,” Schmaeling said. “So there is ongoing conversation. There are outlines of a deal that could be accomplished to extend our maturities and perhaps other benefits. The talks are expected to continue for months before we have an agreement.”

The company has $1.8 billion in debt on its books and its stock price closed down more than 6% at 29 cents per share on Tuesday. The New York Stock Exchange informed the company in August that it was not in compliance with the NYSE’s continued listing standard requiring a minimum average closing price of $1 per share over 30 consecutive trading days. Audacy said at the time that it intended to regain compliance “and is considering all available options that are in the best interests of the company and its shareholders.”

Audacy’s stock price last exceeded $1 on July 5. When the NYSE sent its notice on Aug. 1, the stock closed at 59 cents. It has lost half of that value since that time. The 52-week range for the stock has been between 35 cents and $3.90. The stock was trading at almost $11 per share when Audacy acquired CBS Radio in November 2017.

Audacy began 2022 with a very strong first quarter in which it grew revenue by 14%. As economic headwinds bubbled to the surface in the second quarter, revenue only increased by 5% before declining in the third quarter. Field and Schmaeling predicted Audacy’s fourth quarter revenue “will be flat to down low single digits” despite significant political advertising due to the midterm election.

Audacy has over 220 radio stations.