Audacy Struggles With Soft Ad Demand and Heavy Debt

Audacy last week confirmed that it has begun negotiations with its creditors to restructure its $1.9 billion in debt as the Philadelphia-based audio content provider grapples with financial challenges linked to declining advertising revenue.

“As we have previously stated we intended to do, we have initiated discussions with our lenders to refinance our debt and optimize our balance sheet to position Audacy for long-term growth as we continue to invest in our people, platform, technology, content and growth initiatives,” Audacy said in a statement Tuesday.

Audacy first indicated renegotiations could be on the horizon in a quarterly filing with the Securities and Exchange Commission after releasing its first quarter earnings on May 10. 

In the first quarter, Audacy experienced a revenue decline of 5.7%, with an operating loss of $12.2 million compared to operating income of $8.5 million during the same quarter last year. It reported adjusted EBITDA of $3.5 million and a net loss of $35.9 million in 1Q compared to $26 million in adjusted EBITDA and an $11 million net loss during the first three months of 2022. The company also said the soft advertising demand that has been in place for the past year could get worse before getting better.

While soft advertising demand has clearly had a negative impact on Audacy, so has its debt load. The company inherited most of its debt from the November 2017 acquisition of CBS Radio. That transaction increased its debt from $468 million at the end of 2016 to $1.86 billion at the end of 2017.

The debt has impacted the company’s cash flow, as its adjusted EBITDA sank from $500 million when the CBS deal was announced to just $138 million at the end of 2022.

Audacy has worked in recent months to cuts costs and sell non-core assets. During the first quarter earnings call, the company’s top executives said they expect costs will decline 4%, or $35 million, in the last three quarters of this year.

Audacy has more than 220 radio stations across the country.