Next For Audacy? Costs Cuts, Maybe Change In Senior Management

Under the prepackaged reorganization plan filed in January, Philadelphia-based Audacy will hand control of the company over to a group of lenders, now led by a firm run by billionaire George Soros. In exchange, the lenders have agreed to reduce all but $350 million of Audacy’s $1.9 billion in debt. Existing shareholders are expected to be left with nothing to show for their investments, while larger creditors would be repaid with stock in the restructured company.

With the court signing off on the plan, Audacy expects to emerge from Chapter 11 after the company gets approval from the Federal Communications Commission.

Last week, court filings showed privately held Soros Fund Management acquired roughly $415 million of Audacy’s debt, positioning it to take a greater post-bankruptcy share of equity in the company than any other creditor. The firm essentially bought out much of the debt owned by New York hedge fund HG Vora Capital Management, which was the largest debtholder when Audacy filed for Chapter 11 bankruptcy protection last month.

Current CEO David Field

The new owners could choose to keep the current board and management or replace them. Industry experts say whoever is running the company will be charged with paring down costs such as personnel, real estate, stations and contracts while also trying to figure out a revenue model that is profitable for a company focused on radio and podcasting.

Audacy has struggled since its 2017 acquisition of CBS Radio, which made it the second-largest radio station operator in the country. The company quickly made significant investments in podcasting and related technology before the pandemic dealt a significant blow to advertising revenue. Critics said management did not move aggressively enough to cut costs and pare down debt as advertising revenue failed to rebound. Since the CBS deal was announced, Audacy’s stock price has plunged from $17 a share to 11 cents.

The big cost centers include personnel, real estate, technology and contracts related to content. There is a theory that radio companies can run a more centralized set of operations for stations. That would include sharing and repurposing content, which could take away some of the local flavor for news, opinion, sports and music stations.

With technology being what it is today, multiple radio stations can be located on one floor of an office building rather than taking up multiple floors.