The biggest radio station operator in the US, iHeartMedia, filed for Chapter 11 yesterday to restructure the overwhelming $20B debt they’ve accrued since a private-equity buyout over a decade ago.
The Texas-based holding company owns over 850 radio stations throughout the US, but, like others in the space, their revenue was decimated by the rise of major technology companies like Pandora and Spotify.
The private equity blues
iHeartMedia has spent the last several years trying to get out from under the mountain of debt piled on them by private-equity firms — *ahem* Bain Capital and Thomas H. Lee — that bought them out in 2008, just before the financial crisis.
Unfortunately, that’s proved impossible, and the radio brand’s only fallen further down the financial rabbit hole.
For example, in 2017, they used the ol’ “snooze button” tactic to put off a $476.4m debt securities payment they owed in 2018 in exchange for the same amount of debt at a higher interest rate, due in 2021.
Sexy… for radio
As audio streaming continues to dominate, the company is fighting to stay relevant. Last year, they launched a fairly successful subscription service with Napster, but it wasn’t enough to break out of the floundering radio mold.
The bankruptcy filing will allow the company to reduce their debt to $10B to keep the company afloat for at least a little longer.