What to Do With $21 Billion In Debt


It’s no secret that iHeartMedia is carrying a massive amount of debt and hasn’t been able to nudge it south. While walking the floor at CES, CEO Bob Pittman was interviewed by Fox Business Host Liz Claman who said to Pittman, eventually the two major creditors, Canyon and Goldman Sachs, are going to want their money back. Claman asked Pittman point blank if iHeartMedia was going to have to restructure. Here’s what Pittman said…

Pittman told Claman the operating part of iHeartMedia is business doing quite well. “All the strategies we came up with over the past few years are finally paying off. So the question is what do you do with your capital structure if your operating business is doing well. That puts us in a very interesting position. What (creditors) want is a return. What’s great here is we have a great underlying business.”

Claman then pushed the issue. “Are you saying to restructuring, no way, yes way….”
Pittman said, “We’re not going to get into any of that. Certainly not from me. I’m not the financial guy. We have experts on how to handle it, but for us, what we’re really looking at is what’s best for the company, for the equity holders, and for the debt holders, and those are the things we put into every decision we make. And we have a lot more options with a business that’s doing as well as its doing.”

Watch the entire clip HERE


  1. When guys at the level of leadership where Eric perches can claim openly they do not know what radio should do next, the bell is already tolling.
    The correct answer is: Train or retrain the communications-staffs (at least those that remain). That is, those who are on the air or who write da spawts.
    This is a paltry expense and would justify the re-hiring and re-training of “live & local” talent.
    This would be an opportunity for a very few radio organizations – market exclusivity and the like being very real factors.
    Copycats would have to be just that – and figure out what the other guys are doing all by themselves.
    Besides, there is nothing left for radio to address if it is to move in any meaningful way into the future.
    Tell the story better? What story? “Well, like, we still got listeners!” I don’t think so.

  2. Hey Bob,
    Yu may be right. Perhaps my friendship has clouded my judgement, but I will say that in the past I have taken Bob and the company on when necessary, which have made for some very uncomfortable moments personally. That said, I’d like to address your claims.
    But before I do, let me say that I am NOT in favor of voice tracking in most cases, and I am NOT in favor of people loosing their jobs, and I am NOT in favor with selling without sales people.

    I’d also love for you and others to address specifics of what YOU would do to make the company profitable. It’s easy to arm-chair quarterback but I personally can’t think of what I would do, with the financial restrictions, that would move the needle. Increasing expenses on talent may move it long term with live and local but probably not enough to make it profitable (I prefer live and local).

    Regarding programmatic, if you read AdAge and Adweek, every marketing company in the world is saying that if they cannot buy using a programmatic solution they will not buy. The IHeart response to this is to try and place themselves in a position to get $ they are not going to get otherwise. If it means jobs it’s probably on a national level, not so much locally (yet) but eventually this will creep it’s way into local buying as well. It’s a reality of the ad world.

    Regarding lavish multimillion dollar parties and events, consider this. In the big world of national advertisers at the top tier level, IHeart is up against giant cable outfits, tv networks, and other big media companies who know that to get business they have to have perks and parties and to impress people with their connections. The IHeart music festival for instance has put IHeart on the national radar with advertisers in a big way. When you fly people in, let them meet the stars, let their kids meet the stars they are more likely to move business to you than to someone else. Though you and I may not like that, it’s reality. No CEO in the history of recent radio has been able to even get CEOs to meet with them. Pittman is meeting with CEOs of every major brand in America and leveraging these events to get attention, and it’s working. They are seeing business radio has never seen. Is it enough? Not yet? Will there be enough in time? Hard to know. But if he follows the track of every other past radio company they won’t make the $ they need.

    Regarding voice tracking. Pittman may have furthered it, but it was Randy Michaels who really started it at Clear Channel, and others like Steve Hicks before him. It was one way they could see to cut expenses of talent. I don’t like it, I prefer live, but I think it would be interesting to compare $ and ratings in a scientific way to see if it matters. I do think there is a loss of local relevance and that cannot be measured. But, frankly, I’m not sure what I would do with looming expenses and no way to pay people if we went back to live and local, nor is there evidence that increases billing ((and if there is I would love to see it). I do think there is huge value in live and local and I’d rather every station do it, but I’m merely talking iHearts practicality. I do think broadcasters like Larry Wilson who are doing live, local, and active promotion in markets is very exciting to see, and my hope is they prove that it matters, which MIGHT get others to follow. But my guess is that their financial hands are tied.

    Regarding expensive offices. I’m with you, I don’t see it. BUT, if entertaining clients than some show business matters. I used to bring advertisers to the stations and wanted the coolest high-tech look in the studios to make them feel we were cooler. Does it translate to $? I don’t know. Probably not. But NY is a different animal and maybe it does matter. Maybe we can ask Bob to address this one day.

    I think the bottom line here is that there has been some big increases in spending and some of what they are doing has driven it. Remember Pittman went in when this debt was established. One thing Bob has always told me is that you cannot cut your way to success alone. Though they are making cuts, they are also investing in things they think will move the needle, including some behind the scenes tech that they believe will help them meet advertisers needs to be more digital.

    I’ve often thought about what I would do if I were CEO of a troubled company like this. I’m honestly not sure. I do know that Pittman deeply cares and I’ve had those conversations where I know it’s painful when lives are disrupted when cuts have to occur. It’s easy for me and all of us to be critical, and I am much of the time. Yet, I’m not sure I could fix it. Imagine the most successful lavish CEO you can think of. What would she or he do differently? What would a showman like Branson do? Probably the same things.

    Pittman is a showman, which is why he probably has a better chance. On the surface he is show, behind the scenes he is all business. I get messages from Bob at 2 in the morning when he is working. A few years ago when he came on board I said he might move the needle because he is a showman and can get into doors no other CEO in radio has ever been able to penetrate. What I think is refreshing about Pittman is that he is not doing what every other radio CEO does, which has not, for the most part worked for many of them.

    I also know that if IHeart fails it’s going to damage all of radio, yet when they do high visibility things like a major TV network would do, it makes radio sexier, and that lifts the tide of all ships. Just a few years ago it was unheard of to see a radio company on network tv with a major festival. This is a game changer. It may not be resulting in the profits yet, and maybe it won’t, but it’s at least not doing things the way we have always done them.

    I know it’s popular to be anti-big radio and to second guess the moves these people make. NONE of us like to see great people loose their jobs, but I don’t want to see ALL of us loose our jobs, which is one of the reasons I don’t always pile on. I’m not sure it serves any purpose to do so. Yes, it’s easy to look back to pre-1999 and think that things were better, and in some ways they were, but that was the fault of the government and we are living with the outcome. It was too easy to get money and thus the debt piled on, and the assumption that they could pay that debt was what everyone believed. (Note David Field did not buy in, which is one reason his company is so stable today).

    I appreciate the dialogue, and clearly it’s not fun to watch what has happened to the industry we all love so much. The good news is that radio has not lost its audiences to the degree of tv and newspapers, so let’s all hope these CEOs will ultimately manage to salvage these companies from their debt. I suspect it all gets recasts so that they can eventually get ahead. Sadly some investors will loose their money, but maybe radio will get ahead again. Of course the economy will impact all of that, and much of the reason radio is seeing some off months is because, as an industry, we could do a better job of being where advertisers want us to be. The irony in all of this is that IHeart is one of few who really get this and are moving in that direction.

  3. Sorry Eric, but your personal friendship with Pittman is preventing you from being objective about him. Although certainty it is admirable that you are loyal to a friend. But from an objective standpoint, Pittman is a showman, not a businessman at all. You do not turn around bIllions of dollars in debt by constantly throwing lavish multi-million dollar parties as Pittman does, or by spending millions of dollars for your new offices on things like water misters, as Pittman has, all paid for by the investors.
    Further, Pittman has led the charge to voice track as many small market Clear Channel/îheart stations as he can, killing the values and relevance of those stations. Pittman is leading the charge to automate sales with programmatic software, that will cost many iheart salespeople their jobs. …And with increased competion that radio faces for ad dollars, firing your salespeople and automating sales demonstrates a horrible misjudging of your company’s sales challenges. Pittman may be a nice guy, but he has failed for 6 years to make one dime of profit or even to cut the debt principal. No other major company in any other major industry would tolerate that kind of consistent underperformance and failure by Bob Pittman, or any top guy who is accountable for results.

  4. Indeed, Eric, a collapse of IHeart is good for very few – other than those who might pick up some properties at “bargain-basement, never-to-be-repeated, low, low prices”.
    Given I have my own agenda, my question remains: In what ways, specifically, are a thousand radio stations being dramatically improved?
    Otherwise, what may be happening is that the scene of the crash is being moved only slightly downrange.

  5. Kathi,
    What answers are u seeking. Though its popular to trash Pittman and team for the debt let’s not forget that they came after the debt and are trying to eradicate it. Pittman may be good at spin but he is also very upfront with us about their situation and the efforts to pull the company out of it. Frankly it’s a tall order and almost impossible task yet Bob entered it know how the deck was stacked against him. I’ve stayed close to the efforts and this radio company us making more progress than most combined with their effort to bring new clients to radio. Pittman isn’t cruising. Because of his reputation he can get into CEO level doors no one else in radio has ever been able to do, and he is pitching radio and his company daily. I’m not sure anyone including Pittman can resolve this debt problem he inherited but I know of no one in radio or outside of radio who stands a better chance of fixing this company. Bob has built a world-class team and they are tending to business and growing business. Though I’ve know Pittman since we were both teens, my confidence in him lies in his history of turnarounds and innovation. It’s fun to bash this company and its always unfortunate to see many of the decisions companies like this need to make, which often puts people on the streets and changes the status quo of radio, but I’d bet on Pittman. And rather than tearing him down, we all shoot be rooting that he succeeds, because if he does, radio will be better off by having saved its biggest company. Things are not perfect, debt and restructuring is looming, but there is too much to loose for everyone if IHeart and Pittman fail.


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