After four extensions to a Forbearance agreement that would have put the company into default after skipping a $106 million interest payment, iHeartMedia has announced that it has reached an agreement with holders of more than $10 billion of its outstanding debt. The company says this agreement “reflects widespread support across the capital structure for a comprehensive balance sheet restructuring that will reduce iHeartMedia’s debt by more than $10 billion.” To implement the restructuring, iHeart – and certain lenders – have filed for Chapter 11 Bankruptcy in Houston.
iHeart has filed a series of motions with the bankruptcy court seeking to maintain business-as-usual operations and uphold its commitments to employees and other stakeholders during the process. These “first day” motions, which the Company expects to be granted in short order, will help facilitate a transition into Chapter 11. It appears from all of the court documentation that a first hearing on motions will be today at 2:00.
Here’s what CEO Bob Pittman had to say. “iHeartMedia has created a highly successful operating business, generating year-over-year revenue growth in each of the last 18 consecutive quarters. We have transformed a traditional broadcast radio company into a true 21st century multi-platform, data-driven, digitally-focused media and entertainment powerhouse with unparalleled reach, products and services now available on more than 200 platforms, and the iHeartRadio master brand that ties together our almost 850 radio stations, our digital platform, our live events, and our 129 million social followers. The agreement we announced today is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure. Achieving a capital structure that finally matches our impressive operating business will further enhance iHeartMedia’s position as America’s #1 audio company.”
The company says, much like Cumulus said when it announced a Chapter 11 filing, that it will be business as usual on the operating side. iHeartMedia believes that its cash on hand, together with cash generated from ongoing operations, will be sufficient to fund and support the business during the Chapter 11 proceedings.
While iHeart says operations have been strong, it was never able to chip away at its $20 billion in debt. This Chapter 11 filing was set in motion back on February 1 when iHeart chose not to make a $106 interest payment. That started a 30-day clock that, upon expiration, could have pushed iHeart into default. What it seems to have done is forced the two sides to sit down and work out an agreement. It also lead to iHeart skipping another $138 million in interest payments on March 1. When the first 30 days expired, iHeart and some of its major lenders, agreed to extend the discussions four times, culminating with the agreement announced here, and the Chapter 11 filing. iHeart is hoping to come out of the re-organization a much stronger company, and not be saddled by so much debt. If the bankruptcy proceeding is successful the company will shed about 50% of its $20 billion in debt. The company owns over 850 radio stations.
According to Variety, here are some of the outstanding debts that we’ll soon bel learning about in court: Nielsen (owed $20 million); SoundExchange ($6.4 million); Warner Music Group ($3.9 million); Universal Music Group ($1.3 million); and Spotify ($2.1 million). ASCAP and BMI are each owed slightly over $1.4 million; GMR ($2 million).
While specific details are not yet available, recent talks had the company handing over 94% of the equity in iHeart’s radio business, and 100% of the equity in Clear Channel Outdoor, to senior creditors led by Franklin Mutual Advisers. Wall Street analyst Lance Vitanza tells The Wall Street Journal that “Regardless of the details, iHeart’s business will be substantially more valuable when it eventually emerges from bankruptcy.” And that, along with a stronger Cumulus, and a hyped up Entercom, will certainly be good for the entire radio industry.
hopefully restructuring leads to more business opportunities for those seeking to make radio 7 music better
Joel Nava.
This is My story: I am programming a Low Power FM radio station in Greeley, CO (A city in the middle of no where), and I had a vision. My vision was to program this radio station based on my feelings, my music taste, and my instincts. After two years, we are the number one radio station in town even though Nielsen won’t survey us because we are a non commercial radio entity. But, what does a low power FM radio station has to do with a huge conglomerate like I Hearth Radio which is bankrupt and who owns 850 of the most important radio stations in the most important markets of the United States? The answer its nothing and All in the same time. Even though we are an small radio station doing radio for the community, we are, may be, the first community radio in Spanish which is professionally programmed and produced to create a huge audience.
We are competing with KXPK 96.5 Denver 100K of Power. KJMN 92.1 Denver 50K of Power, KGRE Greeley, 6000K of Power, 1630 AM 10K of Power, and KJJD AM 1K of power. The Competition its fierce! If we want to create an audience, we have to create, innovate, and put all the meat on the grill.
We are doing radio, as radio was meant to be done since its origins. We don’t care about BDS, about Nielsen, or about the status quo. We choose the best music ever produced, we mixed it, we schedule it, and we play it; and people love it!! The formula its very simple. Play music who its commercially great! And don’t allow any payola to ever get into our scheduling decisions!
Our entire programming its done LOCALLY! Our Morning show its LOCAL! if some thing happens in our town, we are the first ones to broadcast it to the entire community!
Being a Low Power FM doesn’t mean that we can not produce an extremely professional competitive radio station. The industry has changed a lot. The internet has changed every thing. Now we are competing with Spotify, with Facebook, with youtube, and radio its suffering its most important challenges ever!
while social media its thriving, the traditional media its facing very difficult times,
Now every thing its centralized. Huge conglomerates like iFart Radio or Univision in spanish killed the local warmth and taste of radio. Now the same show in Los Angeles can be heard in 60 markets at the same time! Automatically killing all those local morning shows that may have produced their own and unique content.
Radio clusters like Ihate Radio, I mean I fart radio, I mean I hearth radio, lost and killed the local feeling of radio, and their music in all their formats really sucks! . As much as they try it, a satellite feed will never compete with the worst local DJ’s talking about the things that really matter to their local communities.
Content its KING, but Local Content well done its KING with SUPER STRONG STEROIDS!
Yes, Clear Channel ( Ifart radio) acquired a huge un payable debt, but despite their debt, their centralized stinky content was and its a huge burden for a company who lost touch with the real destiny and mission of LOCAL RADIO. Centrilized content was good to save money in the short term, but in the long term, it killed the opportunity to give local communities the things that you want from a local radio station: Local DJ’s Local News, Local Bands playing their new release, Local People talking about local things going on the community; THAT’s RADIO!!
You can have two radio stations both playing the same exact music, but the one with better DJ’s, Better Promotions, and Better local content will be the one who will prevail over the other one.
SO this are my recommendations to iHate Radio, from a Low Power FM radio station broadcasting with 60 watts of power with a lousy signal, yet defeating the most powerful monsters of radio in a city of about 97,000 people where 45 are latinos, and where most of them listen to La Guapa 95.3 FM. KSIK-LP designed, produced, and programmed by me.
So, This is what I would do in order to turn around Clear Channel. I mean Ihearth Radio.
1.-Fire their CEO
2.-Program their Most important radio venues LOCALLY
3.-Sale all their less Profitable AM radio stations.
4.-Produce Local Content like News, Promotions, and contests.
5.-Sale their less profitable FM radio stations in Small or Median Markets.
6.-Rebrand their name to some thing that will reflect better their Terrestrial Radio mission.
7.-If some bigger firm offers enough money, sell off every thing, and pay their debtors!
8.-Listen to the people more then they have listened to stupid radio consultants who know not much about how to do radio with a mission on the community and not only on profits.
9.-Don’t ever buy more radio venues and clusters who are grossly over priced!
10.-The Local theory or Radio will be the king that will save their butts and their bank accounts!
My name is Joel Nava.
CEO and Radio Strategiest.
La Guapa Music Foundation.
KSIK-LP 95.3 FM
Greeley, CO.
[email protected]
1-970-775-4148
Not many listen to radio any more as most of radio our now own by the Bankers .when was the last time you were in a big Bank they are for the most part just a money making machine. Radio now own by your Banks (nice sound Eight?) the 1 % seen to control most of every thing now.
Bonneville has zero debt and just bought 8 more radio stations in California. What do they know that iHeart can’t figure out!
Iheart’s problem started way back in 1996.
Radio stations were being purchased at 18 times the price.
Bland, innocuous assertions to the contrary, corporate radio has abandoned any connectivity to ethics, morals or sound business practices.
“Glaring Immediate Expediency” is what drives radio – so long as it serves the protectionist needs of the elite.
Shareholders, audiences and advertisers can suck on it.
As a past radio alum and now a retired network television executive, I find it striking that the two biggest names in radio (iHeart and Cumulus) needed to file Chapter 11. That seems to say that the medium can’t properly quantify scale. We live in a world that technology continues to fractionalize the share of voice. This will be the case for television and digital platforms as well. Paying too much for something that will reach a smaller audience over time is a very hard situation to overcome.
And there you have it,The gross effects of Wall Street radio mentality I-Heart, Cumulus/WWO, over paying unrealistic multiples for markets and sports properties driven by large ego’s, all coming at the expense of invested shareholders and the radio broadcasting industry.
Perhaps opportunity for real radio broadcasters and related groups with potential sell off’s getting stations back into solid hands to protect the interest of the rest who do it right, day in day out across radio dials.
Mr. Swick-
Your own company has benefited greatly from the the very same station cutbacks and “mentality” of which you’re critical of iHeart and Cumulus. But your company’s own practice of using out of town voice-tracking talent and not local talent is in your case not to benefit Wall Street, but you yourself! Amazing!
This/your sickening approach to “radio” has lead to poor radio product, lower local connectivity, lower civic responsibility and frankly less public safety as well.
You should be ashamed of your post and continue to “do it wrong”.
Sorry James to disagree with you but Mr. Swick’s company has provided a wonderful opportunity to localize the signal of a station in small markets……having jocks talking about local events is amazing, their system allows us to customize all our stations on minute by minute, hour by hour, day by day basis…..we provide a better radio product with Mr. Swick’s company than we could if we did not use them…..not sure if you have really heard how “local” the service can be….it is an amazing process and provides our listeners a better product (because we tell the jocks what we want them to talk about) than we could give them……when we are not live on our local stations….good luck with on next career….
I agree whole-heartedly. No pun intended.
Is that how Pittman wants to represent himself in a trade periodical or in business? – in a T-shirt??!! He probably thinks that’s “cool.”… It is not. It is unprofessional, and a CEO should not be representing their company wearing a T-shirt.
This statement is part of the problem in Radio. Why so stuffy? It’s supposed to be fun. I assume you have heard of Facebook, right? Zuck wears a t-shirt and/or a hoodie all the time. His investors and advertisers don’t care. Other than his golden parachute, what Pittman is wearing is irrelevant.
You are dead wrong. Don’t compare Pittman to Zuckerberg! Zuckerberg is a young billionaire making billions of dollars PROFIT in the new digital world. Pittman is a 70-something elderly man whose company OWES BILLIONS! Big big difference. And i guarantee that Pittman wouldn’t appear in front of Federal Bankruptcy Court Trustee in a t shirt. Not very credible.
Why are they still in business? They have ruined radio, countless lives and they do not feel one bit of remorse
.
you could not have said it better
I have to agree.
Business as usual in the red. Let’s not forget iHeart executives were awarded major bonuses several days ago (before the papers were signed!) With the chapter 11, there should be a “cleaning house” of execs and those who are responsible for putting this company so much in debt.
Actually they weren’t “awarded major bonuses.” They were made eligible for bonuses. Very different thing. No bonuses have been awarded. The people responsible for putting the company in debt are Lowry and Mark Mays, who left the company several years ago.
what an efffing mess! Ha.. too bad I don’t feel sorry for any of the pri–ks that run I-fart.
Time to start selling off stations to pay their debts, although they will never undo the damage they did to the industry.
right you are