(By Radio Ink Publisher Deborah Parenti) Should we look at that statement as good news? Of the approximate 11,300 AM and FM radio stations in America, over 11% of them (iHeart with 850/Cumulus with 445) are now under the umbrella of bankruptcy. And there are many in our industry who are cheering that fact. Why are they cheering? Why is this good news to them? It’s not because they wanted those two companies to fail. Rather, they see light at the end of a long, dark tunnel. Radio’s two big companies are finally facing the elephant in the room and working on plans to shed over $22 billion in debt that for years has been kicked down the road.
Many radio executives have been prognosticating, even hoping, this day would come. They were hoping radio’s two biggest companies would get their restructure in motion, get it over with, and get back to business. Since the day Mary Berner took over Cumulus she has been very forthcoming that the debt situation she inherited needed to be addressed. And she’s following through with addressing their $2 billion in debt.
Since the day Bob Pittman inherited iHeart’s massive debt load, while unable to move that needle, he transformed a radio company into a multi-media platform giant. Many may not agree with all of the decisions made, but conventional wisdom alone was never going to be enough to erase that massive debt. Bold moves are never sure bets but credit should go to those who dare to try.
It appears 2018 may be the year it all gets cleaned up, and certainly that IS good news for all. Of course, anything can happen along the way; these bankruptcy plans could fall apart, which would be catastrophic (and rare). Other radio companies could find themselves in the same position. And for sure, there are going to be many who are not repaid a penny in these situations. For them, none of this is great news.
Industry watchers have said for a long time that the enormous amount of debt iHeart and Cumulus have been carrying around, combined with their inability to pay it down, has been marring the entire industry. It has cast a dark shadow over everyone, including advertisers, and the sooner they both clean up their balance sheets and come out on the other side stronger, the better it will be for everyone.
When you really think about it, shouldn’t we all be rooting for Mary Berner and Bob Pittman to succeed? Shouldn’t we hope both Cumulus and iHeart emerge as more solid companies, making the industry stronger? We all know there were a lot of layoffs along the way, and there may be more, but there are still many thousands of employees we should also be cheering for, championing their efforts to create great content, market and sell that great content, and best of all, serve their communities all across the country better than any other medium. This could be the dawn of a new day for radio.
Deborah Parenti is Publisher of Radio Ink Magazine and can be reached at [email protected]