On or about January 1, 2019 according to an updated filing with the bankruptcy court. The nearly 400 page document is the third amended joint Chapter 11 plan of reorganization of iHeart. It includes financial projections based on the assumption that the company will emerge with a lighter debt load to start 2019.
The company says if the plan is significantly delayed, additional expenses may start to rack up negatively impacting operating results. In it’s latest plan iHeart is projecting years of revenue declines in its core business.
Here’s a look at the financial projections the company presented in its latest plan.
iHeart based its revenue projections on third-party forecast audio market declines of -2.6%, -2.9%, -3.4%, -3.7% and -4.1% in 2018, 2019, 2020, 2021 and 2022, respectively. Management expects its core audio business to return to historical market outperformance of 200 bps, as measured by standard industry sources, by Q4 2018. Additionally, management anticipates continuing the 200 bps outperformance in each year from 2019-2022. The outperformance is measured prior to any growth-related initiatives.
iHeart’s core business: spot, streaming, and non-traditional and other market revenue, was $2,289 million in fiscal year 2017 and is projected to decline to $2,207 million in fiscal year 2018 and $2,160 million in fiscal year 2019. Thereafter, it is projected to total $2,095 million, $2,025 million, and $1,949 million in fiscal years 2020, 2021, and 2022, respectively.
Management expects trade revenue to decline from $187 million in fiscal year 2017 to $174 million in fiscal year 2018 and remain approximately flat through fiscal years 2019 – 2022.
Management expects political revenue, which totaled $28 million in fiscal year 2017 to fluctuate with mid-term and presidential election cycles ($78 million, $24 million, $102 million, $26 million and $80 million in fiscal years 2018 through 2022, respectively).
The remaining revenue is primarily sourced from Premiere Networks, Total Traffic & Weather Network, Katz Media, RCS, and growth initiatives related to iHeartMedia Analytics and programmatic platforms. The Debtors’ digital platform composition is shifting towards home smart speakers. As of April 2018, home consumer electronics comprised 22% of total monthly active users for the Debtors’ iHeartRadio app.
iHeart filed for Chapter 11 back in March hoping to wipe away $10 billion of its $20 billion in debt.