The largest radio station ownership group is in big financial trouble. iHeartRadio, which owns over 850 terrestrial radio stations, is struggling as it’s projected to lose more than $80 million this year and has threatened bankruptcy. That has spooked the investors that loaned the company more than $6 billion, and now they want their money.
Actually, the company is more than $21 billion in debt, and it’s been that way for more than 8 years since it changed it’s name from Clear Channel. At that time, the company made a big push into Internet radio by aggregating programming from all of its terrestrial stations, although that seems like a moot point since from a music perspective it’s all pretty much the same.
Clear Channel has often been blamed for the demise of the healthy radio business as it scooped up stations across the country, laid off DJs and newsroom employees, and automated the stations with a homogenized brand of pop music and news designed to sell ads more than please listeners. In the process, local radio was decimated as most of the programming came from a central office in San Antonio.
The fact of the matter is that radio is currently in big trouble, and one of the reasons is because of station groups like iHeartRadio have squeezed the originality out of it. Listenership is dropping like a rock as people tune in to Spotify or Apple Music to be entertained instead, which will continue to increase as cars become more connected.
Take AM radio, for instance. Even during prime time (drive-time), it’s not uncommon to hear free public service announcements because the ad slot couldn’t be sold. FM fares a little better, but advertising rates have dropped in recent years, which is a prime reason why iHeartRadio is in trouble.
This is another case of greed in the entertainment business, where private equity investors take over an industry with the express intent of squeezing as much profit from it as possible. It’s actually nice to see that backfire for once, as iHeartRadio will undoubtedly be broken up and sold for pennies on the dollar if it enters bankruptcy, or the investors get their way in court. Sadly, that probably won’t change radio in the foreseeable future.