It just goes to show the state that radio is in these days when iHeartMedia, the largest station group in the United States, needs to files for bankruptcy protection. The company formerly known as Clear Channel, which owns 858 stations as well as well as the iHeartRadio digital streaming venture, had been stymied under the weight of a $20 billion debt since the company’s leveraged buyout in 2008.
In a statement, the company indicated that it had reached an agreement with the holders of more than $10 billion of the company’s outstanding debt to reduce it by more than $10 billion.
According to Chairman and Chief Executive Officer Bob Pittman, “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 company also owns a 90% stake in the billboard advertising company Clear Channel Outdoor Holdings, which did not follow its parent into Chapter 11 proceedings.
Radio in the United States is currently in a precarious position. Although it’s been found to be still the dominant medium in the car, it’s facing more challenges than ever from online media. As a result, ad revenues aren’t what they were, and may never be again, which makes deals like the Clear Channel/iHeartMedia one look pretty dubious in retrospect.
Where radio once was the major platform for music discovery, it’s now lost that lead to streaming. In fact, radio now looks to streaming to determine what to add to its playlists. Music radio is more homogenized than ever with extremely narrow playlists, and its influence and capability of breaking a hit is at its lowest point.
Any company involved in radio carrying as huge a debt load as iHeartMedia is doomed to financial difficulties, as we’ve seen for the last 10 years. We’ll see what happens now that the company has less of a debt load on its plate.