Battered by years of restructuring negotiations to cope with more than $20 billion in debt, radio conglomerate iHeartMedia has filed for Chapter 11 bankruptcy.
From its headquarters in San Antonio, iHeartMedia, known as Clear Channel Communications until 2014, announced Wednesday that it had reached an agreement with shareholders to restructure and reduce the company’s debt by $10 billion while it continues operating as a leading global multi-platform media, entertainment, and data company.
With 850 broadcast stations across the country, iHeartMedia is the nation’s largest radio broadcaster, but it has struggled under the weight of growing debt since its acquisition a decade ago during the Great Recession.
“iHeartMedia has created a highly successful operating business, generating year-over-year revenue growth in each of the last 18 consecutive quarters,” Chairman and CEO Bob Pittman stated. “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.”
Chapter 11 is a form of bankruptcy that involves reorganization of a debtor’s business affairs, debts, and assets. It is generally filed by corporations that require time to restructure their debts, and it gives the debtor a fresh start.
According to an article in Thursday’s edition of the New York Times, “iHeartMedia…paid $1.4 billion last year in interest on its debts. Its media division, which includes the broadcast stations, a popular music app and a unit that syndicates shows by Rush Limbaugh, Sean Hannity and others, had $3.6 billion in revenue and $735 million in operating income. Counting its global business in outdoor billboards, which is not part of the bankruptcy, the company had $6.2 billion in revenue over all.”
iHeartMedia is the parent company of iHeartCommunications, which provides radio, digital, outdoor, mobile, social, live events, on-demand entertainment, and information services for local communities.
San Antonio businessmen Lowry Mays and Red McCombs built the Clear Channel empire starting with the purchase of one local radio station in 1972. (iHeart now owns 850 radio stations, including KJ97 and WOAI 1200 in San Antonio.) iHeartMedia employs 14,300 people in the United States and 4,400 in other countries.
In 2006, Clear Channel announced plans to go private, and in 2008, Mays and McCombs sold Clear Channel to two private-equity firms in a deal worth approximately $25 billion. The company was renamed iHeartMedia in 2014, the same year Pittman was named chairman and CEO.
The company’s outdoor advertising arm, Clear Channel Outdoor Holdings and its subsidiaries, did not file for bankruptcy.
In its filing, iHeartMedia requests to maintain business-as-usual operations, including commitments to employees and other stakeholders. iHeartMedia management believes it has enough cash on hand, together with cash generated from continuing operations, to fund and support the business during the Chapter 11 proceedings, according to the company statement released Wednesday.