iHeart Radio, owner of Mix 98.9 and others, files bankruptcy, the largest network with over 800 stations is about 20 Billion in debt, it owns outdoor billboards, concert promotions and a streaming radio business, all industries that have had issues in recent years as streaming royalties rose, radio listeners fled to digital downloads and social media replaced billboards and print media advertising.
Formally known as Clear Channel, the stock dropped over the last few years to only a tiny fraction of its once lofty valuations, closing at 48 cents yesterday.
IHeartMedia, which has struggled with $20 billion of debt and falling revenue at its 858 radio stations, said cash on hand and cash generated from ongoing operations will be sufficient to fund the business during the bankruptcy process.
The filing comes after John Malone’s Liberty Media proposed on Feb. 26 a deal to buy a 40 percent stake in a restructured iHeartMedia for $1.16 billion, uniting the company with Liberty’s Sirius XM Holdings satellite radio service.
Clear Channel Outdoor, a subsidiary of iHeartMedia and one of the world’s largest billboard companies, and its units did not commence Chapter 11 proceedings.
IHeartMedia skipped a $106 million interest payment on Feb. 1, triggering a 30-day grace period during which the company has tried to hammer out a deal with it bondholders.
The company disclosed on Monday it was still exchanging proposals with its creditors, but had yet to reach an agreement.
Its most recent proposal would have given holders of secured loans, who are owed nearly $13 billion, about $5.6 billion in new debt and 94 percent of the equity in a reorganized iHeartMedia. These creditors also would have received iHeartMedia’s 89.5 percent stake in Clear Channel Outdoor Holdings.
Bain Capital and Thomas H. Lee Partners control 68 percent of the voting stock of iHeartMedia, according to the company’s most recent annual report.
The private equity firms led a $17.9 billion leveraged buyout of what was then Clear Channel Communications Inc in 2008, just as the buyout boom was fading and as the signs of the financial crisis began to emerge.
Shares of iHeartMedia lost three-quarters of their value in the second half of 2015 and have never recovered since then. On Monday, the pink sheet stock closed at 48 cents.
IHeartMedia traces its roots to the 1972 purchase of KEEZ-FM in San Antonio, Texas, where it is currently headquartered. It also produces syndicated radio programs that feature “American Idol” host Ryan Seacrest and political personalities Rush Limbaugh and Sean Hannity.
The company had 14,300 employees at the end of 2016, according to its most recent annual report.