It's The 'Largest Radio Station In The Country,' But iHeartMedia Is Filing For Bankruptcy
From Texas Standard.
Now $20 billion in debt, iHeart Media has filed for bankruptcy protection.
Clear Channel Communications, which was founded in San Antonio, has become a household name. In recent years, the company has been gobbling up stations and transforming itself into a radio and music streaming empire called iHeart Media, with more than 850 stations from coast to coast. Still headquartered in San Antonio, iHeart owns stations that are often the top-ranked stations in major market cities.
Dawn Kopecki, business editor for the San Antonio Express News, says the company first hinted at bankruptcy two years ago.
“The company transferred some stock – it was an intercompany stock transfer – and its bondholders challenged it, tried to force them into default, and I Heart fought it,” she says.
In court, iHeart Media said that defaulting on the bonds might force the company into bankruptcy.
“It all stems from the 2008 leveraged buyout by private equity firms Bain Capital Partners and Thomas Lee Partners,” she says. “The company had significantly less debt. It had $18.8 billion in assets at the time and $5.2 billion in debt. And that flipped completely in that buyout. It was something called an LBO or leveraged buyout, where they used debt to buy the company, and then the shareholders and people who buy the bonds have to pay for it.”
Despite financial trouble, it’s still the largest radio company in the country, Kopecki says. If you listen to hit radio in the U.S., you’re probably listening to I Heart Media.
“A couple of years ago they hired Bob Pittman. He was one of the original guys at MTV and he’s known as a visionary in the industry. He started the concert series that you see, iHeart Concerts, and all the top performers performing at them,” she says. “In San Antonio alone, they own at least four or five stations.”
Kopecki says the bankruptcy filing won’t have an immediate impact on day-to-day operations at the company, though I Heart Media bondholders will lose a lot of money.
“Now their credit rating is ruined, so it will have to pay more to issue debt, but they negotiated a deal with their investors because the investors would rather take 20 cents on the dollar than no cents on the dollar,” she says. “Going forward, the company should be leaner and meaner.”
Written by Jen Rice.