losangelesnewstoday.com April 22, 2018

IHeartMedia files for bankruptcy to shed $10B in debt

16 March 2018, 01:02 | Nina Hammond



The two cases are unique, but both companies face similar challenges in a troubled industry.

Under the company's debt-cutting deal, holders of secured loans and secured notes, who are owed almost $13 billion, agreed to accept about $5.6 billion in new debt and 94 percent of the equity in a reorganized iHeartMedia, according to court documents. The media firm has been battling a massive debt load for some time, much of which stems from a so called "leveraged buyout" of the company by its current owners back in 2008.

"The heavy debt burden became unsustainable during the persistent long-term secular decline of the radio broadcasting business", analyst Sharon Bonelli of Fitch Ratings said in an email.

About 265 million people in the US still tune in to iHeart's stations at least once a month, but newer media such as Spotify's streaming service and SiriusXM's satellite broadcasts have cut into the audience and put a damper on sales.

After four extensions to a Forbearance agreement that would have put the company into default after skipping a $106 million interest payment, iHeartMedia has announced that it has reached an agreement with holders of more than $10 billion of its outstanding debt.

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The company said it had enough cash to support it through Chapter 11 proceedings.

The San Antonio-based company used to be called Clear Channel.

The branding switch to iHeartMedia didn't make the stations in the corporation's roster immune from the same kind of digital-age revenue downturns that have afflicted the Denver Post, which announced thirty layoffs yesterday.

These creditors also will receive iHeartMedia's 89.5 percent stake in Clear Channel Outdoor Holdings Inc, the world's largest billboard company, which did not file for bankruptcy.

The radio business has struggled with flat advertising revenues over the last decade, as ad dollars have migrated to Google and Facebook. iHeart has sought to diversify its business with its digital offerings and its concert business. The more than six months long negotiations between the company and its creditors evolved into this pre-packaged Chapter 11 filing.

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