Largest U.S. radio company iHeartMedia files for bankruptcy

The company said the agreement it ‍reached with holders of more than $10 billion of its outstanding debt would restructure its balance sheet by transferring 94 percent of the stock in the reorganized company to its lenders.

IHeartMedia has struggled with debt that was taken on to finance a $17.9 billion leveraged buyout, or LBO, in 2008 of what was then Clear Channel Communications Inc. That deal led by Bain Capital LLC and Thomas H. Lee Partners LP closed just as a financial crisis began to undermine the U.S. economy.

 In the years that followed, the operator of 849 radio stations has faced intensifying competition for advertisers and listeners from internet platforms such as music streaming services. 

“The LBO put this massive debt on the balance sheet that the company was supposed to grow into,” a lawyer for iHeartMedia told U.S. Bankruptcy Judge Marvin Isgur at a hearing in Houston on Thursday. “We’re here to right-size the balance sheet.”

The company traces its roots to the 1972 purchase of KEEZ-FM in San Antonio, Texas, where it is currently headquartered. It said it would fund the business and bankruptcy process from cash on hand and cash generated from operations.

It said in a statement it was seeking to maintain business as usual during the bankruptcy, and to “uphold its commitments” to its staff. It employs 12,400 people, according to court records.

The filing comes less than four months after Cumulus Media Inc, which operates 445 U.S. radio stations, filed for Chapter 11.


IHeartMedia had $3.58 billion in revenue in 2017 and reaches 271 million radio listeners, which the company says gives it a wider reach than Alphabet Inc’s (GOOG.O) Google. The company also sells advertising on digital platforms, at live concerts and on syndicated programs featuring personalities such as Rush Limbaugh and “American Idol” host Ryan Seacrest.

However, the company spent $1.4 billion on interest payments last year and has more than $8 billion in debt maturing by the end of 2019.

The company’s lawyers told the court iHeartMedia was on the cusp of having enough support from creditors to impose its plan on hold-outs.

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