Didn’t they just have the IHeartRadio Music Awards this past Sunday? You would think they everything was straight with all of the star power the show boasted that night. IHeartRadio’s parent company iHeartMedia sent shockwaves throughout the radio world when they filed for bankruptcy on Thursday.
The popular radio broadcast company which has about 850 radio stations in the U.S, made the move to file for bankruptcy protection to help restructure a part of the $20 billion debt load. That same debt load has been a burden on the company since the buyout it leveraged a decade ago.during the recession of 2008. In an announcement, the company said it has reached an agreement with creditors that will help reduce its debt by $10 billion dollars and still continue to run its stations.
Court filings also revealed that the company paid $1.4 billion last year in interest on its debt. The companies media division which is comprised of its popular music app that allows people to hear DJ Envy threaten to issue “fades“, broadcast stations, as well as other factors, accounted for $3.2 billion of revenue. In total the company pulled in a revenue of $6.2 billion.
Now how exactly did IHeartMedia manage to get in such serious financial trouble? This all came about and was expected by analysts when the company decided to not pay a $106 million interest payment for some reason.It’s also a clear indication that radio right now is in a losing battle thanks to the ever-rising popularity of streaming services such as Spotify and Pandora.
Lance Vitanza, an analyst at Cowen commends IHeartMedia as being one of the few companies that have done better at expanding their audience and adapting to the new climate by introducing new technologies.He also felt that the companies debt weighed it down and that this move will help alleviate some of that weight. He also adds “we fully expect them to be able to focus on their resources on growing their business rather than on debt service, which is what they had to do for the last 10 years.”
Moral of the story kids, don’t skip out on $100 million interest payments.
Photo:Smith Collection/Gado / Getty
Largest U.S. Radio Broadcaster iHeartMedia Files For Bankruptcy was originally published on hiphopwired.com