iHeart Media, the owner of radio stations that cover the Delaware market has filed for a Chapter 11 filing that includes a deal with creditors.
The filing by 850-station iHeart Media had long been anticipated, due to the crushing debt load of the San Antonio-based company. The filing was made in Houston by the company, which is said to be the nation’s largest radio station operator.
iHeart has 10 stations in the Wilmington and Salisbury markets that include WDOV in Dover, WILM in Wilmington, WDSD, Dover. iHeat has a dozen stations out of Salisbury, MD that cover the Delmarva Peninsula and include country station Froggy 99.9.
The radio giant has another five stations in the Philadelphia market with signals that spill over into northern Delaware.
Hefty prices for stations
iHeart paid heavily in acquiring stations prior to the economic downturn and was sold to private equity owners for nearly $18 billion. Its stock price stood at nearly $19 a share in 2008, with shares now trading at 52 cents each.
iHeart has since struggled with a hefty debt load, sluggish ad sales, and digital and satellite competition.
The normal option for debt-laden companies, selling off radio stations, was not an attractive option, due to sluggish revenues and signs that many younger people have moved on to other listening options.
The heavy debt load also precluded the. company from snapping up rivals, sometimes at bargain prices in a struggling rdio market.
In northern Delaware, iHeart ’s conservative talk mainstays Rush Limbaugh and Sean Hannity are heard on low-wattage AM station WILM, which scrapped its news format under Clear Channel/iHeart. Rival WDEL moved its talk-news format to the FM side.
According to a company release, the overall deal will reduce the company’s debt load by $10 billion.
Building a multi-platform business
iHeart has moved aggressively in building what it calls a “leading global multi-platform media, entertainment and data company.” It may be best known for a mobile device app that includes programming from its stations as well as online stations. The company has also built a music festival that rewards listeners with trips and tickets.
“We have transformed a traditional broadcast radio company into a true 21st century multi-platform, data-driven, digitally-focused media and entertainment powerhouse with unparalleled reach, products and services now available on more than 200 platforms, and the iHeartRadio master brand that ties together our almost 850 radio stations, our digital platform, our live events, and our 129 million social followers,” said Bob Pittman, CEO. “The agreement we announced today is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure. Achieving a capital structure that finally matches our impressive operating business will further enhance iHeartMedia’s position as America’s #1 audio company.”
Outdoor sign company not affected
iHeart’s Outdoor sign company Clear Channel Outdoor Holdings, Inc. and its subsidiaries did not commence Chapter 11 proceedings. iHeart formerly carried the Clear Channel name.
iHeartMedia believes that its cash on hand, together with cash generated from ongoing operations, will be sufficient to fund and support the business during the Chapter 11 proceedings.
CNBC reported iHeart has received an offer for a sizable minority stake from the owner of the Sirius satellite system, a competitor that has moved many listeners away from local radio.
Sirius faces problems of its own that include no-charge content from iHeart, Pandora and others.