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iHeartMedia, Inc., the parent company to iHeartRadio, announced on Thursday they have filed for bankruptcy. With 850 AM and FM radio stations across the U.S., iHeartRadio is by far the country’s largest radio broadcast network. It now joins its rival, Cumulus, as the two major radio networks in America have now filed for bankruptcy, Cumulus filed for Chapter 11 a few months back after facing similar challenges as its competitor.
A statement from the company reveals that iHeartRadio has accumulated more than $20 billion in debt, but has now reached an agreement with its creditors to restructure around half of that debt, about $10 billion. Per CNN, the company been burdened by their debt for many years, struggling to recover from the debt load it took on by buying out billboard advertising company Clear Channel Outdoor in 2008. According to iHeartRadio’s official statement, however, “Clear Channel Outdoor Holdings, Inc. and its subsidiaries did not commence Chapter 11 proceedings.”
That said, Chairman and CEO of iHeartRadio, Bob Pittman, seems to be optimistic about the future of his company, saying in the statement:
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.
While the iHeartRadio financial position is undoubtedly not ideal, the company said it has enough money to support it through Chapter 11, and the day-to-day practices of the company and its subsidiaries should go unaffected, meaning that the 850 radio stations the company holds, the iHeartRadio Music Awards, and the series of live events the company runs are set to remain “business-as-usual.”
Interestingly enough, as iHeartRadio files for bankruptcy, streaming industry leader Spotify prepares for its highly anticipated debut on the New York Stock Exchange. Still, it’s an ominous look at the state of radio in America when its two biggest owners, Cumulus and now iHeartRadio, are simultaneously going bankrupt.
