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April 24, 2017 at 6:20 AM (PT) courtesy AllAccess,com
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Financial WoesLast THURSDAY (NET NEWS 4/20), ALL ACCESS broke the news that as part of an SEC filing of supplements to its debt swap proposals, iHEARTMEDIA released a preliminary first-quarter earnings report that shows consolidated revenue off 2.4% to $1.329 billion and consolidated operating income dropping 72.9% to $114 million, but the numbers were skewed by the previous year’s inclusion of $278.3 million from the sale of some outdoor assets and 2017’s included a charge of $12.8 million involving foreign exchange rate changes. Without those charges, revenue would have increased 1.6%.
Some experts said bankruptcy is now almost inevitable. 
There were several statements from the company that sent shivers across the industry, iHEART wrote, “we will continue to incur net losses and generate negative cash flows from operating activities given iHEARTCOMMUNICATIONS’ indebtedness and related interest expense.” The company followed by reporting management anticipates that the final financial statement for first quarter will “include disclosure indicating there will be substantial doubt as to our ability to continue as a going concern for a period of 12 months following the date the first quarter 2017 financial statements are issued as a result of uncertainty around our ability to refinance or extend the maturity of our receivables based credit facility, to achieve our forecasted results, and to achieve sufficient cash interest savings from the pending Exchange Offers and Term Loan Offers.”
That SEC filing led to a report over the weekend in MARKETWATCH explaining the, “Station operator is saddled with $20 billion of debt it took on with a $24 billion 2008 leveraged buyout by private-equity firms,” noting that, “The company has almost $350 million of debt coming due this year, part of a massive $20 billion debt load it took on as part of a $24 billion leveraged buyout of then Clear Channel Communications Inc. by private-equity firms BAIN CAPITAL and THOMAS H. LEE PARTNERS in 2008. It has another $8.3 billion of debt coming due in 2019.”
MARKETWATCH Corporate News Editor CIARA LINNANE concludes, “Some experts said bankruptcy is now almost inevitable.”
- “I think it will go into Chapter 11 and what will happen is what has happened in most of these LBO cases,” TRIPP SCOTT LAW FIRM International Bankruptcy Expert/Sr. Attorney CHUCK TATELBAUM told MARKETWATCH. “The lender will take back the company as part of a Chapter 11 plan, the other creditors will get nothing and the shareholders will be wiped out.”
- On FRIDAY (NET NEWS 4/21) REUTERS reported that a group of iHEARTMEDIA’s lenders has agreed to oppose the broadcaster’s debt restructuring bid.
- READ MORE HERE AT AllAccess.com
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It is a shame that IHeartRadio may go bankrupt but it will be a great opportunity for a lot of smaller companies to grow and for probably cheap. I was hoping with the Bell/Iheart deal to stream all Bell stations on a Canadian version of the Iheart app that we would actually see some of the US companies syndicated shows on during the evenings or overnights. Maybe even some other content sharing that could have seen some Canadian shows in syndication in the US. There are some very talented people that work on air at Bell.
This whole Iheart situation will be very interesting the next 6-12 months.