It is Official: iHeart Media, Parent to WHJY, WHJJ and Coast 93, is Bankrupt
Friday, March 16, 2018
The largest radio conglomerate in America, iHeart Media, is entering bankruptcy. As part of the agreement, only $10 billion of its $20 billion in debt will be restructured. The company will be saddled with ongoing staggering debt when it leaves bankruptcy in 6 to 12 months.
Bob Pittman, Chairman and Chief Executive Officer, said in a 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.”
“IHeartMedia, which has struggled with $20 billion of debt and falling revenue at its 858 radio stations, said cash on hand and cash generated from ongoing operations will be sufficient to fund the business during the bankruptcy process,” reports CNBC on Thursday morning.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAs GoLocal reported last week:
Cumulus, who owns stations like WPRO AM, WPRO FM, LITE 105 and Hot 106, entered into bankruptcy in November of 2017. iHeart is expected to file any day. Combined, the two conglomerates own much of the radio market in the Providence market.
The two of the three largest radio groups (with Entercom being the second) have now proven big debt -- in a shrinking and consolidating market -- is an unsustainable business model.
Financial Collapse — Executive Bonuses
RadioInk reported that the iHeartCommunications’ board compensation committee “approved millions of dollars in bonuses for iHeart CEO Bob Pittman, COO Richard Bressler, and General Counsel Robert Walls. Pittman, who reportedly received $500,000 bonuses each of the past two years, is eligible to earn a bonus for each calendar quarter of 2018 of $2.325 million and Bressler is eligible for $1.325 million."
For the local stations, spending and staffing will be under the microscope and severely limited in bankruptcy --with significant reductions are expected.
And Radio + Business Report wrote this week, “The judge overseeing Cumulus Media‘s Chapter 11 reorganization petition will hold a hearing ...to determine whether or not the company can move forward with two specific incentive compensation programs one group of lenders has formally objected to. Cumulus wants Shelley Chapman, Judge for the U.S. Bankruptcy Court for the Southern District of New York, to overrule the objections."
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