Giant iHeart Media Files For Chapter 11 Bankruptcy Protection

SAN ANTONIO, TX — Giant iHeart Media Inc., the largest radio owner in the United States, filed for Chapter 11 bankruptcy Thursday after an in-principle agreement with creditors that will allow it to shed about half of its $20 million in debt. The San Antonio-based company, which owns 858 radio stations across the country, said it has reached agreement with creditors to restructure about $10 billion in debt.

Falling revenues at its radio stations have crippled iHeart’s ability to manage its debt load. The restructuring plan calls for iHeartMedia to transfer 94 percent of its stock in the reorganized company to lenders.

The company said it has enough cash on hand from its other operations to continue operating as usual during the bankruptcy proceedings in the Houston Division of U.S. Bankruptcy Court for the Southern District of Texas.

The company said it filed a series of customary business-as-usual motions that will allow it to “uphold its commitments to its valued employees and other stakeholders” during the bankruptcy proceedings. At the end of 2016, about 14,300 people had jobs with iHeart Media, according to its most recent annual report.

The filing included iHeart Communications Inc. and some other subsidiaries, but did not include Clear Channel Outdoor Holidings Inc., one of the world’s largest outdoor billboard company, and its subsidiaries, the company said.

Bob Pittman, iHeart’s chairman and CEO, said the agreement with creditors “is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure.”

Last month, Liberty Media, which owns Sirus SM Holdings, offered to buy a 40 percent stake in a restructured iHeartMedia.

IHeart Media was created in 1972 with the acquisition of KEEZ-FM in San Antonio. Its financial problems began in 2008 with a $17.9 billion leveraged buyout of Clear Channel, Reuters reported.The deal led by Bain Capital LLC and Thomas H. Lee Partners LLP closed just as the recession took hold and in the next decade, iHeart Media faced more competition for advertising and listeners from internet platforms.

Photo via Shutterstock