The nation’s biggest radio station owner, iHeartMedia Inc., has filed for bankruptcy.
After amassing debt worth $20 billion, the company filed for Chapter 11 protection on Wednesday (March 14), according to the Los Angeles Times. By doing so, iHeart, formerly known as Clear Channel, is attempting to remain in business while solidifying its recovery efforts.
However, the deal has not been finalized, as of yet. Before moving forward, the court and some creditors need to approve this action.
“Achieving a capital structure that finally matches our impressive operating business will further enhance iHeartMedia’s position as America’s #1 audio company,” said Robert Pittman, iHeart’s Chief Executive Officer.
The report indicates that iHeart, which is owned by Thomas H. Lee Partners and Bain Capital, “hasn’t posted an annual net profit for a decade” and that a leveraged 2008 buyout is the reason for much of its debt. So far, they say they’ve reached an agreement with investors who hold $10 billion of its debt.
“What they’ve done to try to stay afloat is financial engineering,” said Seth Crystall, a Debtwire analyst, in a statement to Variety. “There’s no reason to file for bankruptcy until you have to… but we’re at that point.”
iHeart’s growth has been cut by a number of obstacles, including Spotify, Apple Music, TIDAL, and SiriusXM. Ad dollars have also shifted more from radio to online, ending up in places like Google and Facebook more readily. The company has reportedly tried to combat these issues with its own streaming services and live-events, including concerts and awards shows.
Despite the bankruptcy filing, Crystall said fans may not see a change in the operation. “They’re not shutting down. They’re going to pay their bills,” he explained. “If you were listening to iHeartRadio, or going to iHeart concerts, you will not even know the difference.”