Audacy, the increasingly troubled US radio and audio-streaming company, has sought Chapter 11 bankruptcy protection to slash its debt by 80% and survive a slump in advertising and other revenues and a surge in interest costs as the great boom in streaming audio (ie Spotify and podcasting) claims its biggest victim yet.
Audacy is the second-largest radio broadcaster in the US (after iHeartMedia) with 235 owned radio stations across 48 markets and it asked for protection via a pre-packaged bankruptcy deal with creditors, which is the way these arrangements are done in the US.
The company said in its filing with a federal bankruptcy court in Texas on Sunday night (US time) that it has entered into a restructuring agreement to reduce its debt from about $US1.9 billion to $US350 million.
It claims the restructuring will not impact advertisers, employees or business partners.
The company has been unable to meet its debts for months and has faced an increasingly tough battle to survive without radical action such as Chapter 11.
Its cost cutting has been intense - in November of last year it delisted from the New York Stock Exchange to save on the fees.
CEO David Field said in the company’s 2023 third-quarter earnings release that Audacy was in “constructive conversations” with its lenders to stay afloat.
In a May SEC filing, Audacy also pointed to “current macroeconomic conditions” hurting their forecasted revenue, such as high inflation and increased competition for advertisers. More importantly, Audacy said its revenue forecast over the next year wouldn’t be enough to fulfil its debt obligations.
The company had a grace period for interest payments due in October 2023. At the time, Audacy said it was going to use the extension to strategize a plan with lenders for its business operations.
The company’s stations include L.A.’s KROQ, KNX and KRTH; New York’s WFAN sports-talk radio and 1010 WINS; Atlanta’s V-103 (WVEE) and 92.9 The Game (WZGC); Chicago’s Newsradio 780 WBBM and 670 The Score (WSCR); San Francisco’s Alice (KLLC) and KCBS; and Seattle’s KISW.
The company said it expects its bankruptcy plan to be considered in court in February, and plans to emerge from bankruptcy after obtaining approval by the Federal Communications Commission. Audacy said it expects to operate normally through the process.
Audacy was clouded in 1968 and grew to be the Number 2 in the US (and with that huge debt burden) when it merged with CBS Radio in 2017.
Audacy shares are now traded over the counter after the delisting last November. The shares are down 97% over the past 12 months, closing Friday at 19 cents, for a market cap of a still substantial $US946 million.