Broadcast & Satellite

Does Anyone Want To Buy A Radio Station? iHeartRadio Needs $6 Billion To Pay Back Loans

1 (1)Terrestrial radio giant iHeartRadio is in a slew of financial trouble as scared investors demand it pay back $6 billion it simply doesn't have, and as advertising revenue for radio continues to decline, things look bleak for broadcasters everywhere.

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Guest Post by Bobby Owsinski on Music 3.0

The largest radio station ownership group is in big financial trouble. iHeartRadio, which owns over 850 terrestrial radio stations, is struggling as it’s projected to lose more than $80 million this year and has threatened bankruptcy. That has spooked the investors that loaned the company more than $6 billion, and now they want their money.

Actually, the company is more than $21 billion in debt, and it’s been that way for more than 8 years since it changed it’s name from Clear Channel. At that time, the company made a big push into Internet radio by aggregating programming from all of its terrestrial stations, although that seems like a moot point since from a music perspective it’s all pretty much the same.

Clear Channel has often been blamed for the demise of the healthy radio business as it scooped up stations across the country, laid off DJs and newsroom employees, and automated the stations with a homogenized brand of pop music and news designed to sell ads more than please listeners. In the process, local radio was decimated as most of the programming came from a central office in San Antonio.

The fact of the matter is that radio is currently in big trouble, and one of the reasons is because of station groups like iHeartRadio have squeezed the originality out of it. Listenership is dropping like a rock as people tune in to Spotify or Apple Music to be entertained instead, which will continue to increase as cars become more connected.

1Take AM radio, for instance. Even during prime time (drive-time), it’s not uncommon to hear free public service announcements because the ad slot couldn’t be sold. FM fares a little better, but advertising rates have dropped in recent years, which is a prime reason why iHeartRadio is in trouble.

This is another case of greed in the entertainment business, where private equity investors take over an industry with the express intent of squeezing as much profit from it as possible. It’s actually nice to see that backfire for once, as iHeartRadio will undoubtedly be broken up and sold for pennies on the dollar if it enters bankruptcy, or the investors get their way in court. Sadly, that probably won’t change radio in the foreseeable future.

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6 Comments

  1. Interesting thoughts Mr. O. However you have missed a few facts while bashing radio – namely that radio in the U.S. reaches 97% of everyone while Spotify reaches just 7% of the U.S. If you want to reach people, radio is the #1 medium and growing. Yes you read that correctly, PUR (Persons Using Radio) has been GROWING for the last 16 months while TV continues to decline. Another fun fact – 75% of Americans will never hear an ad on Pandora.

  2. Radio is in free fall. Low advertising rate more competition from the Web. Ninety seven percent of people may have access to it but how many people listen to it on a daily basis. People spend more time on FB than they do listening to radio. The only time most people listen to radio is when they are in their cars. Sorry radio as a business is terrible. Ask anyone under thirty what is their favorite radio station and they will look at you like you got something growing out of your forehead.

  3. Why all the clamour about how the product is delivered? We all know eventually anything terrestrial will go away. Somebody STILL has to produce the product and program it…and we all know, homogenized one size fits all for radio programming is DEATH to creativity and connection to the listener. Perhaps the eventual sell of i-Heart stations will give re-birth to TRUE communication and companionship paving the way for true community service to a local region.

  4. Maybe this would be the perfect time for the FCC to establish new, STRICT, rules limiting the number of radio and television stations an individual or corporation could own. I don’t think the public interest is being served under these conditions.
    BIGGER IS NOT ALWAYS BETTER!

  5. Radio does reach everyone but that’s not important these days. If I am a dentist I don’t want to reach and/or pay to reach everyone. I am only interested in reaching those with a tooth ache AND money to get it taken care of.

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