Why Would Anyone Invest In Post-Bankruptcy iHeartMedia? Because 'Radio Motivates Behavior' says Fred Jacobs
At a time when more younger listeners are tuning out in favor of streaming and other forms of media consumption, broadcast radio giant iHeartMedia is hoping to raise $100 million in an IPO. If an aging audience isn't enough to scare off investors. the fact that iHeart is just emerging from a multi-billion dollar bankruptcy may do the trick.
Not so fast, says respected media consultant Fred Jacobs of Jacobs Media.
He's not alone in pointing out that by some measures, iHeart is a solid company that was saddled with $16.1 billion in legacy debt. Post bankruptcy that debt is now been reduced to $5.75 billion, which in and of itself makes it a more stable business.
"a giant megaphone"
"iHeartRadio has become a global entertainment force," argues Jacobs. "And even while in bankruptcy, managed to invest $55 million in its podcasting initiative via the purchase of How Stuff Works. The company now has equal footing with NPR in that space." The company also has a huge digital footprint thanks to the web sites and streaming versions of its 850 radio stations.
That gives iHeartMedia a "giant megaphone," argues Jacobs. "Broadcast radio motivates behavior – it generates downloads and page views, it puts butts in seats, and it sells merchandising – all key components in a mega-media strategy."
Jacobs says that many radio broadcasters are making sizable bets in podcasting, automotive, eSports, mobile, smart speakers, video, and other innovations designed to leverage local market brand strength while growing their digital assets. "In this way," he says "they’re offering their audiences opportunities to consume their content on their preferred sources, while providing advertisers and marketers with the ability to reach consumers across the media spectrum."
Of course, investors will want to see actual numbers that prove iHeart's reach beyond broadcasting, and how it converts into sales. iHeart's foray into premium music streaming with iHeartRadio powered by Napster has failed to gain traction even after an extensive company wide radio and digital launch campaign.