The company, led by chairman and CEO Bob Pittman, posted a quarterly loss of $309.2 million, compared with a loss of $191.3 million in the year-ago period. Total revenue was virtually flat at $1.69 billion as media and entertainment unit revenue, which includes radio, edged up 2 percent. The company has carried a large debt load since its leveraged buyout six years ago, with long-term debt currently topping $20 billion, according to filings with the SEC.
Fitch Ratings has released a new report and it looks pretty dismal for iHeart/Clear Channel. In order to just break even this year, iHeart must make at least a profit of $1.7 billion just to pay the interest on their $22 billion dollars of debt. This doesn’t even allow for taxes on cash and capital expenditures. Fitch expects iHeart’s cash flow to be negative over at least the next two years reflecting the interest burden associated with the company’s capital structure and operating profile. Not to mention intermediate term debt maturities: $909 million matures in 2018 while $8.3 billion matures in 2019. I’ll bet some of the lesser goliaths in broadcasting are salivating over the prospect that within the next five years, lots of assets are going to be sold off. Nobody, absolutely nobody, is going to keep throwing money at this sinking ship forever.
Looking at their financial statement as of September, 2014 they are in deep debt. Assets are at $14 billion, Debt is $22 billion. That is a big gap! I can’t see any way they could increase their sales to service that debt. Selling off assets won’t help with that much debt. Only thing I can see happening is an eventual bankruptcy. I think they have cut overhead to the bone by now.
There must be some money being lent secretly for them to continue normal operations at this time, or some bills aren’t getting paid. Always watch the accountants, when they start leaving, the end is near.