May 24, 2016 at 12:12 pm #20095
It’s not a question of whether it collapses but when, and it’s likely to come sooner rather than later. It could be within months.
What’s going to sink iHeart is its huge debt, some $21 billion. That’s more than the entire radio industry generates in ad dollars in a given year, and it’s a debt iHeart appears to have zero prospects of paying off, especially since radio ad revenues have been stuck at $17 billion for five years. Without growing revenue, there is no chance the books at iHeart are going to make a turnaround.
iHeartRadio has not seen anywhere near the hoped-for growth. As it turned out, for all the promise of digital media, it simply doesn’t generate the volume of dollars of traditional media, be it radio or TV or print. Advertisers spend less, and sellers make less.
A breakup makes sense because of the sheer value of the many divisions under the iHeart umbrella. Troubled as it may be, iHeart enjoys a wealth of assets. Just what their actual value might be in a sell-off would depend on a lot of factors.
Here’s a look at some of them:
•Premiere Networks: The top-ranked radio network in the country syndicates programs to over 5,000 affiliates, reaching over 190 million listeners each week. The talent contracts alone hold huge value.
•Total Traffic & Weather (TTWN): The leader in traffic, transit and weather info, reaching more than 200 million monthly listeners in over 200 markets in the U.S., Canada and Mexico. TTWN kicks out cash.
•Katz Media Group: With 15 regional offices, KMG is the top media rep firm, representing more than 4,000 radio and 500 TV stations. While Katz is closely tied to iHeartMedia, it could certainly fare well on its own in the event of a breakup.
•Clear Channel Outdoor: A huge money-making machine for iHeart, this division operations in 30 countries on four continents and ranks among the top three out-of-home companies in the U.S.
•iHeartRadio: iHeartRadio transmits over 850 station websites and has a social footprint touching nearly 80 million people. While it hasn’t produced the revenues the company had hoped, it’s a major property with lots of value.
•iHeartMedia: With 858 stations, it enjoys a wealth of assets and talent, but how much it would fetch whole or broken up is a big question mark, with CBS Radio already on the block and the possibility of Cumulus being broken up.
But no matter what any of these assets might fetch, the breakup of iHeartMedia would be a good thing—good for radio, good for the employees and good for all the divisions.May 24, 2016 at 2:45 pm #20101Deane JohnsonParticipant
Nice post Andy, and right on target. These type people have done so much harm to the industry from the beginning, I can only look at their troubles with joy. They deserve what the future holds for them.May 24, 2016 at 2:54 pm #20102BrianlParticipant
Hijack time …
Deane! Good to see you. 😊 Hope all is well.May 24, 2016 at 2:58 pm #20103Deane JohnsonParticipant
Yes, all is well.May 24, 2016 at 4:06 pm #20107
This is the first I’ve read that the investors have finally realized that there isn’t going to be any ‘restructuring’ of debt and that without the revenue increases they were sold on believing in, there is no hope left.May 24, 2016 at 7:02 pm #20111VitalogyParticipant
Didn’t we know 10 years ago they had too much debt and would go belly up?
Corporate radio is a turd circling the bowl. Lots of unhappy bondholders, that’s for sure!May 24, 2016 at 8:46 pm #20113paulwalkerParticipant
There were signs of trouble in Clear Channel when I worked for them in 2001. It has just become worse. I don’t know if the breakup of this company will be better for radio employees or not, but it certainly might bring more local control of hundreds of radio stations. But that may be “pie in the sky” as the more likely scenerio is another established radio company makes the acquisition. In that case, all bets are off.May 25, 2016 at 9:27 am #20127
If I were you I’d forestall the celebratory grave dance. They won their court case yesterday. They’re not going anywhere.May 25, 2016 at 10:17 am #20129
RIP Cheap Channel! Thank you for that great voice tracking, and the wonderful out of market djs who never sound live and local.
And speaking of Celebratory grave dance, that’s funny you mention that Lurk. I just finished doing the Macarena after hearing about the disasterous mess Cheap channel is in. Next up: The Funky Chicken.May 25, 2016 at 11:15 am #20132
You are a parody of yourself.May 25, 2016 at 1:15 pm #20133
The court case victory is a grain of sand on a beach of debt. Stock transfers of one half of one billion dollars value in a 21+ billion dollar sea of debt is not going to give them more than a minute’s reprieve. Another billion and a half of debt comes due in the next 18 months.
Talk about businesses that won’t survive the next and past due recession . . .
Besides, this isn’t about digging a grave. It’s about breaking up a huge conglomerate of businesses the building of which destroyed broadcast radio. The fate of the iHeart bloated mothership has been and remains in the hands of money people. Fact is, Clear Channel got rid of all the radio people a decade ago. It’s sad but true. Getting these bozos out of the business of destroying careers and local identity stations sooner would be better, but this small victory isn’t even a life preserver. They are going down. As I said in the OP, it’s just a matter of when, not if.May 25, 2016 at 3:03 pm #20137
Lurk must work for Cheap channel, he is the only one defending that disasterous company.May 25, 2016 at 4:11 pm #20138
Yes. That must be it. Your keen intellect has once again cut to the quick.May 25, 2016 at 6:21 pm #20139paulwalkerParticipant
I will predict by 2020, there will be no more IHeart, (though their digital/internet componet may survive), Cumulus, and obviously CBS (radio). I think there will still be large owners but not on the previous scale. I also predict there will be hundreds more stations that will be in local control, sort of deja vu all over again.
However, it may be too late. Tech will continue to eat into traditional radio in the 20’s, though like local traditional tv, the road to the end will be long.May 25, 2016 at 9:18 pm #20144
I wanna say Lurk is a music director/ program director/ janitor.
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