Audacy, a Philadelphia-headquartered radio and podcast company, filed for Chapter 11 bankruptcy protection in Texas on Sunday (January 7), aiming to slash its debt burden by 80%, or about $1.6 billion.
The restructuring move comes as the company grapples with declining advertising revenue in the traditional radio market, according to a press release issued the same day.
With over 230 owned stations and media brands across 48 markets, including iconic names like KROQ in Los Angeles and WFAN in New York, Audacy is the second-largest radio broadcaster in the US after iHeartMedia. However, it has faced financial challenges in recent years, burdened by a debt pile of USD $1.9 billion.
The prepackaged bankruptcy plan, approved by a majority of creditors, entails handing ownership of the company to its debtholders in exchange for debt forgiveness. This would reduce Audacy’s outstanding debt by 80%, leaving it with around $350 million to manage.
“Over the past few years, we have strategically transformed Audacy into a leading, scaled multi-platform audio content and entertainment company through our acquisition of CBS Radio and by building leading complementary positions in podcasting, audio networks, live events, digital marketing solutions and our direct-to-consumer streaming platform,” said Audacy Chairman, President and CEO David Field.
“the perfect storm of sustained macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp reduction of several billion dollars in cumulative radio ad spending.”
David Field, Audacy
“While our transformation has enhanced our competitive position, the perfect storm of sustained macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp reduction of several billion dollars in cumulative radio ad spending,” Field said.
“These market factors have severely impacted our financial condition and necessitated our balance sheet restructuring. With our scaled leadership position, our uniquely differentiated premium audio content and a robust capital structure, we believe Audacy will emerge well positioned to continue its innovation and growth in the dynamic audio business.”
In Audacy’s Chapter 11 proceedings, some existing lenders have committed $57 million in debtor-in-possession ,or DIP, financing, including a $32 million term loan and a $25 million increase in the existing accounts receivables financing facility. Pending court approval, this, along with the company’s operational cash flow and reserves, is expected to support Audacy in meeting its obligations to employees, advertisers, partners, and vendors.
Audacy expects the court to consider the bankruptcy plan in February, potentially allowing it to emerge from Chapter 11 shortly after obtaining regulatory approval from the FCC.
The bankruptcy filing marks a significant chapter in Audacy’s history, which dates back to 1968 as Entercom Communications. The company underwent significant expansion in recent years, acquiring CBS Radio in 2017 and podcast companies Cadence13 and Pineapple Street Studios in 2019. However, the pandemic and broader economic headwinds exposed the radio industry’s vulnerability to declining advertising revenue.
While the Chapter 11 filing paves the way for debt reduction, it also wipes out existing shareholders. Audacy’s publicly traded shares will be canceled, receiving no distribution under the restructuring plan. Additionally, the company’s stock will be delisted from the New York Stock Exchange, although it will continue trading over-the-counter during the bankruptcy process.
Audacy’s bankruptcy illustrates the ongoing challenges faced by traditional media companies in the age of digital streaming. While the company holds a strong foothold in the radio landscape, its future success hinges on navigating the evolving audio market and embracing new revenue streams.
The restructuring provides a temporary reprieve from its debt burden, but Audacy’s long-term viability will depend on its ability to adapt and innovate in a rapidly changing media environment.
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