Radio giant Audacy files for bankruptcy
Audacy, the publicly-traded radio and podcast company formerly known as Entercom, announced plans to file for Chapter 11 bankruptcy protection Sunday.
Why it matters: Audacy is the second-largest radio broadcaster in the country, and controls some of the most popular radio stations in major markets, such as WFAN sports-talk radio in New York and KRTH in Los Angeles.
Details: In filing for Chapter 11 bankruptcy proceedings, Audacy has entered into a prepackaged restructuring support agreement (RSA) with a supermajority of its debt-holders to restructure its balance sheet to alleviate its debt.
- Through the restructuring, the radio giant said it plans to eliminate approximately $1.6 billion of its $1.9 billion in debt. Audacy's debtholders will receive equity in the reorganized company.
- Audacy said it expects the bankruptcy court to hold a hearing to consider the approval of the plan in February and to emerge from bankruptcy once regulatory approval is obtained from the FCC.
- In a statement, the firm said it doesn't expect "any operational impact from the restructuring."
- In a note to employees, Audacy CEO David Field said there will be no disruption to employee wages and benefits. "The current leadership team will continue to lead the Company and day-to-day roles and responsibilities will not change."
Catch up quick: Entercom was created as a private radio company in 1968 and went public in 1999. It merged with CBS Radio in 2017, expanding its radio footprint to create one of the largest radio networks in the country. It has since made several acquisitions to build its podcast and sports betting businesses.
- Entercom rebranded to "Audacy" in 2021 to help establish itself as a modern audio company with a foothold in podcasting and digital audio, in addition to radio.
Yes, but: That digital transformation wasn't able to offset steep declines in the radio ad market that presented major problems for Audacy's balance sheet.
- In his note, Field said Audacy paced a "perfect storm" of problems in the past four years, "from the global pandemic and the series of subsequent macroeconomic challenges that have caused sustained headwinds in traditional advertising and materially impacted our business."
The big picture: Radio companies, like newspapers and other traditional media firms, have had their business models upended by the Internet. Most are leaning into podcasts and digital audio ventures to help offset declines in traditional advertising.