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Recording equipment. Photo: Catherine Ivill / Getty Images

iHeart Media, the country's biggest radio broadcaster, filed for bankruptcy protection last week. The news came after the company said it expected bankruptcy within a year last April and after its greatest rival, Cumulus Media, filed in November.

Why it matters: The fates of iHeart and Cumulus raise questions about the future of terrestrial radio, which is struggling to compete with digital broadcasting and streaming services like Spotify. Although the companies' ad-driven revenue model is facing headwinds, market research indicates that consumers are still tuning into radio in robust numbers.

Warning signs
  • iHeart Media paid $1.4 billion in interest on its debts last year, per the New York Times. The company had been continually refinancing its debts for the past four years, Greg Plotko, a legal expert in bankruptcy, tells Axios.
  • "The bankruptcy [was] the culmination of iHeartMedia’s years long dance with its creditors; a final phase, long expected by analysts, began last month when the company skipped a $106 million interest payment," writes the Times' Ben Sisario.
By the numbers

Consumers are still listening to radio, according to Nielsen's market research.

  • 93% of adults over the age of 18 tune into AM/FM radio each week. The number ticks up to 95% when considering just those between the ages of 35 and 49.
  • Listening to radio comprises 17% of American adults' media diet. That's compared to 41% of time devoted to TV and 23% to using an app or the web on a smartphone.
  • Adults tune into radio 5.1 days a week on average, on par with the 5.6 days and 5.8 days a week that they watch TV and use their smartphones.
  • They spend an average of nearly 13 hours a week listening to AM/FM radio.
  • Yes, but: Teens listening to terrestrial radio has fallen about 50% over a 10-year period, Larry Miller, director of NYU Steinhardt's music business program, tells Axios. He writes in an August 2017 study, "Generation Z, which is projected to account for 40% of all consumers in the U.S. by 2020, shows little interest in traditional media, including radio, having grown up in an on-demand digital environment."

But ad revenue is flattening, per PwC's analysis...

  • Radio advertising revenue for terrestrial radio grew by 1.6% in 2016, and that growth is projected to slow to just 0.4% by 2021. Compare that to the 7.5% annual growth expected for satellite radio advertising in 2021.
  • One bright spot for terrestrial radio is online advertising, which brought in $1.35 billion in 2016 and is expected to see an annual growth rate of 8.6% by 2021.
  • Still, the bulk of terrestrial radio's ad dollars come from broadcast advertising, which yielded $16.3 billion in 2016, but has essentially plateaued.
The big picture
  • The future of terrestrial radio is grim because it has failed to engage the newest generation of consumers, Miller says. Even the older, more engaged consumers of radio could slip away as automobile dashboards add options for on-demand, voice-activated content in addition to linear AM/FM radio.
  • One solution for terrestrial radio companies to save themselves is to take their content and put it on the platforms that users are now getting their media from, says Miller.
  • "Don't do a podcast of your 4-hour morning show. No one cares ... Instead, use your talent and your ability to build local content ... [Y]oung people are increasingly listening to podcasts that were built for them," he says.

Go deeper

Ro Khanna accuses Biden of quitting Middle East

Rep. Ro Khanna. Photo: Cody Glenn/Sportsfile for Web Summit via Getty Images

An outspoken progressive Democrat is wary of President Biden’s approach to the Middle East, arguing it’s like “conceding defeat of the aspiration” to win a Nobel Peace Prize.

Why it matters: A number of members of Biden’s own party dislike his Middle East strategy, as his administration signals the region is no longer the priority it was for President Obama and his predecessors.

Democrats eye reconciliation for immigration

Photo: Chip Somodevilla/Getty Images

Comprehensive immigration reform is a pipe dream, but some Senate Democrats are hoping to tie key immigration provisions to the next big reconciliation push.

Why it matters: Immigration is one of the most controversial and partisan issues in U.S. politics, which is why the budget reconciliation process — which allows for bills to pass the Senate with a simple majority rather than the usual 60 votes — is so attractive.

2 hours ago - Politics & Policy

Scoop: Biden meeting Quad amid own pivot toward Asia

Artists paint portraits of President Biden and Vice President Kamala Harris in Mumbai, India. Photo: Anshuman Poyrekar/Hindustan Times via Getty Images

President Biden plans to meet this month with the leaders of Japan, Australia and India in a virtual summit of the so-called Quad, according to people familiar with the matter.

Why it matters: By putting a Quad meeting on the president’s schedule, the White House is signaling the importance of partnerships and alliances to counter China’s growing influence in the Indo-Pacific region.