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

Erica Pandey, author of @Work
25 mins ago - Economy & Business

The high-wage jobs aren't coming back

Reproduced from Indeed; Chart: Axios Visuals

The pandemic has caught up with high-wage jobs.

The big picture: Early on, the pandemic walloped hiring across the wage spectrum and in every sector. Now, states have opened up, and the lower-wage retail and restaurant jobs have slowly come back — but higher-paying jobs are lagging behind.

Caitlin Owens, author of Vitals
1 hour ago - Health

The FDA plans to toughen coronavirus vaccine standards

President Trump and FDA commissioner Stephen Hahn. Photo: Pete Marovich/Getty Images

The Food and Drug Administration plans to toughen the requirements for a coronavirus vaccine emergency authorization, which would make it more difficult for one to be ready by the election, the Washington Post reported Tuesday.

Why it matters: Public skepticism of an eventual vaccine keeps increasing as President Trump keeps making promises that are at odds with members of his own administration.

Dion Rabouin, author of Markets
2 hours ago - Economy & Business

Wall Street fears meltdown over election and Supreme Court

Illustration: Aïda Amer/Axios

The death of Justice Ruth Bader Ginsburg and President Trump's vow to name her replacement to the Supreme Court before November's election are amplifying Wall Street's worries about major volatility and market losses ahead of and even after the election.

The big picture: The 2020 election is the most expensive event risk on record, per Bloomberg — with insurance bets on implied volatility six times their normal level, according to JPMorgan analysts. And it could take days or even weeks to count the record number of mail-in ballots and declare a winner.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Subscription failed
Thank you for subscribing!