Why iHeart Can’t Lower Its Debt
iHeart Media has been trying to reduce its $20B in debt and has re-financed and re-structured several times, but how much it owes keeps growing. The broadcaster took on the debt in a $24B deal when it was acquired by Bain Capital Partners and Thomas H. Lee Partners LP in 2008.
The company is trying to work out a deal to lower its debt load by some $1.4B of is most pressing obligations, reports Bloomberg. The deals being discussed would handle the amounts coming due before 2019, when the company will face $8.3B in senior debt, according to one source.
Its debt is growing because of rising interest payments on the debt iHeart took on in the buyout and according to the account, the company has lost between $219.5M and $4B every year since it was acquired, according to the account.
To increase its cash, iHeart has been tapping into its outdoor and other divisions; we reported the company recently sold some of its billboards to Lamar Advertising for $458.5 million to retire some of its debt.
Bloomberg credit analyst Philip Brendel likened the move to “burning your sofa to heat up your house.”
In general, the debt is symbolic of radio’s struggles as an industry, with flat to small ad revenues forecast for 2016.
iHeart places its programming on several platforms and has recognized the importance of streaming, however as with other radio groups, the bulk of its revenue still comes from the local broadcast stations. iHeart projects it will report $6.2B in sales this year, a slight decline from 2015, reports Bloomberg.
The broadcaster is gaining online listeners, with Edison Research reporting 119M U.S. adults listened to iHeart online weekly and podcast listening reached 27M in the same time-frame.