iHeartMedia files for IPO


Financier Worldwide Magazine

June 2019 Issue

After an initial statement in March noting that the company was exploring various options following its emergence from Chapter 11 bankruptcy, broadcasting and entertainment company iHeartMedia Inc has filed for an initial public offering with the US Securities & Exchange Commission (SEC).

In its filing, iHeartMedia said it intends “to use the net proceeds from the offering to repay indebtedness”. The filing did not note how much money the company expects to raise from the IPO, though it set a placeholder amount of $100m, which was used to calculate the registration fee, and is not indicative of the size of the offering. The company also considered pursuing a direct listing, an unusual process, used last year by Spotify, which would have allowed it to list its shares on the stock market without issuing any new shares.

iHeartMedia owns 848 radio stations in 160 markets and the iHeartRadio music and podcast streaming service, which has 128 million registered users. It also produces over 20,000 local live events per year and eight major national events, including the iHeartRadio Music Festival and iHeartRadio Music Awards, and claims to be the largest commercial podcast publisher.

iHeartMedia estimates a monthly reach of 275 million listeners over age six, outperforming Google and Facebook which have 251 million and 215 million users respectively, in terms of digital US audience, as measured by Comscore in February 2019. “We believe our advantage is driven by our unique ability to build relationships and engage a broad spectrum of audiences and demographics as we fulfil listeners’ need for companionship and to be connected with the world,” the filing continues.

Despite strong listener figures, the company has endured financial difficulties for over a decade. In 2008, iHeartMedia took on substantial debt when Bain Capital Partners and Thomas H. Lee Partners completed a $17.9bn leveraged buyout of what was then Clear Channel Communications. The San Antonio, Texas-based company filed for Chapter 11 protection in March 2018 with a debt pile of around $20bn. iHeartMedia negotiated with its primary debtholders, led by Franklin Resources Group, for around 12 months in order to reduce its debt load. Under the terms of the agreement, the debtholders took control of more than 91 percent of the equity in the reorganised company, while Bain and Thomas H. Lee retained just 1 percent.

Under the terms of iHeartMedia’s bankruptcy plan, which was approved in January, the company will be able to cut its debt load significantly – from $16.1bn to $5.75bn – via a debt-to-equity swap with some shareholders, and spin off its outdoor advertising business, Clear Channel Outdoor Holdings, as its own independent public company which would retain around $4bn in debt. iHeartMedia owns 89.1 percent of Clear Channel Outdoor Holdings and the billboard company was not part of the bankruptcy filing.

In January, iHeartMedia announced that it expected to complete its restructuring process in the first half of 2019. The company’s chairman and chief executive Bob Pittman and president, chief operating officer and chief financial officer Rich Bressler also extended their contracts by four years in January, ensuring that they would stay in their roles throughout and following the restructuring process.

Going forward, iHeartMedia intends to leverage technology and the increasingly attractive podcasting market to help it drive listener growth. The company’s growth plan, outlined in the filing, also includes “developing a leadership position” in the smart speaker realm, as well as expanding its involvement in podcasting, an increasingly competitive market. iHeartRadio acquired podcast content company Stuff Media last September, though a number of other subscription platforms have also been particularly active in the podcast space of late. Spotify, for example, recently acquired podcasting firms Parcast, Anchor and Gimlet, while SiriusXM recently unveiled plans to bring original podcasts to its Pandora service.

© Financier Worldwide


Richard Summerfield

©2001-2019 Financier Worldwide Ltd. All rights reserved.