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Debt Burden Grows at iHeartMedia

Cash interest payment obligations for 2017 are larger than Q1 revenue

iHeartmedia Inc. reported a first quarter 2017 net loss of $388 million, on revenue of $1.33 billion. Its total consolidated revenue for the quarter was down 2.4% from the same period a year ago, according to Thursday’s earnings report, which includes the radio and outdoor divisions. iHeartMedia, which has had a negative cash flow for more than two years, has been selling off some outdoor assets.

The company owed creditors $20.37 billion at the end of the quarter, up from $20.365 billion three months earlier. iHeartMedia now has $1.7 billion of cash interest payment obligations for the full year of 2017; that is more than what the company generated in revenue in the first quarter.

The earnings report for the first time included a series of statement risk disclosures and a warning as to the company’s ability to continue as a going concern over the next 12 months. This comes amid increased scrutiny from Wall Street and speculation that iHeartMedia is nearing a breaking point under the weight of its heavy debt burden.

Company directors have instituted a series of recent moves aimed at amending terms of some loans in an attempt to hold off a possible bankruptcy filing. The company is offering a $14.6 billion debt-exchange in which it seeks some debt forgiveness on loans and bonds. It is also asking for a two-year extension of loan and bond maturities from some lenders. The offer’s deadline, which has been extended several times, is May 12.

The company’s broadcast division, which includes 850 radio stations, showed revenue growth of 2.5% in Q1 over the same period a year ago, climbing to $757.1 million. “That revenue growth was driven primarily by trade and barter, sponsorship and other revenues related to live events in digital and included our core radio business,” said Rich Bressler, president, COO and CFO of iHeartMedia Inc. “National remains soft.”

Expenses in the radio division climbed to $551.5 million and were up 11.2% compared to Q1 2016, Bressler said during the earnings call, which included programming costs, investments and sales capabilities and variable compensation related increases. “We remain actively focused on actively balancing our cost base against our revenue opportunities,” he said.

Several media outlets have reported numerous layoffs of employees at iHeartMedia the past two weeks.

The iHeartMedia earnings report did state improvement to the company’s programmatic solutions with the launch of the SmartAudio digital data product for advertisers in the first quarter that “combines the massive scale of broadcast radio with the power of digital data and more informed audience targeting,” according to an iHeartMedia press release accompanying the earning’s report.

The company also surpassed 100 million registered iHeartRadio users in the quarter.