Don’t expect everyday operations at iHeartMedia radio stations to change much even though the broadcaster has filed for Chapter 11 bankruptcy. Company leaders say they don’t plan to liquidate stations nor lay off staff during the reorganization process. And music will keep streaming through the iHeartRadio app.
The country’s biggest radio group also will likely keep buying equipment as necessary. An observer familiar with United States bankruptcy law says that iHeartMedia likely has identified suppliers and vendors that provide it key goods and services and filed motions for them to receive preferred treatment on prepetition debt.
We have seen at least a partial list of iHeartMedia’s biggest unsecured creditors (AKA Top 30) and no broadcast equipment vendor’s name appears, but experts say some are likely to take a sizable financial hit. So far no one has filed a proof of claim against the broadcaster, according to the court docket in United States Bankruptcy Court for the Southern District of Texas in Houston.
That Top 30 list of top unsecured creditors includes performance rights organizations BMI, ASCAP, Global Music Rights, along with Nielsen Media Research and Vertical Bridge, the tower management company. No dollar amounts are yet available, according to court records.
Interestingly, fellow broadcast groups like Cumulus, Hubbard, Cox, Beasley and Urban One are also listed, possibly connected to iHeartMedia-owned Premiere Networks and inventory provided by the broadcasters.
iHeartMedia on March 15 said it intends to continue working closely with vendors throughout the reorganization. “We can and will pay for goods delivered and services rendered after the Chapter 11 filing in the normal course. In Chapter 11, amounts owed for goods delivered and services rendered after the Chapter 11 filing are deemed administrative priority claims.”
Chapter 11 rules require the company to pay those claims in full before it can pay any vendor or service provider expenses incurred before the Chapter 11 filing, according to court documents.
iHeartMedia’s goal is to move through the Chapter 11 process as “quickly as possible,” but that will likely take months. For example, Cumulus has been in Chapter 11 reorganization since last November. It hopes to emerge from court supervision by May.
Bankruptcy attorneys for the radio conglomerate met for the first time Thursday before United States Bankruptcy Court Judge Marvin Isgur. The next hearing before the judge that’s listed on the court docket is set for March 27, but you can expect boatloads of briefs and motions filed on top of that. The restructuring is expected to reduce iHeartMedia’s debt by more than $10 billion.
