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Audacy’s Q3 Earnings Data Reflect Current Challenges

Schmaeling addresses debt concerns

Financial analysts had forecast a challenging third quarter for Audacy, and their projections were not far off. The radio and digital audio company on Tuesday reported a decline of 4% in quarterly revenue compared to a year earlier, as “advertising headwinds” hindered company performance.

Net revenues for the company were $317 million for the third quarter compared to $330 million in the same quarter of 2021. Radio revenues slipped 6%, with network revenues up a percent but spot advertising down 7% due to what Audacy senior executives call a “challenging macro environment filled with advertising headwinds.”

According to a company press release: “Our radio revenues were negatively impacted by our concentration in the country’s largest markets as small- to medium-market radio outperformed large-market radio by 8% during the quarter.”

CEO David Field called market conditions in Q3 “worse than our expectations” as the company reported an operating loss of $141 million in the quarter ending Sept. 30, compared to income of $29 million in Q3 2021.

The decline in advertising revenue in the broadcast division, which was more pronounced in major markets rather than Audacy’s smaller ones, could not be offset by digital revenue growth of about 2% in Q3 when measured against a year earlier.

Digital revenue was $63 million in Q3 2022, according to the company’s filing with the Securities and Exchange Commission. The company cited “double digit growth in streaming audio and digital marketing solutions” revenue, according to a press release.

However, podcasting revenue declined in Q3 by a whopping 23% compared to YoY, according to the SEC filing. “Podcasting business was impacted by the departure of Crooked Media, which left Audacy podcast platform in May 2022,” Field said.

Axios reported in October that Audacy had hired a banking firm to explore selling its Cadence13 podcast studio, which is one of its two podcast studios. Audacy decried the report as rumor. It also owns and operates Pineapple Street Studios.

The media company said it completed the sale of $56 million in real estate during Q3 with more property sales coming. It facing financial challenges, according to analysts who follow the publicly traded company. The share price closed on Monday at 32 cents and is being threatened with delisting by the New York Stock Exchange.

Audacy, whose stock was trading around $3.75 a year ago, has over $1.8 billion in debt.

Audacy executives addressed speculation by some industry observers that the broadcaster may eventually be forced to file for bankruptcy protection.

CFO Rich Schmaeling says “the majority of the company’s debt maturities are all first lien debt that doesn’t mature until 2024. And our second lien bonds don’t mature until 2027.”

He added on the company’s investor call that the company is working to position itself to refinance the 2024 maturities well in advance of their due dates. Schmaeling says Audacy has already had discussions with debt holders.

“We have had a number of conversations with groups representing our first lien lenders and with groups representing those second lien lenders. I would say those conversations are in their early stages and they have been quite constructive,” Schmaeling said.

“So there is ongoing conversation. There are outlines of a deal that could be accomplished to extend our maturities and perhaps other benefits. The talks are expected to continue for months before we have an agreement.”

The company predicts its Q4 revenue “will be flat to down low single digits” despite a healthy infusion of advertising dollars from the political sector for the midterm election.

[“Digital Helps iHeartMedia Maintain Growth in Q3”]