Facing deadlines this year to pay back some of its $2 billion in debt, Audacy appears poised to file for bankruptcy protection, according to a report in the Wall Street Journal.
The WSJ says all that debt is about to trigger a Chapter 11 bankruptcy, possible within weeks, with senior lenders assuming ownership of the radio company following the reorganization. (Chapter 11 is the type of bankruptcy that allows a company to maintain operations while creating a plan to repay creditors, rather than Chapter 7, which involves liquidation of assets.)
Audacy has been slow rolling payback of its massive debt, which was mostly accumulated back in 2017 when the former Entercom Communications merged with CBS Radio. The broadcast company rebranded as Audacy in 2021.
The publicly-owned radio company has been skipping loan interest payments since late last year in efforts to facilitate talks with its lenders, according to reports to the U.S. Securities and Exchanges Commission. The broadcaster has blamed a softness in the ad markets for its inability to pay back the loans.
The WSJ says Audacy — which has $632 million in first lien debt due in Nov. 2024 — has reached agreement with its lenders for a “pre-packaged bankruptcy plan.” The business and economy-focused newspaper reports lenders will help finance the reorganization. It’s unclear if Audacy CEO David Field will remain with the company following the reorganization.
[Related: “NYSE Will Delist Audacy Stock as Planned“]
Audacy, which is one of the biggest U.S. radio owners with 230 radio stations in 46 markets, has gone through recent format reorganizations that have resulted in significant job losses through consolidation of on-air positions.
Equity research analyst Craig Huber with Huber Research Partners, LLC, who covers Audacy, told Radio World in an email that the radio company’s pending bankruptcy has been in the making for a long time.
“This has been evident to us for many years given long-term secular pressures on radio advertising and listenership and lack of focus on debt paydown and aggressive cost-cutting early enough,” Huber said. “The ill-advised merger with CBS Radio in late 2017, which added around $1.5 billion in debt, became the undoing of the company.”
In addition, Huber says digital revenue for the company “remains too small a part of the overall revenues for Audacy and peers to offset pressures in traditional radio.”
The Philadelphia-based company continues to lose money, according its most recent quarterly report, including a $281.7 million loss in the third quarter of 2023.
Audacy has been working with restructuring advisors from PJT Partners and attorneys from Latham & Watkins LLP, according to the WSJ report.
A Radio World email to Audacy seeking comment on the WSJ report was not immediately returned.
[Related: “Audacy Posts Big Operating Loss in Q3“]
