Audacy Radio Group Company Files For ‘Bankruptcy’ Protection

Paresh Jadhav

12 months ago

Audacy Radio Group filed for Chapter 11 bankruptcy protection following a steep drop in advertising revenue. They anticipate reaching an agreement with their debt holders that will reduce funded debt by 80% from $1.9 billion to $350 million without having an adverse impact on operations.

Philadelphia company Penn Media Group is known for hosting popular podcasts such as 2 CHIX, the Kevin Durant Show and Gwenyth Paltrow’s goop. Additionally, Penn Media offers national and local radio stations with formats that span news, sports, classic rock, adult contemporary and talk radio formats.

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Imploding Advertising Market

Audacy Media of Philadelphia was unable to offset steep declines in radio ad sales by diversifying into podcasts and digital audio in recent years.

Audacy filed its bankruptcy petition citing an “imploding advertising market,” leaving them struggling to meet debt obligations. With approval by a supermajority of creditors, Audacy plans on restructuring through debt-for-equity swap and emerge from bankruptcy upon receiving FCC approval of this transaction.

Delisted from the New York Stock Exchange last November, this company says that business will carry on as usual during this transition period and that its shares will trade over-the-counter.

The company said its current lenders have agreed to provide up to $57 million in debtor-in-possession financing, and expect a hearing on its reorganization plan in February.

$1.9 billion debt to around $350 million

Audacy Radio Group Inc, which owns 235 radio stations in 48 markets including Los Angeles’ KROQ and KCBS stations as well as WFAN sports-talk radio in New York City, recently filed bankruptcy to reduce 80% of their $1.9 billion debt to around $350 million, providing those holding Audacy debt equity in its revised form.

In May, this company issued a warning that their forecasted revenue would not cover debt obligations. As a result, it was delisted from the New York Stock Exchange and now trades over-the-counter.

Expectations is that the bankruptcy filing won’t have any direct repercussions for day-to-day operations of the company, which filed due to diminishing advertising revenues and having already made arrangements with lenders for prepackaged bankruptcy deals, reports the Wall Street Journal. Analyst Craig Huber does expect cost cutting efforts will need to intensify.

National and local radio stations

KYW Media and Philadelphia stations 1201 WPHT, 94 WIP and B101 say their revenues have taken a hit from an uncertain advertising market; sales for mortgage lenders, auto dealers and other industries have decreased below pre-pandemic levels.

Prepackaged bankruptcy filing allows the company to eliminate about $1.6 billion of funded debt while giving creditors equity in a reorganized company. National and local radio stations as well as digital platforms will remain operational during this transitional phase.

Entcom Communications Corp was established in 1968 in Philadelphia, Pennsylvania and provides local content and integrated marketing solutions across its broadcast, audio on demand, podcast, event platforms for local and national advertisers. Their portfolio consists of news, sports, classic rock, talk radio formats such as urban contemporary adult contemporary alternative radio formats; as well as large scale entertainment/live music platforms. They were previously known as Entercom Communications Corp until recent changes at their parent company caused this name change to take effect.

CBS Radio is targeting an 80% debt reduction

Audacy will continue its normal operations during its bankruptcy proceedings. They anticipate this will help position them for long-term growth, without any impact or interruption to operations, trade or unsecured creditors.

The Philadelphia-based firm overseeing major podcast and radio operations as well as recent acquisition of CBS Radio is targeting an 80% debt reduction, offering lenders equity in exchange.

This move comes amid a faltering advertising market for radio and other traditional media companies. Recently, most radio companies have begun investing more heavily in digital audio offerings like podcasts and live sports events to offset declining conventional ad revenues, but that hasn’t been enough to prevent earnings from plunging further. Other broadcasters such as iHeartMedia and Cumulus have filed Chapter 11 in recent years; such filings do not appear to have had an immediate effect on local sports talk programming that includes interviews and coverage of professional teams.