Coverage: iHeartMedia wants to do an IPO

iHeartMedia Inc., the nation’s largest radio broadcaster, said Wednesday it is looking to return to the public markets with a $100 million initial public offering, marking another step in the company’s financial turnaround after filing for bankruptcy last year.

Soma Biswas of The Wall Street Journal had the news:

The company, with 848 radio stations, intends to use proceeds from the IPO to pay down debt, according to a regulatory filing. iHeart could increase the offering size depending on demand, one of the company’s bondholders told The Wall Street Journal.

But first iHeart needs to exit bankruptcy protection. A bankruptcy judge has signed off on iHeart’s restructuring plan that cuts billions of dollars in debt from the company’s balance sheet.

However, iHeart still needs certain regulatory approvals before it leaves bankruptcy, according to court filings. The company has said it expects to exit bankruptcy by May 1.

The radio broadcaster’s restructuring plan erased more than $10 billion in debt off iHeart’s books. It also transfers control of the company to iHeart’s lenders and bondholders from private-equity owners Bain Capital Partners LLC and Thomas H. Lee Partners LP.

Ben Sisario and Michael J. de la Merced of The New York Times reported that the company argues that radio is still relevant:

In its bankruptcy filing last year, the company said that in 2017 it had paid $1.4 billion in interest on its debts. That year, iHeartMedia’s total revenue, including its billboard division, was $6.2 billion; the media division accounted for $3.6 billion. (In 2018, the company’s total revenue grew slightly to $6.3 billion, but the revenue for its media division was flat.)

In its filing, iHeartMedia argued that broadcast radio is still relevant: It provides “companionship,” as opposed to “music collection,” giving listeners a separate experience from music streaming and a bond to a larger community.

“Consumers listen to the radio because the voice on the other side sounds like a friend,” the company said in its filing. “It is this companionship relationship that has withstood the test of time.”

Josh Mandell of Forbes.com reported that the company has a plan to boost revenue:

The company argues that broadcast radio fulfills listeners’ needs for “companionship” and connection with the world in a way that on-demand music streaming and algorithm-driven internet radio cannot.

“Consumers listen to the radio because the voice on the other side sounds like a friend,” the filing reads.

iHeartMedia believes that the growing prevalence of smart speakers will enable its stations to reach more people in their homes. The filing reveals that Amazon’s Alexa surpassed iOS, Android and web players as the largest single source of unique users for its iHeartRadio live streams in December 2018 and in January 2019.

Podcasts are also a key part of iHeartMedia’s growth strategy. According to PodTrac, iHeartMedia currently is the No. 2 podcast provider in America, close behind NPR and well ahead of third-ranked Wondery. Last year the company acquired Stuff Media, the studio behind the HowStuffWorks podcasts, for $55 million.