Audacy, one of the largest radio operators in the U.S. and owner of several Chicago radio stations, filed for Chapter 11 bankruptcy in Texas on Sunday, in an effort to slash $1.9 billion in debt.
The nearly 230-station company — which owns WBBM-AM 780, WBBM-FM B96, WXRT-FM 93.1 and 670 The Score, among others, serving nearly 10 million monthly listeners from its Chicago-based brands — made the announcement Monday.
Bankruptcy proceedings out of the Southern District Court of Texas are seeking to reduce the company’s debt to $350 million, and part of the plan gives Audacy’s debt holders equity in exchange for long-term loans.
Chapter 11 bankruptcies are often referred to as “reorganizations,” meaning the debtor can keep possession of and continue to operate the business as a plan is enacted to reduce its debts.
David J. Field, chairman, president and chief executive of Audacy, blamed a “perfect storm” of pandemic-induced economic conditions, such as a people working from home and not commuting, reducing listenership, and general reductions in radio ad spending for the company’s money troubles.
He said the current plan reflects debt-holders’ belief in the company’s “future potential.”
“To be clear, this is a positive step forward for Audacy,” Field said in an internal memo obtained by the Sun-Times. “But the duration and severity of the perfect storm has necessitated the actions we are announcing today. ... These actions are strictly to address our balance sheet issues and do not reflect on the strength of our business and its future.”
Field went on to pitch the bankruptcy filing as a way for the company to continue its “digital transformation” and “enhance our future growth,” saying it doesn’t expect any change in operations from the move — including “no disruptions” to employee wages or benefits.
Audacy made $1.3 billion in 2022, 16% less than the $1.6 billion it made before the pandemic in 2019, according to court filings. Net revenue for third-quarter 2023 was $299.2 million, down nearly 6% year over year. It expects fourth-quarter revenue to decline “by high single digits,” according to its third-quarter earnings report. The company’s operating expenses increased by about $120 million from the year prior.
WBBM Newsradio 780 lost $2 million in revenue in 2022, though it remained in the top 10 radio stations for over-the-air revenue in 2022, according to BIA Advisory Services, which analyzes the market.
The company claimed to have cut $310 million from its annual expenses in response to “deteriorating market conditions” by consolidating locations, working on “burdensome contracts” and cutting staff, according to court documents.
Projected ad revenue for radio stations in 2023 dropped nearly $1 billion from 2022 due to “headwinds” in digital local advertising, BIA said.
About $1.4 billion of the total debt came from a 2017 merger with CBS Radio, which broadened the company’s market substantially, and was only allowed to go through after a Department of Justice agreement made the company divest some of its stations.
The company said it expects to have a firm plan from the court in February.
“We believe Audacy will emerge well positioned to continue its innovation and growth in the dynamic audio business,” Field said in a statement Monday.
