Local radio has past its peak but that does not mean it has lost all its power. Hosts of local shows connect with their audience in a way that national shows simply can't.
A sports talk station in Michigan, for example, will have very different content than one in Washington state or a national program in the wake of college football's National Championship game.
Local hosts build deep connections with their fanbase, both with frequent callers and people who simply listen along at home. That's because these shows can drill down on topics that matter deeply to a select group of people in a relatively small area.
Related: Another beer brand files for Chapter 11 bankruptcy protection
National talk radio might broadly cover control of Congress while local stations can drill down on House races and even mayoral contests. In many markets, local radio hosts are a major part of the community especially as newspapers have died off and many communities have no place else to turn.
That makes Audacy's bankruptcy filing more personal for many people than when a store fails. Yes, it's sad for some that they can no longer shop at Christmas Tree Shops or Bed Bath & Beyond. But it's potentially devastating if they think they may lose the morning, drive time, and overnight local radio shows that keep them company on commutes and at other lonely times where a familiar voice is welcome.
Audacy's bankruptcy put those local stations in jeopardy and left many radio listeners concerned.
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Audacy has a bankruptcy plan
Audacy owns 235 stations across 48 media markets. The company went public under the Entercom name and merged with CBS Radio in 2017. It entered Chapter 11 bankruptcy with a pre-packaged plan to restructure its debt.
"Through the restructuring, Audacy and its debtholders will undertake a deleveraging transaction to equitize approximately $1.6 billion of funded debt, a reduction of 80% from approximately $1.9 billion to approximately $350 million. The company does not expect any operational impact from the restructuring, and trade and other unsecured creditors will not be impaired," the company shared in a press release.
Basically, the radio giant presented a plan to the bankruptcy court that many of its creditors had already agreed to. There's no guarantee, however, that the court will approve the plan or that another creditor might not present an obstacle (often a lawsuit) that causes the plan to not be approved.
In some cases, even when a deal has been reached, creditors change their mind and a prepackaged plan goes awry.
Audacy has good news for radio fans, bad news for shareholders
For local radio fans worried about their favorite station abruptly shutting down, that's not likely to happen as Audacy has received approval from the United States Bankruptcy Court for the Southern District of Texas to continue normal operations.
"As part of these motions, the Court today granted Audacy access to $57 million in financing from certain of its existing lenders. This financing is comprised of a new $32 million debtor-in-possession term loan and a $25 million upsize of the company’s existing $75 million accounts receivables financing facility to $100 million," the comaony shared in press release.
This added funding, along with cash from operations will allow Audacy to pay its bills including employees, advertisers, partners and vendors. It's a first step in the process, but the approval of the "first day" motions as they are known shows that the prepackaged plan remains on track.
That plan, however, does come with some bad news for shareholders.
"Audacy common stock will continue to trade over-the-counter under the symbol 'AUDA' through the pendency of the Chapter 11 process. The shares are expected to be canceled and receive no distribution as part of Audacy’s restructuring," the company shared.
