Yahoo Finance Radio giant Audacy, which owns WBBM, Score 670, WXRT and other Chicago stations, files for Chapter 11 bankruptcy
Audacy, the nation’s second largest radio chain and a major player on the Chicago airwaves, filed for Chapter 11 bankruptcy in a Texas bankruptcy court Sunday, seeking to reduce nearly $2 billion in debt.
The Philadelphia-based radio giant, which owns 225 stations, including Chicago powerhouses such as WBBM-AM 780, WXRT-FM 93.1 and WSCR-AM 670, blamed a “perfect storm” of pandemic headwinds, revenue declines and mounting debt from its 2017 megamerger with CBS Radio as driving the need for financial restructuring.
“We are unquestionably a much stronger company today in serving our listeners and customers than ever before,” David Field, Audacy’s chairman and CEO, said in an employee memo Monday. “But the duration and severity of the perfect storm has necessitated the actions we are announcing today.”
Field said it would be “business as usual” for Audacy’s radio stations during the Chapter 11 bankruptcy process in the memo, which was obtained by the Tribune.
Audacy station managers in Chicago referred inquiries to a company spokesperson, who declined further comment on the bankruptcy filing.
The Chapter 11 agreement would reduce Audacy’s $1.9 billion in debt to $350 million by converting long-term loans to equity stakes in the reorganized company, pending approval by the Texas bankruptcy court. Much of that debt — about $1.4 billion — was accumulated through the CBS Radio merger, which tripled the size of Audacy and gave it substantial radio presence in major markets, including Chicago.
Audacy’s $1.9 billion in debt would have required interest payments of $120.6 million last year, according to the bankruptcy filing. While the merged company was initially able to service the debt, Audacy has “struggled to satisfy obligations” under its capital structure since the pandemic hit four years ago, according to the filing.
In 2019, Audacy generated $1.5 billion in revenues, according to the bankruptcy filing. Revenues declined to about $1.25 billion in 2022, and are down another 6% year-over-year through the first nine months of 2023, according to the company’s financial filings.
Nationwide, local over-the-air radio revenues fell from $8.1 billion in 2022 to $7.7 billion last year, due to a drop in political advertising, according to data from BIA Advisory Services.
The radio chain, then known as Entercom, completed its $2.4 billion acquisition of CBS Radio in November 2017. The merger added a Chicago cluster of CBS stations including news stations WBBM-AM 780 and WCFS-FM 105.9; Top-40 station WBBM-FM 96.3 (B96), sports-talk station WSCR-AM 670 (The Score); country station WUSN-FM 99.5 (US-99); and eclectic rock station WXRT-FM 93.1. It also immediately flipped WJMK-FM 104.3 from classic hits to a classic hip-hop station, now known as WBMX-FM 104.3 Jams.
The company, which rebranded as Audacy in 2021, is the second-largest radio chain in the U.S. behind iHeartMedia.
In 2022, Audacy’s Chicago stations brought in $97.9 million in local over-the-air advertising revenues, led by WBBM-AM at about $31.9 million, according to BIA. Audacy stations accounted for about 29% of the $337.8 million in revenue generated by the broader Chicago radio market in 2022.
The Chicago radio cluster represented more than 7% of Audacy’s local over-the-air revenues in 2022, according to BIA.
Audacy stations are also regularly well-represented among the top 10 in Chicago listenership surveys, according to Nielsen.
In his memo, Field said the radio stations will “operate normally” during the bankruptcy process, with “no disruption” to wages and benefits, and the current leadership team remaining in place. He cited other radio chains that have successfully emerged from bankruptcy, such as Cumulus and iHeart, as promising for the future of a restructured Audacy.
In Chicago, Cumulus owns WLS-AM 890, WLS-FM 94.7 and WKQX-FM 101.1 (Q101), while iHeart’s portfolio includes WVAZ-FM 102.7 (V103), WLIT-FM 93.9 (Lite FM) and WKSC-FM 103.5 (Kiss FM).
Since the closing of the CBS Radio merger, Audacy has reduced annual expenses by $310 million through such cost-cutting measures as employee downsizing, consolidating locations and reworking or terminating “burdensome” contracts, according to the bankruptcy filing.
Field spun the bankruptcy filing to employees as a “positive step forward” for the company.
“Today marks the dawn of a new era for Audacy with a robust balance sheet that will facilitate our future growth and performance,” Field said in the memo. “I fully recognize that this has been a difficult period as we have coped with a long stretch of challenges and uncertainty.”
