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Is iHeart Radio on the Verge of Bankruptcy?

  • Wednesday, March 23, 2016

    Have you ever wanted to just listen to whatever radio station you felt like at the time?

    What if you could search for radio stations by genre? One minute you might want some rock, the next minute it could be sports talk.

    How about creating a custom radio station to match exactly the crazy, eclectic taste you have?

    What if you could do it all without spending a penny?

    That’s exactly what iHeart Radio can do for you.

    But don’t get your iHeart too set on being able to enjoy it. Or maybe just enjoy it while it lasts, because it looks like iHeart Radio might be filing for bankruptcy.

    Listen Up

    iHeart Radio is more than just a handy platform for listening to stations. iHeart radio is actually iHeart Media Inc. It owns hundreds of radio stations, billboards, and digital content. It’s essentially a media juggernaut.

    All of these business interests equal about $13.8 billion in assets. So that fun little app you can download to listen to the radio is just the tip of the iceberg. The next billboard you see on the freeway, or the next radio station you tune in to, might just be iHeart owned.

    Sounds Like Trouble

    It was just reported that a group of iHeart’s investors are suing the company. The litigation paperwork is over 1,700 pages long – not surprising considering the size of the company.

    But what’s the problem? I heart has over $13.8 billion in assets. Shouldn’t investors be happy?

    The problem is that iHeart Media Inc. also has a jaw-dropping $20.6 billion in long-term debt. Now that can’t be too good for the bottom line.

    But lots of companies operate in the red. Why sue the company?

    Do You Hear What I Hear?

    It was reported that iHeard Media Inc. has been repeatedly repositioning assets and restructuring debt over the years. This likely has given investors the appearance of trying to delay the inevitable debt crisis the company is facing.

    Why pay off debt when you can just shift it to another part of the company after all?

    What iHeart Media Inc. is doing is not unlike a business bankruptcy. The restructuring of a business and reallocation of assets is exactly the sort of thing that takes place when a large corporation files for bankruptcy. However, in bankruptcy this is a controlled process with decisions being made by the court system to ensure creditors, investors, and all other interested parties are treated fairly.

    It’s no wonder investors are suing. They obviously recognize that a company who is acting like it has already filed for bankruptcy is probably only a step away from actually filing.





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