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“You give us 22 minutes, we’ll give you the world” is the timeless slogan of New York radio station 1010 Wins. But the world is not enough for the creditors of Audacy, the radio conglomerate whose more than 200 stations include 1010 Wins. This week, Audacy filed for bankruptcy protection under the weight of $1.9bn of debt it could no longer shoulder.
Radio was the backbone of multiple media empires across the 20th century. Today, it is a legacy platform hobbled by the encroachment of digital entertainment and the resulting change in consumer habits.
Audacy joins the likes of iHeartMedia and Cumulus — large radio groups that have been forced to seek bankruptcy in order to restructure their debts and shrink their valuations.
Radio’s pitch to advertisers was its ubiquity. The idea was that most people would tune in, at least for a few minutes, most days. As with television, election years would be an added boon thanks to political spots. Now, marketers are turning elsewhere. The diminution of the industry is painful and necessary.
Audacy was born from the merger of stalwarts, Entercom Communications and CBS Radio in 2017. In 2019, it generated nearly $350mn in annual ebitda. Since the pandemic, however, listening has fallen by a quarter. Streaming services are luring audiences away. The number of Americans driving to work and tuning in to radio shows on their journey has also fallen. In 2024, Audacy projects ebitda of less than $150mn.
At the end of 2019, the company had a market capitalisation of more than $600mn. In this bankruptcy, shareholders will be totally wiped out. The company’s debt balance will be reduced to just $350mn and its overall enterprise value will be set at roughly $700mn, implying an EV to ebitda multiple of just five times.
Traditional terrestrial radio groups have tried to reposition themselves for the podcasting revolution. But sharp lay-offs and retrenchment at Spotify, a streaming service that has invested heavily in podcasts, shows that the market remains nascent. The annual advertising pie in podcasting is estimated at around $2bn, about an eighth of traditional radio. Satellite radio economics are roughly in the middle.
Audacy projects that its ebitda margin can eventually top 10 per cent. Current senior lenders are poised to own the company’s reorganised equity. But “the world” is no longer up for grabs. Radio must accept a more humble slot in the media landscape.
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