Philadelphia-based broadcaster Audacy has recently filed for Chapter 11 bankruptcy protection following a significant decline in radio advertising expenditure. The company, which operates radio and podcast platforms, announced that it had reached an agreement with the majority of its creditors and has submitted a petition to the U.S. Bankruptcy Court for the Southern District of Texas.
With the objective of reducing its $1.9 billion debt by approximately $1.6 billion, Audacy plans to retain $350 million of outstanding debt after going through the reorganization process, pending court approval. In order to support the proceedings, a group of lenders will offer around $57 million in debtor-in-possession financing. This financing, in addition to Audacy's cash flow from operations and available reserves, is expected to enable the company to meet its commitments to employees, advertisers, partners, and vendors.
Over the past few years, Audacy has transformed itself into a multiplatform audio content and information company, including acquiring CBS Radio in 2017. However, the company's revenue has experienced a decline, resulting in widening net losses. CEO David J. Field acknowledges that while Audacy's transformation has improved its competitive position in news and sports radio, the traditional advertising market has faced significant macroeconomic challenges that have led to a substantial reduction in radio ad spending.
Field remains optimistic about Audacy's future, expressing the belief that it will emerge from bankruptcy well-positioned for continued growth and innovation in the dynamic audio industry.
Audacy anticipates a court hearing in February to review the restructuring plan, and aims to emerge from bankruptcy following approval from the Federal Communications Commission.
Earlier last week, The Wall Street Journal revealed that Audacy was preparing for this bankruptcy filing after missing interest payments on its senior loans in October. In fact, the company's ability to function smoothly as a going concern had been questioned previously. Audacy obtained consent from its lenders for a grace period to restructure its debt.
