iHeartMedia Files for IPO
The company filed for Chapter 11 bankruptcy in March 2018 will use net proceeds from the offering to pay off its debt.
iHeartMedia filed for an initial public offering on Wednesday (April 3), just months after its Chapter 11 bankruptcy plan was approved detailing a path to solvency.
According to the media conglomerate's IPO Form S-1 registration statement filed with the Securities and Exchange Commission to list its Class 'A' common shares, the IPO is underwritten by Goldman Sachs and Morgan Stanley, proposing a maximum aggregate offering priced temporarily at $100 million.
Neither a set number of shares iHeartMedia was offering nor a set price range were disclosed, but the company did state it would have two classes of shares. iHeartMedia currently trades in the pink sheets.
Known as Clear Channel until 2014, iHeartMedia filed for Chapter 11 bankruptcy in March 2018 after accumulating more than $20 billion in debt from a leveraged buyout a decade earlier. iHeartMedia owns and operates more than 850 radio stations, as well as the iHeartRadio streaming radio and music service, which claims over 100 million users, and major events including the iHeartRadio Music Festival and the iHeartRadio Fiesta Latina.
iHeartMedia intends to use the net proceeds from the offering to pay off its debt.
Under the terms of the bankruptcy reorganization plan that was approved in January, iHeartMedia must complete an intensive restructuring of its balance sheet that will reduce its debt from $16.1 billion to $5.75 billion and fully separate the Clear Channel Outdoor Holdings business as its own independent public company. iHeartMedia owns 89.1 percent of Clear Channel Outdoor Holdings and the billboard company was not part of the bankruptcy filing.
In January, iHeartMedia chairman and CEO Bob Pittman and president, chief operating officer and chief financial officer Rich Bressler also extended their contracts by four years, keeping them in their roles throughout and following the restructuring process. According to the filing, they will each receive annual base salaries of $1.5 million with a target annual bonus opportunity of $3.4 million. Pittman assumed the role of CEO in 2011 and Bressler became president and CFO in 2013 and COO in 2015.
As part of iHeartMedia's bankruptcy filing, the company previously announced it had reached an agreement to cut its debt through debt-to-equity swaps with some shareholders. Those deals allowed the company to continue operating and speed up the bankruptcy process.
In an effort to appeal to investors amid an increasingly crowded media space, iHeartMedia argues in its filing that broadcast radio still “holds a unique place in American culture,” and that “consumers listen to the radio because the voice on the other side sounds like a friend.”
The company estimates a monthly reach of 275 million listeners over age 6, outpacing Google (251 million) and Facebook (215 million) in terms of digital U.S. audience, as measured by Comscore in February 2019. “We believe our advantage is driven by our unique ability to build relationships and engage a broad spectrum of audiences and demographics as we fulfill listeners’ need for companionship and to be connected with the world,” the filing continues.
The filing also touts radio’s ability to provide “companionship” as a major benefit, pointing to fans who interact with iHeartMedia’s social media personalities as today’s version of phoning an on-air host. Taking a shot at streaming services, the filing notes that iHeartMedia’s “personalities, stations and brands” have drawn 145 million social fans and followers, “as compared to Spotify’s 28 million and Pandora’s 8 million.”
iHeartMedia's growth plan, outlined in the filing, includes “developing a leadership position” in the smart speaker realm, as well as expanding its involvement in podcasting, an increasingly competitive market. iHeartRadio acquired podcast content company Stuff Media last September; Spotify recently acquired podcasting firms Parcast, Anchor and Gimlet, while SiriusXM unveiled plans to bring original podcasts to Pandora.
iHeart claims it is the number one commercial podcast publisher globally, with 148 million monthly downloads in February 2019, according to Podtrac.