Radio broadcaster Audacy has engaged in discussions with two groups of creditors to restructure around $1.9 billion in debt, the company confirmed on Tuesday.
The affirmation comes one day after the Wall Street Journal reported the Philadelphia-based media firm had hired attorneys to work with lenders on the debt as the radio company continues to address revenue struggles brought on by a downturn in the advertising market.
“As we have previously stated we intended to do, we have initiated discussions with our lenders to refinance our debt and optimize our balance sheet to position Audacy for long-term growth as we continue to invest in our people, platform, technology, content and growth initiatives,” a spokesperson for Audacy said in a statement on Tuesday.
In May, Audacy indicated it might default on its debt when it filed a notice with the U.S. Securities and Exchange Commission warning investors that various macroeconomic conditions, including ongoing advertising woes, “have created, and may continue to create, significant uncertainty in operations.”
In the filing, Audacy suggested that its financial problems could result in lackluster revenue that would make it “unlikely to be sufficient” the broadcaster could continue operations as normal, including making ongoing debt payments to its creditors as required.
If Audacy defaults on those payments, the debt would be immediately owed, according to its agreements. That could ultimately force Audacy to explore filing for bankruptcy protection.
One week after the filing, Audacy was booted from the New York Stock Exchange (NYSE) because its stock price had not met a certain price threshold. The NYSE typically requires companies to maintain a minimum $1 per-share price point to continue trading on the exchange; Audacy’s price point had been well below $1 since last July, and ended its final trading day on the NYSE around 9 cents per share.
Like other media companies, Audacy has had to deal with a downturn in the global advertising market as dollars shift from traditional platforms like broadcast TV and radio toward digital-focused, connected platforms like social media, podcasts and streaming video. In an uncertain economy, marketers feel connected TV platforms offer a better assortment of tools to target their messaging to various populations; radio and television broadcasters typically rely on “reach,” or grabbing the largest possible share of consumers who may or may not be regularly engaged with their product.
Audacy has tried a number of initiatives to generate revenue during the ad slump — from putting its Radio.com domain up for auction (the company wanted at least $2.5 million; there were no takers), to selling the land where some of its transmission towers are based, and even strategizing around the potential of charging AM and FM listeners for premium access to digital radio streams through its Audacy app.
The situation has also forced Audacy to reconsider some of its previous strategies. Last month, Audacy restored hundreds of AM and FM radio streams to the digital audio platform TuneIn, about five years after the company dropped support for the service. Audacy also announced a 30-for-1 reverse stock split, which is intended to bring the company’s stock price back into compliance with the NYSE’s rules.
While Audacy continues to work through its issues, the company’s top executives are still being paid well. Two weeks ago, Audacy revealed its CEO and five other senior executives were paid a collective $3.2 million in retention bonuses, which were approved by shareholders.
