Radio giant Audacy files for Chapter 11 bankruptcy

Jan. 7 (UPI) -- Following years of declining ad spending, American radio and podcasting giant Audacy announced Sunday that it has filed for prepackaged Chapter 11 bankruptcy protection.

Audacy, one of the nation's largest radio companies, announced its filing in a statement, saying it has reached a restructuring support agreement with a supermajority of its debtholders that will see its debt be reduce by about 80%, from $1.9 billion to $350 million.

Formerly known as Entercom, Audacy merged with CBS Radio in 2017 that aided its transition into a multi-platform company, but President and CEO David Fieldman said Sunday that while this enhanced their position, the traditional advertising market was hit by a "perfect storm of sustained macroeconomic challenges over the past four years" that led to "a sharp reduction of several billion dollars in cumulative radio ad spending."

"These market factors have severely impacted our financial condition and necessitated our balance sheet restructuring," he said.

The company and some of its subsidiaries filed for Chapter 11 proceedings in a Texas court on Sunday along with its plan of reorganization, with expectations that a court hearing to consider its approval will be held in February.

Under the plan or reorganization, Audacy's debtholders will receive equity in the reorganized company, it said.

"The restructuring will enable Audacy to continue its digital transformation and capitalize on its position as a scaled, leading multi-platform audio content and entertainment company differentiated by its exclusive, premium audio content," the company said in a statement.

The announcement comes after Audacity reported in September that net revenue for the third quarter had dropped 5.6% compared to the same period a year prior with expectations that the fourth quarter would see it decline by high single digits.

Audacy was in "constructive conversations" with their lenders to shore up their bottom line, Fieldman said in the note, while emphasizing their strong position in the market.

On Sunday, he reiterated confidence in the company's future, stating "we believe Audacy will emerge well positioned to continue its innovation and growth in the dynamic audio business."