One of the biggest radio companies in the country filed Chapter 11 bankruptcy in response to nearly $2 billion in debt.
But the move by Audacy announced Sunday comes just months after the broadcasting giant reportedly delivered $3.2 million in bonuses to its executives despite the dire straits the company was in following a reported decline in advertising revenue.
“While our transformation has enhanced our competitive position, the perfect storm of sustained macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp reduction of several billion dollars in cumulative radio ad spending,” David Field, chairman, president and CEO of Audacy, said in a statement. “These market factors have severely impacted our financial condition and necessitated our balance sheet restructuring.”
“With our scaled leadership position, our uniquely differentiated premium audio content and a robust capital structure, we believe Audacy will emerge well positioned to continue its innovation and growth in the dynamic audio business,” Field said.
The restructuring agreement aims to reduce Audacy’s debt from about $1.9 billion to $350 million.
But back in June, just months before the bankruptcy filing, the Philadelphia Business Journal reported that millions of dollars in bonuses were handed out to company executives to “ensure we keep the right team in place and stay focused on continuing to position the company for long-term growth.”
One of those execs was Field who reportedly got $ 1 million. In addition, EVP/Strategic Initiatives and CFO Richard Schmaeling was awarded $850,000 while $600,000 went to EVP/General Counsel and Secretary Andrew Sutor.
And weeks before the bonuses were handed out, the company noted in an SEC filing the“current macroeconomic conditions” and raised concern over being able to meet debt obligations due to the revenue forecast in the coming year.
But creditors will be taking over the company which filed Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas on Sunday.
“The company had a grace period for interest payments due in October 2023. At the time, Audacy said it was going to use the extension to strategize a plan with lenders for its business operations,” CNN reported.
Formerly known as Entercom, Audacy is the second-largest radio company in the U.S. behind iHeartMedia, which itself filed for bankruptcy in 2018.
The Philadelphia-based company, which acquired CBS Radio in 2017, operates over 220 radio stations as well as produces podcasts that include those by hosts Stephen A. Smith, Dana Carvey and David Spade. It also owns well-known Los Angeles radio stations, including KROQ, KRTH101 and, in New York, AM news station 1010 WINS.
“Subject to the Court’s approval, the DIP financing and the Company’s cash from operations and available reserves is expected to enable Audacy to fulfill commitments to employees, advertisers, partners and vendors,” the company said in a press release.
“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,” it continued. “Audacy operates one of the country’s two scaled radio broadcasting groups, as well as one of the country’s largest podcast studios, the Audacy direct-to-consumer streaming platform and multiple audio networks. Audacy is a major event producer and a digital marketing solutions provider and is the unrivaled leader in local news and sports radio.”