So you are ignoring a 70% to 75% decline in inflation adjusted radio revenues in the last 20 years?
As I said in my prior post, there was a “perfect storm“ in the 2008 to 2010 period consisting of the introduction of the PPM, the introduction of the smart phone and the huge recession of those years. The debt was sustainable up till then, but the combination of three insurmountable occurrences destroyed the possibility for any broadcaster who had made large acquisitions in the later 90s to sustain profitability
Those divisions are up, but nowhere near nearly enough to make up for the industry loss of 75% of Its revenue in the last 20 years
So iHeart created the recession, instigated the PPM, and invented the smart phone. I did not know that. Thank you for clarifying it.
The managers no matter at what level are simply trying to deal with an economic situation nobody could predict in the 1995 to 2000 period. The debt holders simply lend money to people they think will pay it back and give them interest and exchange for the loan. The lenders have no fault here, just as they didn’t in 1995. The numbers predicted that consolidation would produce a great improve improvement in radios, revenues, and profits.
I don’t disagree that consolidation looked attractive in the late 1990s. The assumptions were that larger groups would gain efficiencies, improve revenues, and increase profits. Nobody predicted smartphones, streaming, PPM, or the Great Recession.
But that only explains the ORIGINAL decision. It doesn’t explain why, twenty-five years later, the industry is STILL operating under capital structures that consume virtually all of the cash being generated. Why??
iHeart produces roughly $686 million in cash flow before interest expense and ends up with about $11 million after paying creditors. Audacy has faced similar challenges. At some point, the debt stops being a historical footnote and becomes the principal business problem!! These companies increasingly exist prinivipally to service lenders rather than invest in local programming, talent, or innovation. It’s not 1994 ..we KNOW what’s happened post 1995!
The economic realities of radio have been understood at least since the early 2000s. If the assumptions behind consolidation proved wrong, the rational response would have been to restructure, deleverage, and build businesses that fit the new marketplace—not continue trying to support balance sheets designed for a world that no longer exists.
That’s why I point to stations like WATD in Marshfield. They don’t carry debt interest burdens. They don’t answer to any bondholders demanding every available dollar of cash flow. Instead, they compete through community involvement, local relationships, and strong on-air talent. They can make decisions based on what serves listeners and advertisers rather than what serves creditors.
It’s really really hard. It’s almost like the radio version of dirty jobs. But it works!
If debt isn’t a major factor, why do independent operators with a fraction of the resources often punch so far above their weight while heavily leveraged mega-groups continue to struggle? To me, that’s not a coincidence. It’s evidence that the industry’s greatest challenge isn’t simply technology or changing consumer habits—it’s the enormous debt loads that prevent companies from adapting to those changes in the first place.
