Interested in the entertainment industry or investing in entertainment stocks? If so, you’re going to want to know the following: iHeartMedia, Inc. has filed for bankruptcy. If you didn’t know, this is the parent company of iHeartRadio. Interestingly, the news that the Texas-based company submitted the paperwork for bankruptcy comes just four days after the 2018 iHeartRadio Music Awards.
iHeartMedia, What Happened?
It’s quite well known that iHeartMedia (OTCMKTS:IHRT) has been devastated by piles of debt for a number of years. On top of that, the company has struggled immensely with declining revenue. It is for these reasons it has been working with both creditors and investors over the course of the past couple of months. So, are we really surprised to hear the iHeartRadio owner submitted the bankruptcy paperwork today? I’m certainly not.
Earlier Thursday, the company, which was founded back in 2007, disclosed an agreement to restructure over $10 billion in debt. For perspective, this is roughly half of what iHeartMedia owes. The CEO of the company, Bob Pittman, said the debt iHeartMedia found itself in has “burdened our capital structure.” On the upside, iHeartMedia announced Thursday that it has enough cash to fund business throughout the process of bankruptcy. Essentially this means, according to the company, iHeartMedia will “continue operating the business in the ordinary course as a leading global multi-platform media, entertainment, and data company.”
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Fitch Ratings analyst Sharon Bonelli doesn’t necessarily agree with the above. According to CNN, Bonelli still believes there is “inherent value in the traditional broadcaster sector.”
Further, it seems iHeartMedia marketing strategist Gabriele Wooten doesn’t agree with the above statement, either. Wooten made it clear that there are different kinds of bankruptcy filings, and iHeartMedia is one of the cases where filing for bankruptcy protection appears to be negative, but it is actually a significant accomplishment. Why? According to Wooten, the company entered into Chapter 11 in order to “reorganize our corporate debt,” and this will help to “resolve an issue that has been hanging over the company for some time.”
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The company is currently trading up more than 15% on the OTC market.
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