iHeart Enters Bankruptcy
The shoe finally dropped: iHeart Media, owner of 850 radio stations nationwide including eight in Los Angeles, announced March 14th that it had entered into a court-supervised restructuring through a Chapter 11 bankruptcy filing.
This just weeks after giving bonuses to top-level executives.
Interestingly, many observers miss the point. CNN reported, for example, that “The company has struggled with falling revenue. It was down in 2015, barely grew in 2016 and fell in the first nine months of 2017. This has come amid declines in the radio ad business and growing competition from streaming rivals like Spotify and Pandora.”
As if the the declining revenue was just a random event, and that the massive $20 billion debt it assumed in a leveraged buyout years ago would have not been a big issue had this random event not occured. What is missed is the reason for declining revenue: the very business model that is iHeart Media.
When the cap was lifted on the number of stations a company could own nationwide, the argument was made that economies of scale would allow greater format variety, better programming, better marketing, and more.
Instead, as companies overpaid for stations and the economies of scale never materialized, large owners such as iHeart cut talent, cut programs, added more commercials, and – operating essentially as monopolies – stopped truly competing. Some markets don’t even have local personalities, instead using recorded voices from other cities or satellite feeds.
Even in large markets like Los Angeles, most stations don’t have personalities hosting shows part of the day; few stations do after 10 p.m. daily. In some cities morning shows are repeated in the evening; in others, “music mixes” are played via computer at least one shift.
When all this started, listeners, in response, looked for alternatives. Satellite radio, online services such as Pandora, and of course iPods and the like all capitalized on radio’s failure. With few exceptions, radio evolved into a background listening service, causing ad revenues to plummet. In other words, it wasn’t a random event: the likes of iHeart caused it.
So while this move will give iHeart some breathing room, unless it is forced by creditors to sell most of its stations, I don’t see this as a good move at all. We need local. iHeart is the antithesis of local in far too many cases.
As someone posted somewhere, when retailer Toys R Us is allowed to die but iHeart is not, something is wrong with the world.
Yet, In Another Time …
In the days when one owner could not own more than seven stations nationwide, stations did compete. They had to, even after midnight, when the ratings are not being taken, because owners knew those listeners may transform into ratings later in the day.
From Airchexx.Com comes an example of just that: a sample of the late, great Big Ron O’Brien from WNBC/New York in the wee hours of the morning.
O’Brien was part of the KIIS-FM (102.7 FM) air staff that set records for FM station ratings in the mid 1980s. This recording happens to be from WNBC circa 1982; I believe he was less than a year away form his arrival at KIIS, though he had already been at and left Los Angeles from his tenure at KFI (640 AM).
What makes this aircheck so impressive is the time. O’Brien was a top-tier talent, and WNBC had him on at 4:00 in the morning. I don’t know the reasons – perhaps he was filling in, a recent hire getting used to the WNBC format, or he ticked off the program director. Regardless, NBC apparently felt it important enough to run talent at that time of day, and O’Brien was a true talent.
Regardless, it’s a fun listen. Check it out at https://tinyurl.com/BGRonWNBC.