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The Decline of iHeartMedia...What Happened?

A place to discuss XM, Sirius, and internet radio.
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Some Guy from Toledo
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The Decline of iHeartMedia...What Happened?

Post by Some Guy from Toledo » Tue Mar 20, 2018 12:19 am

Noticed someone tacked the iHeart issue here...
https://www.youtube.com/watch?v=BImjay9KfYc



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MWmetalhead
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Re: The Decline of iHeartMedia...What Happened?

Post by MWmetalhead » Sat Mar 24, 2018 9:44 am

What happened is pretty simple. Bain & Company (and various co-investors) overpaid severely for the company, only realized that once it was "too late," and the Mays Brothers took their enormous windfalls and ran to the bank laughing all the way.

Most radio station owners - except perhaps those situated in small towns - have seen their revenue levels erode 30%, 40% even 50% as compared to ten years ago. That has been caused primarily by the emergence of new, more effective ways to target advertising messages in the digital age. The rosy press releases and company wide memos from David Field, Bob Pittman and Mary Berner conveniently overlook that stunning fact.

Less income + a crushing level of debt service is offset by slashing expenses -- i.e. spending much less on programming (i.e. air talent), marketing, contests and running with a thin staff in other areas of the operation (engineering, for example).

Closely-held (i.e. family owned) stations that have been in the same hands for decades usually don't have to worry about the "crushing debt service" that plagues the nationwide conglomerates.

Satellite radio has a different business model than terrestrial radio and was smart enough to finance their capitalization with much more equity than debt. Unlike iFart and Cumulus, Sirius XM continues to witness steady revenue and EBITDA growth year after year (and increasing levels of free cash flow, too).


Radio's downfall has been under-investing in its core competency and becoming distracted by delusions of grandeur by thinking development of a half-assed national digital strategy will somehow put it on par with the Facebooks and Googles of the world.

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Ed Joseph
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Re: The Decline of iHeartMedia...What Happened?

Post by Ed Joseph » Sat Apr 21, 2018 2:07 pm

It really doesn't help that 99% of their stations blow chunks in terms of programming. Flint has somehow dodged the iHate invasion, so my exposure to iHate stations has been from the Detroit or Grand Rapids markets, or DX AM stations. From what I have heard of their stations, the majority suck as bad as Cu stations, if not worse. When you figure in that CC grossly overpaid initially for most of their "properties" it's no wonder that they tanked. Considering the "Bain of their existence" was involved, and how much they keep paying their hate-talking bloviators, I cannot in any respect say that I'm surprised the company is filing bankruptcy.


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Plate Cap
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Re: The Decline of iHeartMedia...What Happened?

Post by Plate Cap » Sun Apr 22, 2018 10:26 am

MW summed it up quite elegantly.

They jumped in way too late for way too much money into (mostly) a technology that is way too dated and not embraced strongly by young listeners.

I see it happen regularly when high technology industries are marketed to and by parties that are not themselves strongly technical. They can hire a guy like me to value the plant, but it's they who make the final decision....often the wrong one.

It would be like someone rushing in 2 years ago and buying Hazel Park Raceway, thinking they were going to make it big by cleaning the place up, cutting corners on costs, and "fixing all the problems" the old owners didn't. They would have been overlooking that harness racing had a dying audience.

A while back, if you labeled something 'digital', people invested in it and purchased it. More recently, anything that uses "high tech" terms like IoT or the like will get invested in, bought and sold. Closer to home, the spectrum auctions are turning out quite a bit less lucrative than the people who didn't know spectrum from sputum were thinking they would be.

It's not going to recover.....there are not enough Mom and Pops out there to buy up the wreckage, and the core problem of an aging and dying off listener base will not change the overall marketability of the medium. I'm as deep into broadcasting as anyone can get, and I largely listen to streaming or hard drive sources.

The smart ones are getting out while they still have something to sell.


The box that many broadcasters won’t look outside of was made in 1969 and hasn’t changed significantly since.

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MWmetalhead
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Re: The Decline of iHeartMedia...What Happened?

Post by MWmetalhead » Wed Apr 25, 2018 8:43 pm

Excellent post - I love the Hazel Park Raceway analogy. :)


Radio's downfall has been under-investing in its core competency and becoming distracted by delusions of grandeur by thinking development of a half-assed national digital strategy will somehow put it on par with the Facebooks and Googles of the world.

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MWmetalhead
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Re: The Decline of iHeartMedia...What Happened?

Post by MWmetalhead » Mon May 21, 2018 8:35 pm

Sirius XM stock closed at $7.00 per share today. That might not seem like much, but given the fact the company has 4.5 billion shares outstanding, that per share value means the company's market capitalization is now over $31 billion!!!


Radio's downfall has been under-investing in its core competency and becoming distracted by delusions of grandeur by thinking development of a half-assed national digital strategy will somehow put it on par with the Facebooks and Googles of the world.

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audiophile
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Re: The Decline of iHeartMedia...What Happened?

Post by audiophile » Tue May 22, 2018 7:32 pm

That makes no sense. That's like $100 for every person in the US.


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TC Talks
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Re: The Decline of iHeartMedia...What Happened?

Post by TC Talks » Tue May 22, 2018 8:19 pm

Apple is nearly 1 Trillion.


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WOHO
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Re: The Decline of iHeartMedia...What Happened?

Post by WOHO » Thu May 24, 2018 12:48 am

Plate Cap: I couldn't figure-out why harness racing used to be so unbelievably popular in the 60's and 70's - it was simple- it was the ONLY legal way to gamble as there wasn't a single lottery game until 1974, then only one; it took a while to get the 8 games you have now, plus instant, and that eroded harness racing to only the biggest of fans. Likewise, radio bought high and sold low when the pie got cut into smaller chunks with twice as many stations in a market and now you had to battle XM, Pandora, heck, even the iPod.



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