Cumulus Media, Inc., the second-largest radio company in the United States, recently filed for Chapter 11 bankruptcy. The company has existed since 1958, when it began its life under the name Midwestern Broadcasting.
The media company filed for bankruptcy as a way to work down its outstanding debt by $1 billion. Currently, it has $2.4 billion in debt. The Atlanta-based company plans to use Chapter 11 as a way to restructure and become profitable once again.
The Scope of Cumulus Media and its Largest Competitor
Cumulus Media, Inc., operates 446 radio stations. These stations broadcast in 90 markets throughout the United States and provides syndicated content to 8,000 radio stations. The largest radio company in the country, IheartMedia Inc., operates 858 stations in 150 markets. IheartMedia Inc. is also facing difficulties with substantial levels of debt and has cited this debt as a possible roadblock to continuing operation.
Terrestrial radio stations are facing pressure from alternative forms of broadcasting, such as satellite radio, streaming services like Spotify, and the growing popularity of podcasts. Radio stations, like many other existing business and media models, must find ways to meet today’s listeners’ needs and expectations in order to stay relevant and profitable.
Restructuring to Remain Operational
During the company’s restructuring, its programming is planned to continue as normal. The company reported that its current operations are strong and that its business plan will remain on track. The debt it faces today is from years of underperformance, but it currently has the financial reserves to continue operating without creating a debtor-in-possession financing deal.
The business plan currently in place has been in place for the past two years. CEO Mary Berner discussed the plan with Variety, stating that the company is currently focusing on building an operational foundation that will support a higher quality of programming that will continue to reverse past issues of low ratings and high employee turnover. Part of this overhaul is creating a company culture where employees feel energized and engaged with Cumulus Media, which is an important part of growing the company’s revenue.
Cumulus Media filed a pre-packaged restructuring deal, also known as a “pre-pack insolvency.” This means that before the company declared its insolvency, it already developed its restructuring plan and put it into operation. Pre-packaged restructures are not uncommon among Chapter 11 bankruptcies filed in the United States. At the time of its filing, Cumulus Media had reached agreements with 69% of its creditors. It filed for bankruptcy after defaulting on a $24 million million debt repayment to its creditors.
Work with an Experienced Chicago Bankruptcy Attorney
To learn more about the different bankruptcy chapters, filing for bankruptcy, and working through the bankruptcy process to discharge your debt, contact our team of experienced bankruptcy lawyers at Newland & Newland, LLP today to schedule your initial consultation with us. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.
(image courtesy of Igor Ovsyannykov)