March 5, 2024

NWBroadcasters

Radio and TV news

As expected Audacy has filled for chapter 11 bankruptcy

6 min read
Audacy, Inc. has initiated a prepackaged Chapter 11 restructuring to reduce its debt from $1.9 billion to $350 million. This will not affect day-to-day operations or employee wages. The company aims to emerge stronger and continue its strategic transformation into a leading multi-platform audio content and entertainment company, despite recent macroeconomic challenges.

Audacy, Inc., a multi-platform audio content and entertainment company, announced today it has commenced a prepackaged Chapter 11 restructuring process. The company aims to reduce its total debt from approximately $1.9 billion to about $350 million, an 80% decrease, through an agreement with a supermajority of its debt-holders.

David Field Chairman, CEO and President of Audacy shared this memo to employees today.

I want to share with you some important actions we are announcing today that will bolster Audacy’s financial and competitive position and enhance our future growth.

I am pleased to report that we have reached an agreement with a supermajority of our debtholders on a financial restructuring that will place Audacy on a strong financial footing, reduce our debt by over 80% and position us for growth and success in the years ahead. This resolution comes after many months of discussions with our debtholders to address our balance sheet issues in the wake of the perfect storm we have faced over the past four years from the global pandemic and the series of subsequent macroeconomic challenges that have caused sustained headwinds in traditional advertising and materially impacted our business.

To be clear, this is a positive step forward for Audacy and our stakeholders, including our employees, advertisers, partners, vendors and listeners. Our goal has been to emerge as an even stronger company than before, and this agreement will fully accomplish that. The restructuring will reduce our total debt from roughly $1.9 billion to $350 million and leave us well positioned to build on our distinct competitive position and capitalize on the work we have done on our strategic transformation into a scaled, leading multi-platform audio content and entertainment company with compelling growth opportunities. Under this agreement, we will retain the terrific brands, content, talent and capabilities that make us a scaled, leading player in the dynamic, growing audio market.

To implement the agreement with our debtholders, today we have started what is known as a “prepackaged” Chapter 11 process in the U.S. Bankruptcy Court. Put simply, “prepackaged” means that, because we have such strong debtholder support, we have already filed a Plan of Reorganization that has been approved by a significant majority of our debtholders. This vote of confidence in Audacy from our debtholders will result in a quicker and more streamlined process in Court. We expect Court approval of the Plan in February and to emerge from bankruptcy once regulatory approval is obtained from the Federal Communications Commission. When we emerge from Chapter 11, our debtholders will become equity holders in Audacy, reflecting their belief in our business and future potential.

Audacy will operate normally during this process. There will be no disruption to your wages and benefits. Our current leadership team will continue to lead the Company and day-to-day roles and responsibilities will not change. Overall, it will be business as usual as we remain relentlessly focused on serving our listeners, customers and partners with excellence, executing our strategic growth and development plans and achieving our goals.

Many other companies have used variations of Chapter 11 restructurings to reduce their debt and put themselves in a strong position to drive success and accelerate growth. These include a number of household names, such as General Motors, United Airlines, Six Flags, American Airlines, Texaco, Caesars Entertainment, Delta Air Lines, Converse, Tribune, J.Crew, Marvel Entertainment, Chrysler and Neiman Marcus. In addition, within our industry, iHeart and Cumulus have both emerged from Chapter 11 in recent years.

I want to provide some important context for our decision and the factors that brought us to today’s announcement.

Six years ago, we completed our acquisition of CBS Radio, tripling our size and establishing ourselves as one of the two scaled radio broadcasters in the United States with top-ranked positions in the country’s largest markets. Since then, we have capitalized on our scale, pursuing a sweeping strategic digital transformation into a leading, multi-platform audio content and entertainment company positioned for accelerated growth in the dynamic audio marketplace. Today, in addition to our leading radio group, Audacy has built one of the country’s largest podcast studios, the Audacy direct-to-consumer streaming platform, multiple audio networks and is a major event producer and a digital marketing solutions provider with emerging ad tech and data capabilities to serve our customers. We reach and engage over 200 million Americans, distinguished by our outstanding, exclusive, premium audio content with unrivaled leadership in sports and news radio.

Unfortunately, the sustained macro and secular challenges over the past four years have deeply impacted the traditional advertising market and led to a sharp reduction of several billion dollars in cumulative radio ad spending, severely impacting our revenues, profitability and financial health during a time of transformational investments in our business. We have navigated the storm and steadfastly executed our strategic transformation plan, investing in our people, platforms, content and technology to enhance our competitive position. As a result, we are unquestionably a much stronger company today in serving our listeners and customers than ever before. But the duration and severity of the perfect storm has necessitated the actions we are announcing today. To be clear, these actions are strictly to address our balance sheet issues and do not reflect on the strength of our business and its future.

It is also important to note the performance gains and progress we continue to make despite the challenging circumstances. During 2023, we drove accelerated revenue market share growth, increased radio audience share gains, posted double-digit organic digital audience growth and made significant progress in delivering on our ad tech and product roadmap, adding a substantial number of important new customers and content partnerships.

To recap:

· This is a positive step forward for Audacy. We will emerge well positioned to capitalize on our strategic transformation into a scaled, leading multi-platform audio content and entertainment company with compelling growth opportunities ahead of us.

· We don’t expect any operational impact from the restructuring. We will retain all of our key assets and capabilities while reducing debt by over 80%, placing the Company on strong financial footing with an excellent balance sheet.

· We will operate business as usual, focused on serving our listeners, customers and partners with no disruption to wages and benefits.

· Audacy is stronger than ever in serving listeners and customers and well positioned to compete successfully in the growing, dynamic audio business.

We are proactively communicating this news to our advertisers and partners. We want to ensure they understand what we are doing and why, and make sure they know that our business remains strong and their work with us should not be impacted by this process. We understand that you may have additional questions, most of which should be answered by the FAQ now available on AudacyAtWork. You can also send questions to restructure@audacy.com and we will address them.

I will also be holding an All-Team Webinar on Monday to provide additional details about today’s announcement. You will receive an invite shortly.

Today marks the dawn of a new era for Audacy with a robust balance sheet that will facilitate our future growth and performance. I fully recognize that this has been a difficult period as we have coped with a long stretch of challenges and uncertainty.

I want to express my deep appreciation for the extraordinary commitment and resilience you have demonstrated through the turbulence as we have remained diligently focused on delivering the best experience for our listeners and advertisers. I would ask each of you to maintain your focus on serving our customers as we transition and look forward to capitalizing on our opportunities and to better times ahead.

you can read more about the bankruptcy filing and what to expect going forward here and here. As well as my post regarding the future here

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