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Sirius XM owner proposes bid to solve iHeartMedia’s debt problem

By | Published on Wednesday 28 February 2018


American conglom Liberty Media is seemingly making a play for US radio giant iHeartMedia. It has proposed a possible solution to the struggling broadcaster’s long-running debt problems that would also give Liberty a 40% stake in the business.

iHeartMedia – the radio company once known as Clear Channel – has been involved in long-drawn out negotiations with its money lenders in a bid to restructure $20 billion in debts. Those mega-debts are mainly the result of a $24 billion private equity buyout of the radio firm in 2008. As debt restructuring talks continued to go through the motions last year there was various talk of the company going into bankruptcy.

According to the Denver Business Journal, Liberty has approached iHeart debt-holders with a proposal it pump money into the flagging firm. Under the suggested investment, Liberty would take a 40% stake in the radio company, restructure its board, and put itself in an influential position should the broadcaster slip into so called chapter 11 bankruptcy.

Liberty Media already has a controlling interest in satellite broadcaster Sirius XM. So, if Liberty’s new proposal was to go through, it would give the company controlling interests in both iHeart, a major player in AM/FM radio Stateside, as well as America’s big satellite radio business.

From a music perspective, it would be an interesting deal for two reasons. First, Sirius is now a key shareholder in streaming music firm Pandora, which is mainly known for its personalised radio service. Its main competitor is iHeartRadio, the streaming music platform operated by iHeartMedia.

Secondly, Liberty Media is also a significant shareholder in live music giant Live Nation. If it got itself a controlling interest in iHeartMedia, that would mean it would be a key shareholder in America’s biggest terrestrial and satellite radio groups, the country’s biggest live music promoter and ticketing company, and its biggest streaming services. So, a lot of big fingers in the musical pie.

There being some common ownership between iHeart and Live Nation would also be interesting from a historical perspective. The two businesses were previously two divisions of the same company – ie Clear Channel – before the live entertainment side was spun off to create the standalone Live Nation business in 2005.

All that said, it’s far from assured that Liberty’s bold bid to rescue and then control iHeart will come to pass. The Wall Street Journal notes that “despite the potential benefits of the merger, there is no certainty that a merger would survive the often-contentious bargaining sessions played out in bankruptcy court”.

It then quotes analyst Lance Vitanza who muses that: “I think some of iHeart’s bondholders understand the potential power of a merger between iHeart and Sirius, but not all creditors understand that”.