Ed Sheeran, Eminem, Maroon 5 and Cardi B all performed on Sunday night as part of the iHeartRadio Music Awards, a testament to the company’s dominance over the radio business. Its roughly 850 stations, the most of any American broadcaster, still wield considerable hitmaking power, even in the age of streaming.
But on Thursday, iHeartRadio’s parent company, iHeartMedia, filed for bankruptcy protection in an attempt to restructure part of the $20 billion debt load that has burdened it since a leveraged buyout a decade ago, on the eve of the 2008 recession.
The company announced that it had reached agreements with creditors to reduce its debt by more than $10 billion. It said it would continue to operate its stations during the process.
According to court filings, iHeartMedia, known as Clear Channel Communications until 2014, paid $1.4 billion last year in interest on its debts. Its media division, which includes the broadcast stations, a popular music app and a unit that syndicates shows by Rush Limbaugh, Sean Hannity and others, had $3.6 billion in revenue and $735 million in operating income.
Counting its global business in outdoor billboards, which is not part of the bankruptcy, the company had $6.2 billion in revenue over all.
The bankruptcy is the culmination of iHeartMedia’s yearslong dance with its creditors; a final phase, long expected by analysts, began last month when the company skipped a $106 million interest payment.
It is also the latest and most high-profile shift in the tumultuous radio business, which has struggled to retain advertising dollars and compete with streaming services like Spotify and Pandora.
Cumulus Media, iHeart’s closest competitor with 445 stations, declared bankruptcy four months ago. Last year CBS Radio, after announcing its intention to exit the business, merged its stations with the much smaller Entercom Communications.
iHeart’s bankruptcy announcement came on the same day that Spotify held an investor presentation in advance of its public listing on the New York Stock Exchange.
Annual advertising, radio’s chief revenue source, has hovered around $16 billion for years, according to a report last year by the accounting firm PwC. By 2021, the report projected, that figure, for terrestrial broadcast stations, would reach only $16.6 billion, with a 10-year compounded annual growth rate of just 0.425 percent.
iHeartMedia has maintained that its radio stations remain popular and vital even as it has introduced apps and negotiated new licensing deals intended to control its royalty payments online.
The company’s terrestrial stations, it says, reach 271 million people each month, and in many markets it operates multiple outlets. There are eight iHeart stations in Los Angeles, for example, and six in New York, including Z100, a pop powerhouse.
Still, iHeartMedia has moved aggressively into the online market, renaming itself four years ago after a music app that its disc jockeys promote relentlessly on the air.
“We have transformed a traditional broadcast radio company into a true 21st-century multi-platform, data-driven, digitally focused media and entertainment powerhouse with unparalleled reach, products and services now available on more than 200 platforms,” Robert W. Pittman, the company’s chief executive, said in a statement announcing the bankruptcy filing.
Lance Vitanza, an analyst at Cowen, said that iHeartMedia had done better than most radio companies in expanding its audience and adapting to new technologies, but that debt had weighed it down — a burden that could find relief through the bankruptcy process.
“Ultimately, when they come out of bankruptcy, they will be in a much better position,” Mr. Vitanza said. “We expect them to be able to focus their resources on growing their business rather than on debt service, which is what they’ve had to do for the last 10 years.”