![]() “They haven’t done enough to take out costs” to achieve positive free cash flow, says Huber, and revenue hasn’t met the company’s own expectations. After paying interest to service its debt, Audacy’s free cash flow in 2022 was -$31.8 million. In 2022, Audacy’s net interest expense was $107.5 million - about 8.6% of the company’s annual revenue of $1.25 billion. The debt has been a drag on Audacy’s cash flow. Universal Music Group Trims Radio Expenses as Format's Influence Wanes That deal increased Audacy’s revenue more than four-fold, from $367 million in 2016 to $1.7 billion in 2018, but also increased its debt from $468 million at the end of 2016 to $1.86 billion at the end of 2017. Audacy acquired most of its $1.9 billion of long-term debt from its 2017 merger with CBS Radio. “The number one issue is too much debt in a secular declining industry,” says Huber. The advertising market is part of Audacy’s problem, but it’s not the entire problem, according to Craig Huber, media analyst at Huber Research Partners. “And if this advertising market recovery trend continues in 2024,” Pittman added, “we expect to resume our growth trajectory that was interrupted by this period of advertising softness.” iHeartMedia expects its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to improve throughout 2023, CEO Bob Pittman said during the company’s May 2 earnings call. Market conditions appear to be improving, however. ![]() Likewise, shares of Cumulus Media, the third-largest radio company, are down 47.5%. Year-to-date, shares of iHeartMedia, the nation’s largest radio company, have fallen 55.3%. Investors have lost some faith in radio companies’ stocks as advertising growth weakened in 2022. ![]() Audacy last closed above $1 per share on Jmeaning it remained below $1 for 218 consecutive trading days. The NYSE, which has rules to maintain minimum share prices, issued a warning to Audacy on July 31 because its average closing price over a consecutive-day trading period was below $1. Audacy, which changed its name from Entercom in March 2021, last traded at $0.09 per share - down nearly 63% year-to-date - before trading on the NYSE was halted. On Tuesday (May 16), a week after the March 10 filing, the New York Stock Exchange (NYSE) decided to halt trading of Audacy’s shares in order to delist the company. Trading of Audacy Shares Halted as New York Stock Exchange Plans to Delist Company As a result, Audacy explained, the company could default on its debt - which could then cause that debt to become immediately payable. Warning lights appeared again last week when the company revealed in its May 10th 10-Q filing that “current macroeconomic conditions” such as rising inflation and interest rates and lower advertising revenue “have created, and may continue to create, significant uncertainty in operations.” Those factors “have had, and are expected to continue to have, a material adverse effect” on Audacy’s forecasted revenue, which is “unlikely to be sufficient” to maintain compliance of the financial debt covenants its lenders impose to ensure it can make its interest payments. That has complicated the financial position of Audacy, the second-largest radio company in the United States and a major player in the podcast market. A couple of years after the COVID-19 pandemic took radio listeners out of their vehicles and a recession caused an advertising slowdown, the radio industry is experiencing another decline.
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