iHeartMedia tunes into IPO as it nears bankruptcy exit

(Reuters) - U.S. radio company iHeartMedia Inc on Wednesday filed for an initial public offering with the Securities and Exchange Commission to list its Class ‘A’ common shares, as it nears bankruptcy exit and bets on podcast to drive growth.

FILE PHOTO: The iHeartMedia billboard is seen atop a building in the Bronx in New York, U.S., March 15, 2018. REUTERS/Shannon Stapleton/File Photo

The San Antonio, Texas-based company went belly up last March as it struggled with debt that was taken on by its private equity owners in 2008 to finance a $17.9 billion leveraged buyout of Clear Channel Communications Inc.

Last November, it was reportedly in talks with Apple Inc for a stake sale, but soon after the company announced a restructuring plan to emerge from Chapter 11 that included separation from Clear Channel, debt raising, and issuance of new class A and B shares.

“I see an uphill battle for iHeartMedia coming out of bankruptcy,” said Clement Thibualt, senior analyst at global financial markets platform, pointing to the emergence of TV and video streaming, which has made it difficult for radio to retain its footing.

iHeartMedia did not disclose the size of share offering, or set a price range. It set a placeholder amount of $100 million to indicate the size of the IPO, and said it expects to use net proceeds from the IPO to pay off its debt.

As the largest radio station owner charts a new path, it looks to podcast to drive growth. It has more than 800 live radio stations, a monthly reach of 275 million listeners and is the no. 1 commercial podcast publisher in the United States, according to podcast data company Podtrac.

The number of Americans listening to podcasts - portable and mostly free to download on smartphones - has surged 35 percent in the last three years as content on platforms expands beyond radio shows, according to a study by consumer data company

According to PwC, the industry is expected to generate over $700 million in revenue by 2022, from an estimated $400 million in 2018.

Ad spending on podcasts are forecast to almost double to $659 million in 2020 from $313 million in 2017, according to a study in June by the Interactive Advertising Bureau.

In 2018, iHeartMedia bought Stuff Media Llc, owner of the ‘Stuff you should know’ program that is deemed the first podcast ever to reach the 500-million-download mark on Apple Podcasts.

iHeart’s podcast platform competes with Apple, Google and Spotify, which went public last April.

Spotify too has been beefing up its podcast platform to tap into the fast-growing market. It bought its third podcast company, Parcast, last month.

Goldman Sachs and Morgan Stanley are listed currently as underwriters to iHeart’s IPO.

Reporting By Aparajita Saxena in Bengaluru; Editing by Shinjini Ganguli