Another major bankruptcy filing today: IHeartMedia, the largest radio station operator, is in bankruptcy. This was expected and unavoidable as the company took on enormous debts to buy radio stations at the same time that radio is losing its reach. The interesting thing about this case is that it is not entirely clear that broadcasting licenses survive bankruptcy. Business leaders have always assumed so but this theory has not been thoroughly tested. The company says it will continue to operate normally and pay all its bills.
Trends are working against IHeartMedia in the long run, but for now it has cash flow and has some potential to cut costs through further automation.
The common element in the Toys ‘R’ Us and IHeartMedia bankruptcies is that both companies are swimming against the current when it comes to cultural trends. Radio is declining in mind share and cultural influence in much the same way that toys are.
