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[Advertising] Killed the Radio Star

Jan 25, 2024

For those vintage enough to remember, “Video Killed the Radio Star” was released by a little-known band called The Buggles way back in 1979.  The hypnotic anthem, which incidentally sounded like it was mixed using telephone audio, was a cautionary tale of how emerging video-based media could (and would) consume the color-less sounds emitting from our radios.  We were officially on notice, the days of tuning into our favorite frequency modulation (FM) radio station to hear the latest from our most beloved artists were about to be barred by the statute of technology. Like a child absorbed by an iPad, even adults would succumb to the delight of ‘listening’ to music brought to life by visual stimulation.  During the era in which MTV ruled the airwaves, The Buggles’ prophecy may have actually come to fruition.  Ironically, the music video that accompanied “Video Killed the Radio Star” was the very first on MTV in the United States, airing at 12:01am on August 1, 1981.  For the next several decades, teenagers and adults alike would be influenced by the savvy marketing of popular artists, from hair bands to boy bands. Likewise, when the intoxicating beats stopped tantalizing our ears, and the grandiose productions departed from our view, the commercials that followed were carefully crafted and time-tailored to hit their targeted demographic like an arrow from Robin Thicke Hood himself.  RIP radio, and those daring enough to bootleg the weekly top 10 tracks onto a cassette tape.

More recently, one could argue the pendulum returned to a time when provocative visuals were not necessary to grab our attention.  The popularity of streaming music platforms, and the white rabbit hole of endless podcasts, pose viable evidence that, perhaps, the attempted assassination of the Radio Star missed its mark.  What this counter argument fails to contemplate is the old adage of ‘following the money.’  Just because the sonic youth of today may satisfy their latest craving for Taylor Swift via the modern-day garden hose of streaming music, that does not necessarily mean that the big-business advertising money came along for the ride. Despite the medium’s widespread popularity, the power-house advertisers were on the road again.

Introduce: Audacy; previously known as ‘Radio.com.’ This free broadcast and internet radio platform was originally launched 14 years ago under CBS radio and was later acquired by Entercom in late 2017.  Rebranded as ‘Audacy’ – the streaming radio giant was traded on the New York Stock Exchange and enjoyed partnerships with CNN, Bloomberg, Turner, Cox, and Disney.   Audacy owns some of the most visible (the irony is not lost on us) radio stations in Los Angeles and New York including KROQ, KCBS, KNX, 1010 WINS, WCBS, WFAN, and at least 200 more stations across the country.  Indeed, the radio gods had poured some sugar on Audacy’s empire.

As recently as 2019 Audacy generated $1.5 billion in revenue.  Fast forward to 2024, with an approximated $1.9 billion in debt, Audacy announced that it would file for protection under Chapter 11  as a result of a sharp decline in radio ad spending.  In a historic bankruptcy benchmark, Audacy (now, the “Debtor”) recently secured an impressive $57 million of debtor-in-possession financing, and will effectively reduce its debt load by 80%, from $1.9 billion to $350 million.  In exchange, and if approved by the Bankruptcy Court, debtholders would receive equity in the newly resurrected Audacy, pursuant to the Debtor’s Chapter 11 plan of reorganization. 

Lawyers for Audacy advised that the self-described ‘multiplatform audio powerhouse’ intends to operate normally during the restructuring process, that employee wages and benefits will not be impacted, and that unsecured creditors will not be impaired.  By equitizing over 80% of their debt, and through optimistic financing, Audacy and its ‘new’ equity holders will look to continue its innovation and growth in the digital transformation. While hurdles remain, including regulatory approval by the FCC, such a well-funded restructuring certainly offers meaningful hope to creditors (err – soon to be equity holders) who have a vested common interest in the success of the ‘audio powerhouse.’ 

For the uninitiated, the term ‘bankruptcy’ can understandably have some negative connotations.  But in practice, the various levers of bankruptcy can afford an otherwise failing business (and its creditors) a second chance at getting back in the black.  The noteworthy circumstances here are not always duplicable, but the principle remains: rather than allow a sinking ship to also claim its crew, lifeboat options exist with the purpose of living to sail another day in another seaworthy vessel.  

While advertising may have (almost) killed this Radio Star, it is reassuring to see the welcomed reprieve that Chapter 11 protection and reorganization can offer.  Perhaps with a little help from Audacy’s friends, the newly united equity holders can come together and declare they are the champions of the radio world. Likewise, perhaps our old friends The Buggles were right to be concerned about the murderous intent of music videos, but the admittedly less glamorous protections of the US Bankruptcy code (when wielded by experienced attorneys) may have provided the crescendo of resurrection in the 11th hour.    

Written by Lucas Mundell, Esq.

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