The iHeartMedia Bankruptcy Is No Victory for the American Consumer

Well it finally happened. After months and months of inevitability hanging in the air, and only waiting for the final shoe to fall, America’s largest radio station owner iHeartMedia (formerly ClearChannel) filed for Chapter 11 bankruptcy protection in the wee hours of Wednesday night/Thursday morning, setting in motion the alleviation of more that $10 billion in debt that will bring the company’s historic burdens to a close—at least for now—while creditors big and small are left holding the bag for iHeart’s insatiable appetite to buy up as many radio assets as possible in the aftermath of the Telecommunications Act of 1996 and the subsequent radio consolidation race that followed, leaving the American radio consumer woefully underserved now for over two decades.

But just like the recent Cumulus Media bankruptcy, the fact that this is a Chapter 11 filing (restructuring) instead of a Chapter 7 filing (liquidation), means little will change in the radio landscape, and the misdeeds of America’s long-standing #1 and #2 radio station owners is not being punished, it is being forgiven, with the result likely being the same “one size fits all” nationalized programming, evisceration of local talent in lieu of syndicated shows, programming decision made from on high trickling down to local stations, and a great homogenizing of American culture from sea to shining sea.

Radio is quickly racing towards irrelevancy, and frankly needed a bloodletting punch to the nose, not a passing glance on the brim like they’re getting here. Creditors, seeing the adverse future for the radio industry, saw more value in getting pennies on the dollar for debt as opposed to forfeited portfolios of hundreds of radio stations that may not be worth anything in five years or less with the rampant spread of streaming as the preferred media for consuming music and audio media.

That’s not to say radio couldn’t be relevant, and isn’t relevant when considering certain markets and specific stations, especially ones whose focus has been to keep it local. In the impersonalized era of streaming, what local radio can offer that is unique is a local perspective, a local personality that you can then connect with at live events in the community, that can serve you local news and perspective, and that makes the whole enterprise of interacting with passing entertainment as you commute to and from work, or listen in the backyards during a barbecue, more than a passing notion.

But instead we’ll get even more cost-cutting measures, and more consolidated programming, aided by a recent decision by the FCC to relax regulations even more, with local television and the entire media and telecommunications industry looking to simulcast whatever possible to save money. Radio has become so irrelevant to some, certain new cars are being manufactured without tuners in the dashboard. Granted, iHeartMedia’s iHeartRadio app has become a useful tool in the smartphone era, and is allowing listeners to connect with stations that may be foreign to their local market, but dedicated to their more personalized tastes. But this is a far cry from the rapid growth of Spotify and other streaming behemoths, who offer something the consolidated radio landscape doesn’t: choice.

Yes, it’s great that all the voices decrying radio consolidation for the last two decades have finally been vindicated in their opinions that consolidation didn’t just make for bad radio, it didn’t make prudent economic sense. But now Cumulus and iHeartMedia will be allowed to continue to go about their business barely scathed. There won’t be massive layoffs in the executive offices of these companies. There won’t be any major restructuring of their assets in a way the American consumer will hear or see. There won’t be the returning of ownership of radio stations back to the local level so there can be a rebirth in the medium.

The poor performance of iHeartMedia won’t significantly affect its standing beyond credit ratings. The lessons learned will be fleeting, and their tireless work to erode everything cool about American culture will drag on. Unfortunately, this was the lesson we have learned in the 3 1/2 months since Cumulus filed its Chapter 11 paperwork.

A complete liquidation of iHeartMedia would have been terrible for the company and many of its employees (or what’s left of them) in the short term. But it also could have been the wake up call American radio needed to look towards the future. Now, they’re granted another reprieve, delaying the inevitable, and making the rest of us pay for it.

There’s no more Toys ‘R’ Us, but iHeartMedia survives. That just doesn’t feel right.

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