Radio broadcasters take focus on earnings watch; Cumulus notes soften; iHeart steady

By Cristal Cody

Tupelo, Miss., Feb. 26 – Some distressed radio names are expected to be in focus this week with earnings reports on the calendar.

Cumulus Media Inc.’s bonds softened in front of the company’s earnings release scheduled Tuesday.

The 6¾% notes due 2026 (Caa1/B) opened the week over 2 points lower.

iHeartCommunications, Inc.’s notes were steady ahead of the company’s earnings release later in the week.

The 5¼% senior notes due 2027 (Caa1/B+) went out mostly unchanged from Friday.

Parent iHeartMedia, Inc. is expected to post earnings losses for fiscal 2023, B. Riley Securities analyst Daniel Day said in a note released Monday to Prospect News.

The space saw one default in January from Audacy Inc., which filed for Chapter 11 bankruptcy after missing interest payments across its institutional loan and high-yield securities in late 2023 and announced on Feb. 20 that it received court approval for its reorganization plan.

Audacy’s 6¾% senior secured second-lien global notes due 2029 (Caa3/C) were treading water on a 3 bid handle but have improved around 1½ points since the end of 2023.

Monday finished with a weak tone, though volatility was little changed.

The S&P 500 index fell 0.38% and the Nasdaq dropped 0.13%.

The iShares iBoxx High Yield Corporate Bond ETF was down 25 cents, or 0.32%, at $77.10.

The CBOE Volatility index declined 0.07% to 13.74.

The benchmark 10-year Treasury note yield moved up 3 basis points to 4.299%.

Cumulus softens

Cumulus Media New Holdings Inc.’s 6¾% senior secured first-lien notes due 2026 (Caa1/B) were thinly traded on Monday at 60¾ bid, down about 2¼ points to 3 points from where the issue last traded on Thursday, according to a market source.

Moody’s Investors Service downgraded the issuer and the notes on Jan. 30 based in part on increasing refinancing risks over the 6¾% notes.

The bonds traded with a 68 bid handle at the end of 2023.

Cumulus Media will report its fourth-quarter and full-year 2023 earnings results on Tuesday.

The Atlanta-based audio media company owns and operates 403 radio stations in 85 markets.

iHeart mostly flat

iHeartCommunications’ 4¾% senior secured notes due 2028 (Caa1/B+) stayed mostly flat at 70½ bid on Monday on over $5 million of volume, a source said.

The 5¼% senior secured notes due 2027 (Caa1/B+) went out mostly unchanged at the 72½ bid area on over $6 million of notes traded over the session.

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa3/CCC+) were about ¼ point higher at 57¼ bid in light supply.

iHeartMedia will release fourth-quarter and fiscal 2023 earnings results on Thursday.

The company is estimated to see a 5% drop in fiscal 2023 revenue and an 8.3% decline in fourth-quarter revenue, according to the B. Riley report.

Earnings losses of over $1 million are anticipated for fiscal 2023, Day said.

“We place a 10.5x EBITDA multiple on IHRT’s Digital Audio segment (2024E), a 7.5x multiple for the Audio & Media Services segment (’23/’24E), and a 5.0x multiple on its Multiplatform segment (’23/’24E),” according to the note.

San Antonio-based iHeartMedia operates broadcast and digital streaming radio businesses.

Audacy declines

Audacy’s 6¾% senior secured second-lien global notes due 2029 were quiet on Monday and have been little traded in February, a source said.

The issue was last active in the prior week at 3 3/8 bid, down from 4½, 4¾ bid at the start of the month but improved from 1½ bid at the end of 2023.

Audacy announced on Feb. 20 that it received approval from the U.S. Bankruptcy Court for the Southern District of Texas for its reorganization plan.

The restructuring is expected to eliminate about $1.6 billion of funded debt, or 80% of its debt.

The Philadelphia-based radio broadcaster filed for Chapter 11 on Jan. 7 after missing interest payments for several institutional loans and high-yield bonds beginning in October.

Audacy said it expects to exit bankruptcy after it receives approval from the Federal Communications Commission.

The FCC approval process could “take several months,” according to a Fitch Ratings report on Monday.

Audacy’s reorganization “plan was uncontested and received unanimous support from first- and second-lien creditors,” Fitch noted. “Unsecured creditors will receive full cash repayment and Soros Fund Management will hold a majority stake in the company’s new equity.”

Distressed returns higher

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns climbed on Friday to 1.07%.

Returns were up from 0.39% on Thursday, minus 0.33% on Wednesday and 0.37% on Tuesday in the first session of the short holiday week.

Month-to-date total returns hit 2.61% on Friday, up from 1.53% on Thursday, 1.14% on Wednesday and 1.48% on Tuesday.

Year-to-date total returns moved into positive gains at 0.41% at the close of the prior week from minus 0.65% on Thursday, negative 1.04% on Wednesday and minus 0.71% in the week’s first session.

© 2015 Prospect News.
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