Once known as Clear Channel, IHeartMedia is in talks to sell the company’s 860 radio stations to the country’s largest satellite radio provider.
Bloomberg is reporting that IHeartMedia — formerly IHeartRadio, and before that known as Clear Channel — is in talks to sell the company to Sirius XM. The deal, described as in the “preliminary” stages with “no guarantee any deal will happen,” would add the largest portfolio of radio stations in the United States to Sirius’ holdings.
The theoretical company that emerged from such a transation would create a conglomerate of staggering reach, combining the largest networks of terrestrial and satellite radio under one roof.
Variety later described the deal as a potential “merger” rather than a straight acquisition of the struggling IHeartMedia by the substantially more robust Sirius XM.
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IHeartMedia owns more than 800 radio stations in the US. After rumors of the sale leaked last Friday, the stock gained 35%. More ominously, shares in Sirius XM tanked nearly 5% on the same news.
Both companies are facing challenges from the consumer shift to streaming, but IHeartMedia is in a considerably worse position. A 2008 leveraged buyout weakened the company then known as Clear Channel and smothered the company in debt, which later contributed to IHeartMedia filing the 30th largest bankruptcy in US history ten years later. The company emerged with a plan to float the bankrupt company for a stock IPO while simultaneously laying off staff that stuck with the company through the bankruptcy. At the time, the company reportedly offered a stake to tech companies including Apple, which allegedly kicked the tires on IHeartMedia then but took a pass.
Debt is still a major factor in IHeartMedia’s dour prospects — the company is still holding on to about $5 billion in debt against a (temporarily boosted thanks to the sale rumors) $850 million valuation. Sirius XM is valued at about $9 billion.
