Who says bankruptcy is bad for the pocketbook?
Certainly not the honchos at iHeartMedia Inc., the S.A.-based radio conglomerate formerly known as Clear Channel Communications.
iHeart CEO Robert Pittman raked in more than $14 million in the 12 months leading up to the company’s Chapter 11 bankruptcy filing in March, according to recent securities and bankruptcy filings.
On top of that, iHeartMedia has asked its Houston bankruptcy court to authorize up to $24.9 million in additional incentives for 11 top officers, including Pittman. He stands to gain up to $10.5 million under that incentive plan.
The request, which still needs court approval, comes as groups representing the artists iHeartMedia plays on its stations wait to recoup some of the roughly $16.4 million the company still owes them.
Attempts to contact the iHeartMedia for comment were unsuccessful.
Those old enough to remember radio’s heyday may recall watching in horror as Clear Channel — led by San Antonio’s Mays family — gobbled up one local station group after another, turning them into cookie-cutter money machines.
That business model gave DJs no leeway on what to play and instituted nationwide playlists. Later, the company even canned local talent in certain markets and piped in gab from elsewhere. The result? An R&B station in Detroit pretty much sounded like an R&B station in Des Moines, Iowa.
The result, experts say, is that iHeart, which still owns 850 stations, helped hasten radio’s irrelevance as new competition emerged from media players, streaming services and a variety of new entertainment options.
“Too many people are listening with earbuds and not their car radios,” said Gordon Borrell, a Virginia-based media analyst. “That’s spelled trouble for the radio industry as a whole.”
iHeartMedia’s financial problems compounded over time, but 2017 turned out to be a monumentally shitty year. Competition continued to eat away at its listenership while its creditors — to whom the company owed $20 billion – tightened their squeeze. In conjunction with its bankruptcy filing, Clear Channel announced plans to restructure around half of its total debt.
And from the looks of its creditor filings, recording artists will be just one more group waiting in line to get paid. The groups representing artists range from record labels like Warner Music Group, which iHeart owes $3.9 million, to performance rights organization ASCAP, which it owes $1.5 million.
Last year, Pittman’s total pay package included more than $9 million in bonuses on top of his base $1.25-million salary. He made less than $5 million total in the two prior years.
That hefty paycheck was likely engineered to keep Pittman around. After all, he was brought into the company as its golden hope for a turnaround. The exec’s marketing expertise was highly respected, and he understood the digital business, having helped build AOL and engineer its merger with Time Warner.
Pittman brought some sizzle to iHeartMedia by changing its name and pouring more money into its streaming service and concert promotions. But those efforts were likely too little too late, said Borrell, who predicts the company may sell off 10-20 percent of its properties.
“They essentially made Jesus the marketing manager for Edsel,” Borrell said. “He’s a brilliant and charismatic guy, but the debt really tied his hands.”
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