Over recent days, Gray Television, iHeartMedia, E.W. Scripps and Sinclair Broadcast Group have delivered mixed-bag results. Their management teams are optimistic about advertising revenue from the upcoming US elections, but they have also made it clear that their top priority is reducing the debt they’ve incurred as they fight competition from streaming.

At the more conventional end of the spectrum, Sinclair and Gray are pursuing debt buybacks, and Scripps is considering asset sales. Meanwhile, executives at iHeartMedia have made it sound like a liability management exercise could be on the table.

‘Extremely cyclical’

These companies and others in their sector are all facing a similar challenge, which we’ve flagged before: in total, high-yield broadcasters are facing a more than $6bn of maturities in 2026, on debt yielding from 6.5% to 15.2% as of last month.

The four names we’ve already mentioned are all publicly traded, but private broadcasters are in the same boat. Last week, we reported that Apollo-backed Cox Media creditors are organizing with Milbank, as the company’s shareholders continue to take dividend payouts even as the business struggles.

Aside from looming debt maturities, broadcasters face “tightening profitability because of the revenue pressure of losing audience, combined with the fixed-costs nature of putting shows on the radio or paying for sports rights and unique content,” said Heath Gray, a senior managing director at FTI Consulting, who advises telecommunications and media companies.

Those fixed costs — which include paying on-air talent — are a major challenge when so much revenue comes from advertising, which can be fickle.

Many major broadcasters suffered a decline in ad revenue at the start of the year. A recent report from strategic advisory firm Madison and Wall forecast further declines for overall TV ad spending this year and next.

“They’re extremely cyclical,” said a buysider of these broadcasters, noting the slow but undeniable decline of traditional TV broadcasting.

“Usually what happens in content distribution is every recession there’ll be a distributor that goes away. The advertising dollars get pulled out due to cyclicality, and they just don’t go back. Those dollars get moved back to better mediums.”

That slow decline has been happening for years, but 2024 has been particularly tough. Radio station operator Audacy set the tone early on, filing for a prepackaged Chapter 11 bankruptcy in January. Soros Fund Management has since taken a major stake in that business, spurring speculation of a bigger move into the audio space.

Bad news has continued to inundate the airwaves: Cumulus Media sprung a distressed exchange on its creditors, Sinclair revealed that settling with its bankrupt subsidiary Diamond Sports will cost it up to $325m, and Gray shelved a TLB financing after markets were spooked by the announcement of a sports streaming venture by Disney, Warner Bros Discovery, and Fox.

Poor reception

While broadcasters are getting proactive about reducing their debt, it might not always be to creditors’ benefit.

Shares and debt issued by iHeart both plunged last Thursday (May 9) after executives hinted at a potential liability management transaction. We reported that opportunistic credit funds, including distressed hedge funds, have been buying into the bonds.

At Sinclair, meanwhile, revenue and EBITDA were roughly in line with guidance and somewhat below consensus estimates. The company said it back bought $27m worth of term loans due in 2026 for $25m in cash, and signaled that it would be unlikely to move assets between its Sinclair Television Group unit and its Ventures business.

CNBC has since reported that Sinclar could be looking to offload 30% of its broadcast stations, citing anonymous sources.

In the same vein, executives at E.W. Scripps said the company could benefit from asset sales. Last month, the firm announced it would sell its Bounce TV channel; the company also said it made a $40m discretionary debt payout in the first quarter.

When Gray announced its earnings, it also said it had received authorization to buyback $250m worth of its debt. The company’s chief executive officer Hilton Howell Jr. noted that deleveraging remains a top priority.

The kicker is the good news: executives at all these companies anticipate higher revenue from political advertising in the second quarter of this year compared to the same period in 2020. To read our deep dive into the business of political advertising, click here.

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