From building a more robust streaming app to investing tens of millions of dollars in podcasting, Audacy has put digital at the forefront of its business in recent years. As it works to complete its bankruptcy restructuring in the coming months, that digital focus is expected to pick up steam This includes a planned launch of a subscription streaming offering that Audacy projects could deliver as much as $20 million in revenue by 2027.
“We anticipate that like other traditional media, over-the-air listening erosion will persist while reach remains strong, and consumption continues to fragment and shifts toward digital devices,” the company says in its most recent business plan. The document offers a broad outline of the “strategic evolution” that CEO David Field is undertaking.
The plan, which had been confidential until the company’s chapter 11 filing this month, shows how Audacy has been working to accelerate its penetration of the digital audio marketplace. That has included leveraging partnerships such as with TuneIn to distribute its broadcast content and podcasts to streaming listeners, while also leveraging its sales and ad tech capabilities to sell advertising for other broadcasters. Audacy says that not only gives it a share of advertising sold, but it also allows the company to make further inroads with marketers that are seeking digital inventory. Audacy also plans to complete several enhancements to its streaming platform early this year, including adding new programmatic ad sales capabilities.
“We believe that our on-platform personalized, interactive radio experience will allow us to further leverage and exploit Audacy’s unique spoken-word content advantage and increasingly earn more listening occasions and more time spent listening as users get more of what they want, when they want,” the 31-page document says. It also sees an opportunity to “upsell” listeners that it picks up through the new digital distribution of its on-air content, such as by offering them a subscription music streaming option.
With the added digital features, Audacy projects it will be able to grow its share of overall streaming ad revenue from 1.4% in 2023 to 2.0% in 2027, while at the same time the streaming ad market is forecast to expand 16% annually. And while streaming revenue has had profit margins much lower than broadcast to date, as the business grows, Audacy estimates it will be able to expand digital margins from 16% in 2021 to the low-40% range by 2027.
Audacy’s business plan is also built on what it forecasts will be a strengthening radio ad market during 2024. But it forecasts even with an improving ad market this year, it will still have a third less revenue than what it billed in 2019, due to the precipitous drop in revenue during the pandemic and the subsequent slowdown in advertiser spending that began in late 2022. “The impact of share shift to digital advertising and the secular ratings decline will significantly limit the magnitude of that recovery,” the outlook says. In 2019, prior to the pandemic, Audacy had $1.49 billion in annual revenue.
The business plan, which was drafted before the bankruptcy filing, also banks on further growth of Audacy’s podcasting business. The company projects its business will grow at an annual rate of 25% through 2027 with improving profit margins.
How much of the digital plan is executed may depend on what direction the controlling shareholders of Audacy want to head. In an agreement worked out with its lenders, Audacy filed a prepackaged bankruptcy petition on Jan. 7, that will cut its outstanding debt from $1.9 billion to $350 million with the debtholders receiving an ownership stake in the reorganized company. The lenders have committed $57 million in debtor-in-possession financing, which could allow that digital evolution to continue.
“Over the past few years, we have strategically transformed Audacy into a leading, scaled multi-platform audio content and entertainment company,” Field said this month when the company filed its restructuring plan in court. “With our scaled leadership position, our uniquely differentiated premium audio content and a robust capital structure, we believe Audacy will emerge well positioned to continue its innovation and growth in the dynamic audio business.”