Earlier today The Financial Times reported that iHeartMedia’s creditors had been reaching out to Apple as a potential investor ahead of their deadline to file a reorganization plan.
That has quickly morphed into other credible sites morphing that report into “Bankrupt iHeartMedia hopes Apple deal will bring Beats 1 to U.S. radio” when in reality that is just a minor piece of why a deal between the companies should happen.
The upcoming battleground will about distribution platforms and getting content everywhere. In that sense, iHeart is one of the most valuable as it can offer broadcast and platform agnostic distribution of content. The iHeartRadio App is on dozens of devices ranging from Apple’s iPhone, to Google Android, Amazon’s Alexa and Kindle, to multiple Smart TVs and video game consoles, automotive dashboards, and even a Samsung refrigerator. Due to its competition in hardware, Apple’s services are much more limited in distribution.
This is the piece that most hardline AM/FM observers do not understand about iHeartMedia’s investment in its app and why others like Entercom with Radio.com are racing to play catch-up. Outside of Pandora (soon to become part of SiriusXM), the iHeartRadio app is more ubiquitous than any other streaming audio app in North America and has the ability to be promoted on free broadcast through not only iHeartMedia owned stations but any station on the app including Bell Media’s in Canada and the just announced partnership with Gruop ACIR in Mexico.
With Apple seeking to increase subscriptions to Apple Music and to bring viewers to its soon to be launched subscription TV service, having the ability to market those services and their exclusive content through iHeartMedia owned properties and services will help enable them to reach critical mass sooner.
Of course there could be a more simpler reason why this story would break now. SiriusXM/Pandora owner Liberty Media has long been rumored as a suitor to invest in iHeartMedia and will be its largest independent shareholder in the company’s restructuring plan. That would make Liberty by far the most powerful player in audio distribution. Having an Apple (or other strong player in audio) as a fellow bidder will only increase the value in iHeartMedia shares for the creditors.
