Jason Derulo visits iHeartMedia Radio studio in 2012
(Image Courtesy: Official iHeartMedia Facebook)

US radio station giant iHeartMedia (OTC: IHRTC) filed for bankruptcy protection following an agreement in principle with investors to restructure its balance sheet to reduce its debt load.

The company, which reached the agreement with holders of more than $10 billion of its debt, expects to use cash on hand and cash from operations to fund the business during the bankruptcy procedure.

iHeartMedia’s billboard subsidiary, Clear Channel Outdoor Holdings Inc., has not started the Chapter 11 process and its daily operations are expected to continue during the restructuring.

The company, which operates more than 800 radio stations, has been struggling to tackle lower revenues along with more than $20 billion of debt which has put a burden on its capital. iHeart managed to avoid bankruptcy all this time through refinancing and swaps.

iHeart was purchased in 2008 by Thomas H. Lee and Bain Capital, two private equity firms, and has been straddled with massive debt ever since. The company has higher debt payments than sales, and it hopes to emerge from the bankruptcy process with significantly lower debt and more value.

In the world of Google and Facebook, iHeart has been struggling to keep up. Although radio stations still enjoy good reach, they face increasing competition from streaming services like Apple Music and Spotify, and subsequently, sliding ad revenues. Two years ago, iHeart launched two on-demand subscription music streaming services of its own but did not see much of an impact.

Meanwhile, Liberty Media Corp., owner of Sirius XM, is looking to purchase a 40% stake in the restructured company for $1.16 billion.