iHeart Surges on Report That John Malone Wants to Buy Bigger Stake

(Bloomberg) -- John Malone’s media empire could be poised to grow again.

An affiliate of the billionaire’s Liberty Media Corp. is asking the Justice Department for permission to acquire a larger piece of IHeartMedia Inc., the Wall Street Journal reported, citing people familiar with the situation. The deal under consideration would give Liberty control or outright ownership of the radio-station giant, the newspaper said.

The report sent shares of IHeart up as much as 14% to $16.64 on Friday, marking the biggest intraday gain in four months. Before the rally, the stock had been down 19% this year.

A deal would put Malone atop an organization that includes Sirius XM, the satellite-radio provider; streaming service Pandora; the largest stake in Live Nation Entertainment Inc., the top concert promoter; and now the biggest owner of terrestrial radio stations. That would potentially give the company enormous sway over the way millions of Americans consume music.

Still, the rise of Spotify Technology SA and other music streaming services has made radio less dominant in the music industry. IHeart filed for bankruptcy in 2018 after a leveraged buyout saddled it with debt. The company emerged from Chapter 11 earlier this year.

If Sirius, IHeart and Live Nation can work closely together, it may help them ward off competition from tech companies’ streaming ambitions. Sirius acquired online-music service Pandora earlier this year for roughly $3 billion, but that business has lost ground to platforms such as Spotify and Apple Music.

Previous Bid

Liberty currently has a 4.8% holding in IHeart through Liberty SiriusXM Group. The stake was converted into equity from debt when the radio-station owner emerged from bankruptcy. The Justice Department is considering the request to acquire a bigger stake, the Journal reported.

Representatives for Liberty Media and IHeart declined to comment to Bloomberg News.

This wouldn’t be the first time Malone has pondered acquiring IHeart. Liberty Media dropped a takeover attempt in 2018 after deciding the company was worth less than it had thought.

IHeart had previously rejected Liberty’s $1.16 billion bid for a 40% stake because it wasn’t enough to satisfy the company or its creditors. But IHeart said at the time it was still interested in talking to Liberty and any other suitors.

©2019 Bloomberg L.P.

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