Apple Inc. (AAPL) is interested in a deal with U.S. radio company iHeartMedia Inc. (IHRT), people familiar with the matter told the Financial Times. Sources said the two companies have held discussions, but that talks remain at a preliminary stage.
One source told FT that iHeartMedia, the largest radio broadcaster in the U.S., hopes Apple will take an equity stake worth tens of millions of dollars. However, another person familiar with the matter claimed that the iPhone maker could seek to strike a multimillion-dollar marketing partnership, rather than make a direct investment.
In March, iHeartMedia filed for Chapter 11 bankruptcy after agreeing with creditors to halve its $20 billion debt. The San Antonio, Texas-based company has struggled to fend off competition from digital music services such as Pandora Media Inc. (P), Spotify Technology SA (SPOT) and Apple Music.
Despite its unhealthy balance sheet, iHeartMedia is considered an attractive asset in the competitive music industry. The company remains highly influential, operating more than 850 stations across the country.
Liberty Media Corp. (FWONA) was previously identified as a potential suitor. However, in June, the media company run by John Malone decided to withdraw its investment proposal.
Apple Seeks to Widen Music App Reach
Apple’s acquisition of music recognition app Shazam for $400 million earlier this year provided another example of the growing importance it has placed on its streaming service.
Partnering with iHeartMedia would mark a continuation of the tech giant’s efforts to boost Apple Music. A deal with the company could see Apple Music’s Beats 1 expand to broadcast radio, greatly increasing its exposure, particularly among older audiences.
One music industry executive described the potential deal as a “power move” by Apple, according to FT, adding that a tie-up with iHeartMedia formed part of the iPhone maker’s strategy to take down Spotify.
Apple Music, which was launched in mid-2015, overtook its Sweden-based rival in the U.S. with 50 million subscribers earlier this year. However, Spotify still leads the global market, with more than 80 million paying users across the world.