iHeartMedia Faces Another Shareholder Lawsuit

RADIO ONLINE | Tuesday, May 31, 2016

iHeartMedia's collective sigh of courtroom relief may have been short-lived. Fresh off a victory in a Texas court over disgruntled shareholders, another subsidiary shareholder has filed yet another suit that could have the media giant back in court.

Gamco Asset Management owns nearly 10 percent of the stock in Clear Channel Outdoor Holdings not held by iHeartMedia and they are accusing the board of violating its fiduciary duty to protect shareholders by moving Clear Channel Outdoor revenue to iHeartmedia. According to a Bloomberg report from Gamco attorney Norman Monhait, "The deal leaves the outdoor unit 'unable to exploit business opportunities, and with a 'virtually uncollectible receivable' from its parent company of $640 million."

In the suit filed in Delaware Chancery Court, Gamco founding investor Mario Gabelli says that iHeart should not be allowed to move revenues from CCOH to repay debt for the parent company. Gamco also says it believes iHeart is preparing for bankruptcy which would "freeze" its ability to repay" the money it owes CCOH.

In a statement, iHeart calls the allegations baseless and without merit.

Gamco is seeking a swift trial and has also named board members Bain Capital and TH Lee as defendants.