iHeartMedia to launch streaming service this week?

US radio giant iHeartMedia’s CEO Bob Pittman is strongly tipped to announce its paid music streaming service at the company’s music festival in Las Vegas this week.

According to the New York Post, it will include a US$5-a-month ad-free radio station and a $10-a-month on-demand music service in the US. When and if the service will set up in Australia and New Zealand remains to be seen.

It comes as Pandora and Amazon get set to launch full service platforms in the US imminently.

According to the Post, iHeartMedia would be the first of the American radio companies to get into streaming. Based in San Antonio, Texas, its 850 terrestrial radio stations turned over US$6.24 billion (A$8.24 million) in revenue in 2015 with 110 million weekly users.

Its iHeartRadio digital service, which streams its radio stations, has 90 million registered users, as of last month. It is available on 90 devices, including in cars (where iHeartRadio has a strong presence) and wearables.

But a wider music streaming service has been something on the cards for the company, as it widens its footprint. This has included experimenting with virtual reality, adding third-party podcast partners, putting its programming on TV, and marketing itself on third party apps as Smule’s Sing!. Its Snapchat Discover channel is drawing impressive numbers and it has becoming the most-followed publisher on livestreaming social platform YouNow.

Earlier this month, Darren Davis, President of iHeartMedia Networks and iHeartRadio, declared, “You can’t possibly correctly predict what’s going to be the next big thing two years from now.

“So our strategy has been, don’t guess, just go everywhere. […] It’s all about ubiquity for our broadcast brands. We want to make it as easy as possible to take away all the possible friction for people who want to access those brands.”

For iHeartMedia, expanding further into digital would be highly appealing. Digital music subscriptions leaped 50% last year and paid streaming is estimated to rise from last year US$2.2 billion (A$2.9 billion) to US$12.7 billion (A$16.8 billion) by 2020.

Its target audience of 13—24 has the largest audio listening time on streaming, making up 21% but only 39% of the time they listen to radio. In comparison, those aged 35-to-54 make up 11% of streaming time. Those aged over 55 constitute 4% of streaming time and 71% of radio.

But the problem iHeartMedia faces is that it will have to licence freshly and directly with record labels. These would be at a higher rate than the radio side of the business.

iHeart has the additional problem of US$21 billion (A$27.8 billion) in debt and stagnant revenue over the six months ended June 30. A US$1.74 billion (A$2.3 billion) interest expense drove a net loss of US$661 million. Its shares have fallen 76% in the past 12 months.

Earlier this year, it looked to restructure while holding off its creditors. They accused it of shifting US$200 million (A$265 million) from one division to another, and the company was forced to apply for an injunction to give it more time to work out its debt.