Thanks to Quarantine, Elevator Music Is Filing for Bankruptcy

Muzak is in trouble. Since 1934, the popular company has been providing retailers with musical strategies to boost worker productivity, encourage consumerism, and manipulate mood in a brick-and-mortar experience. Muzak was purchased in 2011 by Austin-based Mood Media, which also specializes in the manipulative power of carefully curated scents, decor, and social media, in the hopes of the parent company cornering the in-store music market.

But Mood Media — which also owns Trusonic, Somerset, DMX, BIS Group, Technomedia, and South Central A\V in addition to Muzak — is now filing for Chapter 11 bankruptcy, according to a notice sent to a record label this week and acquired by Billboard. The company has entered into a a comprehensive Restructuring Support Agreement in an attempt to reduce its debt of $680 million by $404 million, according to a statement from Mood Media. It also forecasts 2020 net sales to be down by 33% from 2019 net sales. The company has scheduled a hearing on July 31st to confirm its Chapter 11 filing and restructuring plans in the United States Bankruptcy Court for the Southern District of Texas.

The company owes much of its financial struggles to the COVID-19 lockdown, as many citizens continue to shelter in place and a wide variety of businesses remain either closed or partially open. Mood Music — which acknowledged the virus’s “widespread devastation” on consumer habits and a reorganization of priorities at its retail clients — has told investors that it will continue operate throughout “the contemplated court-supervised process with a primary focus on the health and safety of its employees, independent affiliates and clients.” Mood provides in-store music marketing (a.k.a. “elevator music”) for clients like malls, restaurants, and dental offices, in addition to other products like digital signage and scents.

In the statement, the company says: “Mood Media intends to build on its structure, support and resources to continue serving its clients as they manage through the global COVID-19 pandemic and over the longer-term once the pandemic has passed.”

But Mood Media can’t solely place the blame on quarantine: This is the second time the company has found itself in bankruptcy court in four years. The prior instance came in 2017 — two years after SoundExchange sued Muzak for withholding royalties, and therefore underpaying artists and rights holders. Mood Media filed for Chapter 15 protection to soften the blow of a $650 million debt load, and it ended up doing a deal with Apollo Global Management and GSO Capital Partners, which appeared to help it get back on track.

It’s also worth noting that a Chapter 11 filing is what led Muzak to Mood Media in the first place. Muzak originally filed for bankruptcy in 2009, after missing a $105 million payment to creditors. As a result, the company successfully restructured in 2010, according to Digital Music News, and Mood Media came in with an offer a year later.

Without a vaccine for COVID in sight, it’s not clear when stores will be able to fully reopen across the globe — and nor is it clear if Mood’s struggles will totally ease when stores are able to reopen. Pandemic aside, online shopping has been on a huge upswing for years, putting the broad future of in-store marketing into uncertainty.

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