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After Lackluster January, iHeart Sees Improving Ad Market In Q1 And Beyond.


Coming off a tougher than expected ad market in 2023, iHeartMedia sees 2024 as a turnaround year for its businesses, both broadcast radio and digital audio. Despite a lackluster January, ad pacings picked up in February and March and the back half of the year holds the promise of record-setting political spending.


“As we look to the year ahead, we see 2024 as a recovery year and we expect to return to growth mode, which will benefit all of our assets with a disproportionate [earnings] benefit to our Multiplatform Group and broadcast radio assets,” Chairman and CEO Bob Pittman said Thursday.


Low-Single-Digit Growth Expected For Broadcast


Home to its 860 radio stations and assorted networks, the Multiplatform Group is poised for quarter-by-quarter improvement throughout the year after declining 6.7% in fourth quarter 2023. The broadcast business unit, which delivered more than double the revenue of its digital counterpart in Q4, is anticipated to decline by mid-single digits in the first quarter before resuming low-single-digit growth later this year.


The Digital Audio Group, where revenues rose 5.5% in Q4 and now represent roughly 30% of total company revenue, is pacing to grow by mid-single digits in the first quarter. A big part of that is its flourishing podcast business, which hit a new high of $408 million in full year 2023 revenue for a 4% year-to-year gain. Pittman said he believes iHeart now holds a 20% share of the podcasting marketplace. “Podcasting by almost any measurement, and there are a number of them out there, show it to be the biggest growth factor in the media business today. And we don't see any sign that it's subsiding,” Pittman said.


Since 2019, iHeart has reduced expenses in its broadcast business by 7%, shifting a big chunk of those dollars to digital. That allowed the company to create a digital business that generated $1 billion of revenue last year.


Momentum Picked Up In Feb. and March


During a call with analysts Thursday morning, Pittman and Bressler highlighted signs of an improving ad market. “Across the board, we’re seeing a strengthening of advertising,” Pittman said. Added Bressler, “We expect 2024 to be back in growth mode, as we continue to see signs of improvement throughout our business and the broader advertising marketplace.”


Drilling deeper into the pace of business in 2024, Bressler said the trajectory turned around after a disappointing January. “The first quarter got off to a slow start with January revenue down 8% year over year,” he said. “However, we are seeing momentum in February and March, which are both pacing up low single digits.” As of Thursday, iHeart was pacing “slightly better than down 1% for the quarter” and said it expects Q1 revenues to be flat to down 2% year-over-year. The momentum is continuing into the second quarter, which is pacing up low single digits. “We see this trajectory as further validation that January was an anomaly,” Bressler said.


Looking ahead to the second half, Bressler predicted “robust” political ad spending would benefit the company in the third and fourth quarters. Political, one of radio’s highest margin ad categories, generated $167 million in revenue for iHeart during the 2020 presidential election, Bressler said. Pittman said he thinks the biggest political opportunity for iHeart will be on its broadcast radio properties, especially as television viewing continues to decline. In light of investments made in data and analytics that enable advertisers to target specific audience cohorts instead of just traditional age and gender demographics, Pittman said the company is well positioned to target specific voter groups for political advertisers.


Reducing Debt Leverage


The company ended the year with $4.9 billion of net debt and $772 million in total liquidity, which includes a cash balance of $346 million. Its debt-to-earnings ratio was seven times in 2024 and Bressler said they are making progress to reduce it to four-times.


Total revenues at iHeartMedia declined 5.2% to $1.1 billion in fourth quarter 2023 as the company delivered a slightly better performance than its guidance range of down high-single digits. Factoring out last year’s political ad windfall, Q4 revenues would have been flat.

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