Bob Pittman On Why iHeart’s Momentum Will Continue In 2022.


Digital made up 25% of iHeartMedia revenues in first quarter 2022, a new company high, rising 36% year-over-year to $214 million. But the vast majority of the audio giant’s bread was buttered in its Multiplatform Group, home to 850 radio stations, various networks, and live events, with billings up 15% to $571 million. Unpacking the company’s strong Q1 performance for analysts Thursday afternoon, Chairman and CEO Bob Pittman offered five reasons why he expects the Multiplatform Group’s momentum to continue in 2022.


For starters, iHeart management is seeing signs that key ad categories, like auto, entertainment and retail, will continue their recovery to pre-pandemic levels. Meanwhile, pharma and other reliable strongholds are showing continued strong growth. And emerging categories, such as cryptocurrency and sports betting, have opened up new revenue doors.


Beyond categories, Pittman said Heart is continuing to “take share from and outpace” its competitors in the radio industry, based on MillerKaplan data. Moreover, major advertisers are turning to radio to compensate for audience shortfalls from television. “Broadcast radio in general, and iHeartMedia specifically, is the most efficient and cost-effective asset an advertiser can utilize to provide the missing reach in any TV-centric advertising campaign at scale,” Pittman explained.


It’s not just the TV market iHeart is looking to siphon ad dollars away from. With this week’s launch of the iHeart Audience Network, which spans broadcast, podcast and streaming audiences, it aims to further tap into the $160 billion digital ad market. Of course, the biggest differentiator for iHeart and all of broadcast radio remains trusted personalities during a time when trust in media overall has declined and trust is a key ingredient in any successful ad campaign.


‘Tug Of War’ Between Consumers And Advertisers


President, Chief Operating Officer and Chief Financial Officer Rich Bressler pointed out that the company turned in a stronger than expected financial performance – total revenues rose 19.4% year-over-year to $843 million, slightly exceeding the high end of the 17%-19% guidance range provided earlier – “despite external factors that have been impacting the economy.” And those macroeconomic conditions – rising inflation, higher interest rates, supply chain issues and global uncertainty – have some investors worried about a potential advertising recession on the horizon. Pittman said they have observed a “tug of war” between consumers with money to spend and ready to fully reengage and advertisers being cautious about the economic environment. “If there's a tug of war, I think the consumer wins and the advertiser follows the consumer,” Pittman argued. “And we're seeing that even in some of the areas that have had supply chain constraints.”


When asked how iHeart might weather softness in certain ad categories or even the potential for a recessionary environment over the next year or two, Pittman and Bressler said the company’s diverse revenue base is a potent asset, with no single ad category comprising more than 5% of revenues, and no single advertiser more than 2%. “All of which helps to mitigate pockets of ad category softness,” Pittman explained.


That diversity extends beyond broadcast radio to other platforms. Podcasting alone accounted for 10% of company revenues in first quarter. “Being able to transform our broadcast radio business into digital-like inventory, with impressions and data-infused, and using the data for targeting and attribution allows us to play in a different world than traditionally this company or the radio business has played in,” said Pittman. “All of those are our strengths in terms of us mitigating any possible negative effects in any sort of downturn.”


Another strength the company and the larger industry have on their side: “Audio is hot now,” Pittman added, which hasn’t been the case for the past 25-30 years. “Having that moment changes whatever trajectory might be historic for anyone in the audio business, including radio.”


Second quarter looks to keep the momentum going. The company is calling for 10% to 14% year-over-year growth, with April revenue up 8%, and May and June currently pacing up in the mid-to-high teens. April would have been up 12% if non-recurring COVID-related ad campaigns that ran in Q1 2021 were excluded from the comparison.


While the radio station division accounted for about three of every four dollars booked in Q1, digital was the main growth propellant, thanks to explosive gains in podcasting and double-digit increases in streaming, third party digital extensions, social and other digital offerings. Revenues at the Digital Audio Group shot up 36% to $214 million. Podcasting contributed $69 million to that bucket, rocketing up 79% year over year. Digital revenues minus podcasting increased 22% to $146 million.


Total company earnings rose 42% to $145 million at a profit margin of 17.2%, up from 14.5% in the same period one year ago.

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