Digital Leads iHeartMedia’s Transformation: Pittman Sees Upside For Radio.

Executives at iHeartMedia say the transformation of its business has reached a notable milestone as digital audio operations are now consistently generating more earnings than its broadcast radio stations. However, CEO Bob Pittman says that widening gap is not the result of listeners abandoning radio. Instead, he argues radio has a monetization problem — one the company believes it can address by making broadcast inventory look and transact more like digital media.

The company reports its Digital Audio Group generated $123 million in adjusted earnings during the second quarter, up 14.5% from a year ago, compared with $59 million for the Multiplatform Group, which includes iHeartMedia’s broadcast radio, networks and events businesses. It marks the sixth consecutive quarter that digital earnings have topped radio’s earnings.

“Even when we get the Multiplatform Group back to growth, we expect this trend to continue,” Pittman told analysts Monday. Yet he pushed back against the idea that the performance gap reflects weakness in radio's underlying consumer position.

“Unlike other traditional media, we have more users of broadcast radio today than we did 20 years ago,” Pittman said. He explained the company’s broadcast radio audience is twice that of the largest television network and has four-times the reach of the largest digital-only ad-supported audio service. “We don't have a broadcast radio audience challenge. We have a broadcast radio monetization challenge,” Pittman said.

The problem, in iHeartMedia's view, is increasingly how advertisers buy media rather than whether radio delivers an audience. Pittman said many are giving preference to services available within their digital buying platforms, leaving broadcast radio at a disadvantage even when its reach and advertising results remain strong.

That’s driving iHeart's effort to make its broadcast inventory available through programmatic platforms, including Amazon, Google and Yahoo, while also expanding its AudioGraph and programmatic offerings. “We feel confident that our broadcast radio participation in these digital platforms will significantly improve our radio revenue performance and will help the entire radio industry,” Pittman said.

President/COO Rich Bressler said the investment is designed to remove the distinction advertisers encounter when buying broadcast versus digital media. “This is all in support of our efforts to make our broadcast inventory as easy for our advertising partners to transact as our digital inventory,” he explained. Bressler also described the embrace of programmatic as “one of the important steps” in returning radio to growth.

The potential is significant enough that iHeart expects roughly $200 million in total programmatic revenue this year, up about 50% from $135 million in 2025. In the near-term, revenue at the Multiplatform Group dipped 1.6% in Q2 while the Digital Audio Group’s revenue was up 12.4% year-over-year. Overall, the company reported revenue of $977.2 million in the quarter, up 4.7% from a year ago.

Management says the underlying advertising market remains uneven. Bressler said the company saw some softness during Q2 that appeared to correlate with the Middle East conflict and related economic effects. Among advertising categories, political, gambling, computers/electronics/appliances and professional services posted the largest dollar gains, while telecom, financial services, and auto were softer.

Still, Pittman said advertising has held up better than he expected given the broader uncertainty.

“I've been surprised with all the uncertainty in the marketplace how resilient the ad market has been,” he said. “There's a body of thought which say this is the new normal, and everybody's got to sell their products and build their brands, and they can't let that get in the way of it.”

Optimism For Second Half

While some businesses are being squeezed by inflation and higher fuel costs, Pittman said others are relatively insulated or view the environment as an opportunity. “On the whole we're sort of cautiously optimistic about the second half of the year,” he said.

For the third quarter, iHeartMedia expects revenue to increase in the mid-single digits, with Multiplatform revenue approximately flat with Digital Audio revenue projected to rise in the low teens.

Political advertising is expected to provide another major lift. Pittman said early indications suggest this year's midterms could be unusually strong.

“It's shaping up to be a pretty big political year,” he said. “Some people are saying it may be as big as the presidential year — that remains to be seen, although the early indications are it's probably performing at that level.”

Bressler said strong political demand on television could also indirectly benefit radio. As broadcasters sell through their available TV inventory, he noted broadcast radio tends to be “a big beneficiary.”

Pittman said there is another potential year-end tailwind. Political demand can crowd regular advertisers off television, sending some of that money toward radio. And advertisers that have held back spending because of economic uncertainty could release those dollars if conditions stabilize. “Our hope is that some of the money that we've missed first part of the year because of the uncertainty shows up at the back end,” he said.