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Historical Growth Ahead For iHeart In 2024, Rich Bressler Predicts.

On its second quarter financial results call, iHeartMedia forecast a mid-single digit revenue decline for third quarter, or low-single digits if you take out political. Speaking at an investor conference Wednesday, President & COO Rich Bressler said they remain comfortable with that outlook.

“We're sitting here in the middle of September, and we continue to feel comfortable with that overall guidance,” Bressler said, adding that the company is hearing “a little bit more of an optimistic tone” in discussions with advertisers. Looking ahead to 2024, which is expected to bring record-setting political ad spend, Bressler said iHeart “expect(s) to return to historical growth.”

Speaking at the Bank of America Securities Media Conference, Bressler provided a lookback at iHeart’s political ad revenue in the past few election years: $170 million in political revenue in the 2020 presidential election year, followed by $130 million in the non-presidential election year of 2022. Both were company records. Before 2020, the political ad revenue record for iHeart was $100 million.

“We haven't given guidance, but we have every reason to believe that 2024 will be very strong,” Bressler said, noting that the conversion of revenue to earnings on political revenue is “our highest conversion.” Broadcasters like political advertising since it's the only ad category where they get the cash up front.

When the investor conference Q&A with Bressler and iHeart Chairman and CEO Bob Pittman turned to AI, Bressler said they were looking closely at it for both efficiency and in terms of creative. And Pittman predicted AI will be “a huge game changer” when it comes to operating efficiencies.

It has been more than two years since iHeart bought Triton Digital from E.W. Scripps Co. for $230 million and Pittman said it has allowed iHeart to sell broadcast radio inventory the way that digital advertising is bought and sold. The company has seen an impact from the ability to give advertisers the specific audiences they want across all forms of audio: broadcast, digital streaming and podcasting, Pittman added. “By being able to do that for an advertiser, we can give them this incredible scale and ways to reach that audience in many new ways,” Pittman explained. But the company has not yet seen the impact from using Triton to sell inventory programmatically or through real-time bidding, with the latter just starting to roll out.

Focus On Podcast Profitability

In a time when many media companies are shedding unprofitable podcasts from their lineups, the number of shows that are part of the iHeartPodcast portfolio has continued to grow. It had 877 active shows during August, compared to 814 in January. Pittman said that as deal-making has become more profit-centric it has helped the company enlarge its roster. “It makes our deals easier to do,” he said.

Walking away from opportunities to do business with some big-name talent took “discipline,” he said. But he told the room of investors that opting not to cut deals that were financially upside down has paid off in the long run for iHeart.

“It turned out, they couldn't get a return, and so I think things have returned to Earth,” Pittman said. “I do think you're going see values getting much easier.” He said even though they may not have signed the celebrity talent that some other podcasters are now shedding, iHeart was still able to bring partners onboard such as the NFL and NBA. “They wanted to build something sustainable,” he said.

The podcast industry has continued to have some of the strongest growth numbers in advertising this year in what is otherwise a softer marketplace than what media companies faced in 2022. Pittman expects business to pick up in the fourth quarter, and he told investors that next year ad spending will probably look a lot more like it has in the past.

“The growth is still extraordinary out there. And we expect to continue to have strong growth,” Pittman said. He thinks iHeart’s focus on podcast profitability will mean that its podcast business will have earning margins of around 35% going forward.

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