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How iHeart Is Using AI To Help Make Music Decisions.


While much of the talk about AI in radio revolves around concerns about the use of synthetic voices, the technology has far more practical applications for the industry. Programmers at iHeartMedia, for example, use it to assist in making music choices. “AI provides us with a level of efficiency that I think we couldn't have dreamed up five or six years ago,” CEO Bob Pittman said Tuesday at the Morgan Stanley 2024 Technology, Media & Telecom Conference.


Pittman explained to investors the importance of program directors getting the music right on their stations. “We have the same music that everybody else has, how are we No. 1 and somebody else is No. 20?” he asked rhetorically. The answer lies in using AI in the decision-making process. “We used to do about three big data inputs for a programmer to look at every week. When we started using AI, we could get 3,500 inputs,” Pittman said.


Typically, AI is used at iHeart to provide suggestions with the programmer choosing from among those suggestions, he explained. “In some markets, we actually tested letting AI make the final decision. The ratings were about 10% better,” Pittman said. “So now we can reduce time spent on other stuff, and add more productivity. And that's just one example of how we intend to use it.”


Radio Growth Of 1% To 2% Expected


To counter perceptions that radio is like “a melting ice cube,” Pittman pointed to Nielsen's just-released Total Audience Report for Q3 2023, showing AM/FM radio's widening lead over TV. Over the past six years, AM/FM's average audience among persons 18-49 has gone from being 63% of that of live and time-shifted TV in 2018, to 3% greater than TV in 2022 and up to 12% higher in 2023. Over that period, TV's reach has fallen from 82% to 58%, with daily time spent down from two hours and 46 minutes to 1 hour and three minutes. “It means radio actually is pretty rock solid, in terms of being America's companion,” Pittman told the Morgan Stanley crowd. “We think that radio continues to be a growth engine. For us, we think it will be a 1% to 2% long term growth – small, but it also has great free cash flow characteristics.”


Using Radio To Build Adjacent Businesses


Importantly, iHeart uses the reach of its broadcast radio footprint to feed other parts of its business – podcasting, events, digital radio, all of which are growth drivers for the company.


During 2023, iHeartMedia had $408 million in podcast revenue and while other companies including Spotify and Acast have said they aim to turn their podcast businesses profitable this year, Pittman says the link to radio has meant iHeart has been in the black since entering the business.


“Everybody else is struggling to do it. But because it's an adjacent business – that gives us an enormous advantage,” Pittman said. “We already have an infrastructure. We make audio content every day, we just got to make a little more of it for podcasting, we don't have to build the infrastructure for it. When we sell audio advertising, we don't have to start from ground zero and hire all these salespeople, we just have to tell our sellers to sell some podcasting.”


President, COO and CFO Rich Bressler said that with more than 1,000 sales reps across 150 markets nationwide, iHeart has also adopted the strategy of allowing any salesperson to sell anything in the company’s entire portfolio. “That means we have a thousand feet on the street, yes, selling broadcast radio, but we have a thousand-plus feet on the street selling podcasts,” he added.


As iHeart has grown into new businesses, Pittman said that strategy has paid off. “As we have new products, they're able to talk to the advertiser about more products, which gives them more credibility with the advertiser. And for us, it allows us to be able to put revenue on to new revenue streams very quickly,” he said. “The podcasting business really has been a juggernaut for us, and a lot of that is because of having that advantage in the local markets as well as our national sales.”

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