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iHeart’s Bob Pittman Says Podcast Industry Has Entered Its Consolidation Phase.

The deal-making may not be at the pace of the past few years so far in 2022, but iHeartMedia CEO Bob Pittman says the podcast industry focus on consolidation continues with more deals likely.

“We're in the consolidation phase. So the top podcasters get bigger, and it becomes harder and more fragmented for the smaller players to catch up. And I think that's exactly what you've seen as a trend line,” said Pittman. “Therefore you should expect us to get bigger from it, and not only bigger in terms of users, but also bigger in terms of those users consuming more podcast episodes.”

Pittman told the Goldman Sachs 2022 Communacopia + Technology Conference on Tuesday that a bigger-is-better philosophy is paying dividends for iHeart. “We use radio to promote our podcast, and because we've got 90% reach -- we can't make a non-hit a hit – but if you got something that could be a hit, if people could find it, we can make sure they find it.”

Pittman also said that iHeart is happy to remain on the sidelines when deal-making for shows runs into the millions resulting in what he calls an “uneconomic” amount of money paid by companies to secure the rights.

“Some people will take that,” he said. “Remember a podcast called Serial? There were nothing hotter than Serial. They took money from somebody to take their podcast, and people forgot about Serial. That's a lesson for everybody in podcasting to learn.”

The New York Times bought Serial Productions two years ago for $25 million.

Pittman thinks it is a better deal long-term for a producer to build a show with its publisher since eventually even those companies forking over millions are going to want results. He also reiterated that iHeartMedia has no plans to leverage its sizable ad sales team to offer ad rep services to the podcast industry. “We'll help you build the podcast, and we want a long-term relationship,” Pittman said.

‘Pretty Mild’ Downturn

It’s not the robust advertising year that many expected when 2022 first got out of the starting blocks. But now, just two years after a global pandemic sent shockwaves across the planet, marketers aren’t drastically cutting their ad spends due to recessionary fears the way some may have expected.

“Right now, we think this one is pretty mild in the grand scheme of things we've seen through our years of living through any sort of downturn,” says Pittman.

The reason why there hasn’t been a significant advertising fall-off in 2022, according to him, is because marketers that gutted their ad budgets in 2020 learned a lesson from the pandemic.

“I think people who cut back their advertising, if they had to do over again and knew it was coming back so quickly, wouldn’t cut their advertising out,” Pittman explained.

Analytic Partners, a firm specializing in marketing return on investment, released a report in early August showing that during a down cycle, brands cutting spending in categories where competitors maintain or increase it stand to lose up to 15% of their market.

While there has been no shortage of recessionary fear in today’s macroeconomic environment, Pittman made the case that whatever is going to happen is already here. “I don't think we have something looming; it feels like we're in it,” he said. “I think this is what it is.” The company is building its business based on the current environment, leaning on high growth businesses like podcasting and digital, that represented about 10% of its business in 2020 and now comprise 26% today. “Our composition of revenue has changed rather substantially in just this two-year period of time,” Pittman added.

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