iHeartMedia executives are seeing more evidence that 2024 is a recovery year for advertising revenues.
“While the marketplace is dynamic, we continue to see strong momentum in our podcast business, our digital ex-podcast business, and the sequential improvement of our Multiplatform Group’s year-over-year revenue performance,” Chairman & CEO Bob Pittman told analysts and investors on a call discussing the company’s Q3 earnings. Along with a recovering ad market, Pittman said the quarterly results “also reflect the power of our assets, the upside from political advertising and the benefit of our ongoing focus on cost efficiencies.”
The 2024 election results are expected to have a positive influence on business, Pittman added. “The sense you hear from the election, regardless of your political belief, is people think this is very good for business, and we’re hearing that from Main Street on up. So, I think that’s good as sort of an overall complexion about what’s going on.”
iHeartMedia reported total Q3 2024 revenue of $1 billion, up 5.8% year-over-year and within its earlier guidance of up mid-single digits. Excluding political revenue, Q3 revenue increased by 2%.
Q3 revenues at the company’s Multiplatform Group, home to 850 AM/FM radio stations, assorted networks, and events, inched down 1% to $620 million, or minus 3% excluding political revenue. Within that, broadcast radio revenue for the quarter was $448 million, down 1.4%, while network revenue was $115 million, a decrease of 0.9%. Sponsorships and events revenue was $50 million, up 1.7%.
Revenue at its Audio & Media Services Group, which includes the Katz Media Group rep firm, increased a whopping 45.3% year-over-year to $90 million.
Strong momentum continued at iHeartMedia’s podcast business in the third quarter as revenues jumped 11% to $114 million. The growth, combined with a streaming audio business that increased 13.6% to $187 million, pushed up revenues at the company’s Digital Audio Group by 12.7% to $301 million. That made the digital group almost three quarters the size of the Multiplatform Group that houses iHeart’s 850 radio stations.
“We expect that strength to continue,” Pittman said. “Our financial discipline in podcasting continues to pay off as our podcasting [earnings] margins remain accretive to our total company.”
Digital Audio Group earnings grew 6.8% to $100 million at a profit margin of 33.2%. Looking ahead, senior management said it expects the digital group to grow revenue in the mid-to-upper single-digit range.
Debt Maturities Pushed Out
Before the earnings release, iHeartMedia announced it had entered into a transaction support agreement with a group of debt holders representing approximately 80% of the company’s outstanding debt. The agreement calls for the company to exchange $4.1 billion of existing debt for new notes and term loans, push out debt maturities by three years, keep total annual cash interest payments essentially flat; and provide some overall debt reduction. The offer is expected to close by the end of this year.
COO/CFO Rich Bressler said the exchange offers “will strengthen the company’s financial flexibility and provide us with the runway to accelerate our strategic growth initiatives. This marks a significant step in iHeart’s strategy of disciplined balance sheet and capital structure management,” he added.
The company also announced cost-cutting programs expected to generate $150 million in annual savings in 2025. “We've now taken another significant step in our modernization journey, flattening our organization, eliminating redundancies, and breaking down silos,” Pittman explained. “It will be easier to do business with us and easier to get our business done, as well as accelerate revenue growth.”
Programs enacted earlier this year will generate another $50 million in 2025, for a total of $200 million of year-over-year savings in 2025, Pittman said.
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