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.”
During the investor call, Pittman placed emphasis on the company’s ongoing modernization program – both its positive cost implications for the company and the importance of technology in continuing to move the company forward. “Technology is the key to increasing our operating leverage, and it is a consistent focus for us,” said Pittman. “It allows us to speed up processes, streamline legacy systems, and it enables our folks to create more, better and faster. We’ve now taken another significant step in our modernization journey – flattening our organization, eliminating redundancies and breaking down silos.”
Pittman says creating more and better content has been enabled by technology that gives some of the company’s best on-air talent, including popular local personalities once limited to specific markets, the capability to be located anywhere and do shows that are as local as if they were sitting in a studio in that market. This, combined with music specifically localized for that market, lets these personalities seamlessly connect with local markets no matter where they are physically based, as well as build their brands in other markets. This enables iHeart to both leverage its best talent from across the company while continuing to promote its most popular locally-based talent, who have strong local followings, in other markets.
Pittman added, “Great talent are great talent because people want to be their friends…so we are increasing our relationship with the consumer, and we’re using technology to do it.
This modernization effort will reduce iHeart’s annual expenses by approximately $150 million in 2025, and a total of $200 million in 2025 when factoring in other actions the company took earlier this year.
Additionally, before its earnings call iHeart announced it had entered into a Transaction Support Agreement with debtholders representing on an aggregate basis almost 80% of the company’s outstanding debt. According to Pittman, this will allow the company to extend the majority of iHeart’s debt maturities by three years; keep annual cash interest expenses essentially flat; and provide some debt reduction. According to Pittman, “the high levels of support from our debtholders demonstrates the confidence they have in the future of our business”, and the agreement will provide the company with flexibility to continue iHeart’s transformation.
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.
Comments