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In Vote Of Confidence For iHeart’s 2023, Pittman And Bressler Expand Their Company Holdings.


It is one thing for a company’s executives to tell investors that they are on the right path long-term, it is another for management to put its own money into play as a demonstration of their confidence. That is what iHeartMedia’s top two executives did Monday as CEO Bob Pittman and CFO/President/COO Rich Bressler invested more than one million dollars in iHeart stock after last week’s news that first quarter revenue was pacing down mid-single digits spooked some investors.


In filings with the Securities and Exchange Commission, iHeart says Pittman and Bressler each bought 94,518 shares of company stock for about $525,000 apiece. The purchase brought Pittman’s total holdings in iHeart to nearly 1.9 million shares of Class A common stock and Bressler’s holdings to more than 1.6 million shares.


The result was iHeartMedia’s stock price jumped 8% on Monday. It reversed a trend of recent days that saw the company’s stock price fall by more than a third after last week’s earnings report.


Total fourth-quarter revenue at iHeartMedia grew six percent to $1.13 billion as the audio giant’s Digital Audio Group – which includes its podcast business – posted a 10% growth rate during the fourth quarter. And iHeart’s Multiplatform Group, which includes its radio business, squeezed out a one percent growth rate for Q4.


The business climate looks similar in the first quarter according to iHeart executives. The company is forecasting its revenue will be down mid-single digits during the first three months of this year after a one percent revenue drop in January.


“In periods of uncertainty, what we find is advertisers holding back and taking a look at what the year might be. If they’ve got an opportunity to hold back, it’s certainly in Q1,” Pittman said. But he said that while last year's business was better from the big marketers, so far in 2023 it has been the smaller advertisers that have been stronger.


The stock purchases by iHeartMedia executives follow the cautious outlook many investors got last week from Wall Street analysts. Wells Fargo Securities media analyst Steven Cahall said in a note to investors that he thinks the Multiplatform Group is “more challenged” and will likely drag down iHeart’s earnings this year starting with an estimated $60 million year-to-year drop in earnings during the first quarterdue to “macro” ad market conditions.


“Digital is still growing,” Cahall noted, adding that radio’s challenges are not unique as there are similar “lingering ad market challenges” with the TV broadcast marketplace.


B. Riley Securities analyst Daniel Day said the forecast by iHeart management that revenue will be down during the first quarter implies national ad spending has slid further following an initial pullback by brands last summer. Day told clients that is “partially due to advertisers being conservative with budgets early in the year.”


Yet Day also acknowledged some investors may remain nervous in the short term. “We recognize that amidst a challenging ad spend backdrop combined with concerns around the secular headwinds facing broadcast radio longer-term, investors may need to be more patient with the name than we had expected coming into 2023,” he said.


But even as Day cut his 2023 revenue outlook by two percent and his earnings estimate by 12% to account for a softer-than-expected ad market, he also reiterated his “buy” rating on the iHeart stock. That’s because the company is expected to generate more than $200 million in cash flow this year even without the added benefit of political advertising. Day says the deleveraging that iHeart will be able to do with the cash will all by itself provide 20% to 30% annual returns for the foreseeable future.

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