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Podcast Revenue Up 12% During First Quarter At iHeartMedia.


Even with a slower ad market, iHeartMedia entered the new year with anther quarter of double-digit revenue growth for its podcast division. It reports its podcast revenue totaled $$77 million during Q1, up 12% from a year ago.


“We're probably seeing a slightly better marketplace than we had expected. And our expectation based on what we see today, is that it's going to continue to get better through the year,” CEO Bob Pittman said. During a conference call with analysts, Pittman said that he believed that some advertisers were “holding back” money during the start of the year. “As the year goes on, and especially as you get to the biggest sales quarter for most companies, which is Q4, that that money begins to flow. And we're seeing evidence of that happening.” Pittman said that a lot of marketers learned during the 2020 pullback that when they lurch in and out of the ad market, it actually cost them more to get back in. “Hopefully that's a lesson that is moderating the impact of this downturn,” he said.


Podcasting was the fastest-growing ad segment for iHeartMedia during the first quarter. Overall, its Digital Audio Group – which includes its streaming music and other online businesses – saw revenue increase four percent year-to-year to $223 million. Without the podcast ad lift, however, it would have only been up one percent. Either way, iHeart’s podcast and digital business remains profitable. The company said its Digital Audio Group had earnings of $54 million during the quarter, up three percent from a year ago.


“We continue to see positive changes in the podcasting industry as relates to content costs,” Pittman told analysts. “While some podcast publishers had chased on economic deals that drove up content cost across the podcasting marketplace, we're now seeing a reversal of this trend. This return to rational economic behavior across the marketplace is good news for iHeart and good news for the podcasting industry as a whole.”


Pittman also said that iHeartMedia benefits from having its vast radio operation, giving it a “natural advantage” in podcast content creation, promotion, marketing, and advertising sales. “At its core, podcasting is an adjacent and truly complementary business,” he said.


To that point, Pittman said data shows 68% of broadcast radio listening happens out of the home, and that 69% of podcast listening occurs inside home which he says is “clearly illustrating that broadcast radio and podcasting are complementary and mutually additive businesses in terms of consumer usage.”


The just-released iHeartMedia’s new State of Podcasting 2023 report has also given radio’s biggest group that its efforts in on-demand audio are not cannibalizing what it does on-air. Pittman pointed to data that shows 70% of podcast listners said they replaced time spent with social media platforms, 50% said they replaced time spent with YouTube, and 46% said they replaced time spent with streaming music services. “And most important, not much podcast listening was drawn from broadcast radio listening, illustrating the truly complementary nature of broadcast radio and podcasting,” he said. “These trends are significant because advertisers and the marketing dollars follow consumer usage.”


iHeart Outperforms Earlier Guidance.


Beating the guidance range it gave three months ago, iHeartMedia reported its overall revenue declined 3.8% revenue to $811 million during the first quarter. While billings at the company’s Digital Audio Group grew, the Multiplatform Group, home to 850 radio stations and various networks, saw a 7.4% revenue decline during the quarter. The result was audio giant reported a first quarter operating loss of $48.9 million compared to operating income of $12.3 million in Q1 2022.


Pittman said that while Q1 results were “a little above the high end” of its guidance ranges, the macro economic climate and the advertising marketplace remain “uncertain.” Yet he said the advertising market was “a bit stronger” in the quarter than management had initially anticipated.


Even so, iHeart still expects second quarter revenue to be down by the mid-single digits from a year ago, or by low-single digits when political ad sales are removed from the comparison. But at its Digital Audio Group, CFO/COO/President Rich Bressler said they are forecasting revenue to be up mid-single digits. “Assuming a continued improvement in the advertising marketplace, we believe that our Multi-Platform Group revenues will continue to recover, and our Digital Audio Group revenues will continue to grow throughout 2023,” he said.

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