Podcast revenue at iHeartMedia continues to grow, topping the $100 million mark during the second quarter. Company executives say they see the pace of advertising picking up steam in the second half of the year.
“We’re still in the early days of understanding how to monetize it, although we’re making great progress,” CEO Bob Pittman said Thursday. “Advertisers have a great interest in podcasting. They walk in the door with podcasting usually top of their list of things they want to talk about.”
During Q2, iHeart says podcast revenue totaled $104.5 million, an 8% increase vs. a year earlier. And during the first half of the year, iHeart’s podcast revenue totaled $195 million, a 13% increase from last year.
“We continue to see strong momentum in our podcast business,” Pittman said during a conference call with analysts. He said the business faced tough year-to-year comparisons during the third quarter, as well as a big ad buy a year ago related to COVID vaccines. Pittman calls then an “anomaly,” explaining there was “zero chance” that money would return this year. But he told investors that iHeart expects podcast revenues to return to double-digit growth in both the third quarter and for the full year. In Q3, the company said based on current ad sales pacings that podcast revenue is expected to be up low double-digits.
Beyond advertising growth, Pittman said there are plenty of reasons to be bullish about the future of podcasting. “Not only are more people coming to podcasting, but they are spending more time with it. So, you have two growth vectors, an increasing audience and an increasing usage by the existing audience. And I don’t see that abating anytime soon,” Pittman said. “Podcasting has now surpassed the reach of the streaming music services, and I think that’s obviously a very positive sign.”
In terms of monetization, Pittman told analysts the industry overall is still coming to grips with the economics of podcasting. Gone are the days of paying “uneconomic prices” for content, he said, as he sees more companies “being more rational” in the kinds of deals they are writing.
CFO/COO/President Rich Bressler said not only is podcasting a high-margin business, but he said the decision to allow sales reps around the country to sell anything, anytime, anywhere — whether it’s a broadcast radio spot, digital display ad, or podcast spot, continues to pay off.
Digital, more broadly, was a strong point for iHeartMedia during the Q2, as its Digital Audio Group overall saw revenue grow 10% from a year earlier, to $286 million.
Similar to podcasting, the overall business is gaining strength in the second half. Total revenue is expected to increase in the mid-single digits in Q3.
“We call this a recovery year in the ad market,” Pittman said. While podcast ad sales benefit by targeting, he believes there is a growing sense among marketers that too much money has been taken out of mass market advertising in favor of media that usually do better on lower funnel ad metrics, like digital.
“Unfortunately, that’s running out of steam because the top of funnel wasn’t full,” Pittman said. “And so I think they’re looking back to full funnel advertising partners like us. They’ve just got to get reach — to get them to do whatever. They’re also finding that if they put advertising like ours on top of the performance advertising, that it indeed boosts the response rate.”
For the second quarter, iHeartMedia reported an operating loss of $910 million, largely due to a $920 million write down in the value of its radio portfolio.
Bressler told investors that iHeart continues to have “active dialogue” with the group holding a majority of the company’s debt as it looks at a possible refinancing. He noted that the roughly $4.85 billion in net debt outstanding at the end of Q2 was the lowest in iHeart’s history. The company had $365 million cash on hand and no debt due until May 2026.
Comments