To give investors greater visibility into the performance of its two main businesses, iHeartMedia is reorganizing its operating structure. Separating its fast-growing streaming audio and podcasting business from the more mature broadcast radio division will give the investment community a better appreciation of the rapid growth, profitability and improving margins of its digital business; and the scale and cash generating power of its 860-station broadcast radio platform, company officials said Thursday.
“The creation of these two new segments will enable us to strengthen the mission and tighten the focus of each group, accelerate our ability to deliver industry-leading products and services to our listeners and advertising partners across all platforms, and accelerate our transformation into a nimble and digitally-focused company,” CEO Bob Pittman told investors during the company’s fourth quarter and full year 2020 earnings call.
Digital Audio Group
In addition to iHeartRadio and the iHeartPodcast Network, the newly created Digital Audio Group includes the company’s websites, newsletters, digital services and programs; and its digital advertising technology companies, including Jelli, RadioJar, Unified and Voxnest. It will also include Triton Digital upon completion of the pending $230 million acquisition of the digital audio services and measurement company.
As of fourth quarter, the Digital Audio Group encompassed almost 20% of the company’s overall revenue and 23% of its earnings. In Q4 it grew revenue by 53% year-over-year. Pittman said these percentages will continue to rise in the future. “We believe our digital audio business is now significant enough to begin operating and reporting as a distinct segment,” he said.
iHeartMedia Digital Audio will be led as a team by Conal Byrne as CEO and Darren Davis as COO, with Carter Brokaw serving as President of Digital Revenue and Jessica Jerrick as Executive Vice President of Digital Distribution and Platform Partnerships.
Byrne came to the company in 2018 via its $55 million purchase of Stuff Media. “Conal and Darren’s combined breadth of experience and diverse skill-sets position the digital audio group for continued growth and expansion,” Pitman said.
Multiplatform Group
The more mature, bigger brother of the two segments is the Multiplatform Group, which encompasses the company’s 860-station broadcast platform. With its scale and mega cash flow, it represents nearly three-quarters of iHeartMedia revenue and remains the foundation of its business. In addition to the radio group, it includes the company’s live and virtual events business; its national ad sales organization, and Premiere Networks, which includes the Total Traffic and Weather Network; and BIN: Black Information Network.
The iHeartMedia Multiplatform Group will be led by Greg Ashlock as CEO and Tim Castelli as Chief Revenue Officer. In addition, Hartley Adkins will become President of the Markets Group; Julie Talbott joins this team in her role as President of Premiere Networks; and Jeff Howard remains President of National Sales and Tony Coles as President of BIN: Black Information Network.
“It has unique assets and unparalleled scale and now, with sophisticated data and analytics, it can offer any advertising client any product, anywhere at any time, at both local and national and on all audio platforms,” Pittman explained. The Multiplatform Group also provides the promotional firepower to launch new digital products and podcasts on a regular basis. “It’s why we can do things no one else can,” Pittman boasted.
Citing Nielsen data, Pittman said iHeart has the No. 1 audience in 99 markets in the 18-49 demo and is ranked No. 1 in 30 of Nielsen’s top 50 metros.
The company’s existing Audio Services segment remains intact.
Looking at iHeart through this new lens shows the Digital Audio Group produced $175 million in revenue and $60 million in earnings in fourth quarter for a 35% profit margin.
Triton Completes Ad Tech Stack
Pittman also used Thursday’s earnings call to explain how the addition of Triton Digital fits into iHeart’s strategy. The latest in a string of ad tech acquisitions that also include Jelli, RadioJar, Unified and Voxnest, Triton is the last piece in a puzzle that makes iHeart a full-stack audio media company. The goal is to give advertisers one-stop cross-platform shopping that spans all of audio with data targeting and attribution services.
Adding Triton will make iHeart “the only company with a total audio advertising technology and data solution providing both supply side and demand side service for all forms of audio,” Pittman elaborated, including on demand, broadcast radio, digital streaming radio and podcasting. Triton will allow the company to “benefit from the continued shift of the broadcast and digital advertising marketplaces toward data-infused electronic platforms,” Pittman offered, “and ensures that we will be in control of the sales and yield of all our audio impressions.”
Triton also provides hosting, infrastructure, monetization and measurement tools and services to many of iHeart’s competitors and will continue to do so, Pittman said, “with the understanding that with iHeart as its owner, broadcast radio will remain a priority into the future.”
Triton also operates outside the U.S. and the acquisition gives iHeart the opportunity to open new growth markets internationally through ad tech.