iHeartMedia Q4 2024 Earnings Call Transcript

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Provided by Quartr
February 27, 2025

Key Takeaways

  • iHeartMedia completed a comprehensive debt exchange that extended maturities, kept annual cash interest flat and delivered net debt reduction, enabling $150 million of annual cost savings from its $200 million modernization plan.
  • In Q4, consolidated adjusted EBITDA rose 18.2% to $246 million and revenues increased 4.8% year-over-year (down 1.8% ex-political), though results fell short of original high-single-digit growth guidance due to lower political ad spend.
  • The Digital Audio Group set a full-year record with $1.1 billion in revenue, saw Q4 revenues of $339 million (+6.7%) and 35% EBITDA margins, driven by 5.7% podcast revenue growth and partnerships expanding its global podcast leadership.
  • iHeart’s broadcast radio business maintained audience strength, with Q4 Multi-Platform Group revenues flat at $684 million (-5% ex-political) and a 5.9% EBITDA increase to $150 million, as programmatic and AI-infused ad tech rollouts aim to boost monetization.
  • For Q1 2025, iHeart expects adjusted EBITDA of $100–110 million and low-single-digit revenue decline, while full-year guidance calls for flat revenues, $770 million in adjusted EBITDA, $200 million in free cash flow and a net debt/EBITDA ratio of ~5.5×.
AI Generated. May Contain Errors.
Earnings Conference Call
iHeartMedia Q4 2024
00:00 / 00:00

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Operator

Good afternoon, and welcome to the iHeartMedia Q4 twenty twenty four Earnings Call. All participants are in a listen only mode. After the speakers' remarks, we will have a question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mike McGinnis, Head of Investor Relations. Thank you. Please go ahead.

Mike McGuinness
Mike McGuinness
Executive Vice President, Deputy Chief Financial Officer & Head of Investor Relations at iHeartMedia

Good afternoon, everyone, and thank you for taking the time to join us on our fourth quarter twenty twenty four earnings call. Joining me for today's discussion are Bob Pittman, our Chairman and CEO and Rich Bresler, our President, COO and CFO. At the conclusion of our prepared remarks, management will take your questions. In addition to our press release, we have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward looking statements regarding our financial performance and operating results.

Mike McGuinness
Mike McGuinness
Executive Vice President, Deputy Chief Financial Officer & Head of Investor Relations at iHeartMedia

These statements are based on management's current expectations and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings, including our recent eight K filing. Additionally, during this call, we will refer to certain non GAAP financial measures. Reconciliations between GAAP and non GAAP financial measures are included in our earnings release, earnings presentation and our SEC filings, which are available in the Investor Relations section of our website. And now, I'll turn the call over to Bob.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Thanks, Mike, and good afternoon, everyone. Before I take you through the fourth quarter financial results, I want to share two key highlights from last year. We successfully completed the comprehensive exchange transaction that we discussed in our third quarter call. This exchange accomplished three things.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

One, it extended the majority of our debt maturities by three years. Two, it kept our current consolidated annual cash interest expense essentially flat. And three, it provided overall debt reduction. This improved capital structure provides the company with the flexibility it needs to remain focused on creating shareholder value. And an important part of creating that value is to continue modernization of our company.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

In 2024, we took another significant step in that journey, flattening our organization, eliminating redundancies and breaking down silos. It will be easier to do business with us and easier for us to get our business done and will help to accelerate earnings growth as well. As we discussed last quarter, the actions we took over the course of 2024 will generate over $200,000,000 of annual cost reductions. There will be some ordinary course add backs of approximately $50,000,000 to our expense base, which results in net savings of approximately $150,000,000 And with that, I'll turn to our fourth quarter financial results. In the fourth quarter, we generated adjusted EBITDA of $246,000,000 up 18.2% versus prior year.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Our consolidated revenues for the quarter were up 4.8 compared to the prior year quarter. Excluding the impact of political, our consolidated revenues were down 1.8%. Turning to our individual operating segments. The Digital Audio Group generated fourth quarter revenues of $339,000,000 up 6.7% versus prior year, which represents approximately 30% of the company's revenue. The Digital Audio Group generated fourth quarter adjusted EBITDA of $119,000,000 up 2.1% versus prior year and the Digital Audio Group's adjusted EBITDA margins were 35%.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

I will also note that this was the Digital Audio Group's best full year performance on record generating over $1,100,000,000 of revenue and approximately $380,000,000 of adjusted EBITDA. Within the Digital Audio Group, our podcast revenues grew 5.7% compared to prior year and our non podcast digital revenues grew 7.1% compared to prior year. Our podcasting financial discipline continues to fuel what we believe is the most profitable podcasting business in The United States. Additionally, our podcasting EBITDA margins remain accretive to our total company EBITDA margins. And as Rich will discuss later, our podcasting revenues in Q1 are expected to grow in the high teens.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

In January, iHeart was once again ranked the number one podcast publisher in The U. S. According to PodTrak. And iHeart is the number one sales network in podcasting as well with approximately three times the downloads and monthly audience of the next largest U. S.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Sales network according to PodTrak with a similar leadership position globally as well. To that end, this week, iHeart podcast served as the official podcast partner for the twenty twenty five Web Summit Qatar, where our marquee talent, including Malcolm Gladwell and Jay Shetty, led panel discussions. And on Monday, we announced a groundbreaking multi year partnership with the Government Communications Office of the State of Qatar to help create a thriving podcasting industry in The Middle East and North Africa. We see this as further validation of the continued growth potential of the podcast industry and of our ability to expand our leadership position as the largest U. S.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Podcast publisher to the global market as well. In addition to our industry leading podcast business, we also have the number one streaming digital radio service, which has five times the listening of our closest competitor. We have the largest social footprint of any audio service by a factor of five and we operate 3,000 national and local websites with more than 140,000,000 unique users in The United States each month. And in the fourth quarter, we launched the next generation of our iHeartRadio app, which combines the key features of the car radio that listeners know and love with innovative technological enhancements. We've had a strong positive response from our listeners.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

So if you've not done so already, I encourage everyone to check out the redesigned iHeartRadio app and see for yourselves. Turning now to the Multiplatform Group, which includes our broadcast radio, networks and events businesses. In the fourth quarter, revenues were $684,000,000 flat versus prior year and excluding the impact of political advertising, revenues were down 5%. The Multi Platform Group's adjusted EBITDA was $150,000,000 up 5.9% versus prior year. As we look at the Multi Platform Group, let me take a moment to focus on Broadcast Radio and tell you why we continue to believe it's a growth engine for our company, not a declining business.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Broadcast radio has more listeners today than it did twenty years ago. In an environment in which broadcast and cable TV audiences have dwindled and print audiences have disappeared, broadcast radio audiences have remained strong. And our broadcast radio is the undisputed leader in monthly audience reach even when compared to Google and Facebook. And as we look at our advertising growth opportunities for broadcast radio, the most important variable for advertising on any medium is what's happening to the audience. On that front, broadcast radio is not only healthy, but robust.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Additionally, when audio is added to a social media campaign, the response rate jumps by 83%, powerful evidence that in addition to reaching more potential consumers for advertisers, we can also meaningfully improve the response rates for their other media as well. This combined with the ad tech innovations we're rolling out to inject our broadcast radio inventory into data infused digital buying platforms, including programmatic, makes us more confident than ever in the growth of broadcast radio revenue. Turning to the Audio and Media Services Group, revenues were $98,000,000 dollars up 44.7 percent year over year and adjusted EBITDA was $49,000,000 up 136% from $21,000,000 in the prior year. Excluding the impact of political, the Audio and Media Services Group's revenues were down 1.6%. As we look to the year ahead, we remain focused on supporting our high growth businesses like podcasting, while as I said before, finding new ways to unlock the power and value of our broadcast radio assets, including our ongoing work to integrate our broadcast radio inventory into programmatic platforms.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

As evidence of our progress, I'm excited to announce that in March of this year, our broadcast radio inventory will be available via the Yahoo DSP and Google's DV360 for digital buyers to purchase alongside other programmatic assets like CTV. This is a critical early step in aligning our broadcast assets with digital buying behavior, which will allow iHeart's broadcast radio assets to participate in the growing digital and programmatic TAMs. And as we continue to innovate and grow, our operational efficiency is critical to our success and we remain relentlessly focused on cost efficiencies and on our commitment to take advantage of new and evolving technologies like programmatic and AI to deliver both short and long term results. Before I turn it over to Rich, I'd like to take a moment to briefly mention the devastating Los Angeles Wildfires. Serving our local communities is at the heart of everything we do.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

And I want to acknowledge the incredible work of our teams on the ground during that time of crisis. It's moments like this and the hurricanes last fall that the dramatic value of what we do becomes apparent. And now I'll turn it over to Rich.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Thank you, Bob, and good afternoon, everyone. Our Q4 twenty twenty four consolidated revenues were up 4.8% year over year, below the guidance we provided above high single digits due primarily to lower political advertising revenue than we had originally expected both before and after the election. Additionally, we saw a slowdown in non political advertising revenue just before the presidential election, which as we said on our Q3 call, we had hoped would be re expressed after the election. In the end, it was not. Our consolidated direct operating expenses increased 9.9% for the quarter.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

This increase was primarily driven by higher variable content costs related to the increase in digital revenues, as well as costs incurred in connection with cost savings initiatives implemented in the fourth quarter. Our consolidated SG and A expenses decreased 1.7% for the quarter. The decrease was driven primarily by lower compensation expense and the timing of non cash marketing expense through the iHeartRadio Music Festival, partially offset by cost incurred in connection with cost savings initiatives implemented in the fourth quarter. We generated fourth quarter GAAP operating income of $104,500,000 compared to income of $79,800,000 in the prior year quarter. We generated fourth quarter adjusted EBITDA of $246,000,000 dollars up 18.2% versus prior year, which was below the guidance of approximately $290,000,000 due to the advertising impacts I just mentioned.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Turning now to the performance of our operating segments. And as a reminder, there are slides in the earnings presentation on our segment performances. In the fourth quarter, the Digital Audio Group's revenues were $339,000,000 up 6.7% year over year and in line with our guidance of up high single digits. The Digital Audio Group's adjusted EBITDA was $119,000,000 up 2.1% year over year and our Q4 margins were 35%. Within the Digital Audio Group are our podcasting revenues of 140,000,000 which grew 6% year over year.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

And for the full year, our podcasting revenues were up 10% year over year. Our first quarter non podcasting digital revenues grew 7% year over year to $199,000,000 As those of you that follow us know, our podcasting revenues typically have a higher margin than our non podcasting digital revenues and the flow through we saw in Q4 reflected this revenue mix. We expect to turn our flow through performance around in the first quarter with our podcasting revenues up in the high teens, as Bob mentioned, and to comprise the majority of our digital revenue growth, which will help us to continue our year over year Digital Audio Group margin expansion. The multi platform group revenues was $684,000,000 flat compared to prior years and below the guidance of mid single digits. Excluding the impact of political revenues, our multi platform group revenues were down 5%.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Adjusted EBITDA was $150,000,000 up 5.9% from $142,000,000 in the prior year quarter. Multi platform group's adjusted EBITDA margins were 21.9% compared to 20.7% in the prior year quarter. Turning to the Audio and Media Services Group, revenues were $98,000,000 up 44.7% year over year and adjusted EBITDA was 49,000,000 up 136% from $21,000,000 in the prior year. Excluding the impact of political, the Audio and Media Services Group revenues were down 1.6%. At quarter end, we had the lowest net debt position in the history of the company, approximately $4,520,000,000 of net debt outstanding.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Our total liquidity was $686,000,000 at quarter end, which includes a cash balance of $260,000,000 Our quarter ending net debt to adjusted EBITDA ratio was 6.4 times and we expect to end the year at approximately 5.5 times and remain on track to attain our goal of achieving 3.2 times by the end of twenty twenty eight. As Bob mentioned in his remarks, we have completed the comprehensive exchange transaction with a group of debt holders representing on aggregate basis approximately 92% of the company's outstanding debt. To reiterate some of the key highlights, as a result of the exchange transaction, our new notes and term loans have maturities ranging from $20.29 to 2,031 with reduced total debt levels and importantly, our annual cash interest expense remains essentially flat. And notably, none of the exchange transactions had any impact on the equity capitalization of the company. This transaction strengthens the company's financial flexibility while providing IHART with ample runway to achieve our strategic growth initiatives. In the fourth quarter, due to fees and the acceleration of certain interest payments related to the debt transaction, our free cash flow was negative $24,000,000 Our free cash flow would have been $111,000,000 when adjusting for the debt transaction related expenses. In addition to that, further impacting our fourth quarter free cash flow were costs associated with the modernization program. As a point of reference, we recorded $33,500,000 of restructuring expenses in the fourth quarter with a portion of those payments hitting Q4 and negatively impacting our Q4 free cash flow.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

As we look at the Q1 twenty twenty five, although the year began with optimism, many companies are now focusing on how potential tariffs, inflation and higher interest rates may impact their businesses, introducing an element of uncertainty. An indication of that uncertainty, as I'm sure you've seen is the Conference Board measure of consumer confidence, which reported that February saw the largest single monthly decline in consumer confidence since August 2021. We've done our best to incorporate the impact of this uncertainty into our guidance. Our first quarter results will also be impacted by the wildfires in LA. Not only is Los Angeles our largest revenue market, but our national major camp sales team is based there as well, affecting revenue beyond just LA.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

All of which is compounded by the fact that Q1 is always our smallest revenue quarter for the year. With that in mind, we expect to generate consolidated first quarter adjusted EBITDA in the range of $100,000,000 to $110,000,000 compared to $105,000,000 in the prior year quarter. We expect our consolidated Q1 twenty twenty five revenues to be down low single digits compared to the prior year. As a reflection of the optimism the year began with and then the uncertainty that rolled in later, our January revenues were up 5.5% and our February pacing is down approximately 7%. Turning to the individual segments for Q1, we expect the Digital Audio Group's revenues to be up low double digits with podcasting revenues expected to grow in the high teens.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

We expect the multi platform group's revenues to be down mid single digits and we expect the Audio and Media Services group's revenue to be down approximately 15% due to the impact of political advertising spent in the prior year period. At this point, we remain optimistic about the year ahead even with the uncertainty in the economy and we want to reiterate our full year 2025 guidance. We expect our full year 2025 revenues to be approximately flat compared to 2024. We expect to generate full year adjusted EBITDA of approximately $770,000,000 and we expect to generate free cash flow of approximately $200,000,000 The following assumptions are included in our free cash flow guidance. We expect our cash taxes to be approximately 10% of our adjusted EBITDA.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

We expect our full year capital expenditures to be approximately $90,000,000 We expect our cash restructuring expenses to be approximately $45,000,000 At year end 2025, we expect our net debt to adjusted EBITDA ratio to be approximately 5.5 times and we remain on track to achieve our goal of 3.2 times by the end of twenty twenty eight. Now I will turn it over to the operator to take your questions. Thank you.

Operator

Thank you. Our first question comes from Jessica Reif Ehrlich from Bank of America. Please go ahead. Your line is open.

Jessica Reif Ehrlich
Jessica Reif Ehrlich
Analyst at Bank of America

Thank you. I have a couple of questions, if that's okay. So first, Bob and Rich, I know you both consistently talked about the resilience of broadcast listening. Can you talk about how you're thinking about monetizing that going forward? And maybe in that context, I know Bob you mentioned both programmatic and AI.

Jessica Reif Ehrlich
Jessica Reif Ehrlich
Analyst at Bank of America

How much of a needle mover will programmatic be? What does the ramp look like? And then I have a follow-up. Thanks.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Sure. Look, I think the programmatic is an essential part of what we're doing. It's a growing part of the ad market. And I think you're sort of implying the answer to the question, which is how do we take this incredible amount of listening we've got, the strong relationships we've got with our consumers. And by the way, when measured, broadcast radio has enormous performance in terms of performance marketers, in terms of delivering the metrics they need.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

So clearly, the issue for us in broadcast radio is we need to make this inventory fit the buying systems that are out there and the new way people are buying, which is very digital centric. Programmatic is part of it. It's also automated buying. It might be actually live conversations, but they can execute it through an automated platform, and beginning to have it sit side by side with the other digital options. Our hope also as people are putting these systems together that algorithms versus human beings making decisions about allocating the dollars to different media.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

We know there is a certainly a bias against radio is considered old media. I think we've gotten tarred with a brush of TV or print that have really seen a substantial degradation in their audience. And here we are with this incredible audience, incredible performance. So I think when the algorithm looks at the facts and makes choices about allocations, that can be very beneficial to broadcast radio as well. So programmatic for us, we're, I think, making great progress on the automated platform.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

We're making great progress on putting all of our inventory into a platform, so it can be accessed from any seller anywhere, anytime and can be accessed with the key data that's needed are all making progress. I think this year is as we talked last year, this is probably the year which we're rolling it out. We're beginning to get NDSPs rolling out our platforms. So we probably will learn a lot this year and I think we should begin to see some revenue this year, but I think the impact probably is built next year and the following year.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Hey, Justin. Just to add just quickly what Bob said is you talked about the ramp and everything, but the first step before you kind of get to the ramp and learn is to get into platforms. And that's why Bob's point about the DV360 and the Yahoo, two very significant platforms is significant for us.

Jessica Reif Ehrlich
Jessica Reif Ehrlich
Analyst at Bank of America

Right. Okay. And then maybe just two more quick ones. But could you address the video podcasting opportunity? Spotify has been talking about that a bit and you obviously have a really strong position in podcasting.

Jessica Reif Ehrlich
Jessica Reif Ehrlich
Analyst at Bank of America

And then just finally on the overall market outlook, I mean obviously there's a lot of puts and takes as you guys have outlined, that LA is your biggest market. Can you give us some color on what the impact was in Q4 and how it looks moving forward?

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Sure. Why don't I hit first the video podcasting? Is look, there's a lot of talk about video podcasting. Clearly, YouTube would love everything to be video podcasting. When you look at the research, though, it looks like about 10% of podcast users would prefer video.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Others are willing to look at video, but most people actually, the overwhelming majority actually want it to be audio. They are using podcasting because it's a great experience for them because they don't want to use their eyes. They are cooking, they're driving, they're running, they're doing other activities where they can listen, but they can't watch. I think it's also with many of these hosts and I know, Jessica, you listen to a lot of them. It is very conversational, very personal.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

It is not TV style production. As a matter of fact, unlike TV, which is very story and production driven, podcasting is very host driven. And often the more just loving hands at home it sounds, it's just the easygoing is, and casual is what people prefer. Podcasting like radio is a lot about companionship. It's who is that person I've chosen to hang out with and I hang out with them regularly.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

So although there are opportunity I'm not really the opportunities for us, if we can make more money adding video to it, we will. Some of our podcasts do have video, and we are open to it. It's not terribly expensive. It's just what do you want to focus on. And, and again, we just always start with the consumer.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

And if the consumer really wants it, we'll figure out how to deliver it. And you're right, given we're the number one podcast publisher, we've got by far the biggest stable to play with and there's a lot we can do there.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Just before Bob turns to your question on the advertising environment, just in terms of just looking at the facts, we're just coming off a year where we had double digit revenue growth in podcasting. And again, we're going to continue to get the lower bigger numbers, so a double digit revenue growth. And the guidance we just gave is high teen growth in Q1. So yes, as Bob talked about, we're monitoring and looking at consumer usage, but just look at the facts and the runway we still have with the podcasting business we have today.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

And look also, it's there's a big delta between video and broadcast radio in terms of CPMs. There's not a big delta between broadcast between podcasting and video. So we don't really get a bump up in value if you add video to it. On the LA front, clearly LA is a big market force. It was disrupted by the fires.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

I think it's beginning to get back to normal. And not only was the market disrupted, but our direct to client sales group, which is very important part of our company, National sales is based there. So we had disruption there. People lost houses, employees sort of put went through the struggle. Fortunately, we didn't in our company have any loss of life.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

So it's just this property. And I think again, we think that was probably in terms of the L. A. Market a little bit of a blip. Probably the bigger impact in the L.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

A. Market is that there's more people going back to office. Traffic is getting long again and I hate to sound cynical here, but traffic jams are our friend. We're a company that benefits from people with longer commutes and more time in the car. And so we actually think that probably has ironically a beneficial effect on the company.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Yes. And just one last, I think you also just touched upon in terms of the overall advertising market and we laid out the puts and takes in our opening remarks. And I think just looking at all the other companies and supported companies between yesterday and today, that release I think we're kind of all seeing the same trends out there in terms of the start of the year and the uncertainty whether it's the tariffs, we also have the consumer confidence piece come out today, uncertainty in terms of inflation and interest rates. But at the same time, as we look forward, I think it's very important. We reiterated our confidence in the business for the rest of the year.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Again, going back to what Bob said earlier about the strength of our assets, the economy will sort itself out and we'll all work through this, but we continue to be optimistic as we go forward.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Yes, I think, look, what we're dealing with is and it always happens this way. If there's change, people take a beat and adjust for the change. There's a big change between this administration and the last one. And I think people are digesting and I don't think the uncertainty is totally unexpected and it's certainly understandable. But we think going forward that that begins to steady up a lot and we move back and continue to be optimistic about the year.

Jessica Reif Ehrlich
Jessica Reif Ehrlich
Analyst at Bank of America

Thank you.

Operator

Our next question comes from Patrick Scholl from Barrington Research. Please go ahead. Your line is open.

Patrick Sholl
Vice President at Barrington Research Associates

Hi. I was wondering if you could talk a little bit more about the automated buying and how much that sort of contributes to the improving trend of the year to make up that difference in total advertising as a result of the political comp?

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Yes. So really good question. I think it comes in and it comes in in pieces. It's a gradual movement. First step is we did it with smart audio, which is we have a suite of data enhancements that go with our audiences, and building out cohorts.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

I think it's pretty significant the number of advertisers today that use our data in some form or another. You know, sort of second phase of that is let's put hands on keyboards instead of phone calls in traditional ways to, to buy advertising. And the third is that in addition to but not replacing it, there's also the programmatic advertising, which is built on the automated systems and probably we'll get into some of the real time bidding stuff as well. We have some marketplaces already up. We have the iHeart audience network up, which allows us to have a pretty broad array of options for advertisers in digital.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

And we are adding the broadcast radio options to that, which is for us the great opportunity. I think that again, I go back to probably the biggest upside we've got in terms of underappreciated asset or underutilized asset is broadcast radio inventory. I mean, it's got audience that know what it has, and it has impact for advertisers. Again, that's pretty remarkable.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

And just to be fair, one point, we're not assuming anything to Bob's point as we've gotten to the systems and learning, we're not assuming any significant contribution this year from that. But obviously, we're incredibly excited about the TAMs that will enable us to take advantage of.

Patrick Sholl
Vice President at Barrington Research Associates

Okay. And then on you talked about January advertising being up and I realize that was short lived. What were some of the drivers of that turnaround from kind of maybe a slower than expected close to the air to at least the positive start?

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

It's interesting. We talked about that pause in advertising we saw before the election. We had thought and hoped it would be re expressed in December. It wasn't. I think there's an argument that it was re expressed in January.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

There was a little longer sales cycle on that and you saw that sort of rush of optimism turn into buying. I think as reality set in and January, February and saying, wait a minute, what are tariffs, what inflation is not completely gone and other issues, I think people take a little bit of a step back and look keeping in mind that if there's ever a quarter in which advertisers feel confident and comfortable stepping back a little bit its first quarter, it's probably of all four quarters. It's the one that there is least pressure to advertise. Most people don't. It's the lowest advertising quarter of the year.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

So not totally unexpected, but hopefully what we're seeing is a return to some comfort and stability and absorption and digestion of all the change.

Patrick Sholl
Vice President at Barrington Research Associates

Okay. Thank you.

Operator

Our last question comes from Steven Laszczuk from Goldman Sachs. Please go ahead. Your line is open.

Stephen Laszczyk
Stephen Laszczyk
Vice President at Goldman Sachs

Hey, guys. Thanks for taking the questions. Two, if I could. Maybe first on podcasting for Bob and Rich. I was wondering if you could talk a little bit more about your expected drivers of growth in the podcasting business this year, perhaps between adding new content to the platform, improving engagement, monetization.

Stephen Laszczyk
Stephen Laszczyk
Vice President at Goldman Sachs

What do you see as the main drivers or the largest drivers of that expected growth in podcasting revenue? And then second, maybe just on political, I think it came in a little bit below what we had expected in the twenty twenty four cycle. Just curious if you talk a little bit about why that might have been the case and what do you think that means if anything for the next few rounds of political spending as we come up on the midterms and the next presidential cycle? Thank you.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

Sure. The drivers of pie casting are all of them. I mean, we're in that fortunate phase of podcasting, which everything is growing. We are expanding the product on our platform. We're expanding the audience.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

We're expanding the value and the pricing. There's expanding demand. People are beginning to say I got to have podcasting, it's sort of a must buy. So all of those are drivers now. And for us, I think probably see that at least continuing through this year and hopefully beyond that as well.

Bob Pittman
Bob Pittman
Chairman & CEO at iHeartMedia

On political, I think again looking at I'll let Rich talk to the specifics, But I think in political, I think the lesson here this year is that the political campaigns want a lot of that. And it's probably more data driven than it's ever been. And so when you say what's the what do we learn from this that we take forward to the midterm and to the presidential year is that we have to up our gains like we are in programmatic and automated with the political sector as well. And won't surprise you to know we're actually working on it right now even though the midterms don't begin for a while to be ready for that to absorb the lessons we learned.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Yes. And by the way, the one thing I might just add is to, we did talk about it in Q3, the pause that happened with the change in the candidates and everything on the Democratic side and we covered that and do that at that time. But we thought there might be some more money coming in post the election, which didn't materialize. But at the same time, why we didn't quite get to the number that we thought, if you look at the performance of MPG in Q4, we did have overall 8% EBITDA growth in Q4 on relatively flat revenue. So it just the absolute performance was terrific.

Stephen Laszczyk
Stephen Laszczyk
Vice President at Goldman Sachs

Got it. That's great. Thank you both.

Rich Bressler
Rich Bressler
President, COO, CFO & Director at iHeartMedia

Well, operator, if there's no other questions, we again appreciate everybody taking the time to listen to spend the time to focus on the I Heart story. And the team is available starting with Bob, myself and Mike for any follow ups. And thank you again.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Executives
    • Mike McGuinness
      Mike McGuinness
      Executive Vice President, Deputy Chief Financial Officer & Head of Investor Relations
    • Bob Pittman
      Bob Pittman
      Chairman & CEO
    • Rich Bressler
      Rich Bressler
      President, COO, CFO & Director
Analysts
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