iHeartMedia, Inc.

My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the iHeartMedia Q3 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Mike McGinnis, Head of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for taking the time to join us for our third quarter 2024 earnings call. Joining me for today's discussion are Bob Pittman, our Chairman and CEO, and Rich Bressler, 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. 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 today's recent 8K 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. Thanks, Mike, and good morning, everyone. Before we discuss the company's third quarter operating results, I want to provide two important and positive updates. The first is about our capital structure. As you may have seen in our 8K file this morning, we're pleased to report that we have entered into a transaction support agreement with a group of debt holders representing, on an aggregate basis, approximately 80% of the company's outstanding debt. We've agreed to pursue, and the supporting debt holders have agreed to support, exchange offer transactions that will be offered to all holders of the company's existing debt. The exchange offers will accomplish three things. One, they will extend the majority of our debt maturities by three years. Two, our current consolidated annual cash interest expenses will remain essentially flat. And three, they will provide for some overall debt reduction. We expect the exchange offers to close prior to the end of the year. The high levels of support from our debt holders demonstrates the confidence they have in the future of our business, for which we are extremely appreciative. The transaction support agreement marks an important step in our commitment to optimize our balance sheet, and it provides the company with the flexibility to remain focused on continuing iHeart's transformation. The second is an update on our ongoing modernization initiatives and the associated cost savings. As a reminder, iHeart is a high operating leverage business. Technology is the key to increasing our operating leverage, and it is a constant focus for us. It allows us to speed up processes, streamline legacy systems, and it enables our folks to create more, better, and faster. We've now taken another significant step in our modernization journey, flattening our organization, eliminating redundancies, and breaking down silos. It will be easier to do business with us and easier to get our business done, as well as accelerate revenue growth. And this new use of technology will have a major impact on cost, reducing our annual expenses by approximately $150 million in 2025. Coupled with the full-year benefit of actions taken earlier this year, this brings our total annual cost savings to $200 million in 2025 compared to 2024. In addition to improving our operations, these cost savings give us greater certainty in delivering our financial performance for next year and beyond. And we will continue this modernization process as we further deploy AI and other advancements to transform our operating structure as we move forward. Now, turning to our financial results, we're pleased to report that our third quarter 2024 results were in line with our previously provided adjusted EBITDA and revenue guidance ranges, and we see continued evidence that this is a recovery year for advertising revenues. While the marketplace is dynamic, we continue to see strong momentum in our podcast business, our digital ex-podcast business, and the sequential improvement of our multi-platform group's year-over-year revenue performance. In addition to the continuing positive impact of an ad market recovery, our results also reflect the power of our assets, the upside from political advertising, and the benefit of our ongoing focus on cost efficiencies. Now let me take you through some of the key financial results for the quarter. In the third quarter, we generated adjusted EBITDA of $205 million within the guidance range we provided of $200 to $220 million. Our consolidated revenues were up 5.8% compared to the prior year quarter, in line with our guidance of up mid-single digits, and excluding the impact of political, our consolidated revenues were even up 2% compared to the prior year quarter. Turning now to our individual operating segments, the digital audio group generated third quarter revenues of $301 million, up 12.7% versus prior year, in line with our previously provided guidance of up low double digits and represented approximately 30% of the company's total revenue and is now about half the size of the multi-platform group's revenue. For the quarter, the digital audio group generated adjusted EBIT of $100 million, up 6.8% versus prior year. The digital audio group's adjusted EBITDA margins were 33.2%, continuing the trend of sequential margin improvement in each quarter this year. The digital audio group's earnings are now almost three-quarters the size of the multi-platform group's earnings. Within the digital audio group are our podcast revenues, which grew 11% versus prior year, in line with our previously provided guidance of up low double digits. Our non-podcast digital revenues grew 14% versus prior year, and we expect that strength to continue as well. In September, iHeart was once again ranked the number one podcast publisher in the U.S., according to PodTrack, and our financial discipline in podcasting continues to pay off as our podcasting EBITDA margins remain accretive to our total company-adjusted EBITDA margins. As a reminder, our leadership position in podcasting is, in part, the result of the power of our broadcast radio assets. We have used those assets to build not only the podcast business, but also the iHeartRadio app, which is the number one digital radio service, and our marquee live events business, which includes the recent iHeartRadio Music Festival, as well as the upcoming iHeartRadio Jingle Ball Tour. In addition to our industry-leading podcast business and our digital radio streaming service, which has five times the digital listening of our closest competitor, we also have the largest social footprint of any audio service by a factor of six, and we operate 3,000 national and local websites that reach more than 140 million people in the United States each month. all of which represent additional opportunities for our advertising partners to interact with our highly engaged consumer base and provide additional revenue growth for the company. Turning now to the multi-platform group, which includes our broadcast radio, networks, and events businesses. In the third quarter, revenues were $620 million, down 1.1% versus prior year, in line with our previously provided guidance of down low single digits and down 2.9%, excluding the impact of political advertising. Adjusted EBITDA was $130 million compared to $162 million in the prior year quarter due primarily to the timing of certain non-cash marketing expenses associated with our iHeartRadio Music Festival, which we discussed last quarter, as well as expenses associated with serving as the exclusive audio home of NBC's coverage of the 2024 Summer Olympics in Paris. We believe NBC's ratings success further validates the strength of our relationship with our listeners and the power of our multiple platforms, including broadcast radio, to drive performance for our partners. And there's one more point I want to make about the power and uniqueness of our broadcast radio assets that's particularly relevant right now. Over the past few years, we've done groundbreaking work to identify and understand the ignored consumer as part of our ongoing tracking of the American consumer. This is a huge consumer group that feels ignored and even disrespected by the media and advertisers. Indeed, this week's national election could even be thought of as the revenge of the ignored consumer. Let me tell you who they are. Their top participatory sports are not golf and pickleball. They're cornhole and bowling with hunting and fishing not far behind. They have deep respect for religion, the military, and the police. And they span gender, age, ethnicities, geographies, and income levels. We saw this ignored consumer and the wave of public dissatisfaction coming. How? We've been connecting with these ignored consumers for years through our network of trusted hosts and broadcast radio stations who talk and engage with them on a daily basis. These ignored consumers will have a tangible impact on business and marketing decisions going forward, and given our unique position here, we think we'll benefit from that. And with our multi-platform group, we're also continuing the important development of programmatic platforms that will enable the automatic buying, selling, and planning of our broadcast radio inventory, which allow us to participate in the growing and substantial digital and programmatic TAMs. Turning to the audio and media services group, revenues were $90 million, up 45.3% year-over-year, and adjusted EBITDA was $44 million, up 162% from $17 million in the prior year. Excluding the impact of political, the audio and media services group's revenues were still up 13.7%, driven primarily by the growth in digital revenues. Digital is an important growth area for CATS, and the ad tech investments made across iHeart will continue to enhance that performance. Before I turn it over to Rich, I want to take a moment to acknowledge the incredible work of our teams on the ground as two hurricanes impacted the country last month. As the storms approached, our local stations updated listeners with forecasts and provided life-saving insights into how to prepare for storms of this magnitude. And as the storms made landfall, our teams remained on site and on the air, providing critical, real-time updates to our listeners, often the only source of information available as power outages knocked out TV stations and took down cell and Wi-Fi service. We're extremely proud that in the midst of these overwhelming natural disasters, the people of IHART continued to do what they do best, even as they were personally impacted, tirelessly supporting their communities in times of need, serving as trusted and necessary sources of information, assistance, and vital personal connection when nobody else could. And now I'll turn it over to Rich.