As iHeartMedia faces weak advertising trends and another round of layoffs, the nation's largest radio company will save $200 million in 2025 compared to 2024 and has renegotiated 80 percent of its long-term debt, the company revealed. Thursday (November 7). in the third quarter earnings announcement.
The debt “exchange offers,” which are expected to close by the end of the year, will extend the majority of iHeartMedia's debt maturities by three years, allow cash interest costs to “remain substantially flat” and provide for “some overall debt reduction,” CEO Bob Pittman he said during an earnings call. “The transaction support agreement marks an important step in our effort to optimize our balance sheet and provides the company with the flexibility to remain focused on iHeart's transformation.”
The revelation about the cost savings and debt restructuring comes days after news broke that iHeartMedia had laid off dozens — hundreds, according to a report — of staff from radio stations across the country. Pittman called the layoffs part of iHeartMedia's “modernization journey” that will create a flatter organization, eliminate layoffs and make it easier to do business with the company. Those cuts add to three rounds of layoffs in 2020 as the radio business faced a slump in advertising during the first year of the pandemic.
Throughout the earnings call, Pittman and CFO/COO Rich Bressler emphasized that the company is embracing technology to make improvements and reduce costs. “Technology is key to increasing our operating leverage and is a constant focus for us,” said Pittman. “It allows us to speed up processes, streamline legacy systems and empowers our people to create more, better and faster.” Technology alone will reduce annual spending by $150 million by 2025, he said, while measures taken earlier this year will bring total annual savings to $200 million.
In explaining how iHeartMedia uses technology to save so much money, Pittman gave the example of expanding the reach of on-air talent. “What we can do now, because we have technology, is we can take the talent that we have in any location and put it on the air in another location,” he explained. “So it allows us to essentially upgrade the quality of our talent in every market we're in and it allows us to showcase talent in the situations where you're going to have the greatest impact.”
In terms of financial performance, iHeartMedia's third-quarter revenue rose 5.8% to $1.01 billion, meeting the company's previous guidance for mid-single-digit growth. Excluding political revenue, revenue increased 2.0%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a common measure of operating profitability, was flat at $204 million and fell to the low end of the guidance range of $200 million to $220 million.
At iHeartMedia's multi-platform group, which includes broadcast stations and radio networks, revenue fell 1.1 percent to $619.5 million and adjusted EBITDA fell 20.1 percent to $129.9 million. Broadcast revenue fell 1.4% due to lower spot revenue, but was helped by an increase in political advertising.
The digital audio group, which includes podcasts and the iHeartMedia digital service, saw revenue rise 12.7% to $301 million and adjusted EBITDA improve 6.8% to $100 million. Podcast revenue rose 11.1% to $114 million. Audio and media services revenue increased 45.3% to $90 million due to political advertising spending for the recent national and local elections.
iHeartMedia Q3 2024 Financials:
- Revenue: up 5.8% to $1.01 billion
- Adjusted EBITDA: flat at $204 million
- Net loss: up 360% to $41.3 million
- Free cash flow: up 8.4% to $73.3 million
from our partners at https://www.billboard.com/pro/iheartmedia-earnings-radio-giant-save-200m-cost-cuts-tech/
