Q2 Revenue Dips, But Net Loss Narrows At iHeart

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It was a mixed three-month period for iHeartMedia, the company with the highest count of AM and FM properties across the U.S., as consolidated revenue declined.


That’s primarily due to a $36.1 million impact tied to the sale of outdoor businesses. Minus that, revenue was up.

Meanwhile, operating income soared—helping iHeart narrow its massive net loss.

An OTC Pink Sheet company, iHeart has some liberties in how it reports it numbers. With this morning’s release of its Q2 results, it revealed the following on a GAAP basis:

  • Consolidated revenue slipped 1.5%, to $1.59 billion.
  • Consolidated net income soared by 22.9%, to $310.66 million.

On a non-GAAP basis, iHeart saw the following results:

  • Consolidated revenue, including movements in foreign exchange rates, was statistically flat, at $1.61 billion.
  • Consolidated OIBDAN (a non-GAAP measure introduced by publicly traded radio companies several years ago), slipped 6%, to $453.97 million. Excluding the effects of foreign exchange movements and the revenue from the sale of outdoor business, consolidated OIBDAN fell 4.1%, to $456.2 million.

OIBDAN is defined as consolidated operating income adjusted to exclude non-cash compensation expenses, included within corporate expenses, as well as the following line items presented in iHeart’s Statement of Comprehensive Loss: depreciation and amortization; Impairment charges; and other operating income (expense), net.

When all was computed, iHeart ended up narrowing its net loss in Q2, shrinking it to $174 million, from $278.9 million.

But, for the first half of 2017, its net loss widened — to $562.3 million, from $367.4 million.

And then … there’s the debt. Total long-term debt (including the current portion of its long-term debt) increased to $20.38 billion as of June 30, from $20.37 billion on Dec. 31.

Meanwhile, its cash on hand is just $260.5 million as of June 30, compared to $845 million at the end of 2016; the shareholders’ deficit surged to $11.4 billion, from $10.9 billion. Total current assets as of June 30 were $1.97 billion, compared to $2.5 billion on Dec. 31.

But, iHeart is starting to address its debt: On July 10, the company exchanged $15.6 million principal amount of its 10.0% Senior Notes due 2018 for $15.6 million principal amount of newly issued 11.25% Priority Guarantee Notes due 2021.

These were issued as “additional notes” under the indenture governing the 11.25% Priority Guarantee Notes due 2021, and gives the company more time to repay its debts, albeit at a higher interest rate.

Meanwhile, iHeart has again extended exchange offers on a series of its outstanding debt securities for new securities of the company, iHeartCommunications, and subsidiary CC Outdoor Holdings, and concurrent consent solicitations with respect to the terms of the existing notes.

This offer commenced March 15, as did iHeart’s offers to amend its outstanding Term Loan D and Term Loan E borrowings under its senior secured credit facility and/or issue new securities of iHeart, CC Outdoor Holdings, Broader Media LLC and/or iHeartCommunications to participating lenders. The notes exchange were amended on April 14, but there have been few takers.

The Exchange Offers and Consent Solicitations, and the Term Loan Offers, have been extended to 5pm Eastern on Aug. 18.

They could be extended again, and again: As 5pm Eastern on Wednesday (8/2), an aggregate amount of approximately $45.5 million of Existing Notes, representing approximately 0.6% of the outstanding Existing Notes, had been tendered into the Exchange Offers.

This 0.6% participation hasn’t budged for weeks.

If there’s a bright rainbow at the end of the long tunnel iHeart must travel through to escape its financial bog, the iHeartMedia division comprised of its AM and FM stations could be the catalyst.

The iHM division saw its net revenue rise 1.9% in Q2, to $884.4 million. But … iHM’s Q2 operating income fell 7.2%, to $262.5 million. OIBDAN decreased 7.1% to $321.3 million for the second quarter of 2017 as compared to the second quarter of 2016.

Commenting on the results, iHeart COO/CFO Rich Bressler said, “Adjusting for the impact of certain businesses we sold in 2016 and foreign exchange, consolidated revenues grew, with increases at our iHeartMedia and international outdoor segments. To date, the iHeartMedia segment has delivered 17 consecutive quarters of year-over-year revenue growth. We remain committed to balancing financial discipline with investments to grow our businesses while continuing to work on our capital structure.”