While the attention of media industry observers and influential Wall Street analysts has arguably been focused on the fiscal situation at Cumulus Media and the soon-to-be-completed Reverse Morris Trust-fueled merger of CBS Radio with Entercom, the nation’s No. 1 owner of radio stations has something it’d like to say: It’s not only a radio leader, but also a media leader.
Those are the words of iHeartMedia COO/CFO Rich Bressler, who used his company’s Q3 earnings call to plug his company’s reach.
Speaking after a brief overview of the company’s Q3 results, which were lackluster due to two key events, Bressler referred to iHeart as “a national leader, not only in radio and audio, but in media overall. We continue to be the undisputed leader in audience reach.”
For example, even with the heavy focus on the Top 50 markets by Entercom following its CBS Radio acquisition, in those Top 50 markets iHeart still reaches 93% of listeners 12+ and Entercom reaches only 67%, according to Nielsen.
Then, there’s digital reach, and Bressler wants it made known that Entercom can’t come close to iHeart. “We are seven times their size in digital reach,” Bressler said.
As a result, iHeartMedia houses a “powerful national network with unparalleled local reach,” Bressler boasted.
A SHOT AT THE TWO DIGITAL GOLIATHS
With expansion in Boston and Seattle, Bressler believes his company should be compared to a pair of social and digital entities capturing millions of consumers — and dollars — every hour.
“Our broadcast radio assets alone reach over a quarter-billion consumers monthly — more than Google and Facebook in the U.S.,” Bressler said.
However, AM and FM radio and streaming audio through the iHeartRadio app isn’t the same as Google, or Facebook. This is one reason why iHeartMedia trades on the riskiest exchange on Wall Street — OTC Pink — and why its publicly traded “stub” of shares was at $1.25 as of 11:15am Eastern Wednesday.
As RBR+TVBR was first to report early Wednesday morning, iHeart’s consolidated revenues declined in the third quarter. However, revenues were flat after adjusting for the sale of “certain outdoor businesses and the impact of foreign exchange.”
Importantly, iHeartMedia generated revenue growth at both the iHeartMedia and the international outdoor segments, offset by decline at Americas’ outdoor segment. But, the revenue growth in the iHeartMedia sector was statistically flat, rising just 0.3%.
A one-time expense benefit in 2016 and the sale of certain outdoor businesses are the main culprits for a decline in consolidated operating income.
RADIO’S BILLING LEADER
Bressler also took time during the iHeart Q3 call to cite Miller Kaplan Arase LLP data that show the company outperforming the entire radio industry in revenue.
With 18 consecutive quarters of revenue growth at the iHeartMedia division, what is driving it? “The growth is attributed to increases in national and digital revenue partially offset by lower local and political revenue,” Bressler said.
Lower spot revenue is the big reason why local dollars dipped in Q3, he added.
Additionally, higher expenses were taken on based on expectations for “a more robust advertising market” than what has been seen for iHeart in 2017. Bressler said, “The investments in future growth in line with how we thought the ad market would be growing.”
How does iHeartMedia’s Q4 pacings look? For the iHeartMedia division, Bressler said revenues are projected to be statistically flat once again — with a forecast for growth of just 0.2%, excluding political.
Lastly, Bressler reminder analysts on the quarterly call that neither he nor any other iHeart executive is able to comment — per SEC guidelines — on the company’s exchange offers and term loan offers that iHeart has been seeking to complete for some eight months. Discussions regarding the company’s debt restructuring are also off limits.
DIGITAL QUERY FROM WALL STREET
With that, the first question on the earnings call came from Credit Suisse Senior Analyst David Farber — who focuses on High Yield/Distressed companies in the Media/Cable/Gaming/Lodging/Leisure areas.
He asked further about where improvement is being seen in iHeart’s digital sector. But, Bressler did not speak of digital specifically, as “this is not how we think of our company.”
What about liquidity? Farber wanted to know about where iHeart stood today; iHeart couldn’t offer anything beyond where the company’s cash stood as of the end of Q3.