A steady stream this week of third quarter earnings reports from major U.S. radio groups has culminated with a rebound report from the country’s largest radio group.
iHeartMedia’s climb back to pre-COVID revenue levels continued at an accelerated pace in the third quarter of this year. The company’s third quarter earnings call on Thursday afternoon was highlighted by consolidated revenue growing nearly 25% year over year to $928 million. The company says it is confident it will be back to 2019 Adjusted EBITDA levels by the end of this year.
The broadcaster’s multiplatform group, which includes its 850 radio stations, saw Q3 revenue climb 19% year over year. iHeartMedia Chairman and CEO Bob Pittman said during Thursday’s call “the strong recovery and growth potential of our radio business” added to the quarter’s revenue recovery.
Specifically, broadcast revenue grew $79 million or 19.5% YoY, while networks added $8.9 million or 7.5% up from Q3 2020.
“Our strong results this quarter are further evidence of the success of our company’s continuing transformation — data-led, digital and podcast focused, along with the unparalleled audience reach of our broadcast radio assets — supported by the largest sales force and the only unified ad tech stack in audio advertising,” Pittman said in a statement that accompanied its filing with the U.S. Securities and Exchange Commission.
For comparison sake the radio broadcasters said the multiplatform group’s revenue for the quarter was down 17% compared to Q3 in 2019, Pittman said, continuing the quarterly sequential rebound since the onset of COVID.
Digital continues to boost iHeartMedia’s revenues YoY, according the latest financial report. The digital audio group reported a 77% jump in revenue compared to Q3 2020, which includes a significant increase in podcast revenue. The broadcaster’s podcast platform boasted a revenue increase of $41.3 million over the same period a year before, which is an increase of 183.7%.
In January 2021 the broadcaster began reporting financial statements based on three reportable segments; the digital audio group, the multiplatform group and the audio & media services group, which includes Katz Media Group and RCS. Revenue from that final group decreased nearly 12% compared to the same quarter in 2020 in large part due to lower political advertising revenue this year, according to the SEC filing.
The company’s continued modernization efforts resulted in capital expenditures climbing to $101.3 million through the first nine months of this year compared to $58 million in 2020 through the same period. The company says the increase is due to its real estate consolidation initiatives.
“We expect cap ex to go down next year. This quarter we spent about $50 million in cap ex and the major increase was due to the downsizing of our real estate and becoming more efficient in that area,” said Rich Bressler, iHeartMedia president, COO and CFO.
iHeartMedia earlier this week announced a multiyear strategic relationship with DraftKings, making the sportsbook the official odds supplier for all iHeartMedia’s broadcast, digital, podcast and social media platforms. The agreement allows DraftKings to co-create and distribute long-form content with iHeartMedia using the company’s personalities.
“This partnership builds on iHeartMedia’s industry leading sports assets, which includes partnerships with the NFL and NBA. We expect sports and sports betting to be a significant growth engine for us going forward,” Pittman said on Thursday’s earning call.
Radio groups have been aligning with betting apps and sportsbooks creating a new ad category for radio broadcasters with quickly growing revenue figures, according to analysts who follow the broadcast industry. iHeartMedia already has several radio stations with the moniker “The Gambler,” which are dedicated to sports talk and sports gambling. Bressler said during the investment call its Draft Kings deal is not exclusive and the broadcaster is open to other partnerships in the sports betting space.
iHeartMedia last week announced a $60 million voluntary buyback of its preferred stock. Pittman at the time said the repurchasing of stock demonstrates the broadcaster’s commitment to strengthening its balance sheet. As of September 30, 2021, the company was carrying approximately $5.7 billion in total debt.