iHeartMedia sold off a significant number of tower assets in the past few months to improve its cash position.
In an earnings report for the third quarter, the company said that it sold 122 broadcast tower sites in September for net proceeds of $45.3 million, entering instead into long-term operating leases on most of them. iHeart says the proceeds will be used to pay down debt.
iHeart has engaged in a variety of “real estate reduction measures” to cut spending and raise cash. The tower site sales are more of the same.
Radio World emails to iHeartMedia representatives seeking more information on those asset sales were not returned. The name of the purchaser(s) was not disclosed in the announcement.
This isn’t the first time iHeart has sold off tower assets in recent memory. In 2014 Radio World reported that it sold more than 400 of its tower sites to Vertical Bridge for $400 million.
[Related: Audacy Posts Big Operating Loss in Q3]
In Q3 the company posted a GAAP operating net loss of $8.9 million in the quarter, according to its filing. It had quarterly revenue of $953 million, down 3.6% compared to the same period last year. Things were a bit brighter when excluding Q3 political revenue, with overall revenue down 1%.
Broadcast revenue continues to show the drag of a soft national advertising climate. Total revenue for the Multiplatform division, which includes its approximately 850 radio stations, was $626 million, down 5% from last year. Excluding the impact of political, the division’s revenue decreased by 3.2%.
A closer look at the iHeart financial disclosure shows that broadcast radio had revenue of $455 million, a drop of 6.1% year over year. The radio network business continues to struggle, with revenue at $116 million, down 8.6%. But the company says it continues to see substantial upside in its broadcast assets in large part due to its scale and participation in “the migration to data and analytics infused planning, buying and selling of media.”
Digital audio revenue rose 5.2% YoY to $267 million. Podcast continues to be a growth engine, with revenue of $103 million, up 13%. Digital revenue excluding podcast was $165 million, up 1%. Revenue from digital audio accounted for 28% of third-quarter consolidated revenue.
The company reported that it has begun using artificial intelligence in its digital audio division for various purposes, including a cost-effective way to translate its English podcast library into foreign languages to allow for global expansion. It said AI also gives iHeart’s selling team enhanced tools to prospect and engage with advertisers for podcasting and broadcast. In addition, AI is being used to enhance podcast ad insertion.
Its third reportable division, the Audio & Media Services group, saw revenue decrease $15.8 million, or 20.3% YoY, primarily due to a decrease in political revenue. That division includes RCS and Katz Media Group.
Expense management continues to be a focus, though expenses in the quarter increased. Consolidated direct operating expenses increased $8.3 million, or 2.2%, from a year before.
“The increase in direct operating expenses was primarily driven by higher music license fees, and higher variable content costs resulting from an increase in digital revenue, including third-party digital costs and profit-sharing costs,” according to a company statement. “The increase was partially offset by lower employee compensation as a result of cost savings initiatives.”
In Q3 the company also reported a cash balance and total available liquidity of $213 million and $625 million, respectively, as of the end of September. But its debt burden continues to overshadow the rest of its filing with the U.S. Securities and Exchange Commission. Total debt stood at $5.3 billion, though the company says there are no material debt maturities prior to 2026.
“While there continues to be lingering uncertainty in the advertising market driven by the current global geopolitical situation, as the advertising ecosystem continues to improve, combined with what is expected to be a record political advertising year in 2024, we believe that we will resume our growth story in terms of revenue and profitability,” said Rich Bressler, the president, COO and CFO of iHeartMedia.
iHeart expressed additional uncertainty about its Q4 outlook. It expects consolidated revenue to decline in the high-single digits.
The company had been predicting Q4 would be its best quarter of the year. While it is still on track for that, Chairman/CEO Bob Pittman said: “Q4 will be weaker than anticipated.”
[Related: “A Leasing Company Wants Your Tower, Should You Go for It?“]
