iHeartMedia and other radio broadcasters have closed the books on a disappointing 2023, but there seems to be a consensus that ad markets will recover over the course of 2024.
Full-year consolidated revenue for the largest audio content creator and distributor in the U.S. stood at $3.7 billion, down 4% YoY, according to the company’s filing with the U.S. Securities and Exchange Commission (SEC). iHeart reported a net loss of $1.1 billion for 2023, which was primarily the result of a $965 million of non-cash impairment charges the company recorded in Q2 2023.
The challenging advertising climate in 2023 stretched into the fourth quarter for iHeart with total consolidated revenue coming in at $1.1 billion, down 5.2% year-over-year. Of the three reportable business segments, only the Digital Audio Group saw an increase in revenue in the Q4. That division reported $318 million in total revenue, which was up 6% compared to Q4 in 2022.
Driving the digital revenue growth was podcasting. iHeart reported a total of $132 million revenue attributable to podcasting, which is up 17% YoY. Company Chairman/CEO Bob Pittman said podcasting remains “the biggest growth vector in the media business and shows no signs of subsiding.”
The company’s Q4 data release shows that the Multiplatform Group, which includes the broadcast radio segment, was down 6.7% in revenue at $684 million. Part of that decline was attributable to a decrease in political advertising compared to the fourth quarter a year prior, the company said in its SEC filing.
iHeart’s broadcast revenue from its 860 radio stations in 160 markets was down 6.9%, but the radio network business for iHeart continues to struggle even more. The company’s Premiere Networks and Total Traffic and Weather Network (TTWN) saw revenue decline 8.4% in the fourth quarter compared to YoY.
The Audio and Media Services group, which includes Katz Media Group and RCS, tumbled 28.6% in Q4, reporting $67.5 million in revenue as compared to $94.5 million in the same quarter in 2022.
The company reported operating income of $80 million in the Q4 2023, down from $173 million in Q4 2022.
iHeart’s full year 2023 revenue results show Multiplatform Group revenue dropping by 6% to $2.6 billion. The Digital Audio Group saw yearly revenue climb to just over $1 billion. That represented a 5% boost YoY. Podcast revenue for the year jumped up 14%.
[Related: “Cumulus Revenue Tumbled 11.4% in 2023“]
Asked on the earnings call about his view of the broadcast radio sector, Pittman said he is optimistic. He spoke to the development of the company’s proprietary technology program to enhance its advertising business, saying it will unlock programmatic and automated trading revenue for its broadcast inventory.
“The problem with broadcast radio has not been the consumer reach, but in how we are selling our advertising,” said Pittman. “Now we are developing the technology platform so that the advertisers who are looking for that inventory to look like digital inventory, will have the platform to allow that to happen. Broadcast radio has an incredible upside opportunity for advertising sales.”
The company “still values broadcast radio,” Pittman said. Broadcast revenue accounts for 64% of total revenue at iHeart. The Digital Audio Group’s contribution to total revenue has now grown to 30%.
iHeart’s top executive said he views 2024 “as a recovery year with a return to growth mode … with strengthening of advertising across the board.” Political advertising in a presidential election year will also bolster the second half of the year, he said. iHeart generated $167 million in political revenue during the last presidential election cycle.
iHeart revenue in January 2024 was down 8% compared to YoY, but, after a slow start, the company reports trends that will lead to a strong fiscal 2024. iHeart leadership said the company’s momentum grew in February and March with revenue pacing up in the low single digits. iHeart now expects its revenues to be flat for Q1 2024, according to the SEC report.
Pittman on the earnings call said the application of AI to translate podcast content is enabling cost effective international expansion into non-English markets, which is “extending its audio audience leadership position beyond just AM and FM and onto new devices and platforms.”
Further, Pitman said iHeart executives continue looking at the company’s cost-base “and have built a culture within the company that is relentless in driving efficiency. And of course, we have a new tool to fuel that, which is AI.”
iHeart President, COO and CFO Rich Bressler called AI “a driving force” of expense reduction and spoke further on the company’s priority of finding operating efficiencies.
“As part of our relentless focus on efficiency, we have been re-allocating capital from our lower growth Multiplatform Group to feed our higher-growth in our Digital Audio Group,” said Bressler. “In fact, since 2019 we have actually reduced our Multiplatform Group expense base by 7%, which has in turn helped us fund the growth of our Digital Audio Group.”
The company realized proceeds of $7.5 million from real estate sales in 2023, according to its SEC filing. Radio World has previously reported iHeart sold off some tower assets to improve its cash position. The broadcaster sold 122 of their broadcast tower sites in September 2023 for net proceeds of $45.3 million and entered into long-term operating leases.
It’s full-year capital expenditures in 2023 were $102.7 million. Bressler said cap-ex for 2024 will be approximately $100 million. The company received more than $100 million in proceeds from the sale of its equity stake in BMI in February 2024.
iHeart reported approximately $4.9 billion in existing net debt at the end of 2023. Bressler says the company has no debt maturities until May of 2026.
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