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iHeartMedia Posts Another Quarterly Loss

Radio side edges up but debt looms as big payments approach in 2018

The radio business at iHeartMedia appears to be doing just fine and has stretched its year-over-year quarter growth string to 18 consecutive quarters, but the overall financial picture for the multiplatform company in the third quarter ending Sept. 30, is gloomy.

iHeartMedia today said it suffered a third quarter 2017 net loss of $248.1 million while overall consolidated revenue decreased 1.9% in Q3 to just over $1.53 billion. Nearly $30 million in revenue was zapped by difficulty at the company’s subsidiary Clear Channel Outdoor Holdings. In fact, the company said it sold some of its Canadian outdoor market during the quarter, which caused the company to log an additional $12.1 million loss in Q3.

The group’s radio segment, which stands at more than 850 radio stations, actually saw revenue increase 0.3% in the third quarter 2017 to $859.5 million. That was compared to $857 million for the quarter in 2016.

It is clear from today’s earnings call that iHeartMedia is watching and waiting for the expected merger later this month of Entercom/CBS Radio. Rich Bressler, COO and CFO of iHeartMedia says his company remains the undisputed leader in market reach compared to any radio rival and then specifically mentioned Entercom. “For example, even with the heavy focus on the top 50 markets by Entercom following its CBS Radio acquisition, in those top 50 markets we still reach 93% of listeners 12+ and they reach only 67%, according to Nielsen. In addition, we are seven times their size in digital reach,” Bressler says.

Bressler also discussed the plan announced last week for iHeartMedia to exchange properties in Richmond, Va., and Chattanooga, Tenn., for Entercom and CBS Radio stations in Boston and Seattle, which “were two of the few markets where we did not have a full complement of stations.

He continued, “The station exchange will allow us to further expand our presence in those two strategic markets and further strength our presence in Boston and Seattle.”

Podcast listening on iHeartRadio increased a whopping 58% year-over-year in the quarter, according to iHeartMedia’s financial report today. “All together we have increased the catalogue of podcasts available on iHeartRadio to almost 10,000 across 18 different categories,” Bressler said on today’s call.

Bressler says “personal assistant” systems such as Amazon Alexa, Google Home and other voice-activated platforms continue to be a focus of iHeartMedia as it searches for as many platforms it can find to deliver radio content and podcasts. The company says it is expanding its voice-controlled footprint to the newly launched Amazon Echo Plus and Google Assistant-enabled Google Home Mini, Google Home Max and Google Pixel Buds, while iHeartRadio’s radio stations and custom artist radio stations are now available on the Android Wear 2.0 watch.

The company also added iHeartRadio All Access to Sonos smart speakers for on-demand listening to playlists and customized stations with unlimited skips with “the ability to curate, save songs and access on demand playlists using the free Sonos app on Android, iPhone or iPad,” according to its Q3 financial report.

iHeartMedia is still trying to fix its debt. As of Sept. 30, its debt was $20.6 billion. The company has been trying to renegotiate with creditors, and acknowledges it has some major credit deadlines looming in early 2018. A story Tuesday in the San Antonio News, where the company is headquartered, said analysts will be digging through today’s financial report for any potential signs of a possible bankruptcy filing. A quote in the article about iHeartMedia from Phillip Brendal, a Bloomberg Intelligence credit analyst, stands out. “It’s not a broken business model. It’s a broken balance sheet,” he told the newspaper.

Industry observers believe iHeartMedia is attempting to negotiate a prebankruptcy agreement with its bondholders. The company today warned investors that if it’s unable to refinance its credit notes due in January, 2018, the “forecasted cash flows are not sufficient for us to meet our obligations, including upcoming interest payments and maturities … as they become due in the ordinary course of business for a period of 12 months following Nov. 8, 2017.”