iHEART PREPS FOR RECOVERY

iHeartMedia was two-thirds of the way through a strong first quarter when the pandemic hit, leading to a sharp decline in broadcast radio advertising.

Still, revenue dipped only 1.9% to $780.6m due to effects of the COVID-19 pandemic.

Execs have analyzed three COVID-19 scenarios—recovery beginning in Q3; recovery beginning in Q4 and prolonged recession in 2021—and project that the company has sufficient liquidity.

“Although businesses and brands across the country have been impacted, we are working closely with them on their marketing needs and are focused on helping them generate the consumer demand to reopen or ramp up,” said Bob Pittman, Chairman and Chief Executive Officer of iHeartMedia. “Our multiplatform offering, our unparalleled reach and our unique data and analytics position us well to benefit as a company from this returning advertising demand.”

Growth in podcasting helped push up the digital revenue stream by 22.2% to $92.8m, while Audio & Media Services grew 17.2% to $60.2m on a reported basis.(It increased by 3.2% when political revenue is excluded).

“We’re seeing distinctly different stories with consumers and advertisers, Pittman noted in a call with analysts.

As more and more Americans were staying home at the end of Q1, iHeart’s listening platforms saw their audiences increase—web listenership was up 40% and accessing iHeart content via gaming devices increased 28%. Podcast listenership skyrocketed by 100% according to some usage metrics.

Pittman also touted iHeart’s ability to respond to the new reality by creating unique programming such as live-streamed concerts and performances, virtual proms and commencement addresses.

Ad revenue dropped for obvious reasons: Major companies shut down and save money but eliminating advertising costs as they rebuild their messaging.

“We hate to be in this environment, Pittman said. “We monitor the business environment every day. We’re now focused on recovery and … benefiting from the upturn whenever that occurs.”

In the traditional radio business, broadcast revenue declined by 5.2% to $461.7m on a reported basis and declined 8.3% excluding the impact of political revenue. Revenue from Sponsorship and Events decreased by $10.4m, primarily as a result of the postponement or cancellations of events in response to the COVID-19 pandemic.

Modernization initiatives put in place in January are expected to save the company approximately $100m by mid-year 2021. Operating-expense-saving initiatives in response to the COVID-19 pandemic savings are expected to save another $200m.

iHeartMedia will reduce its capital expenditures in 2020 by approximately $80m from its previously announced guidance of $155m- $175m.

It expects that The CARES Act will deliver a reduction in tax-related cash payments of approximately $100m.

“Given the current economic environment, iHeart has taken actions that we believe expand the company’s financial flexibility and provide sufficient liquidity to operate effectively even in an extended period of economic weakness,” said Rich Bressler, iHeartMedia President, Chief Operating Officer and Chief Financial Officer.