Political ad spending in this presidential election cycle is expected to be a boon for radio broadcasters. There was just enough of it in the second quarter to push iHeartMedia’s net revenue up by 1% compared to the same quarter last year.
The company reported net revenue in Q2 2024 of $929 million, which was flat if you exclude political revenue of $15 million. It marked the first quarter in which the company’s consolidated revenue increased year over year since the end of 2022.
But iHeartMedia also posted an operating loss of $910 million in Q2, mostly due to non-cash impairment charges related to goodwill and its FCC licenses, according to the report filed with the U.S. Securities and Exchange Commission. That compared to an operating loss of $897 million a year earlier. (Its adjusted EBITDA revenue for the quarter was $150.2 million, a decline of 21% from a year earlier.)
The company’s digital audio arm reported revenue growth of around 10% to $286 million in the second quarter, with podcast revenue totaling $105 million of that. Podcast revenue growth slowed in the quarter to about 8%, the company said. iHeartMedia reported podcast revenue up 18% in Q1 YoY.
Digital now represents 31% of total revenue, according to the company’s financial disclosure filing; it included this graphic in its presentation comparing the current revenue mix to four years ago.
iHeartMedia’s Multiplatform division, which includes radio, posted revenue of $576 million in Q2, down 3% from same period a year prior. The company operates 860 radio stations and the Premiere Radio Network. Specifically, revenue from radio stations declined $3.7 million, or just under 1%, while network revenues dipped by $15.6 million or almost 13% in the quarter.
The Audio and Media Services group, which includes Katz Media Group and RCS, posted $70 million in revenue in Q2 compared to $65 million in the same quarter in 2023. That’s an increase of nearly 7%. The increase was primarily due to higher political revenue.
iHeartMedia, the largest radio ownership group in the United States, is the audio home for the NBC coverage of the 2024 Olympics in Paris, with original podcasts from the Olympic Village. Some of its radio stations are streaming real-time play-by-play of events.
President/CEO Bob Pittman said on the earnings call that the advertising environment remains dynamic, “with the changing outlook on interest rates, inflation trends, global uncertainty and the rapidly evolving domestic political landscape.”
Still, he remains confident about the back half of 2024 as the company continues to see revenue reflect the impact of an ad market recovery, the upside from political advertising as well as a focus on cost efficiency.
“We continue to see strong momentum in our podcast business, our digital ‘ex-podcast’ business, and have seen sequential improvement of our Multiplatform Group’s year-over-year revenue performance,” Pittman said in a prepared statement. “This performance is built on iHeartMedia’s strong and unparalleled audience and demonstrates the progress we are making in maximizing the monetization of it.”
The company continues to look for cost savings, Pittman said. “We think technology has unlocked a lot of cost savings. Technology provides efficiency. It always has. And efficiencies not only help the cost but it helps everyone here to feel better because they can get their work done better and faster and give us a competitive advantage.”
The company is counting on a boost from political to help its second half. iHeartMedia told investors it expects to see record political ad spending this year. Full-year political is pacing about 20% higher than the last presidential cycle. In 2020 the company had $167 million of political revenue.
iHeartMedia has a lot of debt, according to the SEC filing. The company reported total debt of $5.2 billion at the end of the second quarter. President, COO and CFO Rich Bressler said the company remains focused on financing opportunities available, including with respect to its debt maturities, the earliest of which is May 2026.
“We are engaged in active dialogue with a group holding more than a majority of our debt and look forward to sharing updated regarding our ongoing refinancing activities when appropriate,” Bressler said during the earnings call.
iHeart’s capital expenditures for the six months ended June 30 were $42.8 million compared to $61.9 million in the six months the year prior. Capital expenditures decreased primarily due to lower spending on real estate optimization initiatives, according to the financial disclosure. Bressler said the company’s estimate of full-year capital ex is now $90 million.
The company expects its Q3 2024 revenue to be up mid-single digits.
