iHeartMedia reported Thursday that its third quarter revenues rose 3% year-over-year to $948.3 million and increased 4.9% excluding the impact of political revenue. Broadcast revenue declined 0.6% (+0.4% minus political) to $573.0 million while the company’s Networks business grew 9.2% to $160.1 million, driven primarily by growth in its Total Traffic & Weather network. Digital, once again, was a major growth catalyst, increasing 33.4% to $96.7 million, with most of that growth attributed to podcasting, along with other digital revenue.
iHeart’s Audio & Media Services division declined 14.3% to $59.9 million and increased by 0.2%, excluding the impact of political revenue. Political has the biggest impact on the company’s Broadcast and Audio & Media Services revenue, which show greater variance in non-political years. Sponsorships revenues grew 4.4% to $55.5 million. In fact, all of iHeart's revenue streams grew year-over-year when the impact of political is removed, which the company pointed to as evidence of continued momentum in its business.
“During the third quarter, our integrated multi-platform approach to meeting listeners wherever they are continues to drive our strong performance, and we’re seeing momentum across all of our businesses - from broadcast radio to digital, social, podcasts and live events,” Chairman and CEO Bob Pittman said in a press release ahead of the company’s Thursday morning earnings call. “This quarter, we advanced our offerings of goal-oriented marketing solutions to advertisers, expanding our addressable pool beyond radio. And we continued to strengthen our leadership position in our podcasting business, announcing multiple new partnerships and a slate of exciting new content. Looking ahead, iHeartMedia is well-positioned to continue to grow our leadership position in the audio space,” Pittman added.
Said President, COO and CFO Rich Bressler, “When iHeartMedia returned to the public equity markets, we set clear goals to increase our share of radio advertising spend, tap into TV and digital advertising revenue pools, and extend our leadership in podcasting and drive sponsorship revenue. Our results demonstrate significant progress against these goals and we are pleased with the revenue growth we’ve seen across the board. We continue to work to build long-term shareholder value, and de-leveraging remains a key priority.”
Operating expenses rose 8.3%, mostly from expenses from the company’s purchase of Stuff Media and Jelli in fourth quarter 2018, along with digital royalties, content costs and production expenses from podcasting and digital subscriptions. Operating income fell 24.6% primarily from higher depreciation and amortization expense from the company’s “fresh start” accounting that began after emerging from bankruptcy, and share-based compensation expense from a new equity incentive plan.
Earnings before interest, taxes, depreciation and amortization (EBITDA, a measure of cash flow) grew 0.3% to $274.7 million with margins of 29.0%, down modestly from 29.7% in the prior-year period.
The company generated operating cash flow of $180.3 million, up 16.0% year-over-year and free cash flow of $151.5 million, up 11.9%, consistent with its goal of achieving $375 - $400 million of cash on the balance sheet by year-end.
Look for more color and commentary from iHeartMedia’s third quarter 2019 financial performance in Friday morning’s Inside Radio.