Bob Pittman220

Historically during recessions, advertisers roll the dice and try something new — and this time it’s podcasting. “It’s the darling right now. It’s the thing people are looking to try,” iHeartMedia CEO Bob Pittman told Wall Street on Thursday. With 225 million downloads for its podcasts in July, a year-over-year increase of 60%, Pittman told the Bank of America media conference that podcasting is “a tremendous growth area” that is attracting premium pricing. “It’s something advertisers want and come to us looking for,” he said.

This week iHeartMedia used the backdrop of the IAB’s Podcast Upfront to announce new podcast ventures with former President Bill Clinton and rising New York-based radio personality Charlamagne Tha God. The company’s consistent ranking as the top commercial podcaster, per Podtrac, and the promotional power of 850 radio stations have given it a “first look” advantage with content providers looking to enter the space. “We see it as an extension of radio,” said Pittman. “Podcasting is already bigger than streaming music services like Spotify, and the growth continues, so we are investing heavily into it.”

Billings are keeping pace. COO/CFO Rich Bressler told the virtual conference that iHeart’s podcast revenues are up 100% through second quarter. “That shows no signs of slowing down,” Bressler said.

‘A Tale Of Two Cities’

The impact from the COVID-19 pandemic was like “a tale of two cities,” according to Pittman. Listening held up, but there was a “significant fall-off in revenue.” He said broadcast radio was hit the hardest, which he chalked up to the fact that the medium relies so much on short-term contracts compared to TV, which writes more long-term deals and didn’t take as big of a hit. 

That’s also why iHeart’s networks division fared better, Pittman explained. Digital was less impacted, thanks to unabated advertiser interest in podcasting, which “continues to grow like a weed” in both usage and revenue, Pittman said.

The iHeart executives appeared at the virtual conference one day after SiriusXM CEO Jim Meyer said he wants to make advertising a bigger part of his company’s bottom line by attracting more broadcast radio listeners to its free, ad-supported Pandora platform. The satellite radio company now has an ownership connection to iHeartMedia after Liberty Media bought a five percent stake in iHeart. Pittman called Liberty a “valued” and “supportive” shareholder. We certainly have tremendous respect for their management team and referred to SiriusXM not as a competitor, but as a brethren in terms of our view of audio.

Leaner And More Tech-Focused

In February iHeartMedia announced “modernization” efforts that will save the company $50 million this year. Another $200 million in savings from pay cuts, furloughs and other measures taken to mitigate the impact of the pandemic will reduce overhead by another $200 million. Bressler said a “sizable piece” of that $200 million will become permanent, by pivoting to a smaller real estate footprint and making a “significant” reduction in travel and entertainment expenses and what the company pays consultants. “We’re going to become more efficient in moving forward,” Bressler said.

The pandemic caused the company to speed up its use of technology for support and administrative work, saving money and improving quality while also allowing it to operate without regard to geography. Technology, Pittman added, will be “an important component of our new cost basis in the new normal.”