iHeartMedia 220

It was another quarter of soaring podcast ad revenue for iHeartMedia which closed out 2022 with a quarter billion dollars of ad revenue tied to its podcast business. “Podcasting revenues alone represented almost 10% of total company revenues, clear evidence of our digital transformation,” said CEO Bob Pittman during a conference call with analysts today (Feb. 23).

During the fourth quarter, iHeart’s podcast revenue jumped 130% to $96.6 million. And for all of last year, the company says podcast revenue totaled $252.6 million. That was a 148% increase over the $101 million podcast revenue it booked in 2020.

At year-end, iHeart says nine percent of its fourth quarter total revenue was tied to its podcast business. That compares to a one percent contribution at the start of 2019.

“Our podcast business is really built at the end of the day on our strength as a publisher,” said Pittman. “Eighteen months or so ago, we were neck and neck with NPR. Today, in the last Podtrac report, we had more downloads than the next four podcast publishers combined. That kind of strength gives us a lot of what we think of strength and building marketplaces.”

In addition to having its own shows, CFO/COO/President Rich Bressler told analysts that iHeart also sees opportunity in going beyond its own iHeartPodcast Network original series to act as a sales rep for outside publishers. “There might be a big third-party opportunity,” he said. “It doesn’t come with the same margins as our published podcasts do -- but I think there are opportunities for us to extend.”

Pittman said it also opens doors to sell more podcast ad inventory that may be going unsold today. “When we have a huge podcast, we tend to sell it out. But we have a lot of small podcasts, and some very big regional podcasts -- we've got an opportunity now to tie all those together and find money. And then when we make that sale, we have a much better margin, because it's a published podcast, versus just a sales rep deal.”

In a move iHeartMedia says is geared to make advertisers more comfortable with buying ads across its network of more than 750 iHeartRadio Original podcasts, the company last week announced it was partnering with Sounder to integrate its brand safety rating tools for use by ad buyers across the iHeartPodcast Network. It also made a minority investmentin the podcast management and monetization platform. 

“We have made the investment to build out our ad tech stack, but it became apparent that there's still going to be a portion of the podcast inventory that we're not going to be able to get through traditional sales methods even though we have the largest ad sales group,” said Pittman.

As the year closed with another quarter of triple-digit revenue gains for its podcast business, some analysts wondered whether that pace of growth can be continued in the new year. While Bressler did not offer any specific numeric outlook, he noted that there is a level of certainty for the division. 

“There's a consistency to the story. There's a consistency to the numbers and to the growth rates. I'm not sure if people have fully appreciated this is not just one, two, or three or four quarters -- there is a consistent story here. And we feel very comfortable with this story going forward,” Bressler said.

Pittman said it also comes with continued profitability for the podcast business. “The question is, will it one day have the same kind of reach as broadcast radio? I don't know. But I certainly think it's got that kind of engagement and got that kind of popularity. So we are, you know, both fueling it and benefiting from it,” he said.

Overall, fourth quarter 2021 closed with better-than-expected results at iHeartMedia. The company reports revenue grew 14% year-over-year to $1.1 billion. That was four percentage points better than management had been predicting for the quarter. The boost came as digital revenue in particular soared, posting a 59% gain versus a year ago. 

Revenue from its Digital Audio Group, which includes not only podcasting, but also streaming, websites, and other digital assets, jumped 59% year over year to $273.2 million. 

Increases were also recorded at iHeart’s Multiplatform Group, which includes its 850 radio stations. The company says revenue at that unit was up 9% during the fourth quarter, continuing the trend of sequential improvement from pre-pandemic 2019. 

Looking ahead, iHeart expects first quarter revenue to grow 17% to 19% after a strong 18.3% growth rate recorded in January.

“We believe we're poised for continued success in 2022 and beyond, and that our Q4 and full year 2021 performance is strong evidence of that momentum,” said Pittman.