iHeartMedia Company Q2 Update Memo Amplifies Good News

Some Good News

Following the official iHEARTMEDIA 2020 Q2 Report (NET NEWS 8/6) showing revenue fell 46.6% year-to-year to $488 million (down 47.1% excluding political revenue) -- another victim of the economic effects of the COVID-19 pandemic -- the company says that it has seen improvement each month since the APRIL low point and saw podcasting revenue double from last year.

In a company-wide memo, Chairman/CEO BOB PITTMAN and CFO/COO RICH BRESSLER thanked everyone for their hard work and expanded on the good news.

Team,

We want to take a moment to bring you up to speed on the progress of the company. Yesterday we announced the company’s Q2 earnings, and although like every other advertising-supported company in America we had disappointing financial results this quarter, there was some good news as well. We are seeing a sequential advertising revenue recovery every month; APRIL was the low point, with ad revenue declining 50%, but we saw an upturn in ad revenue in each consecutive month into July, which had a decline of 27%, and Q3, although still challenging, is shaping up to be materially better than Q2. 

That advertising upturn is encouraging -- and it is a tribute to the hard work and commitment of all of you. On yesterday’s earnings call, we highlighted our appreciation of all you’re doing, saying in our remarks: “I want to take just a moment to salute our employees. This is a tough time for everybody, and our employees have risen to the occasion to keep the company moving forward during this period. They’ve never worked harder; they’ve never been more creative and innovative; they’ve never had to adapt so quickly to a major disruption, in this case, moving from an office to working from home; many of them have kids, and have had to deal with issues like school and childcare and many other factors -- but in spite of all of that, they continue to make progress on key initiatives, to build out new ideas, to serve our communities, and to service our clients. It’s frustrating for them, as it is for RICH and me and all of you who are stakeholders in this company, because they don’t see this translate into financial success right now. However, as we look to the future -- as we begin to see an upturn and look past this period -- we know all the work they’re doing now is setting the stage for accelerated growth.”

In contrast to our advertising downturn, the usage of our products is stronger than ever. The increased time at home has introduced our listeners to more and more devices where our radio stations are available, which plays into our strength of having built out so many digital platforms for our radio listening. For example, our listening was up almost 20% on our consumer electronic (CE) devices, including smart speakers, gaming consoles and smart TVs. As you know, today our products are available on 2,000 devices and 250 platforms in addition to AM/FM, and there seems to be evidence that, even as people return to a more normal lifestyle, they will continue to take advantage of additional opportunities to listen to us at home as a result of these new devices.  Additionally, our podcast listening saw a 62% increase in downloads year over year and we surpassed NPR as the overall podcast leader in addition to being the #1 commercial podcast company.

In addition, what this quarter also showed is that the decision we made to expand into new areas to drive growth, diversify our revenue and give us leadership across multiple platforms has been the right one. In Q2 our traditional broadcast revenue was down 57%, but our Networks revenue was down only 38.4%, Smart Audio, which is built on our unique data and analytics capabilities, was down 28%, our Digital revenue was up 2.4%, and our podcast revenue was up over 100%. 

We also want to let you know how much we appreciate the contributions and sacrifices you all have made in the last several months, which helped us to mitigate some of the Q2 revenue loss.  You’ve done more with less, you’ve endured furloughs and unpaid vacations, you’ve worked harder and smarter than ever before even as you adapted to an unprecedented work-at-home environment.  We thank you for your continued dedication to our company and the communities we serve, and we appreciate your ability to rethink how we can do business in this new environment.

Although advertising is recovering somewhat, we still have much hard work ahead of us. We appreciate all you’ve done and we look forward to the contributions you will make to continue and reinforce our leadership as the #1 audio company in AMERICA. We know it’s a tough time, but we have much to be proud of as well. 

BOB PITTMAN and RICH BRESSLER

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