Welcome to the 51st annual JPMorgan TMT Conference. I'm Sebastiano Petti. I cover the media and communications sectors at JPMorgan. I'm pleased to welcome Bob Pittman, Chairman and CEO of iHeartMedia, and Rich Bressler, CFO and COO of iHeartMedia. Gentlemen, thanks for joining us. Thanks. Thank you. Difficult ad environment out there today, which we can delve into later, but I wanted to start with iHeart and its multi-platform strategy. Why are these assets the right mix for the company, and how have you positioned iHeart for long-term growth? Well, I think if you look at sort of fundamentally how you build a business in the consumer space is you look at the consumer. Our business is pretty simple. We build engaged relationships with the consumer, and then we monetize them. The more relationships we have, the more engaged they are, the more valuable they are to advertisers. Obviously, we have to turn those relationships into something that can be used easily by the advertisers, which is why we've invested in the ad tech. When I look at the various businesses here, think about this company. It started in broadcast radio, had about a 90% reach of the American public. Today, it has about a 90% reach of the American public with the broadcast radio assets. What we've done in that period of time is we've built a digital radio business, iHeartRadio, which is, by the way, five times the size of the next largest digital radio group. We have built an events business, whether it's the iHeartRadio Music Awards or the iHeartRadio Jingle Ball or the iHeartRadio Music Festival, which is unto itself a nice business, but also brings a lot of advertisers in. We've been able to build businesses like the podcast business, which is the fastest-growing media business and continues to grow. Today, podcasting is bigger than Netflix in terms of weekly users. We built a method to monetize them all and to tie them together, and we've positioned it so that all these businesses are what the advertisers ultimately need, which is reach and the ability to engage with the consumer. Great. iHeart guided to mid-single-digit revenue declines in 2Q, comprised of high single-digit Multiplatform declines, mid-single-digit Digital Audio growth, and high single-digit audio and media services decline. What are you guys seeing in the business today? Well, you. Go ahead, Bob. Well, I think in terms of the business, we can't say much other than what we said at the conference call a few weeks ago. We're continuing. Our view of the world is that we think the ad market's a little stronger than we had expected it at the beginning of the year. Our expectation is that if it holds for the economy and the conditions in the macro hold, that the ad market is getting slowly better through the year, and that we expect next year to be back on our growth trajectory. One thing we know about advertisers as we look at the marketplace is small advertisers and people that have to advertise to ring the cash register the next day have continued to spend through this. It says the consumer's still there. I think the weakness has been more in the big companies that have the luxury to hold back some ad dollars. By the way, if the CEO of the company says, "Hey, we gotta, we gotta hold some dollars. I'm not sure where the world's going. I want my stock to look good," the easiest place to go is to your advertising budget. Very easy to hold money in Q1, it's the lowest sales quarter for most companies. Almost impossible to hold it in Q4. If you remember last year, we had some slowness began in last year, but Q4 was the best fourth quarter we've ever had for this company. I think that was an indication that Q4 is the one quarter advertisers can't hold back and don't have the luxury to hold back. I think that sort of feeds into the narrative that as we go through the year, it gets better, and I don't think we see anything that, right now in the macro, that worries us about that. Yeah. Maybe just the two things I might jump on and add is, one is, you know, I think we're all, you know, observe different businesses. People are invested in different businesses. You know, to Bob's point, I think, you know, the advertising environment has probably been a little divorced or a little separated, not totally separated, but from some of the other things we're worried about in terms of the challenges with the economy, even with the uncertainty we're having with advertising. If, you know, one of the things we've said, if you look at our Q1 results, we talked about Q2 for EBITDA being between $180 million and $200 million in EBITDA, and that's, you know, about double or more than double what we had in Q1 or, you know, kind of right in that ZIP code. You kind of see the improvement. Also, when you look at this challenging period of time and you go back to what happened, just to address 1 question we get often during the pandemic, you know, I think at the low point there, our Multiplatform Group was down, like, 30%. Here in Q1, it's back, it's down about 7%. I think also when you think about iHeart and you think about, gee, how we think about the economy, how are you looking at your assets, the asset base that you started question 1 with, I think one of the things we're looking at too is we are a different company coming out than we were in terms of our capabilities. I'm sure we'll talk about our ad tech platform, our ability to service the advertisers, and obviously, the variety of the products we have in terms of digital and podcasting. You know, I think you're seeing that reflected in the numbers. Very often, you know, when you've got some headwinds, we are often the first medium and kind of the first company to hit the headwinds on the downside. When you've got, you know, a fixed cost base, you really feel it. When you start on the upside, you know, you really get the benefit moving up where you still have to get the tailwinds behind you. Right. In just, you know, following up on, you know, how we're thinking about expectation for the second quarter. Any change in visibility in terms of what you're seeing then in terms of, you know, maybe brand national versus DR, similar, consistent with, what we discussed or what was discussed on the earnings? I can't give you any new information. I think, you know, that was just a few weeks ago. No change. Agree. Agree. We'll stick with that. Just to confirm as well, Bob, I mean, you're kind of reiterating that, you know, that maybe some budgets will be held back, but you expect that unlock to occur or anticipation of unlock to occur in terms of ad budgets as we kind of move through the year because of 4 Q and the relevance of. Well, look, in the beginning of the year when we gave guidance for Q1, we said, "Look, we expect that there's gonna be a holdback." We thought it was gonna be worse than it was. We did a little better than we had guided to. I think we've you know, in the last earnings call, we basically said we expect that to continue and to continue to improve. Okay. We've been talking about unified buying for some time. Bob, on the call, you talked about having invested in tools and infrastructure over the last several years to support that. When does unified buying become a reality? You know, what gives you confidence that this will benefit iHeart? Well, I think it's already beginning. It happens in stages and happens in pieces. Some people do unified buying by looking at many DMPs. They're all trying to put their own together. Again, I go back to the point Rich made. If you want some evidence of how that's helping us, our broadcast radio in the 2020 downturn was down 30% Multiplatform Group. First quarter was down 7%. The delta between that and the performance of the big digital companies was enormous in 2020 and very small in Q1. I think that's an indication of the success. We expect the more we do of it and the more we can begin to be like digital, and make our broadcast inventory like that, the better it will be. We offer two things in a buy. If we look at the reach, I'm gonna pick three services. If we look at Spotify, Instagram, and TikTok, I think Instagram has about a 40%-45% reach of the country. TikTok only has about a 25% reach of the country. The ad-supported Spotify, I think, has about a 30% reach of the country or 25% reach of the country. Those don't add together to give you 75%. Turns out they're all sitting on top of each other. What it gives you is a frequency of three with about the same reach. What the advertisers need is they need additional people to talk to, 'cause the more people they can talk to, the more customers they can find. They need the extra reach we have. Remember, we reach 90% of America. Our podcasting, by the way, when I plot those three sitting on top of each other, and I look at podcast, it only overlaps a little. Even within the digital space, our podcasting provides fresh customers, radio more. If we can deliver that and deliver it at a better price than they're getting elsewhere, that's sort of the double win for the advertisers. I think they're all moving in that direction, one form or another. We have built the products now, and the Triton acquisition was key to us being able to put that final piece in place, that we can connect to any of the unified systems they have, and for the benefit of them and for us. I wanna follow up on some stuff that you brought up there. Brought up Triton. Just sticking with that for a sec. I mean, You know, I feel like it doesn't necessarily get enough attention. How has that acquisition performed versus expectations? It's done better than we expected it to do when we did the acquisition and did our original model, just as a business. What it's done more importantly is it's been the foundation for us to build out the iHeart Audience Network. It's been the foundation for us unifying all of the audio platforms, all onto one tech stack and allowing an advertiser now who decides they wanna buy an audience, auto intenders, for example, they can now buy seamlessly across podcasting, digital audio, and broadcast radio. I think that becomes critically important for our strategy of both putting our broadcast radio inventory into the digital pool and in terms of giving the advertiser the maximum way to reach that audience effectively and efficiently. By the way, I think from a financial standpoint, the natural extension of that, and again, just contrasting it, the previous times in our company's lives and challenging economics environment and coming out of those economic environments. If you think about it, you know, historically, we would, as a company, go after the radio TAM money, which is like whatever, you know, used to be 20, now, you know, $18 billion-$19 billion radio. The ad-supported TV TAM money out there, which we all, I think, we're all well aware what's happening to ad-supported TV. And the dollars will continue to follow that because, by the way, dollars always follow the audience. Now we have really enhanced capabilities. We can do everything the big digital players could do, the Facebook, the Google. We can't do one-to-one, but the world, as we all know, is going away from one-to-one. We do one to, for many, as Bob articulated, one to cohorts. That pool of money is, let's say, $160 billion-$180 billion in terms of the digital pool money. If you think about it from an iHeart standpoint, our, you know, our optimism about the future and from an investor standpoint, we don't have to take much money away from that pool. There doesn't have to be a seismic shift to make a dramatic difference back to iHeart. By the way, not just on broadcast, Bob brought up, but if you look at our digital revenue, you know, today, digital revenue is about 28%-29% of the revenue stream of this company, the Digital Audio Group. If you go back three or four years, it was, you know, 7%, 8% of the company. If you go back five years, it was zero. In terms of coverage. I think the evidence just, you know, of what we're building and the facts and the data and, you know, and then you tie that in with the significant improvement in Multiplatform Group, and we've continued to see that improvement. I said, "Gee, those are some proof points that we are reaching advertisers in a way they wanna be reached. Proof points that you're perhaps taking, you know, taking some of that share. Yes. from digital and from TV? Yes. Yeah, let's talk about Triton. You talked about making your broadcast inventory look more like digital. Maybe remind us, I mean, what are some of the other strategic investments that you guys have done over the years that have allowed you to do that, you know, whether it be, you know, from measurement, attribution, you know, other perhaps analytics as well? Well, we bought Jelli. I guess it was 2019, 2018, we bought Jelli, which allowed us to take our broadcast inventory, control it centrally and treat it like digital inventory. That was critical to us. Also there was a DSP attached to that. We've done Voxnest, which has been part of our platform for podcasting as well as the Triton Digital marketplace. We've done other smaller acquisitions like Radiojar, which allowed us to digitize all of our studios so that we really moved our studios into the cloud and not equipment station by station. That's it. You know, as we look at what we need to do strategically, we look at make, buy or partner. We actually do most of what we do, either make it or partner, but occasionally it looks like the better opportunity or sometimes the only opportunity is to buy, and in those cases, that's when we make the acquisition. Great. Sticking with digital for a moment here as well, you know, podcasting and digital x podcasting, you know, remains resilient at iHeart, you know, even in this environment. What differentiates iHeart versus peers specifically as we think about the podcasting space? Well, I think in the podcast space is I'm gonna go back to reach. You know, everybody can build a website, but what you really need for your website to be successful is traffic. Anybody can do a podcast, but what you need for your podcast to be successful is traffic. Because we reach 90% of America and because we have such a critical mass of podcasts, we are the number 1 podcast publisher, bigger than the number 2 and 3 combined. We're able to promote our podcast and get the audience to new podcasts. That ability to create the traffic for a podcast is invaluable because no one else reaches 90% of America. The next largest audio group reaches half of that. We have a unique asset there. The second point is because we are in the audio content business, remember, we are reaching 90% of America, they must like the content we create. We're expert at doing that. We already have big talent, some of that have moved over, like Charlamagne Tha God and Elvis Duran and Bobby Bones to do successful podcasts as well. The third level is that we can monetize at a level no one else can. We have the biggest sales force in audio, about 1,500 sellers, and we have this audio tech stack that no one else has, which again, allows us to maximize it. Sort of the proof of that is their podcasters like Malcolm Gladwell came over to us, already had a successful podcast, came over to us, got more audience and better monetization. The NFL, that probably could have picked anyone they wanted to, picked us because what do they want more than anything else? A successful podcast. Right. I think you've got experienced, qualified people making that choice, which I think is a validation of those three claims. Yeah. If we think about reach, traffic, you know, the critical mass, you know, being experts on content and the monetization, differentiation that you bring to the table in podcasting, do you think that there are other, you know, could be other interesting, you know, acquisitions or M&A in this space, kind of, that you could plug and play and probably improve monetization and just feed into the flywheel? If we can find them, we're open. We don't see them right now. We don't see a need. Again, we don't build the company through acquisitions looking for additional earnings. The only time we do acquisitions is when we think we need them to achieve a strategic goal. You know, by the way, just the only maybe fine point I'd put on that, if you look at all the reach numbers Bob's been talking about, whether it's broadcast or podcasting, we don't need reach, you know, any more reach. You know, remember, about a third of the people spend their time on a daily basis in with our medium or, you know, audio medium, we're still only getting. Well, actually, it's a third of the use every day. A third of the use every day. day. Thanks, Bob. We're only getting about 9% of the advertising dollars out there. For us, if you think about, you know, what Bob just talked about, the audio tech stack, which were all very small acquisitions relative to the size of iHeart, what they did is they made the iHeart asset base better. It gave us the ability, which you've seen in our numbers, to improve the ability to monetize our inventory. That goes to the unified buying opportunity. Right. Yep. Yeah. Podcasting revenue, you know, continues to grow double digits, up 12% in the first quarter. Any signs that the median is beginning to slow, you know, because maturation or just different parts of, you know, just the S-curve, or is just maybe, you know, you're seeing just, you know, more of a macro impact on the space? To the contrary, I think podcasting has been the best performer of all media in this period. I think it continues to have that lead on everybody else, and I don't see that slowing. Again, everything's been compressed down as a result of the ad downturn, but nothing other than that seems to be affecting podcasting. What's also interesting is you continue to see the audience grow, the interest grow and the usage grow. You know, today there are more people listening to podcasts than are watching or even subscribing to Netflix. Yeah. On a weekly basis. By the way, I think that's, that really is the key, right? You've gotta keep advertising dollars, just we referred to before, always follow users. They always have in all the years in advertising. This is not the newspaper industry, not the magazine industry, not the decline you see in ad-supported television. You know, the biggest asset I think we have that separates us from everybody else is the rock solid, resilient nature of our relationship with the consumers and with the listeners. Yeah. you announced some cost-cutting initiatives on the fourth quarter. Can you remind us of those programs? How does it perhaps compare to what you announced pre-pandemic? I think on this most recent earnings call, you talked about, you know, should we expect to get to that full run rate of the anticipated savings inside of the second quarter? We, we've announced, just to put context, so back, during the pandemic, we announced a $250 million cost program. Can I add one thing to that? Sure. Before the pandemic, we said we're gonna modernize the company. Yeah. -and announced a cost cutting- Good point. ... before that, like, six weeks before the pandemic came. Yeah. Yep. Yep. Sorry, Rich, I didn't mean to interrupt you, but add that to it. That's a really important point. By the way, I think the context of the total point is we announced some of these programs, but the reality is, I think, you know, Bob and I are cash flow people, we're bottom line people, that's the only thing we get measure ourselves against. We're always doing cost programs. We're always looking, that's what's going to improve and take advantage of the capital expenditures and what's happening in the world of technology. With that background, we announced the initial cost program that Bob said in terms of modernizing the company. We'd asked an additional $250 million at the beginning of the pandemic. Again, we took the actions we needed to take during that period of time. Just as a reminder, we generated free cash flow during that year. Yeah. -pandemic when, most companies were not. We're users of cash out there. Again, I think we demonstrated that we're free cash flow, and we needed to do whatever we need to do to continue to generate free cash flow. Of that $250 million, you know, some were one-time, but, you know, predominantly those were permanent cost cuts. Towards the end of last year, we announced, I think you're referring to a $75 million- Yep. cost program. You'll start to see that or you will see that it's baked into our guidance, and that will start to be baked in in Q2 in terms of a run rate basis. You mentioned that, there's always ongoing, you know, expense reduction initiative. The way we look at it is, Rich and I use this as our guidance, if we started this company today with all we know about technology, what would the company look like? How efficient could it be? Where are we, and how do we move toward that point of sort of maximum efficiency? Every year, that probably changes. Two years ago, we probably wouldn't have put AI much into our, into our calculus. Yeah. I think one of the examples is think about an Amazon warehouse versus a regular warehouse. A lot fewer employees. Employees that are there are basically supervising the robots. We think that eventually we're moving our operation to getting people out of the work, do the work- Right. to supervise the work or edit the work. Yeah. We think that has tremendous cost benefits to us. A couple of years ago, we announced that we had developed an AI to help us with music selection, music scheduling. A significant number of our employees spend their time every day picking the music for the radio station, selecting what should be on the playlist, what categories they're in, and then scheduling it. We've started doing that with AI. In the test markets where we did it, we have, I think it's 10%-15% higher ratings with the AI doing from humans, and it saves us that human cost. We see the opportunity to use technology to have a tremendous benefit to this company over the both short and long haul. That's great. Thinking about, you know, the debt on the business, with cash balance of $181 million exiting the first quarter, you have greater total liquidity of $601 million exiting the quarter. As you touched on earlier, you know, given the cash profile of the business, you know, you expect to generate free cash flow this year. Does it make sense for iHeart to continue using free cash flow to buy back its senior notes in the open market? Well, Look, I think it's something, you point out, in terms of generating free cash flow. By the way, just to remind you, last year, we generated about $300 million of free cash flow. I think this year most people have us at $250+ million of free cash flow. It's a significant amount of free cash flow. You know, you know, we've been talking about the business. You know, we continue to invest, just to be clear, overall in the business. At the same time, you know, we have a philosophy, you continue to feed your winners. At the same time, you're constantly looking at return on investment. I mean, it's what we do every day in terms of allocating capital. Mm-hmm. When you've got a highly leveraged capital structure, such as we do, and you see the overall capital structure is trading, debt structure, I'm sorry, to be clear first for this conversation, is trading much more at distressed levels, and some of the pieces of paper out there are a 20%+ yield in terms of buying them, you know, I would suggest, you know, in and of itself, those purchases create a lot of value. When you de-lever, you're creating a lot of value for your equity shareholders also. By the way, but at the same point in time, you know, we're doing, which we, you know, talking in terms of managing the company, looking at, you know, we took our capital expenditures down from $110 million this year in guidance, I think it was $110 million-$120 million, to $90 million in guidance. By the way, a year ago, our capital expenditures, which a decent part was driven by the real estate, us redoing our real estate was $160 million. I think we're always looking at making those trade-offs. The result of it is, you know, I think back to Bob's earlier point, what would we do if we started the company today? You know, we've now reduced our footprint in the US from 4 million sq ft to 2 million sq ft. That's not something we would've done three or four years ago. Right. Okay? It's, you know, recognizing the way people are working and work styles, it's also dramatically taking advantage, which by the way, it's what we get paid to do, we should do, of the capital expenditures and what's happening from a technology standpoint. We've reduced our employee base just prior to the pandemic, by about 20%. You know, again, a lot of that is the ability to take advantage of efficiencies and have employees be more productive, the fact that we have less office space. Right. You know, I think it's just an ongoing flow of things that we do every day in terms of running the company. Gotcha. As you're thinking about the company's leverage, are there potential asset sales or other sources of liquidity that the market might not be thinking about to reduce leverage? I don't think, you know. There's nothing in particular. Remember, as a reminder, when we went through, you know, the separation of Clear Channel Outdoor from iHeart, when we went through our own restructuring process a number of years ago, we took a very hard look at our asset base. By the way, we should continue to take a hard look at our asset base. If you go back to your first question, to Bob, in terms of, you know, effectively why is, you know, why about the future and the asset base, and why you have this asset base to get you to maximize the value of the company, you know, quite frankly, it's something we challenge each other all the time. As you sit here today, no, I don't see any significant change to the asset base. I think, you know, I think we've talked about, again, four terms of leverage, kind of the right place to be before beginning to contemplate capital returns. No change in that? Yes. That hasn't changed. Just back to something I touched on earlier, we do believe paying down debt and a lot of capital structure may not be a direct return to the equity shareholders, but is a return to the equity shareholders. Yeah. You updated expectations or provided some color on cash taxes on the most recent earnings call. Can you expand on that? Are these deferrals to cash tax savings? Will we see any benefits there in 2024? Unequivocally, they are not a deferral of cash taxes. We're just not pushing out taxes. We've got, you know, a very thoughtful approach with Mike McGuinness and the tax team, and Scott Bickel and the gang. We're just constantly challenging, you know, looking at the rulings and looking at things that we can take advantage of for the benefit of the iHeart shareholders, but obviously within all the IRS regulations. Understood. You know, zooming out for a second, I think we touched on a lot of the different moving pieces, how you're thinking about the business, you know, some of the growth opportunities that continue to emerge, podcasting, et cetera. Between the pandemic, you know, the ad recession that we find ourselves in, you know, growing competition, or growing contribution from digital, has the cash generation profile of the business changed at all in the last few years? Well, we think it gets better. Obviously, in a high operating leverage business, the bigger you get, the better the margin gets. That has not changed. We are pretty sticky in through the podcasting world. You saw a lot of people decide they were getting podcasting and way overpaid for content, which we think if we couldn't make money with all we could bring to it, I don't understand how anyone could have made money. It turns out they weren't. We had the discipline there not to play that game and to hold the line, that's why I think our podcast margin is so good and podcasting is such a profitable business for us. This is just, you know, an unequivocally great free cash flow. I mean, I think the data proves that. There's no speculation of free cash flow business, or at least I'll speak very specifically about iHeart. Again, just to go back to something we touched on, in the pandemic, where we took all the actions necessary, we still generated significant free cash flows. There, back to your point, very tough operating environment, probably the toughest operating environment, I think I'll speak for Bob and myself, that any of us have ever encountered, generated. We go through what happened last year in terms of all the uncertainty with the Russian invasion of Ukraine, and then the onslaught of the uncertainty of the U.S. economy. We did $950 million of EBITDA. We generated about $350 million of cash flow. As we're in this year with the uncertainty we have, you touched upon cash taxes. What we've always said is we have a lot of levers to pull. One of those levers is capital expenditures. And then we just have a number of other pieces from a working capital standpoint. Our commitment, 'cause we are free cash flow managers in the way we run the company, and I think if you look at our history, that's never wavered and never changed. As we're thinking about the next 12 months here, you know, one year from now when we're back, what will we be discussing? What are you most excited about as you look out over the next 12-24 months? Well, recovery, recovery. I mean, I think this is, you know, we suffer on the way down, because so much of our business, almost all of it is ad supported, and we have leverage. On the way up, both of those turn into assets for us. We are looking forward to the recovery and, obviously preparing for it and building the leanest organization we can to take full advantage of it, of that increased revenue. By the way, next year at this time, it will be in the middle of a presidential political year, just to remind everybody. I think the last presidential election cycle, we did $170 million of revenue. By the way, going to cash, the great thing about one of the great things about our business, and particularly during election years, is we get paid upfront. That is a real benefit overall to the company. We expect next year with the backdrop of 170 being the highest year we've ever had to be, all data points are it's gonna be a very robust political year. Seeing any political dollars flow through yet? We have, but they're not material at all. They're insignificant. Great. Well, I think that's a great place to leave it. Gentlemen, thanks for joining me. Thank you. Thank you all. Have a great day. Thanks. Thank you.