iHeartMedia 10Q 2023 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO __________

Commission File Number

001-38987

IHEARTMEDIA, INC.

(Exact name of registrant as specified in its charter)


Delaware		26-0241222
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

20880 Stone Oak Parkway
San Antonio,	Texas	78258
(Address of principal executive offices)		(Zip Code)

(210) 822-2828

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	IHRT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding at November 6, 2023

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Class A Common Stock, $.001 par value

123,309,506

Class B Common Stock, $.001 par value

21,347,363

IHEARTMEDIA, INC.

INDEX


		Page No.
Part I – Financial Information
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Comprehensive Loss	2
	Consolidated Statements of Changes in Stockholders' Equity (Deficit)	3
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
Part II – Other Information
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	40
Signatures		42

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(In thousands, except share and per share data)	September 30, 2023		December 31, 2022
	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	213,479	$	336,236
Accounts receivable, net of allowance of $36,496 in 2023 and $29,171 in 2022	983,927		1,037,827
Prepaid expenses	136,692		79,098

Other current assets	14,901		19,618
Total Current Assets	1,348,999		1,472,779
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net	580,848		694,842
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses and other	1,112,751		1,476,319
Other intangibles, net	1,234,357		1,419,670
Goodwill	1,721,223		2,313,403
OTHER ASSETS
Operating lease right-of-use assets	713,941		788,280
Other assets	165,399		170,594
Total Assets	$	6,877,518	$	8,335,887
CURRENT LIABILITIES
Accounts payable	$	179,707	$	240,454
Current operating lease liabilities	75,559		70,024
Accrued expenses	262,405		325,427

Accrued interest	52,626		64,165
Deferred revenue	171,973		131,084
Current portion of long-term debt	390		664
Total Current Liabilities	742,660		831,818
Long-term debt	5,228,316		5,413,503
Noncurrent operating lease liabilities	772,068		848,918
Deferred income taxes	377,247		483,810
Other long-term liabilities	164,048		73,332
Commitments and contingent liabilities (Note 6)
STOCKHOLDERS’ EQUITY (DEFICIT)
Noncontrolling interest	8,868		9,609
Preferred stock, par value $.001 per share, 100,000,000 shares authorized, no shares issued and outstanding	—		—
Class A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 124,273,910 and 122,370,425 shares in 2023 and 2022, respectively	125		123
Class B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 21,347,363 and 21,477,181 shares in 2023 and 2022, respectively	21		21
Special Warrants, 5,101,870 and 5,111,312 issued and outstanding in 2023 and 2022, respectively	—		—
Additional paid-in capital	2,939,331		2,912,500
Accumulated deficit	(3,343,265)		(2,227,482)
Accumulated other comprehensive loss	(1,786)		(1,331)
Cost of shares (979,162 in 2023 and 597,482 in 2022) held in treasury	(10,115)		(8,934)
Total Stockholders' Equity (Deficit)	(406,821)		684,506
Total Liabilities and Stockholders' Equity (Deficit)	$	6,877,518	$	8,335,887

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)


(In thousands, except per share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	952,989	$	988,930	$	2,684,242	$	2,786,393
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	379,997		371,719		1,079,678		1,067,625
Selling, general and administrative expenses (excludes depreciation and amortization)	393,628		399,892		1,190,202		1,163,293
Depreciation and amortization	106,451		109,305		323,028		334,144
Impairment charges	570		309,750		965,087		311,329
Other operating expense, net	3,378		9,451		3,338		25,985
Operating income (loss)	68,965		(211,187)		(877,091)		(115,983)
Interest expense, net	99,509		87,890		293,659		248,603
Gain (loss) on investments, net	(7,381)		(3,466)		(19,924)		4,359
Equity in loss of nonconsolidated affiliates	(3,514)		(132)		(3,518)		(190)
Gain on extinguishment of debt	23,947		6,892		51,474		15,095
Other expense, net	(738)		(581)		(1,109)		(3,026)
Loss before income taxes	(18,230)		(296,364)		(1,143,827)		(348,348)
Income tax benefit (expense)	9,261		(13,412)		29,513		5,015
Net loss	(8,969)		(309,776)		(1,114,314)		(343,333)
Less amount attributable to noncontrolling interest	84		587		1,469		1,211
Net loss attributable to the Company	$	(9,053)	$	(310,363)	$	(1,115,783)	$	(344,544)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments	(332)		(606)		(455)		(1,503)





Other comprehensive loss, net of tax	(332)		(606)		(455)		(1,503)
Comprehensive loss	(9,385)		(310,969)		(1,116,238)		(346,047)
Less amount attributable to noncontrolling interest	—		—		—		—
Comprehensive loss attributable to the Company	$	(9,385)	$	(310,969)	$	(1,116,238)	$	(346,047)
Net loss attributable to the Company per common share:
Basic	$	(0.06)	$	(2.09)	$	(7.48)	$	(2.33)
Weighted average common shares outstanding - Basic	149,695		148,299		149,084		147,957
Diluted	$	(0.06)	$	(2.09)	$	(7.48)	$	(2.33)
Weighted average common shares outstanding - Diluted	149,695		148,299		149,084		147,957

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(UNAUDITED)


(In thousands, except share data)						Controlling Interest
	Common Shares(1)			Non- controlling Interest		Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
	Class A Shares	Class B Shares	Special Warrants													Total
Balances at June 30, 2023	124,046,612	21,347,363	5,111,055	$	10,351	$	145	$	2,931,598	$	(3,334,212)	$	(1,454)	$	(9,886)	$	(403,458)
Net income (loss)				84		—		—		(9,053)		—		—		(8,969)
Vesting of restricted stock and other	218,113			—		1		(1)		—		—		(229)		(229)


Share-based compensation				—		—		7,734		—		—		—		7,734


Conversion of Special Warrants to Class A or Class B Shares	9,185	—	(9,185)	—		—		—		—		—		—		—


Other				(1,567)		—		—		—		—		—		(1,567)
Other comprehensive loss				—		—		—		—		(332)		—		(332)
Balances at September 30, 2023	124,273,910	21,347,363	5,101,870	$	8,868	$	146	$	2,939,331	$	(3,343,265)	$	(1,786)	$	(10,115)	$	(406,821)


(In thousands, except share data)						Controlling Interest
	Common Shares(1)			Non- controlling Interest		Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
	Class A Shares	Class B Shares	Special Warrants													Total
Balances at June 30, 2022	122,068,221	21,391,972	5,293,055	$	8,659	$	143	$	2,891,129	$	(1,997,000)	$	(1,154)	$	(8,356)	$	893,421
Net income (loss)				587		—		—		(310,363)		—		—		(309,776)
Vesting of restricted stock and other	178,506			—		1		59		—		—		(539)		(479)
Share-based compensation				—		—		10,437		—		—		—		10,437

Conversion of Special Warrants to Class A and Class B Shares	85,141	96,602	(181,743)	—		—		—		—		—		—		—
Conversion of Class B Shares to Class A Shares	9,218	(9,218)		—		—		—		—		—		—		—
Other				(187)		—		—		—		—		—		(187)
Other comprehensive loss				—		—		—		—		(606)		—		(606)
Balances at September 30, 2022	122,341,086	21,479,356	5,111,312	$	9,059	$	144	$	2,901,625	$	(2,307,363)	$	(1,760)	$	(8,895)	$	592,810

(1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2023 or 2022.

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(UNAUDITED)


(In thousands, except share data)						Controlling Interest
	Common Shares(1)			Non- controlling Interest		Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
	Class A Shares	Class B Shares	Special Warrants													Total
Balances at December 31, 2022	122,370,425	21,477,181	5,111,312	$	9,609	$	144	$	2,912,500	$	(2,227,482)	$	(1,331)	$	(8,934)	$	684,506
Net income (loss)				1,469		—		—		(1,115,783)		—		—		(1,114,314)
Vesting of restricted stock and other	1,764,225			—		2		(2)		—		—		(1,181)		(1,181)
Share-based compensation				—		—		26,833		—		—		—		26,833

Conversion of Special Warrants to Class A and Class B Shares	9,383	59	(9,442)	—		—		—		—		—		—		—
Conversion of Class B Shares to Class A Shares	129,877	(129,877)		—		—		—		—		—		—		—
Other				(2,210)		—		—		—		—		—		(2,210)
Other comprehensive loss				—		—		—		—		(455)		—		(455)
Balances at September 30, 2023	124,273,910	21,347,363	5,101,870	$	8,868	$	146	$	2,939,331	$	(3,343,265)	$	(1,786)	$	(10,115)	$	(406,821)


(In thousands, except share data)						Controlling Interest
	Common Shares(1)			Non- controlling Interest		Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
	Class A Shares	Class B Shares	Special Warrants													Total
Balances at December 31, 2021	120,633,937	21,590,192	5,304,430	$	8,410	$	142	$	2,876,571	$	(1,962,819)	$	(257)	$	(6,282)	$	915,765
Net income (loss)				1,211		—		—		(344,544)		—		—		(343,333)
Vesting of restricted stock and other	1,403,195			—		2		472		—		—		(2,613)		(2,139)
Share-based compensation				—		—		24,582		—		—		—		24,582

Conversion of Special Warrants to Class A and Class B Shares	96,516	96,602	(193,118)	—		—		—		—		—		—		—
Conversion of Class B Shares to Class A Shares	207,438	(207,438)		—		—		—		—		—		—		—
Other				(562)		—		—		—		—		—		(562)
Other comprehensive loss				—		—		—		—		(1,503)		—		(1,503)
Balances at September 30, 2022	122,341,086	21,479,356	5,111,312	$	9,059	$	144	$	2,901,625	$	(2,307,363)	$	(1,760)	$	(8,895)	$	592,810

(1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2023, 2022 or 2021.

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


(In thousands)	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(1,114,314)	$	(343,333)
Reconciling items:
Impairment charges	965,087		311,329
Depreciation and amortization	323,028		334,144
Deferred taxes	(107,089)		(31,304)
Provision for doubtful accounts	22,914		10,137
Amortization of deferred financing charges and note discounts, net	5,026		4,589

Share-based compensation	26,833		24,582
Loss on disposal of operating and other assets	1,706		24,547
(Gain) Loss on investments	19,924		(4,359)
Equity in loss of nonconsolidated affiliates	3,518		190
Gain on extinguishment of debt	(51,474)		(15,095)
Barter and trade income	(21,419)		(27,174)
Other reconciling items, net	800		1,504
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Decrease in accounts receivable	30,769		38,685
Increase in prepaid expenses and other current assets	(56,835)		(47,561)
Decrease (Increase) in other long-term assets	401		(5,817)
Decrease in accounts payable	(60,748)		(927)
Decrease in accrued expenses	(6,656)		(84,308)
Decrease in accrued interest	(11,539)		(4,524)
Increase in deferred income	42,497		18,392
Increase in other long-term liabilities	46,529		3,002
Cash provided by operating activities	58,958		206,699
Cash flows from investing activities:


Purchases of property, plant and equipment	(90,456)		(112,567)
Proceeds from disposal of assets	54,101		34,690

Change in other, net	(3,636)		(4,930)
Cash used for investing activities	(39,991)		(82,807)
Cash flows from financing activities:



Payments on long-term debt and credit facilities	(138,565)		(173,990)






Change in other, net	(3,392)		(5,667)
Cash used for financing activities	(141,957)		(179,657)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(192)		(965)
Net decrease in cash, cash equivalents and restricted cash	(123,182)		(56,730)
Cash, cash equivalents and restricted cash at beginning of period	336,661		352,554
Cash, cash equivalents and restricted cash at end of period	$	213,479	$	295,824
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	304,216	$	249,910
Cash paid for income taxes	13,254		12,054

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION

Preparation of Interim Financial Statements

All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to iHeartMedia, Inc. and its consolidated subsidiaries. The accompanying consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The Company reports based on three reportable segments:

▪the Multiplatform Group, which includes the Company's Broadcast radio, Networks and Sponsorships and Events businesses;

▪the Digital Audio Group, which includes all of the Company's Digital businesses, including Podcasting; and

▪the Audio & Media Services Group, which includes Katz Media Group (“Katz Media”), a full-service media representation business, and RCS Sound Software ("RCS"), a provider of scheduling and broadcast software and services.

The consolidated financial statements include the accounts of the Company and its subsidiaries. Also included in the consolidated financial statements are entities for which the Company has a controlling interest or is the primary beneficiary. Investments in companies which the Company does not control but exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process.

Economic Conditions

The Company's advertising revenue is impacted by changes in economic conditions. Increasing interest rates and high inflation have contributed to a challenging macroeconomic environment since 2022. This challenging environment has led to broader market uncertainty and has delayed the Company's expected recovery and has had an adverse impact on the Company's revenues and cash flows. The current market uncertainty and macroeconomic conditions, a recession, or a downturn in the U.S. economy could have a significant impact on the Company's ability to generate revenue and cash flows.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES Act”) was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company was able to defer the payment of $29.3 million in certain employment taxes during 2020, half of which was due and paid on January 3, 2022, and the other half of which was due and paid on January 3, 2023. In addition, the Company claimed $12.4 million in refundable payroll tax credits related to the CARES Act provisions, of which $0.7 million was received in 2020, $3.8 million was received in 2021 and $7.9 million was received in January 2022.

Economic uncertainty due to inflation and higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses. This economic uncertainty has had an adverse impact on the Company's revenues, cash flows, and trading values of the Company's debt and equity securities which indicated a need for the Company to perform an interim impairment test as of June 30, 2023 on the goodwill recorded in its reporting units, as well as its indefinite-lived Federal Communication Commission ("FCC") licenses. The June 30, 2023 testing resulted in non-cash impairment charges of $595.5 million and $363.6 million to reduce the goodwill and FCC license balances, respectively. No impairment was required in the third quarter as part of the 2023 annual impairment testing.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As of September 30, 2023, the Company had approximately $213.5 million in cash and cash equivalents, and the $450.0 million senior secured asset-based revolving credit facility entered into on May 17, 2022 (the "ABL Facility") had a borrowing base of $436.7 million, no outstanding borrowings and $24.9 million of outstanding letters of credit, resulting in $411.8 million of borrowing base availability. The Company's total available liquidity as of September 30, 2023 was approximately $625 million. Based on current available liquidity, the Company expects to be able to meet its obligations as they become due over the coming year.

Reclassifications

Certain prior period amounts have been reclassified to conform to the 2023 presentation.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts reported in the Consolidated Statements of Cash Flows:


(In thousands)	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	213,479	$	336,236
Restricted cash included in:
Other current assets	—		425

Total cash, cash equivalents and restricted cash in the Statement of Cash Flows	$	213,479	$	336,661

Certain Relationships and Related Party Transactions

From time to time, certain companies in which the Company holds minority equity interests, purchase advertising in the ordinary course. None of these ordinary course transactions have had a material impact on the Company.

New Accounting Pronouncements Recently Adopted

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification 606. The Company adopted this guidance during the first quarter of 2023. The adoption did not have a material impact on the Company’s financial position, results of operations or cash flows.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2 – REVENUE

Disaggregation of Revenue

The following tables show revenue streams for the three and nine months ended September 30, 2023 and 2022:


(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Eliminations		Consolidated
Three Months Ended September 30, 2023
Revenue from contracts with customers:
Broadcast Radio(1)	$	455,103	$	—	$	—	$	—	$	455,103
Networks(2)	116,334		—		—		—		116,334
Sponsorship and Events(3)	49,500		—		—		—		49,500
Digital, excluding Podcast(4)	—		164,559		—		(1,222)		163,337
Podcast(5)	—		102,663		—		—		102,663
Audio & Media Services(6)	—		—		61,979		(1,373)		60,606
Other(7)	5,210		—		—		—		5,210
Total	626,147		267,222		61,979		(2,595)		952,753
Revenue from leases(8)	236		—		—		—		236
Revenue, total	$	626,383	$	267,222	$	61,979	$	(2,595)	$	952,989

Three Months Ended September 30, 2022
Revenue from contracts with customers:
Broadcast Radio(1)	$	484,812	$	—	$	—	$	—	$	484,812
Networks(2)	127,239		—		—		—		127,239
Sponsorship and Events(3)	42,562		—		—		—		42,562
Digital, excluding Podcast(4)	—		162,700		—		(1,314)		161,386
Podcast(5)	—		91,253		—		—		91,253
Audio & Media Services(6)	—		—		77,794		(1,287)		76,507
Other(7)	4,865		—		—		(112)		4,753
Total	659,478		253,953		77,794		(2,713)		988,512
Revenue from leases(8)	418								418
Revenue, total	$	659,896	$	253,953	$	77,794	$	(2,713)	$	988,930

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Eliminations		Consolidated
Nine Months Ended September 30, 2023
Revenue from contracts with customers:
Broadcast Radio(1)	$	1,267,493	$	—	$	—	$	—	$	1,267,493
Networks(2)	346,456		—		—		—		346,456
Sponsorship and Events(3)	120,297		—		—		—		120,297
Digital, excluding Podcast(4)	—		475,291		—		(3,627)		471,664
Podcast(5)	—		276,181		—		—		276,181
Audio & Media Services(6)	—		—		189,134		(4,077)		185,057
Other(7)	15,719		—		—		—		15,719
Total	1,749,965		751,472		189,134		(7,704)		2,682,867
Revenue from leases(8)	1,375		—		—		—		1,375
Revenue, total	$	1,751,340	$	751,472	$	189,134	$	(7,704)	$	2,684,242

Nine Months Ended September 30, 2022
Revenue from contracts with customers:
Broadcast Radio(1)	$	1,362,601	$	—	$	—	$	—	$	1,362,601
Networks(2)	372,329		—		—		—		372,329
Sponsorship and Events(3)	114,226		—		—		—		114,226
Digital, excluding Podcast(4)	—		475,254		—		(3,959)		471,295
Podcast(5)	—		245,479		—		—		245,479
Audio & Media Services(6)	—		—		209,716		(4,006)		205,710
Other(7)	14,127		—		—		(447)		13,680
Total	1,863,283		720,733		209,716		(8,412)		2,785,320
Revenue from leases(8)	1,073		—		—		—		1,073
Revenue, total	$	1,864,356	$	720,733	$	209,716	$	(8,412)	$	2,786,393

(1)Broadcast Radio revenue is generated through the sale of advertising time on the Company’s domestic radio stations.

(2)Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies.

(3)Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent.

(4)Digital, excluding Podcast revenue is generated through the sale of streaming and display advertisements on digital platforms and through subscriptions to iHeartRadio streaming services.

(5)Podcast revenue is generated through the sale of advertising on the Company's podcast network.

(6)Audio & Media Services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast software and media streaming, along with research services for radio stations, broadcast television stations, cable channels, record labels, ad agencies and Internet stations worldwide.

(7)Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements.

(8)Revenue from leases is primarily generated by the lease of towers to other media companies, which are all categorized as operating leases.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Trade and Barter

Trade and barter transactions represent the exchange of advertising spots for merchandise, services, advertising and promotion or other assets in the ordinary course of business. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised to the customer. The revenues and expenses may not be recognized in the same period depending on the timing of the services, advertising or promotion received in exchange for advertising spots. Trade and barter revenues and expenses, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Trade and barter revenues	$	77,228	$	57,236	$	175,492	$	130,557
Trade and barter expenses	49,995		38,001		128,902		113,752

In addition to the trade and barter revenue in the table above, the Company recognized $9.7 million and $14.9 million during the three months ended September 30, 2023 and 2022, respectively, and $21.4 million and $27.2 million during the nine months ended September 30, 2023 and 2022, respectively, in connection with investments made in companies in exchange for advertising services.

The following tables show the Company’s deferred revenue balance from contracts with customers:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022










Deferred revenue from contracts with customers:
Beginning balance(1)	$	184,827	$	189,679	$	157,910	$	161,114

Revenue recognized, included in beginning balance	(73,407)		(76,172)		(102,588)		(111,443)
Additions, net of revenue recognized during period, and other	84,600		64,879		140,698		128,715
Ending balance	$	196,020	$	178,386	$	196,020	$	178,386

(1) Deferred revenue from contracts with customers, which excludes other sources of deferred revenue that are not related to contracts with customers, is included within deferred revenue and other long-term liabilities on the Consolidated Balance Sheets, depending upon when revenue is expected to be recognized.

The Company’s contracts with customers generally have terms of one year or less; however, as of September 30, 2023, the Company expects to recognize $313.5 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years. Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Revenue from Leases

As of September 30, 2023, the future lease payments to be received by the Company are as follows:


(In thousands)

2023	$	200
2024	449
2025	248
2026	132
2027	80
Thereafter	96
Total	$	1,205

NOTE 3 – LEASES

The Company enters into operating lease contracts for land, buildings, structures and other equipment. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases primarily include land and building lease contracts and leases of radio towers. Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers. Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use assets ("ROU assets") and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively.

The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt.

ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.

On September 29, 2023, the Company completed the sale of 122 of our broadcast tower sites and related assets for $45.3 million and entered into operating leases for the use of space on 121 of the broadcast tower sites and related assets sold. The Company realized a net loss of $3.2 million on the sale, which was recorded in Other Operating Expense, net in the Statement of Comprehensive Loss. The leases are for an initial term of ten years and include four optional five-year renewal periods. In connection with the transaction, the Company recorded ROU assets and lease liabilities with aggregate values of $26.3 million related to these leases.

The Company tests for impairment of assets whenever events and circumstances indicate that such assets might be impaired. During the three and nine months ended September 30, 2023, the Company recognized non-cash impairment charges of $0.6 million and $6.1 million, respectively, due to changes in sublease assumptions for ROU assets related to certain operating leases for which management has made proactive decisions to abandon and sublease in connection with strategic actions to streamline the Company’s real estate footprint. During the three and nine months ended September 30, 2023, there were no non-cash impairment charges related to leasehold improvements.

During the three months ended September 30, 2022, the Company recognized non-cash impairment charges of $7.6 million, including $7.1 million related to ROU assets and $0.5 million related to leasehold improvements. During the nine months ended September 30, 2022, the Company recognized non-cash impairment charges of $9.2 million, including $8.5 million related to ROU assets, and $0.7 million related to leasehold improvements. These charges were primarily to streamline the Company's real estate footprint.

The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table provides supplemental cash flow information related to leases for the periods presented:


	Nine Months Ended September 30,
(In thousands)	2023		2022
Cash paid for amounts included in measurement of operating lease liabilities	$	104,784	$	109,158
Lease liabilities arising from obtaining right-of-use assets(1)	37,736		153,866

(1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the nine months ended September 30, 2023 and 2022, respectively.

The Company reflects changes in the lease liability and changes in the ROU asset on a net basis in the Statements of Cash Flows. The operating lease expense was $50.9 million and $65.6 million for the nine months ended September 30, 2023 and 2022, respectively.

NOTE 4– PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL

Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets as of September 30, 2023 and December 31, 2022, respectively:


(In thousands)	September 30, 2023		December 31, 2022
Land, buildings and improvements	$	330,565	$	340,692
Towers, transmitters and studio equipment	195,741		215,655
Computer equipment and software	653,171		617,794
Furniture and other equipment	48,977		41,924
Construction in progress	30,364		29,091
	1,258,818		1,245,156
Less: accumulated depreciation	677,970		550,314
Property, plant and equipment, net	$	580,848	$	694,842

On September 29, 2023, the Company completed a sale-leaseback of 122 of our broadcast tower sites and related assets for $45.3 million, and entered into operating leases for the use of space on 121 of the broadcast tower sites and related assets sold. The Company realized a net loss of $3.2 million on the sale, which was recorded in Other Operating Expense, net in the Statement of Comprehensive Loss.

Indefinite-lived Intangible Assets

The Company’s indefinite-lived intangible assets primarily consist of Federal Communications Commission ("FCC") broadcast licenses in its Multiplatform Group segment.

The Company performs its annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. In addition, the Company tests for impairment of other intangible assets whenever events and circumstances indicate that such assets might be impaired.

As discussed in Note 1, Basis of Presentation, economic uncertainty due to inflation and higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses. This economic uncertainty has had an adverse impact on the Company's revenues and cash flows. In addition, the economic uncertainty has had a significant impact on the trading values of the Company's debt and equity securities for a sustained period. As a result, the Company performed an interim impairment test as of June 30, 2023 on its FCC licenses, which resulted in a non-cash impairment charge of $363.6 million to the FCC licenses balance in the second quarter of 2023. No impairment was identified related to our FCC licenses as part of the 2023 annual impairment test performed during the third quarter.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Other Intangible Assets

Other intangible assets consists of definite-lived intangible assets, which primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets. These assets are recorded at amortized cost.

The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.

In connection with its interim impairment testing as of June 30, 2023, the Company also assessed its other intangible assets. Based on the Company’s assessment, no impairment indicators were identified related to the definite-lived intangible assets.

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of September 30, 2023 and December 31, 2022, respectively:


(In thousands)	September 30, 2023				December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer / advertiser relationships	$	1,652,455	$	(758,798)	$	1,652,455	$	(633,352)
Talent and other contracts	338,900		(192,816)		338,900		(160,500)
Trademarks and tradenames	335,862		(147,972)		335,862		(122,403)

Other	18,443		(11,717)		18,443		(9,735)
Total	$	2,345,660	$	(1,111,303)	$	2,345,660	$	(925,990)

Total amortization expense related to definite-lived intangible assets for the Company for the three months ended September 30, 2023 and 2022 was $61.7 million and $63.4 million, respectively. Total amortization expense related to definite-lived intangible assets for the Company for the nine months ended September 30, 2023 and 2022 was $185.3 million and $189.9 million, respectively.

As acquisitions and dispositions occur in the future, amortization expense may vary. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:


(In thousands)
2024	$	244,707
2025	213,514
2026	201,512
2027	176,171
2028	160,395

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Goodwill

The following table presents the changes in the carrying amount of goodwill:


(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Consolidated
Balance as of January 1, 2023(1)	$	1,462,022	$	747,350	$	104,031	2,313,403
Impairment	$	(121,563)	$	(439,383)	$	(34,515)	(595,461)
Acquisitions	—		3,375		—		3,375

Foreign currency	—		(62)		(32)		(94)


Balance as of September 30, 2023	$	1,340,459	$	311,280	$	69,484	$	1,721,223

(1) Beginning goodwill balance is presented net of prior accumulated impairment losses of $1.2 billion related to the Multiplatform Group segment. Refer to the table above for impairments recorded in 2023.

Goodwill Impairment

At least annually, the Company performs its impairment test for each reporting unit’s goodwill. The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.

As discussed above, economic uncertainty has had a significant impact on the Company's revenue and cash flows, as well as the trading values of the Company's debt and equity securities for a sustained period. As a result, the Company performed an impairment test as of June 30, 2023 on its goodwill, resulting in a non-cash impairment charge of $595.5 million to the goodwill balance in the second quarter of 2023. No impairment was identified related to our goodwill balance as part of the 2023 annual impairment test performed during the third quarter.

NOTE 5 – LONG-TERM DEBT

Long-term debt outstanding for the Company as of September 30, 2023 and December 31, 2022 consisted of the following:


(In thousands)	September 30, 2023		December 31, 2022
Term Loan Facility due 2026	$	1,864,032	$	1,864,032
Incremental Term Loan Facility due 2026	401,220		401,220
Asset-based Revolving Credit Facility due 2027(1)	—		—
6.375% Senior Secured Notes due 2026	800,000		800,000
5.25% Senior Secured Notes due 2027	750,000		750,000
4.75% Senior Secured Notes due 2028	500,000		500,000
Other secured subsidiary debt(2)	3,485		4,462
Total consolidated secured debt	4,318,737		4,319,714

8.375% Senior Unsecured Notes due 2027(3)	931,357		1,120,366
Other unsecured subsidiary debt	—		52
Original issue discount	(8,323)		(10,569)
Long-term debt fees	(13,065)		(15,396)
Total debt	5,228,706		5,414,167
Less: Current portion	390		664
Total long-term debt	$	5,228,316	$	5,413,503

(1)As of September 30, 2023, the ABL Facility had a borrowing base of $436.7 million, no outstanding borrowings and $24.9 million of outstanding letters of credit, resulting in $411.8 million of borrowing base availability.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(2)Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2024 through 2045.

(3)During the three months ended September 30, 2023, the Company repurchased $89.1 million aggregate principal amount of iHeartCommunications Inc.'s 8.375% Senior Unsecured Notes due 2027 for $65.2 million in cash, excluding accrued interest, via open market transactions. The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $23.9 million. During the nine months ended September 30, 2023, the Company repurchased $189.0 million aggregate principal amount of iHeartCommunications Inc.'s 8.375% Senior Unsecured Notes due 2027 for $137.5 million in cash, excluding accrued interest, via open market transactions. The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $51.5 million. During the three months ended September 30, 2022, the Company repurchased $75.0 million aggregate principal amount of iHeartCommunications Inc.'s 8.375% Senior Unsecured Notes due 2027 for $68.1 million in cash, excluding accrued interest, via open market transactions. The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $6.9 million. During the nine months ended September 30, 2022, the Company repurchased $188.5 million aggregate principal amount of iHeartCommunications Inc.'s 8.375% Senior Unsecured Notes due 2027 for $173.4 million in cash, excluding accrued interest, via open market transactions. The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $15.1 million.

The Company’s weighted average interest rate was 7.3% and 6.9% as of September 30, 2023 and December 31, 2022, respectively. The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $4.4 billion and $4.8 billion as of September 30, 2023 and December 31, 2022, respectively. Under the fair value hierarchy established by ASC 820-10-35, the market value of the Company’s debt is classified as either Level 1 or Level 2.

On June 15, 2023, iHeartCommunications, Inc. ("iHeartCommunications"), a wholly-owned subsidiary of iHeartMedia, entered into an amendment to the credit agreement governing its term loan credit facilities (the "Term Loan Facility"). The amendment replaces the prior Eurocurrency interest rate, based upon LIBOR, with the Secured Overnight Financing Rate (“SOFR”) successor rate plus a SOFR adjustment as specified in the credit agreement. The Term Loan Facility margins remain the same with the Term Loan Facility due 2026 containing margins of 3.00% for Term SOFR Loans (as defined in the credit agreement) and 2.00% for Base Rate Loans (as defined in the credit agreement), and the incremental Term Loan Facility due 2026 containing margins of 3.25% for Term SOFR Loans with a floor of 0.50% and 2.25% for Base Rate Loans with a floor of 1.50%.

Surety Bonds and Letters of Credit

As of September 30, 2023, the Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $9.0 million and $24.9 million, respectively. These surety bonds and letters of credit relate to various operational matters including insurance, lease and performance bonds as well as other items.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations.

Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts: commercial/contract disputes; defamation matters; employment and benefits related claims; intellectual property claims; real estate matters; governmental investigations; and tax disputes.

Alien Ownership Restrictions and FCC Declaratory Ruling

The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership to be in the public interest. On November 5, 2020, the FCC issued a declaratory ruling, which permits the Company to be up to 100% foreign owned, subject to certain conditions (the "2020 Declaratory Ruling").

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 7 – INCOME TAXES

The Company’s income tax benefit (expense) for the three and nine months ended September 30, 2023 and the three and nine months ended September 30, 2022 consisted of the following components:


(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Current tax benefit (expense)	$	(38,930)	$	15,871	$	(77,576)	$	(26,289)
Deferred tax benefit (expense)	48,191		(29,283)		107,089		31,304
Income tax benefit (expense)	$	9,261	$	(13,412)	$	29,513	$	5,015

The effective tax rates for the three and nine months ended September 30, 2023 were 50.8% and 2.6%, respectively. The effective tax rates were primarily impacted by the forecasted increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods, as well as to impairment charges to non-deductible goodwill as discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill.

The effective tax rates for the three and nine months ended September 30, 2022 were (4.5)% and 1.4%, respectively. The effective tax rates were primarily impacted by the forecasted increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards and net operating loss carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods.

NOTE 8 – STOCKHOLDERS' EQUITY (DEFICIT)

Pursuant to the Company's 2019 Equity Incentive Plan (the "2019 Plan"), the Company historically granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals. On April 21, 2021, the 2021 Long-Term Incentive Award Plan (the “2021 Plan”) was approved by stockholders and replaced the 2019 Plan. Pursuant to the 2021 Plan, the Company will continue to grant equity awards covering shares of the Company's Class A common stock to certain key individuals.

Share-based Compensation

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $8.2 million and $10.4 million for the three months ended September 30, 2023 and 2022, respectively. Share-based compensation expenses were $27.6 million and $24.6 million for the Company for the nine months ended September 30, 2023 and 2022, respectively.

The Company periodically issues restricted stock units ("RSUs") and performance-based RSUs ("Performance RSUs") to certain key employees. The RSUs vest solely due to continued service over time. The Performance RSUs generally vest upon the achievement of certain total stockholder return goals, Adjusted EBITDA goals, Diversity, Equity and Inclusion goals, and continued service. The majority of these awards are being measured over an approximately 3-year period from the date of issuance, while certain Performance RSUs are measured over a 50-month period from the date of issuance. On May 18, 2023, the Company issued additional RSUs and Performance RSUs to certain key employees.

The following table presents the Company's total share based compensation expense by award type for the three and nine months ended September 30, 2023 and 2022:

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
RSUs	$	5,112	$	6,219	$	16,750	$	14,471
Performance RSUs	2,288		2,044		6,520		3,544
Options	791		2,174		4,285		6,567
Total Share Based Compensation Expense	$	8,191	$	10,437	$	27,555	$	24,582

As of September 30, 2023, there was $36.5 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based solely on service conditions. This cost is expected to be recognized over a weighted average period of approximately 1.9 years. In addition, as of September 30, 2023, there were unrecognized compensation costs of $22.3 million for the Performance RSUs related to unvested share-based compensation arrangements that will vest based on certain performance and service conditions. These costs will be recognized over a 3-year or 50-month period from the date of issuance.

Special Warrants

Each Special Warrant issued under the special warrant agreement entered into in connection with the Company's emergence from bankruptcy in 2019 may be exercised by its holder to purchase one share of Class A common stock or Class B common stock at an exercise price of $0.001 per share, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, subject to certain exceptions, (a) such exercising holder owning more than 4.99 percent of the Company's outstanding Class A common stock, (b) more than 22.5 percent of the Company's capital stock or voting interests being owned directly or indirectly by foreign individuals or entities, (c) the Company exceeding any other applicable foreign ownership threshold or (d) violation of any provision of the Communications Act or restrictions on ownership or transfer imposed by the Company's certificate of incorporation or the decisions, rules and policies of the FCC. Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and certifications required under the special warrant agreement. The Communications Act and FCC regulations prohibit foreign entities or individuals from indirectly (i.e., through a parent company) owning or voting more than 25 percent of a licensee’s equity, unless the FCC determines that greater indirect foreign ownership is in the public interest. As mentioned in Note 6 above, on November 5, 2020, the FCC issued the 2020 Declaratory Ruling, which permits the Company to be up to 100% foreign owned.

During the three and nine months ended September 30, 2023, there were 9,185 and 9,383 Special Warrants, respectively, exercised for shares of Class A common stock. During the three and nine months ended September 30, 2023, there were none and 59 Special Warrants, respectively, exercised for shares of Class B common stock. During the three and nine months ended September 30, 2022, stockholders exercised 85,141 and 96,516 Special Warrants, respectively, for an equivalent number of shares of Class A common stock. During the three and nine months ended September 30, 2022, there were 96,602 Special Warrants exercised for shares of Class B common stock.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Computation of Loss per Share


(In thousands, except per share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
NUMERATOR:
Net loss attributable to the Company – common shares	$	(9,053)	$	(310,363)	$	(1,115,783)	$	(344,544)

DENOMINATOR(1):
Weighted average common shares outstanding - basic	149,695		148,299		149,084		147,957
Stock options and restricted stock(2):	—		—		—		—
Weighted average common shares outstanding - diluted	149,695		148,299		149,084		147,957

Net loss attributable to the Company per common share:
Basic	$	(0.06)	$	(2.09)	$	(7.48)	$	(2.33)
Diluted	$	(0.06)	$	(2.09)	$	(7.48)	$	(2.33)

(1) All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Company for the three and nine months ended September 30, 2023 and 2022.

(2) Outstanding equity service awards representing 14.6 million and 11.7 million shares of Class A common stock of the Company for the three months ended September 30, 2023 and 2022, respectively, and 13.3 million and 10.8 million for the nine months ended September 30, 2023 and 2022 respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 9 – SEGMENT DATA

The Company’s primary businesses are included in its Multiplatform Group and Digital Audio Group segments. Revenue and expenses earned and charged between Multiplatform Group, Digital Audio Group, Audio & Media Services Group, and Corporate are eliminated in consolidation. The Multiplatform Group provides media and entertainment services via broadcast delivery and also includes the Company’s events and national syndication businesses. The Digital Audio Group provides media and entertainment services via digital delivery. The Audio & Media Services Group provides other audio and media services, including the Company’s media representation business (Katz Media) and its provider of scheduling and broadcast software (RCS). Corporate includes infrastructure and support, including executive, information technology, human resources, legal, finance and administrative functions for the Company’s businesses. Share-based payments are recorded in Selling, general and administrative expense.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables present the Company's segment results for the Company for the three and nine months ended September 30, 2023 and 2022:


	Segments
(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Corporate and other reconciling items		Eliminations		Consolidated
Three Months Ended September 30, 2023
Revenue	$	626,383	$	267,222	$	61,979	$	—	$	(2,595)	$	952,989


Operating expenses(1)	463,939		173,565		45,003		69,295		(2,595)		749,207
Segment Adjusted EBITDA(2)	$	162,444	$	93,657	$	16,976	$	(69,295)	$	—	$	203,782
Depreciation and amortization											(106,451)
Impairment charges											(570)
Other operating expense, net											(3,378)
Restructuring expenses											(16,227)
Share-based compensation expense											(8,191)
Operating income											$	68,965


Intersegment revenues	$	—	$	1,222	$	1,373	$	—	$	—	$	2,595
Capital expenditures	10,822		6,069		1,509		10,118		—		28,518
Share-based compensation expense	—		—		—		8,191		—		8,191


	Segments
(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Corporate and other reconciling items		Eliminations		Consolidated
Three Months Ended September 30, 2022
Revenue	$	659,896	$	253,953	$	77,794	$	—	$	(2,713)	$	988,930


Operating expenses(1)	452,631		175,636		48,044		63,090		(2,713)		736,688
Segment Adjusted EBITDA(2)	$	207,265	$	78,317	$	29,750	$	(63,090)	$	—	$	252,242
Depreciation and amortization											(109,305)
Impairment charges											(309,750)
Other operating expense, net											(9,451)
Restructuring expenses											(24,486)
Share-based compensation expense											(10,437)
Operating loss											$	(211,187)

Intersegment revenues	$	112	$	1,314	$	1,287	$	—	$	—	$	2,713
Capital expenditures	31,613		4,808		1,276		2,660		—		40,357
Share-based compensation expense	—		—		—		10,437		—		10,437

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	Segments
(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Corporate and other reconciling items		Eliminations		Consolidated
Nine Months Ended September 30, 2023
Revenue	$	1,751,340	$	751,472	$	189,134	$	—	$	(7,704)	$	2,684,242


Operating expenses(1)	1,339,441		519,115		138,315		206,689		(7,704)		2,195,856
Segment Adjusted EBITDA(2)	$	411,899	$	232,357	$	50,819	$	(206,689)	$	—	$	488,386
Depreciation and amortization											(323,028)
Impairment charges											(965,087)
Other operating expense, net											(3,338)
Restructuring expenses											(46,469)
Share-based compensation expense											(27,555)
Operating loss											$	(877,091)


Intersegment revenues	$	—	$	3,627	$	4,077	$	—	$	—	$	7,704
Capital expenditures	52,116		17,348		6,300		14,692		—		90,456
Share-based compensation expense	—		—		—		27,555		—		27,555


	Segments
(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Corporate and other reconciling items		Eliminations		Consolidated
Nine Months Ended September 30, 2022
Revenue	$	1,864,356	$	720,733	$	209,716			$	(8,412)	$	2,786,393


Operating expenses(1)	1,328,688		511,025		141,509		178,938		(8,412)		2,151,748
Segment Adjusted EBITDA(2)	$	535,668	$	209,708	$	68,207	$	(178,938)	$	—	$	634,645
Depreciation and amortization											(334,144)
Impairment charges											(311,329)
Other operating expense, net											(25,985)
Restructuring expenses											(54,588)
Share-based compensation expense											(24,582)
Operating loss											$	(115,983)


Intersegment revenues	$	447	$	3,959	$	4,006	$	—			$	8,412
Capital expenditures	80,329		15,876		5,398		10,964				112,567
Share-based compensation expense	—		—		—		24,582				24,582

(1) Consolidated operating expenses consist of Direct operating expenses and Selling, general and administrative expenses and exclude Restructuring expenses, share-based compensation expenses and depreciation and amortization.

(2) For a definition of Adjusted EBITDA for the consolidated company and a reconciliation to Operating income (loss), the most closely comparable GAAP measure, and to Net loss, please see "Reconciliation of Operating Income (Loss) to Adjusted EBITDA" and "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA" in Item 2 of this Quarterly Report on Form 10-Q. Beginning on January 1, 2021, Segment Adjusted EBITDA became the segment profitability metric reported to the Company's Chief Operating Decision Maker for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Format of Presentation

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related footnotes contained in Part I, Item 1 of this Quarterly Report on Form 10-Q of iHeartMedia, Inc. (the "Company," "iHeartMedia," "we," "our," or "us").

We report based on three reportable segments:

▪the Multiplatform Group, which includes our Broadcast radio, Networks and Sponsorships and Events businesses;

▪the Digital Audio Group, which includes our Digital businesses, including Podcasting; and

▪the Audio & Media Services Group, which includes Katz Media Group (“Katz Media”), our full-service media representation business, and RCS Sound Software ("RCS"), a provider of scheduling and broadcast software and services.

These reporting segments reflect how senior management operates the Company. This structure provides visibility into the underlying performance, results, and margin profiles of our distinct businesses and enables senior management to monitor trends at the operational level and address opportunities or issues as they arise via regular review of segment-level results and forecasts with operational leaders.

Our segment profitability metric is Segment Adjusted EBITDA, which is reported to the Company's Chief Operating Decision Maker for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. Segment Adjusted EBITDA is calculated as Revenue less operating expenses, excluding Restructuring expenses (as defined below) and share-based compensation expenses.

We have transitioned our business from a single platform radio broadcast operator to a company with multiple platforms including digital, podcasting, networks and events, as well as ad technology capabilities. We have also invested in numerous technologies and businesses to increase the competitiveness of our inventory with our advertisers and our audience. We believe the presentation of our results by segment provides insight into our broadcast radio business and our digital business. We believe that our ability to generate cash flow from operations from our business initiatives and our current cash on hand will provide sufficient resources to fund and operate our business, fund capital expenditures and other obligations and make interest payments on our long-term debt for at least the next twelve months.

Description of our Business

Our strategy centers on delivering entertaining and informative content where our listeners want to find us across our various platforms.

Multiplatform Group

The primary source of revenue for our Multiplatform Group is from selling local and national advertising time on our radio stations, with contracts typically less than one year in duration. The programming formats of our radio stations are designed to reach audiences with targeted demographic characteristics. We work closely with our advertising and marketing partners to develop tools and leverage data to enable advertisers to effectively reach their desired audiences. Our Multiplatform Group also generates revenue from network syndication, nationally recognized events and other miscellaneous transactions.

Management looks at our Multiplatform Group's operations’ overall revenue as well as the revenue from each revenue stream including Broadcast Spot, Networks, and Sponsorship and Events. We periodically review and refine our selling structures in all regions and markets in an effort to maximize the value of our offering to advertisers and, therefore, our revenue.

Management also looks at Multiplatform Group's revenue by region and market size. Typically, larger markets can reach larger audiences with wider demographics than smaller markets. Additionally, management reviews our share of audio advertising revenues in markets where such information is available, as well as our share of target demographics listening in an average quarter hour. This metric gauges how well our formats are attracting and retaining listeners.

Management also monitors revenue generated through our programmatic ad-buying platform, and our data analytics advertising product, to measure the success of our enhanced marketing optimization tools. We have made significant investments so we can provide the same ad-buying experience that once was only available from digital-only companies and enable our clients to better understand how our assets can successfully reach their target audiences.

Management monitors average advertising rates and cost per mille, the cost of every 1,000 advertisement impressions (“CPM”), which are principally based on the length of the spot and how many people in a targeted audience listen to our stations, as measured by an independent ratings service. In addition, our advertising rates are influenced by the time of day the advertisement airs, with morning and evening drive-time hours typically priced the highest. Our price and yield information systems enable our station managers and sales teams to adjust commercial inventory and pricing based on local market demand, as well as to manage and monitor different commercial durations in order to provide more effective advertising for our customers at what we believe are optimal prices given market conditions. Yield is measured by management in a variety of ways, including revenue earned divided by minutes of advertising sold.

A portion of our Multiplatform Group segment’s expenses vary in connection with changes in revenue. These variable expenses primarily relate to costs in our programming and sales departments, including profit sharing fees and commissions, and bad debt. Our content costs vary with the volume and mix of songs played on our stations.

Digital Audio Group

The primary source of revenue in the Digital Audio Group segment is the sale of advertising on our podcast network, iHeartRadio mobile application and website, and station websites. Revenues for digital advertising are recognized over time based on impressions delivered or time elapsed, depending upon the terms of the contract. Digital Audio Group’s contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations.

Through our Digital Audio Group, we continue to expand the choices for listeners. We derive revenue in this segment by developing and delivering our content and selling advertising across multiple digital distribution channels, including via our iHeartRadio mobile application, our station websites and other digital platforms that reach national, regional and local audiences.

Our strategy has enabled us to extend our leadership in the growing podcasting sector, and iHeartMedia is the number one podcast publisher in America. Our reach now extends across more than 250 platforms and thousands of different connected devices, and our digital business is comprised of streaming, subscription, display advertisements, and other content that is disseminated over digital platforms.

A portion of our Digital Audio Group segment’s expenses vary in connection with changes in revenue. These variable expenses primarily relate to our content costs including profit sharing fees and third-party content costs, as well as sales commissions and bad debt. Certain of our content costs, including digital music performance royalties, vary with the volume of listening hours on our digital platforms.

Audio & Media Services Group

Audio & Media Services Group revenue is generated by services provided to broadcast industry participants through our Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast software and media streaming, along with research services for radio stations, broadcast television stations, cable channels, record labels, ad agencies and Internet stations worldwide.

Economic Conditions

Our advertising revenue is impacted by changes in economic conditions. Increasing interest rates and high inflation have contributed to a challenging macroeconomic environment since 2022. This challenging environment has led to broader market uncertainty which has impacted our revenues and cash flows. The current market uncertainty and macroeconomic conditions, a recession, or a downturn in the U.S. economy could have a significant impact on our ability to generate revenue.

Cost Savings Initiatives

We have implemented key modernization initiatives and operating-expense-saving initiatives over recent years to take advantage of the significant investments we have made in new technologies to deliver incremental cost efficiencies, including initiatives to streamline our real estate footprint. We continue to explore opportunities for further efficiencies.

Impairment Charges

Economic uncertainty due to inflation and higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses. This challenging environment has led to broader market uncertainty, and has delayed our expected recovery and has had an adverse impact on our revenue and cash flows. This challenging environment could have a significant impact on our financial results. In addition, the economic uncertainty has had a significant impact on the trading values of our debt and equity securities for a sustained period. As a result, we performed an interim impairment test as of June 30, 2023 on our indefinite-lived Federal Communication Commission ("FCC") licenses and goodwill. The June 30, 2023 testing resulted in non-cash impairment charges of $363.6 million and $595.5 million to reduce the FCC license and goodwill balances, respectively.

We perform our annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. No impairment was required as part of the 2023 annual impairment testing. We recognized a non-cash impairment charge of $302.1 million on our FCC licenses as part of our 2022 annual impairment testing performed in the third quarter of 2022.

As part of our operating-expense-savings initiatives, we have taken proactive steps to streamline our real estate footprint and reduce related lease and operating expenses incurred by the Company. These strategic actions typically result in impairment charges due to the write-down of the affected right-of-use assets and related fixed assets, including leasehold improvements.

Executive Summary

Revenues for the third quarter of 2023 decreased for our Multiplatform Group segment due to lower spending on radio advertising in connection with the uncertain market conditions and a decrease in political revenue as 2022 was a mid-term election year, and increased for our Digital Audio Group segment.

The key developments that impacted our business during the quarter are summarized below:

•Consolidated Revenue of $953.0 million decreased $35.9 million, or 3.6%, during the quarter ended September 30, 2023 compared to Consolidated Revenue of $988.9 million in the prior year's third quarter.

•Revenue and Segment Adjusted EBITDA from our Multiplatform Group decreased $33.5 million and $44.8 million compared to the prior year's third quarter, respectively.

•Revenue and Segment Adjusted EBITDA from our Digital Audio Group increased $13.3 million and $15.3 million compared to the prior year's third quarter, respectively.

•Revenue and Segment Adjusted EBITDA from our Audio & Media Services Group decreased $15.8 million and $12.8 million compared to the prior year's third quarter, respectively.

•Operating income of $69.0 million increased $280.2 million from Operating loss of $211.2 million in the prior year’s third quarter mainly due to the non-cash intangible impairment charge of $302.1 million, related to our indefinite-lived intangible asset balance, in the prior year’s third quarter.

•Net loss of $9.0 million, a decrease of $300.8 million from Net loss of $309.8 million in the prior year's third quarter mainly due to the non-cash impairment charge of $302.1 million, related to our indefinite-lived intangible asset balance in the prior year’s third quarter.

•Cash flows provided by operating activities of $96.2 million decreased from $103.1 million provided by operating activities in the prior year's third quarter.

•Adjusted EBITDA(1) of $203.8 million, was down $48.5 million from $252.2 million in prior year's third quarter.

•Free cash flow(2) of $67.7 million increased from $62.8 million in the prior year's third quarter.

•In addition, received proceeds of $45.3 million upon the sale of certain broadcast tower sites and related assets; leasing back tower site space under long-term operating leases.

The table below presents a summary of our historical results of operations for the periods presented:


(In thousands)	Three Months Ended September 30,
	2023		2022
Revenue	$	952,989	$	988,930
Operating income (loss)	68,965		(211,187)
Net loss	(8,969)		(309,776)
Cash provided by operating activities	96,169		103,110

Adjusted EBITDA(1)	$	203,782	$	252,242
Free cash flow(2)	67,651		62,753

(1) For a definition of Adjusted EBITDA and a reconciliation to Operating income (loss), the most closely comparable GAAP measure, and to Net loss, please see "Reconciliation of Operating income (loss) to Adjusted EBITDA" and "Reconciliation of Net loss to EBITDA and Adjusted EBITDA" in this MD&A.

(2) For a definition of Free cash flow and a reconciliation to Cash provided by operating activities, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities to Free cash flow” in this MD&A.

Results of Operations

The tables below present the comparison of our historical results of operations for the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2022:


(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	952,989	$	988,930	$	2,684,242	$	2,786,393
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	379,997		371,719		1,079,678		1,067,625
Selling, general and administrative expenses (excludes depreciation and amortization)	393,628		399,892		1,190,202		1,163,293
Depreciation and amortization	106,451		109,305		323,028		334,144
Impairment charges	570		309,750		965,087		311,329
Other operating expense, net	3,378		9,451		3,338		25,985
Operating income (loss)	68,965		(211,187)		(877,091)		(115,983)
Interest expense, net	99,509		87,890		293,659		248,603
Gain (loss) on investments, net	(7,381)		(3,466)		(19,924)		4,359
Equity in loss of nonconsolidated affiliates	(3,514)		(132)		(3,518)		(190)
Gain on extinguishment of debt	23,947		6,892		51,474		15,095
Other expense, net	(738)		(581)		(1,109)		(3,026)

Loss before income taxes	(18,230)		(296,364)		(1,143,827)		(348,348)
Income tax benefit (expense)	9,261		(13,412)		29,513		5,015


Net loss	(8,969)		(309,776)		(1,114,314)		(343,333)
Less amount attributable to noncontrolling interest	84		587		1,469		1,211
Net loss attributable to the Company	$	(9,053)	$	(310,363)	$	(1,115,783)	$	(344,544)

The table below presents the comparison of our revenue streams for the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2022:


(In thousands)	Three Months Ended September 30,				%		Nine Months Ended September 30,				%
	2023		2022		Change		2023		2022		Change
Broadcast Radio	$	455,103	$	484,812	(6.1)	%	$	1,267,493	$	1,362,601	(7.0)	%
Networks	116,334		127,239		(8.6)	%	346,456		372,329		(6.9)	%
Sponsorship and Events	49,500		42,562		16.3	%	120,297		114,226		5.3	%
Other	5,446		5,283		3.1	%	17,094		15,200		12.5	%
Multiplatform Group	626,383		659,896		(5.1)	%	1,751,340		1,864,356		(6.1)	%
Digital, excluding Podcast	164,559		162,700		1.1	%	475,291		475,254		—	%
Podcast	102,663		91,253		12.5	%	276,181		245,479		12.5	%
Digital Audio Group	267,222		253,953		5.2	%	751,472		720,733		4.3	%
Audio & Media Services Group	61,979		77,794		(20.3)	%	189,134		209,716		(9.8)	%
Eliminations	(2,595)		(2,713)				(7,704)		(8,412)
Revenue, total	$	952,989	$	988,930	(3.6)	%	$	2,684,242	$	2,786,393	(3.7)	%

Consolidated results for the three and nine months ended September 30, 2023 compared to the consolidated results for the three and nine months ended September 30, 2022 were as follows:

Revenue

Consolidated revenue decreased $35.9 million during the three months ended September 30, 2023 compared to the same period of 2022. Multiplatform Group revenue decreased $33.5 million, or 5.1%, primarily resulting from a decrease in broadcast advertising due to the challenging macroeconomic environment as discussed above and a decline in political advertising, partially offset by an increase in trade and barter revenues and higher revenues from live events. Digital Audio Group revenue increased $13.3 million, or 5.2%, driven primarily by continuing increases in demand for podcast advertising. Audio & Media Services revenue decreased $15.8 million primarily due to a decrease in political revenue.

Consolidated revenue decreased $102.2 million during the nine months ended September 30, 2023 compared to the same period of 2022. Multiplatform Group revenue decreased $113.0 million, or 6.1%, primarily resulting from a decrease in broadcast advertising due to the more challenging macroeconomic environment as discussed above and a decline in political advertising, partially offset by an increase in trade and barter revenues and higher revenues from live events. Digital Audio Group revenue increased $30.7 million, or 4.3%, driven primarily by continuing increases in demand for podcast advertising. Audio & Media Services revenue decreased $20.6 million primarily due to a decrease in political revenue.

Direct Operating Expenses

Consolidated direct operating expenses increased $8.3 million during the three months ended September 30, 2023 compared to the same period of 2022. The increase in direct operating expenses was primarily driven by higher music license fees, and higher variable content costs resulting from an increase in digital revenue, including third-party digital costs and profit sharing costs. The increase was partially offset by lower employee compensation as a result of cost savings initiatives.

Consolidated direct operating expenses increased $12.1 million during the nine months ended September 30, 2023 compared to the same period of 2022. The increase in direct operating expenses was primarily driven by higher music license fees and higher variable content costs resulting from an increase in digital revenue, including profit sharing costs, third-party digital costs, and production costs. The increase was partially offset by lower employee compensation as a result of cost savings initiatives and lower performance royalty fees.

Selling, General and Administrative (“SG&A”) Expenses

Consolidated SG&A expenses decreased $6.3 million during the three months ended September 30, 2023 compared to the same period of 2022. The decrease in Consolidated SG&A expenses was driven primarily by a decrease in costs incurred in connection with executing on our cost reduction initiatives, partially offset by higher trade and barter expense, variable bonus expense, and bad debt expense.

Consolidated SG&A expenses increased $26.9 million during the nine months ended September 30, 2023 compared to the same period of 2022. The increase in Consolidated SG&A expenses was driven primarily by higher variable bonus expense, trade and barter expense, and bad debt expense, as well as an increase in costs incurred in connection with live events. These increases were partially offset by a decrease in costs incurred in connection with executing on our cost reduction initiatives and lower sales commissions.

Depreciation and Amortization

Depreciation and amortization decreased $2.9 million and $11.1 million during the three and nine months ended September 30, 2023, respectively, compared to the same periods of 2022, primarily as a result of a lower fixed asset base due to properties sold in 2022 in connection with our real estate optimization initiatives, and lower amortization expense due to certain intangible assets being fully amortized.

Impairment Charges

We perform our annual impairment test on our goodwill and FCC licenses as of July 1 of each year. No impairment was required for our goodwill and FCC licenses as part of the 2023 annual impairment test performed during the third quarter. We recognized non-cash impairment charges of $302.1 million on our indefinite-lived FCC licenses as part of the 2022 annual impairment test performed during the third quarter of 2022 primarily as a result of an increase in the discount rate used in our fair value calculations due to higher market interest rates at that time compared to the prior year.

Economic uncertainty due to inflation and higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses. In addition, the economic uncertainty has had a significant impact on the trading values of our debt and equity securities for a sustained period. As a result, we performed an interim impairment test as of June 30, 2023 on our indefinite-lived FCC licenses and goodwill. We recorded a non-cash impairment charge of $959.1 million in the second quarter of 2023 to reduce the carrying values of our indefinite-lived FCC licenses and our goodwill to their estimated fair values. See Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill, to the consolidated financial statements for a further description of the impairment charges.

In addition, as part of our cost savings initiatives, we have taken strategic actions to streamline our real estate footprint and related expenses. During the three and nine months ended September 30, 2023, we recognized non-cash impairment charges of $0.6 million and $6.1 million, respectively, primarily related to changes in sublease assumptions for certain operating leases previously determined to be subleased as part of strategic actions to streamline our real estate footprint. During the three and nine months ended September 30, 2022, we recognized non-cash impairment charges of $7.6 million and $9.2 million, respectively, due to the write-down of certain right-of-use assets and related fixed assets, including leasehold improvements.

Other Operating Expense, net

Other operating expense, net of $9.5 million and $26.0 million for the three and nine months ended September 30, 2022, respectively, relates primarily to non-cash losses on disposals of assets in connection with our real estate optimization initiatives.

Interest Expense

Interest expense increased $11.6 million and $45.1 million during the three and nine months ended September 30, 2023 compared to the same periods of 2022, primarily as a result of the increase in floating borrowing rates, partially offset by the lower outstanding aggregate principal of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 due to the repurchases of $429.5 million of the notes for $371.8 million in cash made during 2022 and the first half of 2023.

Gain (Loss) on Investments, Net

During the three and nine months ended September 30, 2023, we recognized a loss on investments, net of $7.4 million and $19.9 million, respectively, related to declines in the value of our investments. During the three and nine months ended September 30, 2022, we recognized a loss on investments, net of $3.5 million and a gain on investment, net of $4.4 million, respectively, in connection with changes in the value of our investments.

Gain on Extinguishment of Debt

During the three months ended September 30, 2023, we recognized a gain on extinguishment of debt of $23.9 million in connection with the open market repurchases of $89.1 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $65.2 million in cash. During the nine months ended September 30, 2023, we recognized a gain on extinguishment of debt of $51.5 million, in connection with the open market repurchases of $189.0 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $137.5 million in cash.

During the three months ended September 30, 2022, we recognized a gain on extinguishment of debt of $6.9 million in connection with the open market repurchases of $75.0 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $68.1 million in cash. During the nine months ended September 30, 2022, we recognized a gain on extinguishment of debt of $15.1 million in connection with the open market repurchases of $188.5 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $173.4 million in cash.

Income Tax Benefit (Expense)

The effective tax rates for the Company for the three and nine months ended September 30, 2023 were 50.8% and 2.6%, respectively. The effective tax rates were primarily impacted by the forecasted increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards due to uncertainty regarding the Company’s ability to utilize those assets in future periods, as well as by impairment charges to non-deductible goodwill as discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill.

Net Loss Attributable to the Company

Net loss attributable to the Company of $9.1 million during the three months ended September 30, 2023 reflected a decrease of $301.3 million compared to Net loss attributable to the Company of $310.4 million during the three months ended September 30, 2022, primarily due to the non-cash impairment charge of $302.1 million in the third quarter of 2022, related to our indefinite-lived intangible asset balance.

Net loss attributable to the Company of $1,115.8 million during the nine months ended September 30, 2023 increased $771.2 million compared to Net loss attributable to the Company of $344.5 million during the nine months ended September 30, 2022, primarily due to the non-cash impairment charges of $965.1 million to our goodwill and indefinite-lived intangible assets balances.

Multiplatform Group Results


(In thousands)	Three Months Ended September 30,						%		Nine Months Ended September 30,						%
	2023			2022			Change		2023			2022			Change
Revenue	$	626,383		$	659,896		(5.1)	%	$	1,751,340		$	1,864,356		(6.1)	%


Operating expenses(1)	463,939			452,631			2.5	%	1,339,441			1,328,688			0.8	%
Segment Adjusted EBITDA	$	162,444		$	207,265		(21.6)	%	$	411,899		$	535,668		(23.1)	%
Segment Adjusted EBITDA margin	25.9		%	31.4		%			23.5		%	28.7		%

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Three Months

Revenue from our Multiplatform Group decreased $33.5 million compared to the prior year as a result of the challenging macroeconomic environment and a decline in political advertising as 2022 was a mid-term election year, partially offset by an increase in trade and barter and live events revenues. Broadcast revenue declined $29.7 million, or 6.1%, year-over-year, driven by lower spot revenue and a decrease in political advertising, partially offset by an increase in trade and barter revenues. Networks declined $10.9 million, or 8.6%, year-over-year. Revenue from Sponsorship and Events increased $6.9 million, or 16.3%, year-over-year.

Operating expenses increased $11.3 million, driven primarily by an increase in trade and barter expenses and costs incurred in connection with live events, partially offset by lower sales commissions.

Nine Months

Revenue from our Multiplatform Group decreased $113.0 million compared to the prior year as a result of the challenging macroeconomic environment and a decline in political advertising, partially offset by an increase in revenue from live events. Broadcast revenue declined $95.1 million, or 7.0%, year-over-year, driven by lower spot revenue and a decrease in political revenue, partially offset by an increase in trade and barter revenues. Networks declined $25.8 million, or 6.9%, year-over-year. Revenue from Sponsorship and Events increased by $6.1 million, or 5.3%, year-over-year.

Operating expenses increased $10.8 million, driven primarily by an increase in bad debt expense, higher trade and barter expenses, and costs incurred in connection with live events, partially offset by lower sales commissions.

Digital Audio Group Results


(In thousands)	Three Months Ended September 30,						%		Nine Months Ended September 30,						%
	2023			2022			Change		2023			2022			Change
Revenue	$	267,222		$	253,953		5.2	%	$	751,472		$	720,733		4.3	%


Operating expenses(1)	173,565			175,636			(1.2)	%	519,115			511,025			1.6	%
Segment Adjusted EBITDA	$	93,657		$	78,317		19.6	%	$	232,357		$	209,708		10.8	%
Segment Adjusted EBITDA margin	35.1		%	30.8		%			30.9		%	29.1		%

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Three Months

Revenue from our Digital Audio Group increased $13.3 million compared to the prior year, driven by Podcast revenue which increased by $11.4 million, or 12.5%, year-over-year, driven primarily by continued increase in demand for podcasting from advertisers, and Digital, excluding Podcast revenue, which grew $1.9 million, or 1.1%, year-over-year, driven by an increase in demand for digital advertising, partially offset by a decrease in COVID-19 related advertisers.

Operating expenses decreased $2.1 million primarily driven by lower third-party digital costs in connection with COVID-19 related advertisers, partially offset by higher sales commissions resulting from higher revenue.

Nine Months

Revenue from our Digital Audio Group increased $30.7 million compared to the prior year, driven by Podcast revenue which increased by $30.7 million, or 12.5%, year-over-year, driven primarily by increased demand for podcasting from advertisers.

Operating expenses increased $8.1 million due to higher variable content and production costs primarily resulting from the development of new podcasts, profit share costs and sales commissions primarily resulting from higher revenue, partially offset by a decrease in performance royalty fees and third-party digital costs in connection with COVID-19 related advertisers.

Audio & Media Services Group Results


(In thousands)	Three Months Ended September 30,						%		Nine Months Ended September 30,						%
	2023			2022			Change		2023			2022			Change
Revenue	$	61,979		$	77,794		(20.3)	%	$	189,134		$	209,716		(9.8)	%


Operating expenses(1)	45,003			48,044			(6.3)	%	138,315			141,509			(2.3)	%
Segment Adjusted EBITDA	$	16,976		$	29,750		(42.9)	%	$	50,819		$	68,207		(25.5)	%
Segment Adjusted EBITDA margin	27.4		%	38.2		%			26.9		%	32.5		%

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Three Months

Revenue from our Audio & Media Services Group decreased $15.8 million compared to the prior year period primarily driven by a decrease in political revenue.

Operating expenses decreased $3.0 million primarily as a result of lower incentive bonus expense and sales commissions due to lower revenues.

Nine Months

Revenue from our Audio & Media Services Group decreased $20.6 million compared to the prior year period primarily driven by a decrease in political revenue.

Operating expenses decreased $3.2 million primarily as a result of lower cost of sales due to lower incentive bonus expense and sales commissions due to lower revenues.

Reconciliation of Operating income (loss) to Adjusted EBITDA


(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating income (loss)	$	68,965	$	(211,187)	$	(877,091)	$	(115,983)
Depreciation and amortization	106,451		109,305		323,028		334,144
Impairment charges	570		309,750		965,087		311,329
Other operating expense, net	3,378		9,451		3,338		25,985
Restructuring expenses	16,227		24,486		46,469		54,588
Share-based compensation expense	8,191		10,437		27,555		24,582
Adjusted EBITDA(1)	$	203,782	$	252,242	$	488,386	$	634,645

Reconciliation of Net loss to EBITDA and Adjusted EBITDA


(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(8,969)	$	(309,776)	$	(1,114,314)	$	(343,333)
Income tax (benefit) expense	(9,261)		13,412		(29,513)		(5,015)
Interest expense, net	99,509		87,890		293,659		248,603
Depreciation and amortization	106,451		109,305		323,028		334,144
EBITDA	$	187,730	$	(99,169)	$	(527,140)	$	234,399
(Gain) loss on investments, net	7,381		3,466		19,924		(4,359)
Gain on extinguishment of debt	(23,947)		(6,892)		(51,474)		(15,095)
Other expense, net	738		581		1,109		3,026
Equity in loss of nonconsolidated affiliates	3,514		132		3,518		190
Impairment charges	570		309,750		965,087		311,329
Other operating expense, net	3,378		9,451		3,338		25,985
Restructuring expenses	16,227		24,486		46,469		54,588
Share-based compensation expense	8,191		10,437		27,555		24,582
Adjusted EBITDA(1)	$	203,782	$	252,242	$	488,386	$	634,645

(1)We define Adjusted EBITDA as consolidated Operating income adjusted to exclude restructuring expenses included within Direct operating expenses and SG&A expenses, and share-based compensation expenses included within SG&A expenses, as well as the following line items presented in our Statements of Operations: Depreciation and amortization, Impairment charges and Other operating (income) expense, net. Alternatively, Adjusted EBITDA is calculated as Net income (loss), adjusted to exclude Income tax (benefit) expense, Interest expense, net, Depreciation and amortization, (Gain) loss on investments, net, Gain on extinguishment of debt, Other expense, net, Equity in loss of nonconsolidated affiliates, net, Impairment charges, Other operating income (expense), net, Share-based compensation expense, and restructuring expenses. Restructuring expenses primarily include expenses incurred in connection with cost-saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle. We use Adjusted EBITDA, among other measures, to evaluate the Company’s operating performance. This measure is among the primary measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives

and other members of management. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates. In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry. Since Adjusted EBITDA is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, operating income or net income (loss) as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies. Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs. Because it excludes certain financial information compared with operating income and compared with consolidated net income (loss), the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded.

Reconciliation of Cash provided by operating activities to Free Cash Flow


(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cash provided by operating activities	$	96,169	$	103,110	$	58,958	$	206,699
Purchases of property, plant and equipment	(28,518)		(40,357)		(90,456)		(112,567)
Free cash flow(1)	$	67,651	$	62,753	$	(31,498)	$	94,132

(1)We define Free cash flow ("Free Cash Flow") as Cash provided by (used for) operating activities less capital expenditures, which is disclosed as Purchases of property, plant and equipment in the Company's Consolidated Statements of Cash Flows. We use Free Cash Flow, among other measures, to evaluate the Company’s liquidity and its ability to generate cash flow. We believe that Free Cash Flow is meaningful to investors because we review cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations. In addition, we believe that Free Cash Flow helps improve investors' ability to compare our liquidity with other companies. Since Free Cash Flow is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, Cash provided by (used for) operating activities and may not be comparable to similarly titled measures employed by other companies. Free Cash Flow is not necessarily a measure of our ability to fund our cash needs.

Share-Based Compensation Expense

On April 21, 2021, our 2021 Long-Term Incentive Award Plan (the "2021 Plan") was approved by stockholders and replaced the prior plan. At our 2023 Annual Meeting of Stockholders, an increase to the shares authorized for issuance under the 2021 Plan was approved. Pursuant to our 2021 Plan, we may grant restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.

Share-based compensation expenses are recorded in SG&A expenses and were $8.2 million and $10.4 million for the three months ended September 30, 2023 and 2022, respectively, and $27.6 million and $24.6 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, there was $36.5 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based solely on service conditions. This cost is expected to be recognized over a weighted average period of approximately 1.9 years. In addition, as of September 30, 2023, there were unrecognized compensation costs of $22.3 million for the Performance RSUs related to unvested share-based compensation arrangements that will vest based on performance and service conditions. These costs will be recognized over a 3-year or 50-month period from the date of issuance. See Note 8, Stockholders' Equity, for more information.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following discussion highlights cash flow activities during the periods presented:


(In thousands)	Nine Months Ended September 30,
	2023		2022
Cash provided by (used for):
Operating activities	$	58,958	$	206,699
Investing activities	(39,991)		(82,807)
Financing activities	(141,957)		(179,657)
Free Cash Flow(1)	(31,498)		94,132

(1) For a definition of Free Cash Flow and a reconciliation to Cash provided by operating activities, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities to Free Cash Flow” in this MD&A.

Operating Activities

Cash provided by operating activities was $59.0 million during the nine months ended September 30, 2023 compared to cash provided by operating activities of $206.7 million during the nine months ended September 30, 2022. The decrease was primarily due to a decrease in broadcast radio revenue due to a more challenging macroeconomic environment, higher interest expense due to an increase in borrowing rates, and timing of payments. These decreases were partially offset by a decrease in bonus payments in 2023 compared to 2022.

Investing Activities

Cash used for investing activities of $40.0 million during the nine months ended September 30, 2023 primarily reflects $90.4 million in cash used for capital expenditures, partially offset by proceeds from the disposal of assets of $54.1 million. For capital expenditures, we spent $52.1 million for capital expenditures in our Multiplatform Group segment primarily related to our real estate optimization initiatives, $17.3 million in our Digital Audio Group segment primarily related to IT infrastructure, $6.3 million in our Audio & Media Services Group segment, primarily related to software, and $14.7 million in Corporate primarily related to equipment and software purchases. The proceeds from the disposal of assets mainly consists of $45.3 million related to the sale of broadcast tower sites and related assets. We are leasing back space on the broadcast towers and related assets under long-term operating leases. Refer to Note 3, Leases and Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill for more information. Cash used for investing activities in the nine months ended September 30, 2023 includes $12.7 million of cash paid related to assets acquired in the fourth quarter of 2022.

Cash used for investing activities of $82.8 million during the nine months ended September 30, 2022 primarily reflects $112.6 million in cash used for capital expenditures. We spent $80.3 million for capital expenditures in our Multiplatform Group segment primarily related to our real estate optimization initiatives, $15.9 million in our Digital Audio Group segment primarily related to IT infrastructure, $5.4 million in our Audio & Media Services Group segment, primarily related to software, and $11.0 million in Corporate primarily related to equipment and software purchases. Cash used for investing activities was partially offset by $34.7 million of proceeds from the sale of certain properties related to our real estate optimization initiatives.

Financing Activities

Cash used for financing activities totaled $142.0 million during the nine months ended September 30, 2023 primarily due to the open market repurchases of $189.0 million aggregate principal amount of our 8.375% Senior Unsecured Notes due 2027 for $137.5 million in cash, reflecting a discounted purchase price from the face value of the notes.

Cash used for financing activities totaled $179.7 million during the nine months ended September 30, 2022 primarily due to the open market repurchases of $188.5 million aggregate principal amount of our 8.375% Senior Unsecured Notes due 2027 for $173.4 million in cash, reflecting a discounted purchase price from the face value of the notes.

Sources of Liquidity and Anticipated Cash Requirements

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $213.5 million as of September 30, 2023, cash flows from operations and borrowing capacity under our $450.0 million senior secured asset-based revolving credit facility entered into on May 17, 2022 (the "ABL Facility"). As of September 30, 2023, iHeartCommunications had no amounts outstanding under the ABL Facility, a borrowing base of $436.7 million and $24.9 million in outstanding letters of credit, resulting in $411.8 million of borrowing base availability. Our total available liquidity1 as of September 30, 2023 was approximately $625 million.

In September 2023, we sold 122 of our broadcast tower sites and related assets for net proceeds of $45.3 million. We simultaneously leased back space on 121 of the broadcast towers and related assets under long-term operating leases. We intend to use the proceeds from this transaction to fund working capital needs and general corporate purposes.

We regularly evaluate the impact of economic conditions on our business. A challenging macroeconomic environment has led to market uncertainty which has impacted 2023 revenues and cash flows. For the nine months ended September 30, 2023, our revenues decreased compared to the nine months ended September 30, 2022 primarily due to the decrease in broadcast radio revenue driven by market uncertainty from the challenging macroeconomic environment, among other factors discussed in the Results of Operations section of the MD&A. Although we cannot predict future economic conditions or the impact of any potential contraction of economic growth on our business, we believe that we have sufficient liquidity to continue to fund our operations for at least the next twelve months.

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Consolidated Balance Sheet as of September 30, 2023, while others are considered future commitments. Our contractual obligations primarily consist of long-term debt and related interest payments, commitments under non-cancelable operating lease agreements, and employment and talent contracts. In addition to our contractual obligations, we expect that our primary anticipated uses of liquidity in 2023 will be to fund our working capital, make interest and tax payments, fund capital expenditures, make voluntary debt repayments and pursue other strategic opportunities, and maintain operations.

On June 15, 2023, iHeartCommunications, Inc. entered into an amendment to the credit agreement governing its term loan credit facilities (the "Term Loan Facility"). The amendment replaces the prior Eurocurrency interest rate, based upon LIBOR, with the Secured Overnight Financing Rate (“SOFR”) successor rate plus a SOFR adjustment as specified in the credit agreement. The Term Loan Facility margins remain the same with the Term Loan Facility due 2026 containing margins of 3.00% for Term SOFR Loans (as defined in the credit agreement) and 2.00% for Base Rate Loans (as defined in the credit agreement), and the Incremental Term Loan Facility due 2026 containing margins of 3.25% for Term SOFR Loans with a floor of 0.50% and 2.25% for Base Rate Loans with a floor of 1.50%.

Assuming the current level of borrowings and interest rates in effect at September 30, 2023, we anticipate that we will have approximately $89.3 million of cash interest payments in the remainder of 2023 compared to $92.5 million of cash interest payments during the same period in 2022, primarily related to the increase in floating interest rates, partially offset by a lower outstanding debt balance due to the note repurchases in 2022 and 2023. Future increases in interest rates could have a significant impact on our cash interest payments.

We believe that our cash balance, our cash flow from operations and availability under our ABL Facility provide us with sufficient liquidity to fund our core operations, maintain key personnel and meet our other material obligations for at least the next twelve months. We acknowledge the challenges posed by the market uncertainty as a result of global economic weakness, the recent slowdown in economic activity, rising interest rates, high inflation and other macroeconomic trends, however, we remain confident in our business, our employees and our strategy. Further, we believe our available liquidity will allow us to fund capital expenditures and other obligations and make interest payments on our long-term debt. If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms or at all in the future.

We frequently evaluate strategic opportunities. During the nine months ended September 30, 2023, we repurchased $189.0 million in aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $137.5 million in cash, reflecting a discounted purchase price from the face value of the notes. We expect from time to time to pursue other strategic opportunities such as acquisitions or disposals of certain businesses, which may or may not be material.

1 Total available liquidity is defined as cash and cash equivalents plus available borrowings under the ABL Facility. We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.

Tax Matters Agreement

In connection with the separation (the "Separation") of Clear Channel Outdoor Holdings, Inc. as part of our plan of reorganization, we entered into the Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., Clear Channel Holdings, Inc., and Clear Channel Outdoor Holding, Inc. (the "Outdoor Group"), to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and the Outdoor Group and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.

The Tax Matters Agreement requires that iHeartMedia and iHeartCommunications indemnify the Outdoor Group and its subsidiaries, their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against certain tax claims related to the Separation. In addition, the Tax Matters Agreement requires that the Outdoor Group indemnify iHeartMedia for certain income taxes paid by iHeartMedia on behalf of the Outdoor Group and its subsidiaries.

Summary Debt Capital Structure

As of September 30, 2023 and December 31, 2022, we had the following debt outstanding, net of cash and cash equivalents:


(In thousands)	September 30, 2023		December 31, 2022
Term Loan Facility due 2026	$	1,864,032	$	1,864,032
Incremental Term Loan Facility due 2026	401,220		401,220
Asset-based Revolving Credit Facility due 2027	—		—
6.375% Senior Secured Notes due 2026	800,000		800,000
5.25% Senior Secured Notes due 2027	750,000		750,000
4.75% Senior Secured Notes due 2028	500,000		500,000
Other Secured Subsidiary Debt	3,485		4,462
Total Secured Debt	$	4,318,737	$	4,319,714

8.375% Senior Unsecured Notes due 20271	931,357		1,120,366
Other Subsidiary Debt	—		52
Original issue discount	(8,323)		(10,569)
Long-term debt fees	(13,065)		(15,396)
Total Debt	$	5,228,706	$	5,414,167
Less: Cash and cash equivalents	213,479		336,236
Net Debt2	$	5,015,227	$	5,077,931

1 During the three and nine months ended September 30, 2023, we repurchased $89.1 million and $189.0 million, respectively, of aggregate principal amount of iHeartCommunications, Inc.’s 8.375% Senior Unsecured Notes due 2027 for $65.2 million and $137.5 million in cash, excluding accrued interest, via open market transactions. The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt for the three and nine months ended September 30, 2023 of $23.9 million and $51.5 million, respectively.

2 Net Debt is a non-GAAP financial metric that is used by management and investors to assess our ability to meet financial obligations.

See above under “Sources of Liquidity and Cash Requirements” for details regarding the amendment to our Term Loan Facility entered into on June 15, 2023.

Our ABL Facility contains a springing fixed charge coverage ratio that is effective if certain triggering events related to borrowing capacity under the ABL Facility occur. As of September 30, 2023, no triggering event had occurred and, as a result, we were not required to comply with any fixed charge coverage ratio as of or for the period ended September 30, 2023. Other than our ABL Facility, none of our long-term debt includes maintenance covenants that could trigger early repayment. As of September 30, 2023, we were in compliance with all covenants related to our debt agreements in all material respects. For additional information regarding our debt, refer to Note 5, Long-Term Debt.

Our subsidiaries have from time to time repurchased certain debt obligations of iHeartCommunications, and may in the future, as part of various financing and investment strategies, purchase additional outstanding indebtedness of iHeartCommunications or its subsidiaries or our outstanding equity securities, in tender offers, open market purchases, privately negotiated transactions or otherwise. We or our subsidiaries may also sell certain assets, securities, or properties. These

purchases or sales, if any, could have a material positive or negative impact on our liquidity available to repay outstanding debt obligations or on our consolidated results of operations. These transactions could also require or result in amendments to the agreements governing outstanding debt obligations or changes in our leverage or other financial ratios, which could have a material positive or negative impact on our ability to comply with the covenants contained in iHeartCommunications’ debt agreements. These transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Supplemental Financial Information under Debt Agreements

Pursuant to iHeartCommunications' material debt agreements, iHeartMedia Capital I, LLC ("Capital I"), the parent guarantor and a subsidiary of iHeartMedia, is permitted to satisfy its reporting obligations under such agreements by furnishing iHeartMedia’s consolidated financial information and an explanation of the material differences between iHeartMedia’s consolidated financial information, on the one hand, and the financial information of Capital I and its consolidated restricted subsidiaries, on the other hand. Because neither iHeartMedia nor iHeartMedia Capital II, LLC, a wholly-owned direct subsidiary of iHeartMedia and the parent of Capital I, have any operations or material assets or liabilities, there are no material differences between iHeartMedia’s consolidated financial information for the three and nine months ended September 30, 2023, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same period. Further, as of September 30, 2023, we were in compliance with all covenants related to our debt agreements.

Commitments, Contingencies and Guarantees

We are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued our estimate of the probable costs for resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. Please refer to “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q.

Certain agreements relating to acquisitions provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies generally over a one to five-year period. The aggregate of these contingent payments, if performance targets are met, would not significantly impact our financial position or results of operations.

We have future cash obligations under various types of contracts. We lease office space, certain broadcast facilities and equipment. Some of our lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for our payment of utilities and maintenance. We also have non-cancellable contracts in our radio broadcasting operations related to program rights and music license fees. In the normal course of business, our broadcasting operations have minimum future payments associated with employee and talent contracts. These contracts typically contain cancellation provisions that allow us to cancel the contract with good cause.

SEASONALITY

Typically, our businesses experience their lowest financial performance in the first quarter of the calendar year. We expect this trend to continue in the future. Due to this seasonality and certain other factors, the results for the interim periods may not be indicative of results for the full year. In addition, we are impacted by political cycles and generally experience higher revenues in congressional election years, and particularly in presidential election years. This may affect the comparability of results between years.

MARKET RISK

We are exposed to market risks arising from changes in market rates and prices, including movements in interest rates, foreign currency exchange rates and inflation.

Interest Rate Risk

On June 15, 2023, iHeartCommunications, Inc. ("iHeartCommunications") entered into an amendment to the credit agreement governing its Term Loan credit facilities. The amendment replaces the prior Eurocurrency interest rate, based upon LIBOR, with the Secured Overnight Financing Rate (“SOFR”) successor rate plus a SOFR adjustment as specified in the credit agreement.

A significant amount of our long-term debt bears interest at variable rates. Additionally, certain assumptions used within management's estimates are impacted by changes in interest rates. Accordingly, our earnings will be affected by changes in interest rates. As of September 30, 2023, approximately 43% of our aggregate principal amount of long-term debt bore interest at floating rates. Assuming the current level of borrowings and assuming a 100 bps change in floating interest rates, it is estimated that our interest expense for the nine months ended September 30, 2023 would have changed by $17.2 million.

In the event of an adverse change in interest rates, management may take actions to mitigate our exposure. However, due to the uncertainty of the actions that would be taken and their possible effects, the preceding interest rate sensitivity analysis assumes no such actions. Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.

Inflation

Inflation is a factor in our business and we continue to seek ways to mitigate its effect. Inflation has affected our performance in terms of higher costs for employee compensation, equipment and third party services. Although we are unable to determine the exact impact of inflation, we believe the impact will continue to be immaterial considering the actions we may take in response to these higher costs that may arise as a result of inflation.

Critical Accounting Estimates

The preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material. Other than the following, there have been no significant changes to our critical accounting policies and estimates disclosed in “Critical Accounting Estimates” of Item 7, Management’s Discussion and Analysis of our Annual Report on Form 10-K for the year ended December 31, 2022.

Economic uncertainty due to higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses. This challenging environment has led to broader market uncertainty, and has delayed our expected recovery and has had an adverse impact on our revenue and cash flows. This challenging environment could have a significant impact on our financial results. In addition, the economic uncertainty has had a significant impact on the trading values of our debt and equity securities for a sustained period. As a result, we performed an interim impairment test as of June 30, 2023 on our long-lived assets, intangible assets, indefinite-lived FCC licenses and goodwill.

Indefinite-lived Intangible Assets

Indefinite-lived intangible assets, such as our FCC licenses, are reviewed for impairment using the direct valuation method as prescribed in ASC 805-20-S99. Under the direct valuation method, the estimated fair value of the indefinite-lived intangible assets was calculated at the market level as prescribed by ASC 350-30-35. Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flows model, which results in value that is directly attributable to the indefinite-lived intangible assets.

Our key assumptions using the direct valuation method are market revenue growth rates, profit margin, and the risk-adjusted discount rate as well as other assumptions including market share, duration and profile of the build-up period, estimated start-up costs and capital expenditures. This data is populated using industry normalized information representing an average asset within a market.

On June 30, 2023, we performed an interim impairment test in accordance with ASC 350-30-35 and we concluded that a $363.6 million impairment of the indefinite-lived intangible assets was required. In determining the fair value of our FCC licenses, the following key assumptions were used:

•Revenue forecasts published by BIA Financial Network, Inc. (“BIA”), varying by market, and revenue growth projections made by industry analysts were used for the initial five-year period;

•2.0% over-the-air revenue growth and 3.0% digital revenue growth was assumed beyond the initial five-year period and 2.0% revenue growth was assumed in the terminal period;

•Revenue was grown proportionally over a build-up period, reaching market revenue forecast by year 3;

•Operating margins of 8.0% in the first year gradually climb to the industry average margin in year 3 of up to 18.2%, depending on market size; and

•Assumed discount rates of 10.0% for all markets.

There were no significant changes to assumptions used for the 2023 annual impairment test. No impairment identified related to our FCC licenses as a result of the 2023 annual impairment test performed during the third quarter.

While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate the fair value of our indefinite-lived intangible assets, it is possible a material change could occur. If future results are not consistent with our assumptions and estimates, we may be exposed to impairment charges in the future. The following table shows the decrease in the fair value of our indefinite-lived intangible assets that would result from a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption:


Impact on the Fair Value of our FCC Licenses due to 100 bps Change in:
Revenue Growth Rate		Profit Margin		Discount Rate
(in thousands)
$	201,609	$	155,590	$	222,563

At June 30, 2023, both the carrying value of our FCC licenses after the impairment of $363.6 million and the fair value of the FCC licenses was $1.1 billion. Consequently, an increase in discount rates, a decrease in revenue growth rates or profit margins, or a decrease in BIA revenue forecasts could result in additional impairment to our FCC licenses.

Goodwill

We test goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. The fair value of our reporting units is used to apply value to the net assets of each reporting unit. To the extent that the carrying amount of net assets would exceed the fair value, an impairment charge may be required to be recorded. The impairment testing performed as of June 30, 2023 has resulted in a decrease in the fair values of our reporting units. The carrying values of our Multiplatform, Digital, and RCS reporting units exceeded their fair values. The fair value of our Katz reporting unit exceeded its carrying value.

The valuation methodology we use for valuing goodwill involves considering the implied fair values of our reporting units based on market factors including the trading prices of our debt and equity securities, and estimating future cash flows expected to be generated from the related assets, discounted to their present values using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present values.

On June 30, 2023, we performed our interim impairment test in accordance with ASC 350-30-35, resulting in a $595.5 million impairment of goodwill. In determining the fair value of our reporting units, we considered industry and market factors including trading multiples of similar businesses and the trading prices of our debt and equity securities. For purposes of assessing the discounted future cash flows of our reporting units, we used the following assumptions:

•Expected cash flows underlying our business plans for the periods 2023 through 2027. Our cash flow assumptions are based on detailed, multi-year forecasts performed by each of our operating reporting units, and reflect the current advertising outlook across our businesses.

•Revenues beyond 2027 are projected to grow at a perpetual growth rate, which we estimated at 2.0% for our Multiplatform and RCS Reporting units, 3.0% for our Digital Audio Reporting unit (beyond 2031), and 2.0% for our Katz Media reporting unit (beyond 2032).

•In order to risk adjust the cash flow projections in determining fair value, we utilized discounts rates between 15% and 18% for each of our reporting units.

There were no significant changes to assumptions used for the 2023 annual impairment test. No impairment was identified related to our goodwill balance as a result of the 2023 annual impairment test performed during the third quarter.

While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate the estimated fair value of our reporting units, it is possible a material change could occur. If future results are not consistent with our assumptions and estimates, we may be exposed to additional impairment charges in the future. The following table shows the decline in the fair value of each of our reporting units that would result from a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption:


(In thousands)	Impact on the Fair Value of our Goodwill due to 100bps Change in:
Reporting Unit	Revenue Growth Rate		Profit Margin		Discount Rate
Multiplatform	$	241,000	$	137,000	$	220,000
Digital	62,000		66,000		63,000
Katz Media	19,000		11,000		18,000
RCS	10,000		5,000		8,000

An increase in discount rates or a decrease in revenue growth rates or profit margins could result in additional impairment charges being required to be recorded for one or more of our reporting units.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. This report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, financial position and results of operations, macroeconomic trends including inflation, interest rates and potential recessionary indicators, our expected costs, savings and timing of our modernization initiatives and other capital and operating expense reduction initiatives, debt repurchases, our business plans, strategies and initiatives, benefits of acquisitions and dispositions, our expectations about certain markets and businesses, expected cash interest payments, future impairment charges and our anticipated financial performance and liquidity. Statements expressing expectations and projections with respect to future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements involve a number of risks and uncertainties and are subject to many variables which could impact our future performance. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Actual future events and performance may differ materially from the expectations reflected in our forward-looking statements. We do not intend, nor do we undertake any duty, to update any forward-looking statements.

A wide range of factors could materially affect future developments and performance, including but not limited to:

•risks associated with weak or uncertain global economic and geopolitical conditions and their impact on the level of expenditures for advertising;

•risks related to the COVID-19 pandemic or other future pandemics;

•intense competition including increased competition from alternative media platforms and technologies;

•dependence upon the performance of on-air talent, program hosts and management as well as maintaining or enhancing our master brand;

•fluctuations in operating costs and other factors within or beyond our control;

•technological changes and innovations;

•shifts in population and other demographics;

•the impact of our substantial indebtedness;

•the impact of acquisitions, dispositions and other strategic transactions;

•legislative or regulatory requirements;

•the impact of legislation, ongoing litigation or royalty audits on music licensing and royalties;

•regulations and consumer concerns regarding privacy and data protection, and breaches of information security measures;

•risks related to our Class A common stock;

•regulations impacting our business and the ownership of our securities; and

•certain other factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, as updated by other filings with the Securities and Exchange Commission (“SEC”).

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Required information is presented under “Market Risk” within Item 2 of this Part I.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in a variety of legal proceedings in the ordinary course of business and a large portion of our litigation arises in the following contexts: commercial/contract disputes; defamation matters; employment and benefits related claims; intellectual property claims; real estate matters; governmental investigations; and tax disputes. As required, we have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The following table sets forth our purchases of shares of our Class A common stock made during the quarter ended September 30, 2023:


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 through July 31	21,029	$	4.32	—	$	—
August 1 through August 31	39,117	3.32		—	—
September 1 through September 30	2,384	3.46		—	—
Total	62,530	$	3.66	—	$	—

(1)The shares indicated consist of shares of our Class A common stock tendered by employees to us during the three months ended September 30, 2023 to satisfy the employees’ tax withholding obligation in connection with the vesting and release of restricted stock, which are repurchased by us based on their fair market value on the date the relevant transaction occurs.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS


Exhibit Number						Description
2.1						Modified Fifth Amended Joint Chapter 11 Plan of Reorganization of iHeartMedia, Inc. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code, dated January 22, 2019 (incorporated by reference Exhibit 2.1 of iHeartMedia Inc.’s Current Report on Form 8-K filed on January 28, 2019).
3.1						Fifth Amended and Restated Certificate of Incorporation of iHeartMedia, Inc. (incorporated by reference to Exhibit 3.1 of iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).
3.2						Third Amended and Restated Bylaws of iHeartMedia, Inc. (incorporated by reference to Exhibit 3.2 of iHeartMedia, Inc.’s Annual Report on Form 10-K filed on February 25, 2021).
31.1*						Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*						Inline XBRL Taxonomy Extension Definition Document
104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

____________

* Filed herewith.

** Furnished herewith.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		IHEARTMEDIA, INC.

Date:	November 9, 2023	/s/ SCOTT D. HAMILTON
		Scott D. Hamilton
		Senior Vice President, Chief Accounting Officer and Assistant Secretary

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iHeartMedia (IHRT) 10-Q2023 Q3 Quarterly report

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