Clear Channel Outdoor Holdings, Inc.
Q2 2016 Earnings Call Transcript

Published: 4 Aug 2016

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the 2016 Second Quarter Earnings Conference Call for iHeartMedia and Clear Channel Outdoor Holdings, Inc. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder today's call is being recorded. I will now turn the conference to your host, Eileen McLaughlin, Vice President, Investor Relations. Please go ahead.

[Eileen McLaughlin:]

And thank you for joining our 2016 Second Quarter Earnings Call. On the call today are Rich Bressler, President, Chief Operating Officer and Chief Financial Officer; and Brian Coleman, Senior Vice President and Treasurer. We'll provide an overview of the second quarter 2016 financial and operating performances of iHeartMedia, Inc. and its subsidiaries, iHeartMedia Capital I, LLC, and iHeartCommunications, Inc., Clear Channel Outdoor Holdings, Inc. and Clear Channel International B.V. For purposes of this call when we describe the financial and operating performance of iHeartMedia, Inc., that also describes the performance of its subsidiaries

[Richard Bressler:]

Thank you, Eileen, and good morning, everyone. Thanks for joining us. We're pleased with the results we have achieved this quarter. With iHeartMedia extending its growth momentum, America's Outdoor improving its operating performance, and International Outdoor delivering an overall increase in revenues. We are continuing to execute on right strategies to efficiently leverage our growing capabilities as a multi-platform, 21st century media and entertainment company. And we keep investing in strengthening our businesses, enhancing our offerings to consumers and developing innovative marketing solutions for advertisers and agencies while maintaining our focus on tight operating and financial discipline. Today's earnings call marks my third anniversary here at iHeartMedia, and it's gratifying to see how much progress the company has made and how much more we can achieve with the opportunities ahead of us. For example at iHeartMedia we continue to benefit from favorable trends and how consumers are using media. As we've highlighted to you before, broadcast radio remains the U.S.'s biggest and most stable medium reaching 93% of all American adults 18 and over and radio's reach among millennials is nearly as high at 92%. Compare broadcast radio's reach of 93% to TV's reach of 88% of American adults over 18 and just 78% reach for millennials versus radio's 92% reach for millennials. Further, only about half of the people ages 18 to 24 now watch broadcast TV in Prime Time. And at 93% reach of broadcast radio is even higher than smartphone's reach of 77% of Americans 18 and over. Importantly, smartphones also help us extend our reach through iHeartRadio and our station's websites. In fact we reach over a quarter billion listeners every month and are one of only a few media players in the U.S. with a reach over 200 million people per month along with Facebook and Google. This extraordinary reach gives us the ability to create dynamic new platforms like digital, social and live events. Not only has broadcast radio maintained its impressive reach for nearly 50 years, but recent Nielsen data shows that broadcast radio's time spent listening was up in the first quarter over the previous year. Let me repeat that. Broadcast radio's time spent listening was up in 2016's first quarter year-over-year and the continuing trend among consumers is to spend more and more time out of home, which we believe strongly benefits both our radio and outdoor businesses. A new joint analysis re-released earlier this year with Media best spark indicates that audio and out of home advertising will have the strongest opportunity to influence consumer purchasing decisions shortly before they happen when compared to print, TV, digital video, search and social media. And we know that audio has nearly three times the impact of digital video and two times the impact of TV across all stages of the purchase journey. All of this underscores the valuable scale and depth of the reach that radio announcement provides marketers. And we're focused on monetizing these promising opportunities as the media entertaining company with the largest reach of any broadcast radio or TV outlet in America. We believe it is critical to do business with advertisers in the same way that the digital advertising does today. Our goal is provide marketers with a frictionless programmatic solution that looks and feels like buying digital advertising to them and integrates seamlessly into their planning and buying systems. But we give them the enormous reach of broadcast radio and iHeartMedia, truly the best of both worlds. In April, we started offering automated and data infused ad buying for the first time to our advertisers across our broadcast radio stations. And further advancing our goal, in the past quarter we have expanded this capability with the launch of the first programmatic private marketplace in digital radio in the United States. This marketplace allows select agencies and brands to access iHeartRadio's premium inventory using a combination of first and third party data segments to target their audiences among iHeartRadio's millions of dedicated listeners. That's because we're able to use data from the 88 million registered iHeartRadio listeners and extrapolate over the quarter billion listeners we reach each month. With audio's already significant and growing role in the lives of today's consumer, this new marketplace reflects our commitment to evolving and increasing the ways that marketers can reach and influence their target audiences,. At the same time we continue the scope and quality of content we provide to our listeners. Just this week we asked to renewal and extension to our partnership with Rush Limbaugh. Rush is the most listened to national radio talk show host in America. Our long term, multi-platform agreement reflects the Rush Limbaugh show's status as the top rated program in Premiere Network's industry-leading talk line up of national syndicated properties. Rush continues to deliver impressive results for affiliates and a wide range of advertisers by providing unmatched connections to millions of loyal fans. We're proud to continue our partnership with Rush and look forward to sharing many more years of success. This quarter we added two other new collaborations that are also great examples of our commitment to quality content. We're partnering with NBC News to enable iHeartMedia's 24/7 news network, the world's largest radio only news source, to provide its 1,000 affiliated radio stations and iHeartMedia's more than 850 broadcast stations with hourly newscast and access to other NBC News broadcast copy. In addition, iHeartRadio will feature NBC News radio that will carry the same national and international news content as well as prime time specials, political events and breaking news reports. And we're excited about our recent partnership with WeWork to create a new live station on iHeartRadio called Work Radio that features an original mix of music and exclusive content centered on entrepreneurship and creating your life's work. Work radio is now streaming across all of WeWork's locations and will also be available through the iHeartRadio app and website. At both Americas and International outdoor, we've streamlined the business to focus on our core markets and strategies. We're also making investments in innovative digital technologies and winning new contracts for prime display locations that provide the flexible and creative solutions our marketing partners need to reach consumers. Americas outdoor's results this quarter benefited from its new leaner operational structure. And our launch of one of the largest out of home media installations available in the Los Angeles area and a major airport contract win in Minneapolis-St. Paul will help contribute to future revenues. International outdoor's overall revenue increased, but we are facing challenges in certain markets that are affecting results such as the loss of the London bus shelter contract. That said we are optimistic about the continued success of Adshel Live and our other initiatives in the U.K. And we're making substantial inroads in Spain with the win of new contracts in Madrid and Barcelona, which start in the second half of this year. Of course, identifying critical consumer trends and launching strategic growth initiatives is one thing. Making sure that our potential marketing partners know about them is just as vital. Earlier this summer, both iHeartMedia and Clear Channel Outdoor participated in the prestigious Cannes Lions International Festival of Creativity. At the week-long festival, we showcased our portfolio of products, media platforms, content, creativity, technological innovation and personalities to the world's biggest global brands and agencies in advertising, creative and media. For the third year in a row, iHeartMedia served as the festival's official radio sponsor while Clear Channel International was the official sponsor of the Outdoor Lions Awards for the seventh consecutive year and took home four Bronze Lions. We're excited about the future of all of our businesses. With consumer trends running our way as we continue to drive our growth. Our core strategies are crafted to maximize the power of sound, the power of outdoor, the power of social, the power of data, the power of mobile and the power of our national and local brands, as well as our industry-leading personalities. Now let's turn to slide four and we'll do our key financials. This quarter we have included operating income in our discussion on a consolidated and segment basis in addition to OIBDAN. As part of our GAAP results discussions, I will also talk about our results adjusting for FX and excluding the impact of the nine non-strategic Americas outdoor markets that we sold in January to improve comparability of this year's quarterly results to the prior years. I will refer to these results as adjusted. Additionally in this discussion I will refer to direct, operating and SG&A expenses as expenses. Consolidated revenues increased 1.2% in the second quarter driven primarily by growth at iHeartMedia. Adjusted revenues were up 3.3%, with iHeartMedia up 3.2%, Americas outdoor up 4.6% and International outdoor up 2.2%. Operating income was down $159 million due to the $99 million gain recognized in the second quarter of 2015 related to our sale of the radio towers and the $57 million loss recognized in the second quarter of 2016 upon the sale of the company's Outdoor business in Turkey. This loss on sale included a $32 million cumulative foreign exchange adjustment. Adjusted OIBDAN grew 3% to $484 million. This performance highlights our financial and operating discipline and provides us with the flexibility necessary to continue to manage our capital structure in a prudent manner and allows us to keep – evaluate opportunities to strengthen our balance sheet and businesses. I will provide additional detail on these results as we discuss each segment's financial performance later in this presentation. Now let's review our key non-financial highlights. Moving to slide five. In iHeartMedia we continued to focus on being everywhere our listeners want us to be with the products and services that they expect. With over 25 million monthly listeners in the U.S., and over 85 million social followers, iHeartMedia has the largest reach of any radio or television outlet in America, serving over 150 markets through 858 owned radio stations. And through the success of our multiple platforms, based on the power of our broadcast radio assets, we have been able to increase iHeartRadio's registered users 23% year-over-year to reach 88 million as of June 30, 2016. We hit that milestone faster than any other digital radio or music service. Our total listening hours continue to grow up 16% in the quarter with mobile listening accounting for 73% of total digital listening. And our downloads and uploads exceeded 1 billion at quarter's end. To build on the success of our digital radio platform and because we know how the advertising industry is doing business these days, we are now as I mentioned earlier, offering digital radio's first programmatic private marketplace. Live events continue to be an important part of our sales strategy as they enable us to offer a number of unique marketing solutions to advertisers and agencies while strengthening consumer relationships. They also provide great promotion and brand building opportunities for our stations as well as additional promotional opportunities and exposure to the artists we work with so closely. In addition to being a significant differentiator in sales, branding and promotions, events are an important revenue driver for us also. This quarter included the iHeartRadio Music Awards, the iHeart Country Festival, and the iHeartRadio Summer Pool Party. During our first quarter earnings call I spoke about the iHeartRadio Music Awards which took place on April 3. As I mentioned, it was broadcast to millions with a live TV multicast as well as a live simulcast on iHeartMedia's broadcast stations and iHeartRadio's digital and mobile platforms generating 115 billion social media impressions. To put that in perspective, the 2016 Oscars generated 46 billion social impressions and the 2016 Grammys generated 33 billion social media impressions. The third annual iHeart Country Festival hosted Country music's biggest superstars on April 30 and was streamed live on iHeartRadio.com, Watch AT&T, and on iHeartMedia Country radio stations aired on the AT&T audience network on May 13 through Direct TV and U-verse and became a dominant social media topic throughout the festival weekend. The 2016 iHeartRadio Summer Pool Party took place on May 21 at the Fontainebleau in Miami Beach and was streamed live on, cwtv.com, and iHeartMedia mainstream contemporary hit radio, rhythmic contemporary hit radio and hot AC stations nationwide. #iheartpoolparty trended number one on Twitter and on June 1, the show aired on the CW network for the fourth consecutive year. Turning to outdoor on slide six. At both Americas and International outdoor we've focused on offering the creative marketing solutions and flexibility that our advertising partners want in order to reach consumers who are increasingly spending more time out of home. In the Los Angeles area, we are launching a series of seven new wallscapes and four-wall vertical bolt-ons as the much anticipated Sunset Millennium property, located in the heart of the sunset strip in West Hollywood. The bolt-ons are from 60 to almost 90 feet high and 20 feet wide and the wallscapes are even larger. And those listeners in the New York metropolitan area may have noticed the presence of iHeartRadio's nationally recognized logo on one of the city's most iconic billboards on top the Ruppert Ice House, overlooking the Triborough/RFK Bridge leading to Manhattan. The new billboard is over 8,000 square feet, the size of 12 roadside billboards, and is visible for miles. The billboard will display a digital LED screen that promotes iHeartMedia's iconic New York city-based radio stations as well as upcoming events. In addition, we signed a new ten-year partnership to install and manage state of the art digital assets and terminal wide digital networks in the Minneapolis-St. Paul International Airport. At International outdoor we have added 528 new digital displays in the quarter and due to the success of Clear Channel's U.K. ad show live network, we plan to extend that network of state of the art digital springs. Our team in Spain turned in a very successful start to the year. They were rewarded a multiyear contract to manage Madrid's street furniture. The street furniture will incorporate 1,610 advertising panels into the urban environment, 300 of which will be the most innovative non-discreet furniture digital displays in the world now making us a major player in Madrid. And the team also recently won contracts to manage Barcelona's outdoor street furniture advertising, increasing our presence in the Barcelona area. Now let's review our segment financials starting with iHeartMedia on slide seven. As you can see, iHeartMedia has extended its growth momentum with revenues of 3.2% and excluding political of 3%. Our results this quarter reflect our growing audiences and progress across broadcast radio and digital. During the quarter, we stayed to three tent-pole events I covered earlier. As you may remember, the iHeartRadio music awards was included in the first quarter of 2015 results and so a small portion of our revenue increase in this quarter is due to timing. Traffic and weather continues to be a valuable marketing solution for advertisers as they appreciate the value of advertising during our traffic and weather reports. And as I mentioned earlier, our 24/7 news network with be collaborating with NBC news to bring new content to its affiliated radio stations, iHeartMedia's broadcast stations and iHeartRadio. The advertising categories strongest year-over-year dollar growth in the quarter included medical and healthcare, food and beverage and restaurants and entertainment. And once again, we outperformed the radio sector as measured by Miller Kaplan. Expenses were up 2.8%. Related primarily to variable compensation, investments in our sales capabilities, higher content and programming costs related to higher revenues and increase in spending for strategic revenue and efficiency costs. Operating income was up 3.6% and OIBDAN was up 4%. Now let's review our third quarter pacings. These pacings are just a snapshot in time and certainly don't include everything we do as a company. iHeartMedia third quarter pacings through the end of last week are up 1.7% and, just as a reminder, historically the majority of political advertising revenues will be in the fourth quarter. As we look at this quarter and the rest of the year, we are in the same advertising marketplace right now as many other ad-based companies that you've been hearing from. We have the same questions as to how a number of factors will affect the marketplace

[Operator:]

Thank you. [Operator Instructions] Our first question is from the line of Avi Steiner. Please go ahead.

[Avi Steiner:]

Thank you for taking my questions. First one, hopefully an easy one, I assume based on some commentary in Q2 there was legal expenses in the second quarter in corporate but if you could tell us what those were so it gives us a sense of maybe what those one-time costs were?

[Richard Bressler:]

Hey Avi, it's Rich. Good morning. So we don't break out the legal expenses by number so you could assume that everybody's aware that we've had some litigation activity in the second quarter. And some of that litigation activity currently and that's where we might result in an increase in expenses.

[Avi Steiner:]

Okay. Thank you. The 10% no balance, if our math is right, is now $347 million. Does this give you comfort with respect to, perhaps how the auditors may look at your financial position in the coming year end file?

[Richard Bressler:]

Well certainly I feel better. I mean 347 million reasons why we should feel better. There's still several hundred million outstanding and we'll continue to work to address that but I think we've made a significant step in repurchasing more than half of the remaining balance of the 2018 notes and reduced cash interest expense in doing so. So capturing some significant discount reduced cash interest expense, and we certainly feel better about where we stand today.

[Avi Steiner:]

That is helpful. And then, kind of as I model it nerd-wise here, you didn't generate free cash flow this quarter in what historically has been a lower interest, higher EBITDA quarter. So curious if there are liquidity sources we may not be thinking about that you can pull or some asset tells or something that otherwise may help in the back half as we think through the rest of the year?

[Brian Coleman:]

Well we're a big company. We have lots of assets and we continue to evaluate what is optimal for the company. We continue to invest in the company when appropriate and have assets that are worth more to somebody else than they are to us. We may divest those assets. So a big company, lots of operations. I would say that we continue to evaluate what we have and sure, there can be liquidity levers in the future, I think. Just look at what we've done in the past, and you've seen the company be pretty creative on optimizing this balance sheet.

[Avi Steiner:]

Okay. That's fair. I'm going to end it on this one, and thanks again for the time. I think Rich had mentioned debt repurchases being a component of your strategic plan to strengthen cap structure. You obviously bought in those tens. But curious if your view of what you wanted to accomplish maybe last year with the capital structure has changed given the higher prices we're looking at on some of the junior debt securities today.

[Brian Coleman:]

Well I think there's a couple components to rightsizing the capital structure and Rich would certainly want me to say first and foremost, the focus is on operations and continuing to grow EBITDA. I don't make any money for the company, but I can work on the capital structure side. I do think there are opportunities to capture discount, to reduce cash interest expense. But you can read our trading levels today versus where they were in Q1 and know as well as I do that prices have gone up and thus the opportunities are less. But that doesn't mean there aren't opportunities. We may just have to think about them a little bit differently, be a little choosier about what we select to do, be a little more patient. We continue to have constructive dialogue with investors that are willing to have constructive dialogue. That led to an opportunity post-Q2 that we've talked about and we'll continue to have those discussions and to pool our excess liquidity in the best way that we view possible.

[Richard Bressler:]

Hey, Avi. It's Rich. And just the one thing I'd say in summary too, I think kind of wraps up a bunch of your questions. We are and I think it's evidenced by the results, we will continue – as Brian alluded to, continuing to focus, driving the operations of the company in the environment that we operate in. Continue to out-perform the marketplace. And at the same time we're looking to optimize the capital structure. And I think if you go back I noted up front it's my third year today, probably almost to the day anniversary here. And if you look at the optimization and the capital structure, You pointed out a couple recently, but if we go back a number of years what the sale was. The Sirius outdoor stock or back to the Australian New Zealand JV that we had a regular interest in that I think we did a good job of monetizing till recently, selling the non-strategic assets for the outdoor company, the nine markets. We've been a great provider, great [indiscernible]. So you can rest assured that's just a daily, the thing we do every day. We drive operations and we look to optimize the balance on a daily basis.

[Avi Steiner:]

Thank you very much for the time and the answers.

[Richard Bressler:]

Thanks, Avi.

[Operator:]

Our next question is from the line of Jason Kim. Please go ahead.

[Jason Kim:]

Hey, Good morning, guys. Thank you for taking my questions. First on the political revenue side, I know it's still early in the year, but just wanted to get your updated thoughts about the outlook for 2016. What are you seeing? What are you hearing out there in terms of your political revenues outlook as we get closer to November?

[Richard Bressler:]

Well look. It's early in the political cycle, as we all know. I don't know anything more than we all read, including what we all read and heard this morning in the papers. I think the only thing we do know it's been not only exciting but pretty unpredictable election cycle. In terms of what we can control, and just also as a reminder, the bulk of our political revenue, as we've always said all year, is going to come in Q4 this year. We're very confident in our D.C.-based political sales team. We talked about this a couple times the last few quarters. We had a political media veteran Kenny Day, and he and his team are just doing an outstanding job. And we have pretty high expectations. And they've achieved about [indiscernible] a number of expectations. They've done a great job in leveraging broader and mobilizing our local sellers who assist in the campaigns, not just the national campaigns. But also the local campaigns and targeting the specific demos that we need to reach. And I can say here with confidence that we think we're well-positioned to maximize our share of political ad spending. Clearly it's been a little bit slower. As you know, getting questioned in the last presidential election year and even in the first quarter was pretty normal for spending to slow down. At least what we've seen over time before conventions. And as I've seen historically, the majority of the spending occurs in the fourth quarter. So we continue to be optimistic based on the selling machine that we built led by [indiscernible].

[Jason Kim:]

Thanks for that. And when we look at your CCO Americas segment margins, has there been a lot of changes in the revenue composition that would put your core margin profile than they were pre-recession? So, your segment margins in the CCO Americas side were as high as mid-40% before the downturn. Now they are more in the high-30% range. Is that just a function of lower revenues from peak levels or has there been any changes to the composition of revenues? Just wanted to get a sense of what the kind of medium to long term margin profile for CCOA going forward.

[Richard Bressler:]

Sure. It's a couple different things. First and foremost, we've talked about this before, with Scott Wells, Bob McCuin, the rest of the outdoor team and I think six, nine months ago when we made – or a year ago when we made changes to [indiscernible] decided to bring in new members of them, we talked about that we'd start to see improvement and I think if you look at the numbers today, delivering on an apples-to-apples basis x-FX revenue growth in Americas outdoor U.S. of 4.6%, OIBDAN growth of 5.6%, we feel good about that. And so that's also why I mentioned we have the continuing challenge working with the outdoor America team on streamlining this organization. And like I said, I think they've done an outstanding job in the last six months and you see it starting to manifest itself in the numbers. You add to that, so that's from an operating standpoint, there has been some change in mix. Remember that we lost – we still are down on the L.A. digital boards. So although we've got 50 digital boards around the L.A. market and we've been able to convert about 80 digital boards back to print temporarily. So, we're trying again to get the best out of that asset mix that we can right now, but we're still down in digital boards and we're not up to where we need to be. By the way, I will mention this as an aside, we have a great new offering, which I pointed out in the earnings conversation. We have revenue building wallscapes both in the untapped Millennium and Premier real estate projects in West Hollywood. So, we feel great about that. And we also, by the way, last piece, is we have some more transit contracts than we've had in the past, which operate at slightly lower margins. So, long winded answer because it's a mixed bag, but I think we should feel good about the team and the direction of the business.

[Jason Kim:]

Got it. And then just one question for Brian on the balance sheet. Given the just lower amount of that outstanding, or coming due in 2018 now, what's your current thought process regarding taking vantages, liability, management transactions other than your view dated maturities?

[Brian Coleman:]

Yeah, good question. I've always kind of had a position that you don't want to create a liquidity problem when you otherwise didn't have one and so having some of the 2018 stack taken out certainly is helpful. But we still need to focus on liquidity first and make sure that we're comfortable with respect to the investments we want to make and making sure our operations flow smoothly between now and our vet maturities, and making sure that we can adequately address our 2016 and 2018 vet maturities. So, you know, again, we want to keep an open mind and look at all opportunities. We feel a little better about 2018. There's still some maturities and of course we've got the 2016 maturities as well. Both we think are manageable. But we want to make sure that we don't create that liquidity again. So kind of a non-answer, but it's a balance that we look at. Marginally, I think we feel better about 2018 and perhaps that opens up some opportunities but we never want to forego the security that we feel in our liquidity position.

[Jason Kim:]

Thank you.

[Operator:]

Okay. Our next question is from the line of Lance Vitanza. Please go ahead.

[Lance Vitanza:]

Hi, guys. A couple questions from me. The first on core trends. I found your comments around the outlook just a little bit ambiguous in that you referred to other broadcasters. From my perspective, most broadcasters seem to feel pretty good about where things stand. So are you saying that despite limited visibility you feel good about where the company is headed in the back half of the year? That would seem to fit with the rest of the commentary but when you got to the pacings it just was a little bit hazy to me.

[Richard Bressler:]

Well I think, Lance, two separate things. Right? As I always point out, and I'm sure you guys are tired of hearing me say this, but pacings are just a snapshot in any given point in time and my only point on bringing up rate pricing advertising is, I think, we're all seeing in the media industries that I followed and obviously talked with everybody else in the media industry about the earnings we do see as well as the ones that just came out as early as this morning. I think it's two things. One is we're all seeing later placing media, which I think goes to the point of our pacings, just a given point in time. And then I think the other piece out there is just about the general comment, you know there's lots of factors affecting it. So I don't think what I'm saying, and quite frankly I'm sure what I'm saying is no different than you're hearing from the rest of the media industry that's out there. You know, we're all dealing with the election and the uncertainty around that. We're all dealing with the Olympics and the uncertainty around that. We're all looking at what's happening with GDP growth. You know, again, we're looking at both Europe and what happened outside of the United States because of CCI. So I think the only point you're hearing me say is that there's lots of moving pieces here when you think about the future. Some of them are in our control and some of them are out of our control. But one thing that I pointed out in my opening remarks, we are laser focused on driving the revenue in this environment and in any environment we operate in. Laser focused in managing our core space to maximize the revenue and bring the most down to EBITDA over the down line because there's no confusion here as we're here to drive the operating sides of the company and we continue to like our position. We continue to like our assets. I noted that we outperformed the industry again in terms of when you look at Miller Kaplan. And in terms of the relevance of the medium, just the lesson I'd take is you brought up comparing us to other media companies. I think if you look at our operating performance over a given time and then as I noted in my opening remarks we stack them very, very well. The operating results of anybody else, in terms of looking at everybody's North American results. Our broadcast ratings are up on a year-over-year basis, which is great. Our digital ratings were up significantly, even over our broadcast ratings but broadcast ratings were up just to be clear. I think if you look at our T.V. ratings which are fundamentally – you know we continue to outperform on a ratings basis. And as a reminder we continue to reach 93% of U.S. adults. 92% of millennials from radio reach. While T.V. reach continues to be below its historic high of 95% and we're down to 88% of adults and down to 78% of millennials. So, kind of the bottom line is more adults and millennials are reached by iHeartRadio than any other medium. And the one thing that's interesting. It came out this morning, everybody on the phone, there's a piece that just came out today – you probably haven't seen it – in Media Post and the title of the article is, Millennials Love Radio. So I'd invite you all to go read that and if you need help getting it, I will make sure you get a copy of it. But I think it just really, in one page, points out the relevance and the strength of radio to the millennials age group.

[Lance Vitanza:]

That's a good segue. I wanted to ask you about that. Those are wonderful statistics about your reach and among millennials in particular. Clearly a disconnect between those numbers and the perceptions in the markets. When you go into pitch business though, are the ad buyers – are they surprised by these numbers? Do they push back on these numbers? Or is this widely understood at this point?

[Richard Bressler:]

Well, you know, first of all, I would take exception to when you say not understood in the marketplace. Let's just talk about in terms of the marketplace. One is, again, these are all – just to be clear – these are not like when other companies put out self-generated numbers, these are all Nielsen numbers that are out there. So the relevant to the medium to the consumer to the listener, getting our product to the listener wherever they are, which is what our job is, and to drive the ratings and drive the monetization of those ratings. I don't think there's any confusion from the consumer stand point in the marketplace out there as evidenced by the listening numbers. As evidenced by our ratings year-over-year. I don't think there's any misconception from the talent whether there our DJs in a job. Whether it's, you know, Elvis, or Ryan, or Big Boy or one of all of our guys. The relevance of our DJs, our special sauce. Your best friend next to you in the car, which is what we are. And the engagement of our audience, I don't think there's any confusion there. I think I pointed this out in my opening remarks. Take a look at the iHeartRadio Music Awards this year. We had 115 billion – 115 with a B – brilliant social impressions and to put that in context, the GRAMMYs had about 30 billion followers. The Academy Awards had about 40 billion. We had almost four times the GRAMMYs; three times the Academy Awards which again shows you how engaged our audience is with our stations and shows you how engaged people are with the medium. And then when you go to the advertising side – which is again, our bigger source of upside, is with all of our success we are still wildly under monetized, which I have said before. Nielsen says on average we're six to one ROI. So for every dollar in advertising gives us on average return on investment, just hard facts without everything else, on average we get six to one back and you can see by our results and our out performance, we are continuing to work through and work with advertisers and continuing to drive results out there. And the good news is we've got all the operating results to drive the advertising revenue and also we have a lot of upside here. Do I wish we were further along? Sure. But I think again if you look back, as I said, this is my three year anniversary. If you go back over time and you look at the digression on – and since Bob and I have been here learning this company, if you go with the rest of the outstanding management team that we have if you go back and look at operating results translating into revenue. Operating results translating into revenue you will continue to see steady progress.

[Lance Vitanza:]

And that's great. I appreciate the explanation. Just to be clear, I was talking about confusion in the capital markets not the other markets but in any case, I appreciate the clarification. One last question from me and I apologize if I missed this but, Brian, how did you finance the purchase of the tens? Did you use existing cash or did you wind up borrowing against or selling some of the Outdoor common stock at broader media? Thank you.

[Brian Coleman:]

We used cash.

[Lance Vitanza:]

Existing cash?

[Brian Coleman:]

That's correct.

[Lance Vitanza:]

Okay. And how much cash does that leave, sort of, in unrestricted subsidiaries? Do you have that number available?

[Brian Coleman:]

I don't think we disclosed what's in unrestricted subsidiaries. There's an imagination you can go through the balance sheets of the segment disclosure that we have that you can estimate what non Eurenpor cash and back out outdoor and that gives you non Eurenpor non-outdoor cash. And that's a proxy that people use for the cash and the unrestricted subs and it's not a bad way to estimate what cash is unrestricted subs but we don't disclose assets, or update assets, in our unrestricted subsidiary.

[Lance Vitanza:]

Thank you.

[Operator:]

Our next question is from the line of Marci Ryvicker. Please go ahead.

[Unidentified Analyst:]

Good morning. It's Stefan for Marci. I'd like to dig into the pacings a little bit for at Outdoor. It sounds like America is decelerating. Are there any comparability items here?

[Richard Bressler:]

No. I mean, again, I'm going to say what I've said in opening remarks and I'm going to say what I just said answering the question before. Pacings are a snapshot in the period time. They don't include everything we do as a company. The [indiscernible] thinking has been adjusted for the sale of the non-strategic assets that are out there and again there's an overarching comment. There's more advertising being placed in month, in quarter, closer to the time that the advertising is shown.

[Unidentified Analyst:]

Okay. And then on the international pacings. Did those include the new Spain contracts for the street furniture?

[Richard Bressler:]

Yeah. I mean there's nothing – those are brand new so they're not significant at this point in time.

[Unidentified Analyst:]

Okay. And then is there any way for digital to be broken up for Outdoors, America or at iHeart with percentage of revenues?

[Richard Bressler:]

We don't break it out. We break out of the number digital board which we've mentioned but we don't break out with – we don't look at our business that way. We're selling results to advertisers and that's what advertisers are focused on. So we don't break out separately the digits result in any of the segments of our company.

[Unidentified Analyst:]

Great. Thank you.

[Operator:]

And the next question is from the line of Aaron Watts. Please go ahead.

[Aaron Watts:]

Everyone thanks for taking the questions, just one for Brian, one for Rich. Brian, quickly, what is the plan for the bonds you've repurchased? Will they remain at the unrestricted sub, and then also, will they be cancelled or retired or remain outstanding?

[Brian Coleman:]

We have not cancelled those bonds, but obviously reserve the right to do so going forward. But obviously once you do that you can't undo it, so I don't know that there's been a long term determination on what to do with the bonds but currently they remain outstanding at the unrestricted sub.

[Aaron Watts:]

Okay. And then, Rich, just one for you. The 16% gains in iHeartRadio certainly seems like a positive data point. I'm just curious about your monetization efforts around that increased listening on that platform? And then, maybe you could talk about the ad load on iHeartRadio as well?

[Richard Bressler:]

Well, I'm not sure what the question is on the ad load. We achieved, I think, and thank you for saying that, about the 16% gains we achieved. Also noted the highlight that we had 8 million iHeartRadio registered users as of June, the end of June, which is 23% growth on a year over year basis, and we've had over a billion downloads and uploads of our product, so we feel great about that. Again, you know, on the monetization front, as I've said, I think we continue to do a good job on the monetization front in terms of monetizing our listening. At the same time our greatest opportunity is we are wildly under monetized based on the effectiveness of the medium, which I went through a little bit before I think, in response to Lance's general question.

[Aaron Watts:]

Okay, great, thank you.

[Operator:]

We have no further questions in the queue at this time.

[Eileen McLaughlin:]

Operator, thank you very much. Thank you, everyone, for joining and we appreciate all your questions and if you have any follow up questions, please give me a call or call Brian. Thank you.

[Operator:]

Thank you. Ladies and gentlemen, that does complete your conference. We do thank you for joining while using AT&T Executive Teleconference. You may now disconnect. Have a good day.