Good morning. Welcome to iHeartMedia, Bob Pittman and Rich Bressler. Thrilled to have you guys back. Let's just kind of dig in. You know, even if this recession that we've all been hearing about and everyone's been forecasting does not materialize, advertising has been in a recession for at least the past year, if not a little bit longer. How do you define what you're seeing in the current environment? Are you seeing any signs of a turnaround?
Well, I think we called, if you look in the last earnings call, we said we do think it's getting sequentially better through the year. I think most people who've, you know, called the recovery are, you know, you look at the percentage chances of a recession have suddenly been going down instead of up. We see that same, I think we said in the Q3 call or the Q2 call, we see the same thing going on now. So we do think it's getting better, and I think for us, in the media business, Q4 is always the biggest quarter of the year. It's everybody's biggest sales quarter for most companies. And so I think if people were sitting on the sidelines, this is the quarter which we expect to spend.
So, you know, sort of double benefit of recovery progressing and we see the impact of Q4. And I'll also contrast this to the 2020 downturn in advertising, which was sharp, precipitous, deep, that this has just been sort of a down, but sort of been, you know, at a much lower level than you normally see in these. I think it's just been dragging on. And I think everybody's, certainly us, are ready for it to come on back. And we said, "Look, we think next year gets back to a growth year." So, you know, when you sort of project when it comes out, that's it.
You know, and it's interesting, you just, one thing I might just add, you haven't fully seen it clearly in the numbers, and I don't think any of us can disagree with that. But the tone, it'll be interesting, Jess, what you hear at your conference. But the tone of what we're hearing is clearly much more optimistic in terms of conversations, whether they're ad agency holding companies or CMOs or CEOs of advertisers. There's definitely a tone of optimism about spending going to Q4, but particularly for 2024.
And I think, you know, one more point which, you know, we should make is that I think people, also advertisers, are usually lead the economy. So as soon as they get a little nervous, they're pulling back advertising because it's probably the easiest and quickest way for a company to say, "Look, we until we find out what's going on, let's pull some back." And we saw last year, as this sort of began, that first two months of the quarter wouldn't be nearly as good as the third quarter, meaning they were holding the first couple of months, "Okay, it's not so bad. Put some money in." And, you know, it sort of peaked, and it's been going the other direction.
And how much visibility do you actually have at this point? How does it compare to normal? Like, is it better or worse than it usually is?
Usual what?
Well, the visibility, like, how much... You know, do you-
I think-
Is it a couple of weeks out or?
I think in any time of change, you don't have nearly the visibility you do in stable times.
Right.
So, you can't compare this year to next year directly because of different behavior. We have less visibility than people who do a one-year contract.
Right.
But again, you know, all the signals we're seeing and all the words we're hearing give us comfort.
Well, one of the things I give you guys a lot of credit for is creating, like, new revenue streams and as well as advertising categories. Like, just the way you, like, you can't see a movie on radio, but the way you, your, whatever you call them today, VJs, DJ, like, whatever your announcer-
On-air personalities.
Your personalities-
Yes.
Talk about the movies, you've just been really creative, and I'm just wondering, you know, are there any new areas that you can tap into?
We've put our feelers out in lots of areas. We have this incredible asset called broadcast radio, which is a... We grow in two ways on broadcast radio. One is we sell it to advertisers. The other thing is we use it ourselves to build new products.
Right.
I mean, how did we become the number one podcast publisher, bigger than number two and three combined? Broadcast radio. How do we make those hit podcasts, podcast after podcast? Because we advertise them on the radio. About 150 gross rating points on a new podcast. If it's gonna be a hit, it'll pop. And so, for us, it's, you know, whether it's metaverse or it's, was podcasting. Podcasting was like, we didn't know it was gonna be big. We were just sort of playing with it and put a little bit out there and, and see what grows. So, we're always doing that, and I think that's, you know, the way you find stuff. And if I knew what it was, we'd double down right now. I don't, but I'm certain that there are new things coming.
I mean, we built events. We built the number one digital radio app. We built the podcasting and, you know, lots of other, probably influencer revenue. I mean, influencers now, I saw something today, is $25 billion of influencer revenue.
Radio.
And probably the biggest influencers actually are those on-air personalities. When Charlamagne Tha God talks about something, or Elvis Duran or Ryan Seacrest, people go, "Well, yeah, that means something.
Right.
But you know, one thing I might just add, I think we want to be a little bit careful. I mean, on one hand, if you look at, you know, our Digital Audio Group , we're going to do over $1 billion of revenue. You look at the numbers, and we've said that before, that was zero four or five years ago, in terms of your point, Jess, about creating new revenue streams. But at the same time, we are so under-monetized as a company relative to the opportunity, where I'm sure we'll talk about, you know, whether it's broadcast or if you just even look at the projections out there, what's going to happen to podcasting revenue in the United States. You know, forget about our numbers.
You know, four or five years from now, going from, you know, you know, $0.5 billion to $2 billion, wherever people are saying it is today, to a $5-$6 billion category. So, we have so much opportunity just on the products we've created. You know, yes, we're, I'm sure we'll create a new product based on consumer habit, but we don't need to create new products to have, you know, to be a tremendous growth company.
Right.
This is the only company I've been at where you don't have to create a new product to get your growth. We just have to monetize the products we already have better. And we know of all the studies, whether it's Dentsu or whether it's just the difference in CPMs, that we're so under-monetized compared to television, for example. If we get halfway there, it's a huge win.
But there is a concern, and it's not, it's not just for radio, it's also for linear television, that what's been lost in advertising won't come back when the market recovers as new digital platforms gain share. Like, what's your response to that? And do you think that your other digital businesses will be able to partially recoup these secular shifts, or do you see a potential recovery, sustainable growth in broadcasting?
Can we break that apart?
Yeah, sure. A lot of questions in there, yeah.
Can I go, can I go back in history a little bit, too?
Yeah.
I don't think we're suffering like linear TV at all. I think the reason it's not gonna come back for linear TV is the audience left. I think the reason it's going to digital is not because people love digital, but that's where the audience went.
Yeah, yeah.
And if you look at what happened in TV, 'cause I really do wanna get out of being in that category, I was there when we invented those 24-hour cable channels. The reason we invented them is they were a poor man's on-demand, that we understood the consumer didn't like to get news at a certain time and cartoons on Saturday morning and music on Friday night. And so we gave them these 24-hour channels so they can pick and choose. "I want some news at three o'clock," go to the 24-hour news channel. "I want some music," go to the 24-hour music channel.
Right.
As soon as you had the ability to actually serve somebody the programs they want on demand, you knew these networks were doomed, because that's not the way the consumer wanted that product. And what's happening today is it's just playing out the way the consumer wants it. The consumer always gets what he wants, no matter what it is, eventually. Even if it's illegal, I mean, there'll be bootleggers and people smuggling cigarettes or whatever. The consumer gets what they want, and they're getting it in TV, and it's hurting linear TV. And radio is a different experience. What we're doing is we're keeping people company. Our mission statement is to give everybody in America a friend, anytime, anywhere. That need hasn't changed. As a matter of fact, I would argue it's gotten greater.
People feel a little isolated, they love hanging out with that person on the radio. So I don't see any change in the consumer, which would cause me to say, "Okay, that consumer's gonna go away." And if you look at our reach, you know, we reach 90% with our broadcast radio assets, 90% of America. I think the biggest TV network's about 38%?
Mm-hmm.
The biggest cable network's probably less than 20%. So we got the thing that advertisers need, which is people, and we don't have the problem television does.
Okay.
Yeah.
Just building on that, like, with respect to radio, can you maybe talk about some of the specific ad tech features that you plan to implement to better monetize your radio?
Yes. I think you've hit the nail on the head. The issue with radio is we got way out of whack with how advertisers wanna buy media. And they don't wanna buy a bunch of spots. They don't wanna buy it the way they did 20 years ago. They are looking for audiences, they're looking for targetability to those audiences, they're looking for attribution. They wanna trade, a number of them, wanna buy and sell on an automated platform, and so we put those pieces together. We bought Triton a few years ago, so the final piece of putting the ad tech together. And we are in progress now of working with the advertisers to get into their unified buying systems.
The idea that they're gonna have silos, they're gonna buy some TV, go buy some radio, is an old concept that soon they're gonna be, "What's the most efficient way to spend my money to maximize the dollars I have in advertising?" So they're gonna have algorithms and computers looking at that to make the decision. That will be beneficial to us. Today, 31% of the usage, daily media usage, is audio. It's 9% of advertising dollars. As long as a human being is making that decision, what human being's gonna say, "I'm gonna take it from 9% to 15%"? People go, "Why, you can't change it that much." When an algorithm makes the decision, no one's gonna be looking at that.
Mm.
It's gonna spit something out. We know the algorithm's gonna take into account how much is the usage? Dentsu just did a study about, okay, how much is the attention? 'Cause maybe you could argue, well, people aren't paying attention to radio as much as they are TV. Turns out it's more attention to a radio and audio, broadcast radio ad and audio than they are to their video, their hot, new, highly valued, video on demand and, and OTT. So the inputs that the algorithm is gonna have, we know are very, very positive for us. So we know the quicker the industry moves to algorithms making decisions, the better it's gonna be for broadcast radio-
Right
Because it's just so undervalued. I mean, 20 years ago, 25 years ago, radio and TV were about the same CPM. When I took this job about a decade ago, TV was twice as expensive. Today, it's four times as expensive, because as the audience has declined, they've held their rate much better than you would have expected. Therefore, do the math, as the CPM goes up. Radio's had no degradation of audience, so we've not had the opportunity to boost the CPM like that.
You know, and, and the one thing I might just add, Jess, is, you know, we talk about, and Bob alluded to, like, our audio tech stack, and people say, "Yeah, yeah, I know you have that, I know you have the audio tech stack." But, I'm not sure there's a real appreciation, and I think the ad industry, but particularly the holding companies, is just getting that appreciation about the ability to plan a campaign, monitor a campaign, report out on a campaign automatically, exactly like the big digital players can do. But we're not doing one-to-one, we're doing one to and for many, we're doing one to cohorts, and we've built about 800 cohorts so far. And, you know, I would say there, there's nobody else out there in all of broadcast, not just audio broadcast, that has that capability.
We've also said publicly, we are moving towards, we don't have today...
Mm-hmm.
But will, in, you know, in the not-too-distant future, programmatic buying for broadcast out there, which nobody else is going to have today also. And if you speak to any of, you know, our mutual, you know, people we know that run the big holding companies, they will say, you know, from a broadcast standpoint, that ability to do programmatic, automated buying and selling, not to race to the bottom, but to race from an efficiency standpoint, is kind of the Holy Grail. And you'd hear that from all of our mutual friend CEOs.
By the way, the Dentsu study, and I know you looked at it, said the efficiency of radio was 10 times-
Yeah
What it is for television.
Amazing. So just a more general question on advertising, though. Can you just, you know, give us some color on, are there any categories that are performing better, that are performing worse? Are you seeing different trends from, you know, larger advertisers versus smaller? Any difference in the markets? Like, just some color on the overall market, because we're not getting, we really haven't heard much.
Yeah, it is, for us, you know, as we've talked about before, because we reach 90% of Americans, therefore, we've got a really diverse group of advertisers that come in. So, there's no single category that's more than 5% of our advertising, no single advertiser, more than 2%. And so that gives us, you know, a lot of stability in terms of the different sectors' performance. And, you know, I think we haven't seen anything different than you read in the press about who's doing well and who's not doing well. And we're sort of following along with the same thing. Insurance isn't great these days, and auto has actually done quite well.
Yeah, and pharmaceuticals.
Pharmaceuticals are very well.
Also.
It's been a growth category for radio.
Tremendous.
In your third quarter guidance, you forecast a mid-single-digit revenue decline, but it's actually low single digits if you take out political.
Right.
So, you know, kind of stable with second quarter trends. You know, what are the swing factors that would drive you either above or below that guidance range? You know, what is your current outlook, you know, contemplate in regard to the, just the overall macro environment?
Well-
For this-
You know, if we're sitting here and not going to make any different news, and we're sitting here, you know, in middle of September, and, you know, the other day I says, you know, we continue to feel, you know, comfortable with that overall guidance. I don't see anything in terms of the swing factors affecting it very much. I'll go back to what I said earlier. You know, you are kind of hearing, you know, again, a little bit more of an optimistic tone in the discussions, which, you know, hasn't materially affected any of our numbers out there or any way we're thinking about numbers. But again, you know, Bob touched upon this earlier.
As we look into 2024, which, as a reminder, is a presidential political year, and we can talk about that for a minute also, you know, we've said very publicly we expect to return to historical growth, and everybody can... We haven't put an absolute number out there, but if you kind of look at where, you know, in general, I think people have us targeted for EBITDA for this year, and then you think about historically, what election years have done. You know, our record year for the whole company in a presidential election year was $170 million of revenue in the last presidential election year.
To give a little bit of context, in the last non-presidential election year, in 2022, we did $130 million of revenue, and prior to that, the record had been about $100 million of revenue. So we have no reason to believe 2024 is not, it's, again, we haven't given guidance, but we have every reason to believe it'll be very strong. And just as a reminder, you know, the revenue to EBITDA conversion on presidential revenue, or I'm sorry, election revenue, is very strong, like our highest conversion of revenue to EBITDA. And it's also a neat category because we get the cash up front. It's the only category that we get the cash up front.
So I think, however you triangulate it, you know, when you started out the conversation with Jess, and, and Bob commented on, in terms of, you know, the views about the economy, not just ours, but what we're hearing and what the CEOs of big banks are saying, coupled with the election year, you know, I think under any circumstance, it shapes up to be a very strong year for us.
Right. And then one thing that, which you've done a great job, and you way before we started with COVID, before this recession or potential recession, you've done a great job on cost, and you started cutting costs years ago.
Right.
You know, as you look out, you know, you've managed expenses well. Are there any other buckets or any other areas that you think you can tap into?
Well, look, you know me, and Bob and I, for a long period of time, you know, we are, and people say these words, but we really do wake up every day and constantly challenge each other, "What would this company look like if we built a cost base today from ground zero?" You know, from, you know, the bottom up. And again, that's not like Pollyannaish. I know it's not realistic, but it's a really good way to think about every dollar you spend. And, you know, we announced our $75 million program this year for 2024. By the way, on top of the couple hundred million dollars we announced a few years ago. We started implementing that program in the second quarter of this year.
But, you know, we are always looking in terms of how to make the company more efficient, how to bring more to the bottom line. You know, now everybody's talking about AI, you know, which on one hand, obviously, it's a great opportunity on that. You know, everybody's saying about the opportunity, whether it's on the efficiency side, or it's on, you know, the creative side also. Rest assured, we're looking heavily, you know, at both of those. But at the same time, what I would say, you know, we've been doing a pretty good job, and thank you for saying that, on the cost, about taking advantage of technology for years.
You know, we've been in terms of, you know, whether it's, you know, building out our radio stations, and the stations themselves, and how much we put in the cloud, and what a station looks like today versus, you know, how we monitor, you know, what we play, you know, on the air for people and what consumers are listening to. But, you know, now it's called... I smiled myself. Now it's called AI technology, but effectively it was AI two or three years ago. We would do it, we just didn't call it AI technology.
Well, I also want to add on the AI front, I think this is going to be a huge game changer in terms of cost and quality. I mean, I think back to doing business before the internet and before there was a computer.
Yeah.
And you go, "Wow, how could we get anything done?" I had, I had mail on my desk that was literally two feet high. It's put in separate-colored folders for what I needed to sign immediately. I mean, it was crazy the way we did business. We had a switchboard operator. We had a copy room manager, that if you needed something copied, you hand it to someone, and they would copy it. If I needed a computer run, I went to the computer center, and then a couple of days later, they give me back a run on that perforated computer paper. It is. And I think we're getting ready to have another sea change of that magnitude in terms of operating efficiencies in business. And I think that level of productivity is going to be very powerful.
For a company like ours, with a lot of sort of fixed cost infrastructure, we're going to be able to do a lot more with every dollar.
Right. So, your digital business, as you guys alluded to, has been stronger in recent years, driven by several factors, including podcasting. Now that that business is over $1 billion, you start facing the law of large numbers. Now, how do you think about a more normalized long-term growth rate for this part of the business?
Well, we, you know, look, we, we haven't given any guidance out. We still expect it to be a very strong, you know, growth rate. Just look at our, you know, the growth of our podcasting business, what we did, you know, last quarter, which I think we were, like, at 12% or 13% overall, you know, for a quarter. So, it's still, even with the law of large numbers, the growth is still extraordinary out there, and we expect to continue to have strong growth, and at the same time, we balanced it.
We've said to people in terms of bringing that to the bottom line, which probably is the most important, and after you generate the revenue growth, is to model the business out at about a 35% EBITDA margin, mid-30s EBITDA margin, and we feel very comfortable with that.
I also think when you look at digital is, I think podcasting is probably the fastest growing segment in digital today. Fortunately, we have that, and I think we are looking at how are we going to do in digital. I think we're going to do sort of as well as the digital marketplace does, and I think podcasting is going to be leading that.
Would you say it's sustainable double-digit? I mean, it kind of feels like that, but-
I think it sort of depends on the, on the macro and-
Uh-huh. And do you think that the advertising dollars, do you think of these advertising dollars as truly incremental, or is it just a share shift away from traditional?
For us, this isn't a share shift, because our broadcast radio is doing just fine. It's not, our audience isn't shifting from broadcast radio to digital. We're adding new listening opportunities, and I'll give you a perfect example, podcasting. In podcasting, two-thirds of the listening is done at home. In broadcast radio, two-thirds of listening is done out of home. I mean, those are businesses that neatly fit together. And so, we're able to take advantage of that. I think, you know, we've got nothing like a change of devices. We're now able to find some new listening opportunities. In the past, you might see people in the parking lot in a car like this. They've got the car, they won't get out, because the person on the air is talking about something, and they want to wait until it finishes, and then they rush to the office.
Today, that doesn't happen. When they get in the car, they put their headphones in, they click it on their phone, and they continue to listen. We just picked up new listening opportunity in that what was a dead zone. In the home, over the past 20 years, we've seen a degradation of the number of homes that have a clock radio. There was once upon a time that almost 100% of the homes had a clock radio. Today, I forget what the number is, like, a third of the homes have a clock radio. And we were fretting about that 10 years ago, going, "What are we going to do to get more clock radios in the home?" And then Alexa came along, and Alexa's the new clock radio. And guess what? The number one use on Alexa, AM/FM radio.
Number two its weather. So we again find some technological solutions that fill the hole, and there was nothing good about the pandemic, but we did get a benefit from it, which is that it caused consumers who stayed at home to find us and discover us on new devices, their smart TV, the Alexa, Echo, Roku, et cetera. And that it has long-lasting benefits.
You know, just one very quick thing. I don't have, we don't have it in front of me, but in our, actually, our investor deck that Bob and I talked to, when we do our earnings release, there's actually a slide in there which shows where the listening come from, and about 70%, in terms of podcasting, is actually coming from online video and social media.
In terms of the usage, what did they give up to find time for podcasting?
To your question, what are they giving up?
Yeah. So if it's coming from these other areas, how big do you think the dollars are that you know, like the-
For podcasting?
Well, you know, yeah, it's coming from areas that are pretty big, like-
Yeah. Well-
Thank you.
But, but by the way, if you look, you know, there's two things I've said about podcasting. You know, again, not our estimates, but you look at semester results come out from, you know, from like, you know, eMarketer, Deloitte, PwC, you know, you go out to 2025, 2026, the numbers are, you know, $5 billion, $4 billion, $6 billion. But they, I mean, they're enormous.
How does the market today? Is it $2 billion yet or not?
It's hard to tell.
Hard to get it, but probably in that zone.
It's in, yeah, it's in that zone out there. But, but if you think about it for a second, people say, "Well, how could that..." Just to be fair and give you some context, people say, "Oh, my God, how could the numbers go from whatever we think they are today to those growth rates?" But, but two things, you know, really kind of when you reflect on and say, okay, that can make sense. One is from a medium standpoint, and Jess, you know this as well as anybody, this is the most engaged medium, I would say, the three of us on stage, and we've all been involved in media companies for a long period of time, have ever seen, right? You know, 85% of people that start a podcast listen all the way through. And I just remind everybody that's here, you have all the capabilities.
You can fast-forward, stop, rewind. Somehow people think, well, the reason why that stat is so big is because you don't have the capabilities you have, like with a video, that you do, online video do today. Well, you do have that capabilities. And then the second piece is, you know, it's only the last couple of years that big advertisers have really come in to podcasting. I think, quite frankly, since we've made, you know, we've had such a big push in the podcasting, and that's important. The big advertisers out there, so the advertising dollars, you know, they bring the big dollars to the medium. The big dollars weren't at the medium. So that's why it's, that when you look at it, that's why it's plausible, you know, no, no, promises for that type of growth rate.
Well, I think it's also just the rule, and the three of us have been around for a while and looking at media grow, is advertising follows the consumer.
Right.
If the consumer is there, the advertisers will be there.
Right. So, you know, podcasting in the last couple of years, the past few years, you've seen some pretty, you know, visible, exclusive deals. You guys took a very different approach, and it looks like the market's stepping away from some of these deals. You see some big companies stepping away from exclusive, exclusivity. Does this create an opportunity for you going forward?
Well, I think for us, we had a discipline that there is no such thing as a good deal where we don't make money. I mean, not to say we won't make a mistake, but we're certainly not gonna do a deal that doesn't model out to be a good financial deal for us. And I will tell you, when people are paying these ridiculous amounts of money to people, in our view, we say, "I don't know how on earth that ever plays out for them." And we're looking at the same thing they're looking at, and we got bigger audiences than they do, and we've got an ability to drive more audience than they do using our broadcast radio to get attention for it, and it turned out they couldn't get a return.
So I think as things return to earth, it makes our, our deals easier to do. But even in spite of those, in that period of time, we still had, you know, the biggest players that wanted a big podcast, not necessarily a one-time payday, but they wanted something that was sustainable and wanted to build something, came with us, the NFL, the NBA, in addition to, you know, the big talent. And, I think at the end of the day, you can't do crazy, stupid deals to a degree that really affects the market that much in terms of taking things out of the marketplace. So I think it didn't hurt us in that regard, but I do think you're gonna see values getting much easier to do.
And by the way, you know, if we all go back and look at, just, you talked about new categories, you know, to me, this is just a natural evolution of what happens in a business category, in a new category, particularly a very hot category. You know, there's, you know, if you go back, always in business, there's, like, irrational bidders, people try and buy their way in, and then you realize it's a business. You gotta make money, you gotta generate free cash flow, and the marketplace, you know, it becomes more rational moving forward. I think the great news for us on podcasting, the position, you know, we have in podcasting, you know, we're, I think last month, we just, you know, we had 420 million downloads, according to Podtrac, which is effectively like Nielsen for podcasting.
We're, yeah, as a publisher, just to be clear, and that's, that's where all the money is, in publishing, and we're, we're larger than the next two publishers combined, and we have more uniques than anybody else, combined. And I think the growth, you know, people are about growth, I think the month-over-month growth was, like, 11% or something in terms of our downloads. So I think all the vectors point towards growth, and I think because the lead we have, not to take that for granted, but, you know, you don't often see someone with the position we have, in a growth industry, just not continue, you know, ever really get unseated from that lead position. Just doesn't happen where we are, based on where we are today.
So, Bob, you mentioned Triton, the Triton acquisition, and when you made that acquisition, you guys were very vocal about this being the final piece to putting your entire tech stack together. And you said it could take some time to see the benefits. So now we're two years later. Can you talk about some of the incremental opportunities that the acquisition provided for you? And do you think the real benefit from this will be finally realized, like, when the advertising market fully recovers?
I think it's time. I mean, anytime you have a new platform, it takes time. I can remember when we fought to get $1 billion of digital advertising in the internet era, and it seems sort of quaint today that anybody would worry whether you could get to $1 billion of digital advertising. I think that for Triton allowed us to really make our broadcast radio like digital. We're in the process of rolling that out. But I think if you look at the differential in performance in the last downturn of broadcast radio versus this downturn, it's night and day. I mean, one was down 50%, and one's down, you know, single digits. And I think that you have to say a big part of that is also SmartAudio and the capabilities which Triton is providing.
We have not yet seen the real impact of the programmatic. We've not seen the impact of real-time bidding programmatic. We are beginning to get some usage of the, "I can find an audience and now seamlessly serve it across all forms of audio, broadcast, streaming, and podcast." And by being able to do that for an advertiser, we can give them this incredible scale and ways to reach that audience in many new ways. So those are still rolling out, and I think the big win for us, obviously, is getting into the integrated buying systems, which is, I think, where every advertising agency is eventually going. They're all working on it. They call it different things, and they're working at different speeds.
But to us, that's what Triton unlocks for us, and that's the, you know, to the big win for us.
Right. So, is there, like, a timeframe that you think you can get, like, maximum? Like, is it another, you know, one, two, or three years before you really see the full benefit?
I think we're seeing it incrementally, just continue to see the improvement. I don't think it's a cliff. I think it's, you know, it's a building process, and I think we're underway.
Then I want to go back to something that you mentioned, you know, political next year, which obviously will be a good driver and hopefully a recovery as well. But, you know, with the 2024 presidential campaign, you know, just starting to kick into gear, what are your expectations compared to 2020? And, you know, we've just been talking about digital. How will you leverage your digital assets in the next campaign?
Well, if you look at, you know, from an expectation, I think I just touched upon earlier, we haven't given specific guidance, but everything we are seeing, that we expect it to be a very strong, you know, political year. By the way, not just, you know, I think it's the national campaign, I think it's the local races, you know, because we're just a reminder, you know, our 850+ radio stations in 150 markets out there, so our capabilities go up and down, even to the local races, and by the way, into the issues campaign. Just, you know, all we need to do is pick up the papers, and just you can kind of let your imagination go in terms of the issues out there.
And from a digital standpoint, I think I would just refer to everything that Bob and I have been talking about for the last 30, 35 minutes or so. We are a different company, and the capabilities we have are just different. I think, you know, we point to the $1 billion+ of digital revenue we have as a, as a manifestation and as a data point to share with everybody that that's proof positive we are a digital company. So, you know, Bob touched upon what happened we've had in the last recession in terms of the Multiplatform Group . And yes, you know, we're down to Multiplatform Group now, but on a percentage basis, making sequential progress and down a lot less than we've done in the last recession. And part of that is because we just have different ad tech.
We have different capabilities than we had before, and on digital, we have different capabilities. So, you know, that's one of the reasons we have the optimism for next year being a very strong year.
By the way, in the political, specifically, the political spend is even more interested in the data-
Yeah
That we have, and interested in being able to find that particular, very narrow, in most cases, audience they're looking for, and we now have those capabilities. Now, 10 years ago, we didn't have them. Probably five or six years ago, we didn't have them.
Right.
So, we're getting them better and better, so I think we're feeling good about this election with the political advertising, because not only can we reach this huge audience and reach them very efficiently, but we now can do the data mining that they're looking for and the targeting that they need, as well as Rich mentioned, you know, monitoring and attribution as well.
So last topic, but a couple of questions, is capital allocation. You, you've maintained your target leverage of 4x, you know, for the foreseeable future, but it would seem you need a real reacceleration in the business to be able to get there at any time soon. So, you know, can you help us think through the timeframe just to get there?
Sure. Look, I mean, you know, we haven't changed our goal. Again, just to back the reason we have a goal and the reason why we picked four-to-one is because that's what we've heard from our equity holders, from a risk profile, you know, despite the fact of our significant generation, you know, a free cash flow, you know, and that hasn't changed. You know, I don't want to be a lot more specific than that, but we expect to, you know, as we get back to next year, being, as we articulated earlier, a significant growth year, coupled with, you know, our generation of free cash flow. I think if you look at things we've done proactively on the free cash flow side, you know, we've continued to dramatically look at our capital expenditures.
The guidance we gave this year was about $90 billion. That was down significantly from about $120 million dollar guidance we gave, and that was down significantly. A year or so ago, we were up in $160 million, which, you know, very much that historical increase was done because of our real estate rationalization. And, you know, we reduced our square footprint in the U.S. from about 4 million sq ft to 2 million sq ft on real estate. We've had significant reductions on our employee count, just as we've become more efficient overall as a company. So, I think all those things lead you to, you know, significant generations of free cash flow.
So, I think people should take some comfort that we expect to kind of reaccelerate getting back to that 4x because of the generation of free cash flow and what we said we expect next year to get back to a significant growth year.
Over the past several quarters, you've repurchased your public debt. Do you still think that's the most efficient way to delever the balance sheet?
Well, I think paying down debt is our most efficient way in terms of delevering the balance sheet. You know, heretofore, and again, not predicting what we're going to do in the future, we've been in the market buying the 8 3/8. That had about a $1.5 billion face, and now we're down to about a $1 billion face on that. And so, we've bought that's the face value. We've bought over $400 million, you know, obviously, at a discount of those bonds, and it's had the benefit of saving cash interest expense to the tune of about $40 million a year also.
So, I think when you look at the discount and you look at the cash-on-cash yield on that, you know, whether we could all do the math, you know, whether it's 18%, 22%, depending on where the bonds trade, I think that's a pretty good return back to all of our stakeholders, and particularly our equity stakeholders and balance sheet. Just, you know, go back, everything Bob and I are saying today, you keep coming back to it, you know, we've got one job here, we're not confused, which is the equity creation value of this company. You know, everything else we're talking about, quite frankly, whether it's the balance sheet management, whether it's podcasting, whether it's the ad tech stack, all of that is the goal, gets to the goal of creating equity value for our shareholders.
Right. So last question, because I know we have, like, two minutes, one minute. Can you just talk a little bit about the upcoming maturity schedule and what your plans are given the underlying challenges in the credit markets right now?
Yeah, look, I, you know, and what Jess is referring to is our maturities in, I talked about the 8 3/8, which are due in 2027. We've got other maturities due in 2026. And, you know, from our standpoint, we've got to continue to have the business perform, which we've talked about that for, you know, a significant amount of time today. We feel great about that. We've got to continue to generate, free cash flow, use that free cash flow to help manage down the debt structure, like I just articulated. And we've got, you know, I think we've got a period of time, and I think we've got the benefit of time out there on this end of the credit markets.
Just to put a very fine point on it, you know, at least there, there's no question about the refinancing of whether it's whatever's left of the 2027s and the 2026s. You know, the real question is, what's the change in the composition of cash interest expense, you know, for the company? And quite frankly, under any scenario, you know, we're very comfortable with that, what the cash interest expense is going to be. And, you know, what we just need to do is, you know, be opportunistic. And I think the benefit of Bob and I and the rest of the gang, and we've got a great board of directors on this, too, is patience, you know, and just make sure, patience, and then be opportunistic, the right time to maximize the value of the balance sheet and the refinancing.
Great. We're exactly out of time, but thank you guys so much for coming.
Thank you.
Thank you, Jess.
Thank you, Jess.
Appreciate it.