Good day, and thank you for standing by. Welcome to the iHeartMedia third quarter 2021 earnings call. At this time, all participants are in listen only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's call is being recorded. If you require any further assistance, please press star zero. I would like to hand the conference over to your speaker today, Mr. Michael McGuinness, Head of Investor Relations. Please go ahead.
Good afternoon, everyone, and thank you for taking the time to join us on our third quarter 2021 earnings call. Joining me for today's discussion are Bob Pittman, our Chairman and CEO, and Rich Bressler, our President, COO, and CFO. At the conclusion of our prepared remarks, management will take your questions. Please note that in addition to our press release, we have an investor presentation that you can use to follow along with our remarks. Before we begin, let me quickly cover the safe harbor statements on slide two. During this call, we will make forward-looking statements, including the current and expected impact of COVID-19 on the company's liquidity, financial position, and results of operations. These estimates are based on current expectations and assumptions that are subject to risks and uncertainties.
Actual results could materially differ from these expectations and assumptions, and these risks and uncertainties are discussed in more detail in our filings with the SEC. During this call, we will refer to certain non-GAAP financial measures. Reconciliations between our GAAP and non-GAAP financial measures can be found in our earnings release or in the investor presentation available on our website. Now I'll turn the call over to Bob.
Thanks, Mike, and good afternoon, everybody. Thank you for joining our third quarter 2021 earnings conference call. We feel great about being able to deliver a quarter like this. We think it's further evidence of the success of our company's continuing transformation. Data-led, digital and podcast focused, along with the unparalleled audience reach of our broadcast radio assets, supported by the largest sales force and the only unified ad tech stack in audio advertising, all with the strong flywheel effect of our scale and leadership position. Rich and I want to again acknowledge our employees. It's their ongoing commitment to innovation and creativity that's behind our momentum and the strong results we're announcing today, and it will set the stage for a full recovery to 2019 adjusted EBITDA levels by the end of this year.
Rich will take you through our detailed financials, sharing the performance of our individual business segments and highlighting both the strong growth and potential of our digital business, including podcasting and the strong recovery and growth potential of our radio business. We hope this gives you the information you need to accurately evaluate each of our business segments and our business as a whole. Our business continues its strong revenue and profit growth in the third quarter. Our third quarter consolidated revenue grew 25% compared to prior year. You'll recall that our guidance was an increase of 20% versus prior year. When excluding political, Q3 revenue increased 31% versus prior year. We generated adjusted EBITDA of $230 million, which grew by 42% versus prior year, while generating $45 million of free cash flow.
Our revenue in Q3 2021 is now 98% of our revenue in Q3 2019, continuing our trend of sequential quarterly improvement compared to 2019. The Multiplatform Group grew Q3 revenue by 19% versus prior year and adjusted EBITDA by 50%. The Digital Audio Group grew Q3 revenue by 77% versus prior year and adjusted EBITDA by 91%. Podcast revenue was up 184% versus the prior year, and digital ex-podcast revenue was up 51% versus the prior year. Additionally, our adjusted EBITDA margin significantly expanded in the quarter, reflecting the revenue growth, the success of our previously announced savings initiatives, and our continued focus on expense management. We have a high operating leverage business.
In Q3 2021, the Multiplatform Group margins were 32% and the Digital Audio Group margins were 33%, both of which represent year-over-year and sequential quarterly margin expansion. Turning now to the results of our two largest segments, our iHeartMedia Digital Audio Group, which includes our high growth podcasting business and the iHeartRadio digital service, the industry's number one digital radio service with a 5x lead in digital usage over the next largest commercial broadcast company as measured by Triton. It also includes our websites and newsletters with their monthly audience of over 135 million unique users in the United States, according to Omniture, our digital services and programs for both national and local partners, and our digital ad tech companies.
Our iHeartRadio service also has a social footprint that includes 241 million fans and followers, which is approximately 7 times larger than the next largest audio player. The Digital Audio Group continues to increase its importance relative to the company's consolidated results, and it delivered another strong performance in the third quarter, with revenues up 77% year over year and adjusted EBITDA up 91% year over year, making it one of the best digital performers in the marketplace today. Digital revenues are now about a third the size of our Multiplatform Group revenues and have more than doubled over the last five quarters.
Even with the expected growth of our Multiplatform Group, we believe digital will ultimately grow to Multiplatform Group revenue levels and beyond due to the high growth assets of the Digital Audio Group and the size and expected expansion of the digital advertising TAM. Included in the digital revenues are our podcasting revenues, which are up 184% year-over-year. It's important to note that our podcast business is not only profitable, but has margins that are actually accretive to our overall company margin. Our podcast business continues to reach new levels for revenue, profitability, listenership, and downloads. According to Podtrac, the industry standard for third-party podcast measurement, we are the number one. Our non-podcast digital business also continued its strong performance, growing 51% in Q3.
These revenues, which include our digital audio streaming product, display advertising, and digital services, outperformed the digital ex-podcasting industry growth of 34%, as reported by MAGNA for Q3 2021. This strong outperformance is driven in part by the fact that we have the largest audio sales force in the United States, executing our strategy of any seller, anywhere, can sell anything, supported by our unique technology. Although our podcasting success understandably gets a lot of attention, we want to make sure that we also highlight the strength of our non-podcasting digital businesses. Now let's move to the iHeartMedia Multiplatform Group, which includes the largest broadcast radio group in America by all metrics, reach, audience size, revenue, earnings, and even number of stations. It also includes our national sales organization, our live and virtual events business, our networks business, and our BIN, Black Information Network business.
The Multiplatform Group audience is twice the size of the next largest broadcast radio company and also has twice the audience of the largest digital music streaming service and almost 5 times their ad-enabled audience. We are the only audio player in broadcast or digital that has broad national reach in addition to an unparalleled local footprint. The iHeartMedia Multiplatform Group also reaches more people every month with its broadcast radio assets alone than any other media company in America, and that includes both Google and Facebook. Multiplatform Group revenues were up 19% year-over-year in Q3 and were down only 17% compared to 2019, continuing our sequential quarterly improvement compared to 2019.
These year-over-year and sequential results are evidence that our Multiplatform Group revenues are well on their way to recovering to 2019 levels and that they will continue to grow beyond that. Our share of the broadcast radio sector revenues continues to expand, outperforming the broadcast sector as a whole, as reported by Miller Kaplan, which measures the revenue performance of select broadcast markets. I'd like to give you a couple of data points about why we're so confident in the growth potential of the Multiplatform Group and the future of broadcast radio as an advertising medium. Let's start with a quick overview of the entire audio listening landscape and the revenue potential for each segment.
Using Nielsen and Comscore, which are the industry standards for audience measurement, when looking at the split of listening between broadcast radio and streaming digital audio, broadcast gets about 75% of all listening and streaming digital audio, which includes Spotify, Apple Music, Amazon Music, Pandora, and iHeartRadio, among others, gets about 25% of the listening. Now, let me translate that into advertising potential. It's important to remember that there are two sectors of audio. One is comprised of music services like Apple Music, Amazon Music, Spotify, and even Pandora. It's where listeners go for their personal music collection, replacing CDs, LPs, and music downloads. Consumers go to their music collection when they want to shut out the world. It has no weather or traffic, no talk or information, no personalities, and any ads that run there are perceived as interruptions of this pure music experience.
Radio, on the other hand, is the opposite. It's social. It's where people go when they want to know what's going on in the world, where they go for companionship, music, news, gossip, information, humor, who's hot and who's not. In this environment, information is key, and even commercials are part of that experience. Commercials are native content on radio, but they are interruptions to the music collection. These differences in product appeal are why music collection services can't run anywhere near the same amount of advertising inventory as broadcast radio. That, combined with the listening differential, means broadcast radio has a significant revenue potential advantage over streaming music collections. In the past, radio revenue has been limited by its lack of data and from not being of the modern advertising ecosystem that the digital giants pioneered.
That's changing, and you've seen the progress we've made with both SmartAudio and our ad tech platform led by Triton. The music collection services, on the other hand, are limited by audience reach, time spent, and probably more importantly, advertising load possibilities in their music-only environment. When I analyze the advertising revenue potential of both sectors, I definitely prefer our side by a lot. Now, let me give you a few more facts about the power of broadcast radio. When it comes to competing with other media formats, it might surprise you to know that consumers spend about 50% more time with broadcast radio every day than they do social media. Broadcast radio has actually grown its number of listeners in the past 15 years.
Digital listening has also grown, but the key here is that the overall listening pie is getting bigger as new listening platforms are added. This growth of the pie is driven by the strength of broadcast radio and the music collection services converting CD and music download listeners into music streamers. We know that ad revenue inevitably follows consumer usage, and we're seeing this happen in real time with the decline of linear TV. A WARC study released in September shows that media spending is still out of whack. TV consumption has dropped to 24% of total media time, while audio consumption has grown to 31% of total usage. However, only 9% of advertising spend goes to audio, indicating that some advertisers have been slow to react to this new reality.
Additionally, with 40% of TV viewers classified as light TV viewers, as an advertising medium, TV now faces a significant reach gap. Broadcast radio is uniquely capable of filling this gap for TV advertisers, reaching 90% of light TV viewers, compared to only 50% for OTT options. Our ability to address both the reach and light TV viewer gaps gives us access to the $58 billion TV tab, which is further support for our confidence in the growth potential of our Multiplatform Group revenues. Now let me move to our events business, also included in our Multiplatform Group, where the consumer demand for our live events is strong. Our Q3 2021 sponsorship and events revenue were up 48% compared to prior year, and this quarter includes the impact of the return to live marquee iHeartRadio Music Festival, which was virtual last year.
Ticket sales exceeded 2019 levels, and the event generated over 15 billion social impressions, which was 20 times larger than Lollapalooza. The high consumer demand for live events can also be seen in the recent success of the iHeartRadio Fiesta Latina and this past weekend's live iHeartCountry Festival. Live events are back, and coming up is our 11-date live and in-person iHeartRadio Jingle Ball tour in December. I'd like to take a minute now to address a couple of relevant topics. COVID, of course, continues to affect the country. While its human and social toll is real, the advertising revenue impact appears to be behind us. Supply chain issues are also making headlines, but they have not had a material impact on our business. Finally, I also want to touch on Apple's recent change to their data and privacy policy.
Some digital companies have said they are feeling a negative impact to their ad revenue as a result of Apple's new policy. We aren't, and there are several reasons why. First, we have our own platforms with our own first-party data. Second, we built for the future using smartA udio digital-like broadcast inventory around cohorts, which are defined target audiences like auto buyers or new parents, not one-to-one using cookies and mobile IDs. Even with our purely digital inventory, we stress cohorts instead of focusing on one-to-one. Third, our audio ad tech platform makes us the only audio company that can seamlessly target and serve to the same cohorts across all platforms, from podcast to digital to broadcast. Big picture, we believe that cohorts are replacing one-to-one marketing, and we think we are well positioned for the shift toward data-infused ad buying.
Due to the changes in privacy restrictions and other factors, we see the world moving past one-to-one targeting, past cookies, past mobile IDs, and toward premium platforms that are brand safe, measurable, and that have real scale, like ours. In this new world of advertising, iHeart is uniquely positioned to deliver targetable cohorts and audio comprised of highly engaged audiences with scale that is unparalleled in the U.S. Before I turn it over to Rich, I wanna touch upon the important announcement that we made yesterday about our multi-year strategic partnership with DraftKings. This partnership is in one of the fastest-growing advertising categories and will enable DraftKings to use the assets of the number one audio company in sports, iHeart.
This partnership builds on iHeart's industry-leading audio sports assets, including the largest sports podcast network in the industry, which includes partnerships with the NFL, the NBA, and sports podcasts led by marquee talent like Colin Cowherd and Dan Patrick, as well as the iHeartSports Network, which reaches 75 million Americans, according to Nielsen, our sports talk and sports betting stations, and also our ongoing live coverage of professional teams on select iHeart stations across the country. We expect sports and sports betting to be a significant growth engine for us going forward, and this partnership with DraftKings is further evidence of that potential.
Rich and I and the rest of the iHeart management team are excited about the tangible results iHeart's unique audio assets are delivering, driven by our unparalleled consumer reach across broadcast radio, digital radio, and podcasting, and supported by our unmatched ad tech platform and suite of data analytic capabilities. We believe the revenue potential of our assets is superior to anything else in the audio sector, and we're excited about using these assets to continue to drive growth into 2022 and beyond. With that, I'd like to turn it over to Rich.
Thanks, Bob, and good afternoon, everyone. As Bob laid out, we delivered strong results in the third quarter, which reflect the continued success of our operating strategies and the power of our unique audio assets, as well as improving trends in the macroeconomic environment. Turning to slide 12 of our investor deck, our consolidated revenues were up 25% year-over-year, exceeding our guidance for the quarter of up 20% year-over-year. When excluding political revenues, Q3 increased 31% year-over-year. We are also extremely pleased with our continued sequential improvement against 2019.
Our revenue in Q3 2021 was down only 2% from Q3 2019, improving from being down 6% in Q2 2021 compared to 2019, and improving from being down 11% in Q1 2021 compared to 2019. Direct operating expenses increased 20%, driven primarily by the significant increase in revenue, which drives higher content and profit sharing expenses, third-party digital costs, and expenses related to the return of local and national live events like the iHeartRadio Music Festival. These increases were partially offset by lower employee compensation and other reductions resulting from our significant modernization and cost reduction initiatives. SG&A expenses increased 17%. Driven by increased employee compensation expenses, resulting primarily from higher variable bonus expense based on financial performance and higher sales commissions due to higher revenue.
As a reminder, last year, the vast majority of our employees did not get paid a bonus, and as a result, you'll see our corporate expenses increase year-over-year. In addition, increased headcount from the investments in our fast-growing digital business contributed to the increases in SG&A. These increases were partially offset by the impact of our significant modernization and cost reduction initiatives and lower bad debt expense. Our third quarter GAAP operating income was $80.1 million, compared to an operating income of $39.4 million in the prior year quarter, and our third quarter adjusted EBITDA was $230.2 million, compared to $162.1 million in the prior quarter. If you turn back to slide four, I'll provide additional color on the performance of our operating segments.
As a note, there are additional slides in the investor presentation on our segment revenue performance. Digital Audio Group revenues were up 77% year-over-year, and adjusted EBITDA was up 91% year-over-year. Within the Digital Audio Group is our podcasting business, whose revenues grew 184% year-over-year, and our non-podcasting digital revenues, which grew 51% year-over-year, also continuing their strong performance. Importantly, we expanded our third quarter Digital Audio Group margins to 33%, a 230 basis point improvement year-over-year, and a sequential improvement of 520 basis points from Q2 2021, which as we mentioned last quarter, were negatively impacted by a few one-time expenses. Multiplatform Group revenues were up 19% in Q3 and continued our sequential improvement compared to 2019.
Q3 revenues were down only 17% compared to 2019, a 390 basis point improvement from Q2 2021, which was down 21% versus Q2 2019, and a significant improvement compared to Q1 2021, which was down 26% versus Q1 2019. Q3 adjusted EBITDA margins were 32%, a significant improvement from 25% adjusted EBITDA margins in Q3 2020. On a sequential basis, margins improved 170 basis points from Q2 2021. That margin improvement was achieved even though the quarter included the return to live and the associated expenses for the iHeartRadio Music Festival, which, while profitable, does not have the same margin profile as the rest of our Multiplatform Group businesses. Looking at the revenue streams within the Multiplatform Group, our broadcast revenues grew 20% year-over-year.
Within the broadcast line is SmartAudio, our data-infused programmatic platform. SmartAudio was up 43% year-over-year in the third quarter. As a reminder, it uses the same inventory as the rest of broadcast radio, highlighting the value of data at ad tech. As we continue to add new technologies and data capabilities, we expect that our SmartAudio product will generate revenue from the digital and TV TAMs, especially considering the changes to the advertising landscape that Bob discussed earlier. Our networks revenues were up 8% compared to prior year, which includes our Premiere Networks, which were up 2% compared to prior year, as well as TTWN, the Total Traffic & Weather Network, which was up 14% compared to the prior year.
As a reminder, our Premiere business was less impacted by COVID in 2020, which affects the comparison. Our Q3 2021 sponsorship and events revenues were up 48% compared to prior year. As Bob mentioned, this reflects the strength of the iHeart brand, the high demand for live music, and advertisers' desire to interact with this engaged and enthusiastic customer base. The Audio and Media Services group revenue was down 12% on a reported basis. Excluding the impact of political, revenues in this segment were up 13% year-over-year. On slide 18, there is a summary of our debt.
At quarter end, we had approximately $5.4 billion of net debt outstanding, which includes a cash balance of $369 million, and these figures include the previously announced voluntary prepayment of $250 million of our term loan. We will also benefit from the concurrent repricing of the term loan, which will have a positive impact on our interest expense on a go-forward basis. At the end of October, we repurchased the full balance of our $60 million preferred stock prior to its call date of May 1, 2022, which is not included in these figures. In doing so, we realized interest savings, but more importantly, we exited the most expensive and restrictive instrument on the iHeart balance sheet, reinforcing iHeart's commitment to improving our capital structure and demonstrating our confidence in our business moving forward.
As a reminder, the terms of our debt structure include no material maintenance covenants and there are no material debt maturities prior to 2026. We continue to actively monitor market conditions and will opportunistically optimize our capital structure. We ended Q3 2021 with net debt to EBITDA leverage of 6.9x. We remain committed to achieving our previously announced leverage target of approximately 4x, and we expect to continue our progress towards that goal. In the third quarter, we generated $45 million of free cash flow. As we mentioned last quarter, the accelerated consolidation of our real estate footprint, which is part of our previously announced modernization and cost savings initiative, has enabled us to sell certain redundant assets, which has partially offset the real estate initiative's gross capital expenditures.
Free cash flow, including net proceeds from these real estate asset sales, would be $54 million for Q3. As a reminder, our capital expenditures are elevated this year as a result of one-time spend related to our real estate consolidation. We continue to successfully execute against our previously announced savings initiatives. As a reminder, our pre-COVID modernization initiatives achieved the $100 million run rate target by mid-2021, and we remain on target to replicate the majority of the previously announced $200 million post-COVID savings in 2021. We believe these actions, coupled with our continuing revenue growth, leaves us well positioned for margin expansion as evidenced in Q3.
Consolidated margins were 25%, up from 21% in Q2 2021, 14% in Q1 2021, and up 300 basis points from 22% in Q3 2020. Multiplatform Group margins were 32%, up from 30% in Q2 2021, 21% in Q1 2021, and up 660 basis points from 25% in Q3 2020. Digital Audio Group margins were 33%, up from 27% in Q2 2021, 25% in Q1 2021, and up 230 basis points from 30% in Q3 2020. As we look forward to Q4, I want to provide you with the following.
Our October consolidated revenues were up approximately 1% compared to 2019 and approximately flat year-over-year. It is important to note that October 2020 was our biggest month for political revenue. Excluding the impact of political, October's year-over-year growth would have been approximately 22%. For the fourth quarter, we expect revenue to be up approximately 10% year-over-year, or 22% excluding the impact of political, implying that our Q4 revenues will be slightly higher compared to 2019. Consistent with our previous guidance, we reaffirm that we expect to return to 2019 adjusted EBITDA levels by the end of 2021.
No matter what valuation method you use, utilizing a valuation of the sum of the parts, of potential future revenue or earnings growth, free cash flow per share, et cetera, we think iHeart is undervalued using any metric. We hope the information we have provided today gives you confidence in the value of this company. Bob and I, and the rest of the management team are excited by these results and the audience, revenue and earnings momentum in our business. As a reminder, we'll give specific 2022 guidance on our fourth quarter earnings call. I'd like to close on the same note that Bob began on. We thank our employees, without whom this journey would not be possible, the communities we serve, and our business partners. We appreciate everyone joining our third quarter earnings call.
Now we will turn it over to the operator to take your questions. Thank you.
As a reminder, to ask the question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Again, if you would like to ask the question, press star, then the number one on your telephone keypad. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jessica Reif Ehrlich from BofA Securities. Your line is open.
Thanks. Hi. I have two questions or two topics. One is on DraftKings. Can you give us a little bit more color on the economics, timing of impact? And is it exclusive, meaning can you do other sports betting deals and can they do other radio deals? And then just one on podcasting. You know, with more players coming into the market, you know, there's just so much money kind of chasing content. How is it impacting your costs or how do you expect it will impact your costs? And on the other side of that, maybe, you know, how is it impacting industry growth? Is it driving growth higher than expected? Thanks.
Let me start with the second one. I'll let Rich hit the first one on DraftKings. I think on podcasting, I think you saw, Jessica, in the numbers here, that if you look at Podtrac, we're actually increasing our lead over the other podcast publishers. And if you look at the revenue, I think it's on slide eight, if you look at the MAGNA estimates, with an industry including us that's up 60%, we're up 184%. Again, clear evidence that we continue to gain share. I think that is really the flywheel effect that we have. You know, no matter how much money people bring to the party to play in the podcast game, the reality is it's about having a hit show. Every creator who comes to podcasting has a dream of having a hit show.
The best way to get a hit show is to start with the biggest podcast publisher, which is us. You know, that flywheel is because we tend to get first look as a result of being the biggest. In terms of cost, not only do we do deals, you know, with Shonda Rhimes, with the NBA, the NFL, but we also produce podcasts ourselves internally with no profit participation. We have hits there as well. We have a sort of a marvelous diversity here, which gives us a lot of control over. By being number one and probably getting more looks at product than anyone else, we're able to be pickier. Given our kind of economic position, we're able to say no.
Just something that doesn't make sense. Really carefully watch the economics and not fall into the traps some people do of chasing profitless prosperity. You're not gonna see that from us.
Hey, Jess, it's Rich. Let me just wanna add one thing to what Bob commented on podcasting, and I'm gonna go specifically to your question on DraftKings. You know, just to remind everybody, you know, we're up, as Bob articulated, now at 184% on revenue in this quarter. But if you go back, I think the numbers are, we were up 142% in Q1 on revenues. We were up 152% in Q1 revenues. And obviously we're starting to, you know, lap bigger and bigger numbers in terms of the overall growth. So I think that really proves out, and you've been hearing from us about podcasting, you know, for some period of time, the strategy to outrun the ad-supported strategy as opposed to going behind, you know, a paywall.
The way that Bob's pointed in terms of the flywheel effect, you know, the benefit we get not just on the top line on the numbers, but obviously also on the bottom line, as we said, because it's accretive to our overall margin. I just wanted to remind everybody that with respect to podcasting because there is a lot of noise in the marketplace out there. When it comes to DraftKings, we really can't disclose any more financial details. You know, what I would say is, you know, as we're all well aware, this is one of the fastest growing advertising categories. To partner with DraftKings, you know, DraftKings and the number one company in audio is pretty exciting, I think, for all of us.
I think also the larger point, 'cause there's a lot of people making a lot of claims out there, but we've got the leading audio sports assets, and Bob articulated this during the release. Just as a reminder, we are with the largest sports podcast network in the industry. We have our deal with the NFL. We have our deal with the NBA. We've got the iHeartSports Network, which reaches 75 million people. You know, yes, this deal is significant. What I think, and by the way, it is not exclusive. What I think you should think about is it's a deal that touches all of our platforms.
As everybody starts to think about modeling out the future and we continue the momentum into 2022, into the fourth quarter of this year and into 2022, you know, looking at this should give everybody a lot of confidence in terms of projecting out our future growth.
Great.
Your next question comes from the line of Steven Cahall from Wells Fargo. Your line is open.
Thanks. Maybe first just to talk about what you're seeing in the ad market. Bob, I think you're the first advertising company this quarter to say that what's going on in supply chain isn't really impacting the business. I know you had AudioCon in Las Vegas recently, so maybe you can just talk about what you think is going on there. I mean, is it that folks are moving share into audio? Or how can you maybe kind of put some context around, maybe the difference in what you're seeing in ad trends versus a lot of your peers?
Sure. Well, look, I think certainly there's some people that are being affected by it, but there's some people that are doing better at the same time, so it's sort of give and takes. I think we also see is, and what we're hearing is anytime somebody's got a temporary supply problem, but they've got demand, they, I think most people we talk to realize they're gonna get their supply sooner or later. What is important is to hold that demand. During a period like this, you know, it's hard to prove this, but we probably have a slight advantage because we're more efficient.
You know, if you look at TV, for example, most people think TV and radio deliver about the same impact at the same weight level, yet TV is about 3-4 times the CPM of radio. If you wanna keep your demand, one of the most efficient slash cheapest ways to keep your demand is to substitute radio into some of the slots for some of the more expensive media. You know, sort of a strange, perverse way, people who wanna hold on to the demand but don't yet have the supply to fulfill it probably are looking for efficiencies in marketing. If they're really thoughtful about it, we probably are a good solution to that. Look, I think that's sort of the major issue.
I, again, as we talk to people, I don't think we've talked to any advertisers that think this is sort of a permanent supply problem or they're gonna have to sell diminished quantities. They think they'll catch up, and I think every one of them is focused on, "Wait a minute, I don't wanna have to restart my demand," because they realize if they step away from the having that desire for the product, they are giving up a huge advantage they have in something they've built.
Hey, you know, Steve, the only thing I just to reinforce one or two things you mentioned earlier in support of what Bob just said. You know, there is the general trend, obviously, in terms of audio being hot. You know, the second thing is, I think, you know, again, brings to light our multi-platform, 'cause whether you've got, you know, broadcast and network or TTWN or, you know, everything we're talking about in podcasting or digital or our digital ex-podcasting or our events that Bob touched upon, you can work with us on so many different ways, you know, in terms of coming into our company.
You know, I also think we've got, you know, the technology solution and the ability, you know, to meet the needs of advertisers and play in the big digital TAM and capabilities, you know, and you've heard us say this before, that we didn't really have you know a year ago or even six months ago. Got the full and integrated acquisition of Triton. Finally, we benefit from the diversity of our advertising base. You know, we have no one category that's more than 5%. We have no individual advertiser that's more than 2%. That really touches upon Bob's comments. Sure we have some categories that are down, but we've also benefited greatly from some categories that are up also. You know, it's a total mixture.
Yeah. Maybe expanding on that, could you talk about what SmartAudio is running as a % of Multiplatform sales and maybe where you see that going over the next year or two?
Well, we haven't given out the number, but obviously we think that is gonna continue to increase. We've built out the whole SmartAudio platform so that our broadcast radio can be bought and sold like digital, can be built around the cohorts. With the Triton Marketplace, which we announced, which we're gonna launch in January of next year, you know, we're talking about the first truly integrated audio marketplace in which you'll be able to buy one set of audiences cohorts on an integrated basis across podcasting, digital radio, into broadcast radio using SmartAudio. I think that gives us a, not only us, but I think the audio industry, a great new tool, to bring money broadly into this business. When you look at the kind of reach radio has, every advertiser today has got a problem.
They need reach. Digital doesn't reach the numbers that radio does. TV is declining and certainly doesn't reach what radio does. You know, people at least have to be able to see or hear your commercial for it to have an impact. Radio winds up, I think, in this pretty good position of being this reach enhancer for everyone. Well, by using SmartAudio, we're able to put it into a language and a technology that they're comfortable with and looking for us to do. I think, you know, as an overall percentage of our advertising on broadcast radio, we look for SmartAudio to be continuing to climb.
By the way, Steve, you know, and you think about it, if you look at the significant progress we continue to make on the multiplatform line and what Bob just touched upon, which includes SmartAudio, and we talk about, you know, as people, you know, growing past, but getting back to 2019 levels, and we talked about as a total company and we commonly get the question, do you want to get back there on the multiplatform line and your confidence in getting back on the multiplatform line? Remember what Bob just articulated, our capabilities of SmartAudio in the multiplatform line. That too enables us to tap into the digital TAM, the $160 billion-$170 billion digital TAM. It's not just our digital lines that could tap into it, but it's also our multiplatform line.
Thanks. Maybe last one, kind of housekeeping one. As we think about next year, any major changes on either cash interest, cash tax or CapEx we should be mindful of?
Well, we're gonna see capital expenditures go down. I think, you know, we said this quarter we spent approximately $50 million of capital expenditures, you know, increase from the mid-30s last year. The major increase in that is due to our real estate, in terms of our downsizing of our real estate, you know, just getting more efficient in that. Again, those operating savings already in the expense saving numbers that we've talked about on the modernization efforts, and on the $200 million that we said would be, you know, a substantial piece would be permitted for this year.
Also on interest expense, I think, as you all know, one is we just had the preferred that we retired early from May of last year, which is gonna bring some interest expense savings, coupled with the fact that reinforced our confidence in the business. I think everybody should take our payment of the $60 million to on both accounts. Then finally, as a reminder, you know, we do have the refinancing on the 8.375%, that's coming up, which is about a third of our interest expense. You know, we're heavily looking at our options, but rest assured that we expect that interest expense to go down and be another lever for value creation for us.
Great. Thank you.
Our last question comes from the line of Dan Day from B. Riley Securities. Your line is open.
Yeah. Hi, afternoon guys, appreciate you taking my questions. Just first one, you know, we've talked about this 4x leverage target for a while, and you look to be getting there in the next quarter or 2, as long as, you know, at least on a forward-looking basis. I guess once you're there, you know, talk about the priorities for free cash flow between paying a dividend, buying back shares, how you weigh that against M&A opportunities. You know, whether this is a business that you see, given how cyclical it is, can even support a dividend. There might be a debate out there on that. Curious your thoughts on that.
Well, this won't surprise you, and I really appreciate the question, but I'm not gonna comment on anything specifically, including your comment on when we're gonna get to 4x. Again, all that we've said is our target is to get to 4x leverage. I think everybody could see the significant progress we've made towards doing that.
When we get in around 4 times leverage, you know, Bob and myself, working with our board and working with Mike and the team, we'll look at our options, and what's the best way to get money back to our shareholders, which, you know, I would suggest that, you know, just paying down debt right now in our capital structure is just, you know, another form of returning capital to our shareholders because just from a numerical basis, you know, what it does to the equity value out there. We'll always continue to look at any potential assets that can help the total iHeart base.
I think if you look at our history, since Bob and I have been with the company, you know, whether it's, you know, whether it's Jelli or Stuff Media or any of the assets, acquisitions that we've made, they've always been. None of them, I would suggest individually have been significant to overall iHeart. Quite frankly, even in total, haven't been significant to the iHeart capital structure, but each and every one of them have made the rest of the iHeart base more valuable. I don't see any change to that pattern.
Gotcha. Thanks for that. I wanna turn to another topic. Just the DraftKings deal here that you announced. Obviously sports betting being such a big opportunity here for radio advertisers. I mean, do you see either at the local or national level, maybe the calculation changing for you know, how aggressive you get in terms of going after the live sports radio rights? Is that something you see as changing, getting more aggressive there?
We're actually pretty aggressive, and actually we have quite a number of major teams carried on our radio stations play-by-play. We have a number of big sports talk radio stations. We even have some specific sports betting stations, The Gambler is the name of them, where we run them. Then we are doing the iHeartSports Network, which is sports information even on our music stations. It reaches about 75 million people according to Nielsen, and I think probably is the largest sports network. We cover the gamut. When you go to podcasting, you know, we've got the biggest sports podcasting network as well. Not only the leagues that Rich talked about earlier, but also Colin Cowherd, Dan Patrick.
We've got a lot of big names there with a lot of success. We continue to invest heavily in it, and think it's a great investment for us.
You know, by the way, one thing I'd say maybe relative to all of these comments and the questions we're just talking about is, you know, our focus here is really to drive the value of this company, drive the equity value of this company. Everything you hear Bob and I talking about and, you know, whether it's from an operating standpoint or a balance sheet standpoint, is put through that filter with the two of us and our board of directors.
Awesome, guys. I appreciate the commentary. Thanks for answering my questions. I'll turn it over. Best of luck.
Great. Well, first of all, if there's no other questions, wanna thank everybody for taking the time to hear the iHeart story.
Thank everybody for the support. Bob, myself, and Mike are available any time for follow-up and your questions.
This concludes today's conference call. Thank you for participating. You may now disconnect.