All right, we just open things up here. We'll give everyone a couple seconds to get in from the lobby, and then we'll kick it off. Okay. All right, let's get started here. My name is Greg Burns. I'm a Senior Analyst at Sidoti & Company. Welcome everyone to our year-end microcap conference. Really happy to have iHeartMedia here presenting for us from the company. We have Rich Bressler, the company's President and COO. We're going to go through this like a fireside chat. So we're going to have hopefully a good conversation here over the next half hour. If anyone does have any questions, you could enter them through Zoom, and we could get to as many of those as we can. So first off, thanks, Rich, for being here with us this morning. Really appreciate it.
Big thanks very much, and thank you, everybody in the audience, for taking a few minutes to listen to the iHeart story.
All right, maybe we could start off on a high level to get people acquainted with the company. So, you are the number one audio company in America. Maybe we could start off by talking about the reach of your various platforms, your strategy for your business, and how maybe the different segments of the business factor into that.
Sure. So, at iHeart, just, for everybody's benefit, we do about $4 billion, approximately $4 billion a year in revenue, all advertising revenue. We do that through three platforms or, or two platforms, what we call the Multi-platform Group. And for all of you, that would be, you know, broadcast radio, what you might think of the more traditional radio business, our network business, things like Premiere Networks. And then we have the Digital Audio Group, which is our podcasting business, our streaming business, websites, and social extensions.
And if you look at the composition of that $4 billion, it's about , $2.7 billion, $2.8 billion is in the Multi-platform Group, and about $1.2 billion, $1.3 billion is in the Digital Audio Group, or we refer to as DAG. We reach 273, approximately million people in the United States. Our economic model, just for the benefit of everybody's background, is to monetize our relationships with our consumers. We own 850 radio stations. We basically own all.
Well, not basically, we own all of our distribution systems. We're in 150 cities. From an economic standpoint, the way I would think about us is we're also a great free cash flow generation company. We've got minimal CapEx, minimal working capital requirements. We're focused on the generation of revenue growth, EBITDA, and generation of free cash.
Okay. Maybe we could start off by talking about the traditional broadcast radio market. Obviously, there's been a lot of change and shifting from traditional advertising to more digital demand. So, how do you view the future of broadcast radio and maybe what sets iHeart apart from peers in the space?
Sure. Well, you know, it's interesting. It all starts with the consumer. It all starts with the listener. And I'll give you, I think everything is about context. Give you some context. Our broadcast radio business, our listening is higher than it was 10 years ago. Listening was higher than it was 20 years ago. And people say to me, "Rich, really? Like, broadcast radio listening is high since it's been in 10 and 20 years?" And the answer to that question, yes. If you take, you know, I think sometimes all of us, East Coast or West Coast, you know, elites, think about the whole world is, in terms of digital. As I mentioned, we reach 90% of the country. And people have to, you know, remember the average household income, household income in the United States is $70,000 a year. And at iHeart, we represent America.
So we go, right, we're the biggest conservative, spoken word, whether it's Sean Hannity or Clay and Buck. On the other side, we've got Charlamagne tha God, and we've got, you know, with the Breakfast Club and Bobby Bones and Ryan Seacrest, and we have them all under the one iHeart umbrella. And so because the resiliency of that listening is out there, as opposed to, if you think about, ad-supported television, which other than live sports, I think we all know, we all read the same things, listeners, viewership has dropped dramatically. The magazine industry, where readership has pretty much gone away, the newspaper industry where readership's gone away, our audience, again, has remained rock solid through this period of time.
And so the reason in terms of our view in terms of the belief of broadcast is so optimistic is because our business model is to again monetize those relationships with the consumers out there. Starts with the listening, and then I'm sure we'll talk about we build out things like our ad tech stack along the way to make sure we're delivering our product to advertisers the way they want to buy it. And we've got about 1,000 advertising salespeople across the country in those 150 markets, and all of those people can sell all the products anywhere, anytime out there. And so that is a strategic advantage for us.
Okay, so maybe we could talk about how you monetize, how you go about monetizing, because if the listenership is up, you know, why has revenue shrunk? Is the value of the dollar or the value of that year less than it's been, you know, historically?
No, it's not so much the value of the year. You know , I would say it's a couple things, and, and obviously, a fair question. If you look at, over the last number of years, what's happened, we've obviously, as we all know, we've been through some pretty, economically, challenging periods of time out there over the last couple years. Maybe a year ago, a year and a half ago, it may have not been a technical recession, here in the U.S., but it certainly was at all the makings of an advertising recession. If you look, and obviously before that, we had the pandemic.
And if you look at going into this year, where I think all of us on the heels of the presidential election cycle a year before thought that we'd be off to the races at the beginning of the year, then all the questions that happened with the tariffs in terms of how much they were going to be, the implementation, you know, everything we all know about the questions about what was going to happen with interest rates. And you know, we have 40,000 advertisers also put in perspective across the country.
And what happened again from a multi-platform standpoint, and radio, what we have found is radio has been, you know, like historically, as you're going, out of some, when you're going with some wind at your back, which we feel right now, a breeze at your back, we tend to be good early indicators and start to see the benefit early on. When you're going into uncertain times or, you know, or the beginning of uncertain times or there's people who have questions, we tend to be, probably one of the first things that have been cut back, at least historically out there.
You know, having said that, I think if you look at the medium today, our medium today, because of the reach, because of the fact that, you know, with all the, you know, words out there about people like Spotify, they reach 18% of the country on ad-supported basis. We're at about 90%, as I just mentioned. TikTok's about 34%. Again, we're at about 90%. So we really are the last reach medium, know how to engage consumers. I think if you go with things like podcasting, which I'm sure we'll talk more about, has brought the focus back on audio, back on radio, back on the resiliency of the medium, back on the efficiency of the medium out there, and so again, we've never been more optimistic.
And if you look at the Multi-platform group, which includes broadcast, you'll actually see us continue to make progress quarter after quarter after quarter, in terms of, I'll say, less of a decline in revenue. But we have, and what we've said is that we expect Multi-platform group to get back to low single-digit growth, so positive revenue growth out there. And the reasons, again, for our resiliency of the audience, efficiency, relevancy of the medium. And the last thing I would say, which is very important, the fact that we've built out what we call our programmatic offering for broadcast, which means that the advertisers again can buy and sell it like they bought digital, is another key point, in terms of our plan to get back to revenue growth.
Okay. Maybe leading off of that, you know, could you talk about that digital programmatic initiative? Where are you in terms of implementing that? Maybe what investments you had to make to set that up, and how does that compare to maybe more traditional means of ad selling in your business?
Sure, so simply said, if you think about the world of advertising, as you, Facebook and Google a number of years ago, when they went deeper into the advertising business, I'll say they taught the world, and the way the world has gone, the advertising world is the ability, what people call hands-on keyboard, whether it's with the big agencies, with advertisers, or with DSPs. Your inventory's put into a system that it's very easy to automatically build a media plan, to be able to plan something, monitor that campaign, and report out on the results in what you think about, you know, in a digital format, in just a couple different pages. To be clear, all of our digital products, our streaming products, podcasting, you can do all that and have been able to do all that with our digital products.
Nobody in media, whether it's audio or video, to be clear, has ever done a broadcast programmatic offering. And so that's why this is significant. And in its simplest terms, is you take broadcast radio, which historically has been bought on a CPM basis, which people are probably cost per thousand familiar with that term, and to the advertising world and buyers, we will now be able to look like a impression-based buy. And that's so important, just practical, clearly, is you're somebody building a media plan and that hands-on keyboard, even with all the great facts we've had in broadcast radio, it's always been harder to buy.
And so yes, we've had great success and we have some of the most biggest sophisticated advertisers in the country, whether it's a T-Mobile or an AT&T or Procter & Gamble or Bank of America, but to really be and who are big broadcast radio buyers out there or, you know, a DraftKings or VGW, newer companies, but it's always been a little more work. The reason why this is so important, because now this ability to make it more scalable, the ease of buying broadcast, we expect to be a very significant because we have the facts on our side and we expect this to be not instead of in addition to revenue that we're already getting, because remember the TAMs out there, total marketplace for digital entertainment is about $250 billion-$300 billion, maybe even more than that.
And so, you know, right now, that ability to tap into that TAM more and more, we only need to get little crumbs to benefit iHeart and the asset base out there. And if you look at other people in the broadcast radio industry, we really are in a different industry, because of our size and scale, which you need, because of all the platforms we have, because of all the audio ad tech that we're able to use. And just to give you again some relevance here or how to put it in perspective, if you took the EBITDA for whether it's Cumulus, Townsquare, Audacy, which is now private, Beasley, and added all the EBITDA together for those companies and multiplied them by, you know, two, one and three quarters, two, two and a quarter, we are still larger than that.
So it's technically people look at that industry and in the real world, we don't ever encounter those companies to any great degree in the advertising world. You know, we get questions from the investment world, which I understand. But again, from the broadcast standpoint, you know, our optimism starting with the audience, with our technology. And the last thing I'll remind everybody is we're going into a political year, a political election cycle next year, as we all know, and all the discourse that we see in the U.S. is likely to help us. We expect it to be a very solid year in political spending next year.
All right, great. Maybe we could switch over to talk a little bit about the Digital Audio Group that's been a really strong, strong growth engine for the company. Could you maybe talk about what the, the primary growth drivers have been there?
Sure. You know, the way to think about that is by far the biggest piece of that, is the podcasting business. And I want to give you a perspective on the podcasting business, because I know there's a lot of noise out there. And for those of you that haven't followed us, and I also would invite you to look at our third quarter, you know, investor presentation, because in there we show that in podcasting, you've got the publisher side of the business, you've got the rep part of the business, and just pure distributors. All the money is in the publishing side of the business, to be clear. We are by far the biggest publisher in the United States and probably the world on podcasting. If you take the number two, three, and four publishers and combine them, we are bigger than they are.
We're going to do about $550 million in revenue in podcasting in 2025. If you go back to 2019, to give your friend a reference, podcasting was about $50 million of revenue out there, and we're going to, for 2025, our revenue growth is about 22%. We've talked about going forward. We expect it to be, you know, continue to be very robust, and the reason for that is twofold. One is the podcasting TAM of U.S. advertising dollars is, which today is projected, you know, about $2 billion, $2.25 billion in 2025. Under any scenario in the U.S., it's expected to go to, you know, $4 billion or $5 billion over the next few years, so we'll continue to participate with that, and we will continue to take share in that area, and if you think about podcasting, it's really nothing more than AM, FM, radio on demand.
And our ability to promote podcasting with our broadcast that we just talked about earlier is absolutely critical because there's probably three or four million podcasts right now in the United States. So you could have the greatest podcast in the world, but if nobody knows it's there, it doesn't do you any good. Now the other just to be clear, we distribute our podcast everywhere because our goal is to get the biggest audience to monetize that audience. And so we'll distribute it on Apple, on Spotify, and any other distribution system out there. And we will distribute anybody else's podcast on ours because we don't want our listeners coming to in our iHeart world and not and our focus is to kind of keep them in that world. So we will distribute everybody else that's out there.
And Apple, which is the biggest distributor of podcasts on the other end, that's not a business for them. They're not making money off of that distribution. So that's why for us, the publishing side of the business is so important. And what I would say, because we just talked for a second earlier about programmatic on broadcast, you think about our ability, I call them, to generate or birth businesses off of our broadcast airwaves. That's what's so exciting here. So if you take something, example like podcasting, as I said, in 2019, it was like $50 million of revenue. Today it's $550 million of revenue with EBITDA margins that are accretive to the companies. That business was helped created and prospers and continue to do because of our broadcast airwaves.
We recently announced a deal with TikTok that came out as an operating partnership out there, which is very exciting, and that operating partnership and TikTok, you know, wanted to partner with us. Yes, we're going to create special TikTok podcasts off of that. We're going to have TikTok influencers at our events. But one of the key reasons for them to partner with us is because of the fact that they wanted to take their influencers. They were looking for much wider reach than they have today, and we're going to have a lot of the TikTok influencers on our broadcast radio stations across the country going forward. Also very relevant is, recently Amazon announced that they're committing in 2026 to put our broadcast inventory into the Amazon DSP. So that gets back to that ability of monetizing broadcast the way it's bought and sold by digital.
And I just take a minute to mention those because if you think about we're here for one reason. We're here to create value for all of our stakeholders. Just to be clear, everything else is a tactic to get there. And I think our responsibility as management is continue to find ways to use our assets and our platforms to generate new incremental revenue streams that create value for all of our stakeholders. And I think those are some pretty good examples there.
All right, great. Maybe you could just talk about the publishing aspect of podcasting. You see these large deals like Joe Rogan signing with Spotify. Like, is the industry rational right now in terms of cost spend for talent? You know, how does that work and how do you maintain discipline in that type of environment?
You know, Greg, it's interesting. We've, you know, in all the years we've been in podcasting and due to our management and who we are, we don't believe in management. We don't believe in profitless prosperity. As I mentioned just upfront, you know, we are about, we have one reason to be here, which is to make money, generate EBITDA, generate free cash flow out there. And so I would say , we see every deal out there. If we pass on a deal, it's because for a reason we can't make the numbers work. If you look at somebody like Spotify, yes, they have Joe Rogan, but for those of you that follow closely, they've basically gotten out of the podcasting business. If you see, you know, they had a you know, they're really focused on subscriptions and getting everything behind the paywall.
You know, one decision we made early on, which was a question three or four years ago. I don't think a question today is do you put things behind the paywall or do you make everything available and make it for free? And we stand for free in terms of our listeners. But I'd say Spotify's really not in the business anymore. SiriusXM had a couple high profile. God bless them. What happens with those in terms of high profile acquisitions on the podcasting side? But again, you know, for us, you know, that importance on the publishing side in terms of the IP, and controlling that IP and controlling what many of you may be aware of, like the RSS feeds and the way the podcastings are delivering. That's critically important. And then why do people come to us? Because, you know, we have the NFL, right?
The biggest brand on the planet. We have Shonda Rhimes. You know, we do, you know, the NBA in podcasts. We do Malcolm Gladwell. We do Jay Shetty. People come to us because they have the greatest success of being successful with a podcast. You know, yes, they might be able to go to somebody else for a minimum guarantee for a short period of time, but that's, I think that's proven out to be very short-term thinking. As you see people that have kind of gone into podcasting, gone in uneconomically, maybe gone in for the wrong reasons, and you've clearly seen them back away. As I said, just again, think about podcasting simply as AM, FM, radio on demand. There's no relationship between making an expensive podcast and success.
And so it's not an expensive medium, but that ability to understand how to make a podcast, that is really nothing more than a great dinner conversation and how to promote that podcast and how to monetize that podcast. And one last piece I would remind everybody of, if you go back a couple years, podcasting was mainly a DR, a direct response, advertising medium. It's only the last couple years that big advertisers have come to podcasting, which we've brought. And that's critically important because big advertisers bring big dollars out there. So that's why I say, you know, I'm not the biggest sports person in the world, but we're in the early innings, or the top of the first ever, I think, in the podcasting life cycle.
All right, great. Maybe we could talk about some more recent results and some financial aspects of the business. You've been doing a good job of managing costs and taking costs out of the business. Could you just talk about, you know, where you are in terms of cost optimization and margin optimization?
Sure, Greg. You know, look, everything for us is a way of life in terms of cost and efficiencies, so for those of you that haven't followed us closely, we've had numerous cost takeouts over the years, and by the way, these were all. We're able to do this because of AI technology investments in the company that we've made historically. If you know, a year ago at this point, the end of 2024, we announced a $200 million-dollar net $150 million-dollar cost program for 2025, and by the way, when we announced these programs, they are all identified already. This is not saying we're going to do this, you know, or whether they involve people or office space or other aspects of cost reduction. When we announce them, they've all been identified and implemented.
So for 2025, we reduced the company's expense base by $150 million, real net over net real cost. On the last earnings call, we announced an additional $50 million cost program for 2026, starts 1/1/2026. And the way to think about it comes out ratably throughout the year, about $25 million a quarter. And again, I would invite you, if you look at our third quarter investor presentation, which we take feedback on and continue to try and update. And so things are very clear, but these are all highlighted in there.
All right. And, are these coming out of the Multi-platform Group? Like, where are these targeted, where are these cuts targeted? And, you know, are you putting money back into the digital group?
Yeah, they are, well, first of all, all these numbers are over both groups, multi-platform and digital. Beause as a reminder, you know, digital has, you know, podcasting, streaming website, social extension. So there's, you know, multiple pieces that are there. A majority of them are coming out of the Multi-platform group. If you look at the breakout there and the Digital Audio Group, which is, we've talked about and has had great growth and continue to have great growth and great margins. You know, one of the things in business you always have to be careful of is, yes, you want to feed your winners, which we do, but at the same point in time, you can very easily be lulled because things are growing so well and the cost just growing and justify everything out there.
So, you know, what we try and do is discipline ourselves and we're constantly looking at both groups, including the digital group, which is great growth. If we had started this company today or this business today, or this area business today, you know, would we have the same cost base that we have? And so we're just constantly looking at that. And quite frankly, also, you know, things like AI technology, you know, often an overused word out there. But you know, how do you take advantage of that? You know, particularly for task, day-to-day task, you know, things like sales support.
You know, it's done an amazing job of allowing our hosts, you know, whether it's Ryan Seacrest or Elvis Duran or Charlamagne, Bobby Bones, all these people, their ability to stay more in touch with their audience, which gives us more rich data to present to our advertisers to advertise and be more efficient with the results. To give everybody some context, if you go back, you know, four or five years ago, we had about 13,000 people in our company at iHeart. Today we're at about 8,500 individuals. We had about 4 million sq ft of office space. Today we're at about 2 million sq ft of office space. So, I think for us, we're going to, you know, taking out costs, making ourselves more efficient, taking advantage of technology that will just continue and continue and continue. It's a way of life here.
Okay. And then, maybe you could just touch upon the balance sheet and cash flow. Where are you in terms of leverage and where do you want to get that to?
We haven't really, you know, what we've said publicly and is that we want to continue to deleverage. You know, we generate, you know, free cash flow every year, but in terms of a risk profile out there, it's important bcause we do know that even though, you know, equity investors would like a little less, you know, in general, would like a little, not all of them, but would like a little less risk in terms of leverage profile. The information we have out there when we restructured our debt at the end of last year, the information out there is that we want to get into 3-3.5 leverage EBITDA on a leverage basis.
And then today, depending on how you look at it, you know, we're probably somewhere, depending on secured, unsecured, you know, approximately, you know, 5.5-6 times, depending because people look at it, you know, different ways, depending on the classes of debt.
Okay. All right. Kind of close to the end of our allotted time here. So I just wanted to finish off with asking about where you think you are in terms of the digital transformation of the business, kind of from traditional radio broadcast to more of kind of a broad-based audio platform? Where are we in that transition? And then maybe leave it off to you to with some any closing comments beyond that.
Well, first of all, and thank you, Greg, for this, by the way. Let me say that. I think if you kind of look back . You say about transformation, you know, as I articulated during the conversation, we now are getting our broadcast inventory into the buying system so it could be bought and sold like digital. And again, so in terms of the transformation, that's really the last big piece out there. And by the way, just to be clear with everybody, we are running broadcast inventory now in programmatic, in automated buying and selling out there. We announced DSP announcements throughout the year with a number of players like Yahoo and DV 360.
And all you're hearing in terms of that is as we go to 2026 and we, you know, we'll be at CES and everything else, there'll be more coming, and it'll be more impactful on the company as we go forward. And then, you know, from that digital transformation, I think we're in terms of the audio tech stack that I mentioned, you know, bringing our broadcast inventory to be bought and sold like digital is, is a big piece of that out there. Having our broadcast inventory now being able to be measured more and more out there, like digital campaigns are measured there. And so I think, again, and our listening is rock solid. And so we are as optimistic as we've ever been about this company out there, and its relevancy and its ability to generate growth and generate significant free cash flow.
And, you know, from us, from an iHeart standpoint, you know, we've been at this for a number of years. And people talk about, Oh my God, it's digital or you've been doing the broadcast. Well, we started doing this a number of years ago and we said now all the pieces are coming together until all of our platforms can be bought as efficiently as any other advertising company in the U.S. And so we're excited about the future and thank you all for listening.
All right. Thanks so much, Rich. And thanks everyone else for listening in. With that, we will wrap it up.
Thank you.