Even as the U.S. advertising market’s slowdown stunted iHeartMedia’s post-pandemic recovery, the company posted record revenue of $3.9 billion in 2022, up 9.9% from 2021, the company announced on Tuesday (Feb. 28).
“The macro economic conditions are certainly impacting the entire advertising marketplace,” CEO Bob Pittman said during Tuesday’s earnings call. “Even the podcasting industry is not immune to some effects of the advertising slowdown.”
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $950.3 million, up 17.2% year over year. That’s the second-best adjusted EBITDA in the company’s history following 2019 when the company hit $1 billion. Annual free cash flow of $259 million was also the second-best in history after reaching $400 million in 2019.
Podcasts, the company’s fast-growing segment, generated revenue of $358.4 million in 2022, up 41.9% from the prior year. The high-growth podcasting business could benefit from what Pittman called “a transition toward more rational behaviors” in spending. Pittman didn’t point to any specific company, but an era of big spending on podcast content deals appears to be over at Spotify, where chief content officer Dawn Ostroff recently left the company and the head of audio talk shows and partnerships, Max Cutler, also departed. “I think there were people who thought they were buying [market] share, but were really buying losses,” he said.
Digital revenue other than podcasts improved 14% to $663.4 million. Broadcast radio, by far iHeartMedia’s biggest revenue source, grew 4.1% to $1.89 billion. Network revenue was flat at $503.2 million. Revenue from sponsorships and events climbed 17.9% to $189 million. Revenue from the audio and media services group jumped 22.7% to $304.3 million.
In the fourth quarter, iHeartMedia’s revenue grew 6% year over year to $1.13 billion, the high end of guidance of 2% to 6%. Adjusted EBITDA was $316 million, in the middle of its guidance range of $305 million to $325 million. Both revenue and adjusted EBITDA hit record highs for any quarter in the company’s history.
Although the company started 2022 strong, “increased volatility and uncertainty” moderated annual results, Pittman said. Some of that slowdown was “self-inflicted,” he admitted. During the fourth quarter, iHeartMedia put greater emphasis on “sales initiatives and commission structures on targeting certain incremental revenue streams,” he explained. “In retrospect, we believe those decisions had a negative impact on our revenue growth and margin for the quarter.”
As a result, iHeartMedia has “initiated steps to realign” its focus on “higher-margin digital revenue opportunities,” said Pittman. “We believe we’ll start seeing the positive impact of those adjustments in both revenue growth and margins as early as Q2.”
