iHeartMedia, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) March 31, 2021 December 31, 2020 (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 529,134 $ 720,662 Accounts receivable, net of allowance of $ 33,228 in 2021 and $ 38,777 in 2020 704,096 801,380 Prepaid expenses 99,074 79,508 Other current assets 33,777 17,426 Total Current Assets 1,366,081 1,618,976 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net 825,208 811,702 INTANGIBLE ASSETS AND GOODWILL Indefinite-lived intangibles - licenses 1,771,882 1,770,345 Other intangibles, net 1,881,023 1,924,492 Goodwill 2,313,223 2,145,935 OTHER ASSETS Operating lease right-of-use assets 781,459 825,887 Other assets 112,122 105,624 Total Assets $ 9,050,998 $ 9,202,961 CURRENT LIABILITIES Accounts payable $ 157,032 $ 149,333 Current operating lease liabilities 85,242 76,503 Accrued expenses 249,224 265,651 Accrued interest 69,843 68,054 Deferred revenue 143,491 123,488 Current portion of long-term debt 28,628 34,775 Total Current Liabilities 733,460 717,804 Long-term debt 5,976,358 5,982,155 Series A Mandatorily Redeemable Preferred Stock, par value $ 0.001 , authorized 60,000 shares, 60,000 shares issued in 2021 and 2020 60,000 60,000 Noncurrent operating lease liabilities 748,842 764,491 Deferred income taxes 647,097 556,477 Other long-term liabilities 71,290 71,217 Commitments and contingent liabilities (Note 6) STOCKHOLDERS’ EQUITY Noncontrolling interest 7,830 8,350 Preferred stock, par value $ .001 per share, 100,000,000 shares authorized, no shares issued and outstanding — — Class A Common Stock, par value $ .001 per share, authorized 1,000,000,000 shares, issued 112,033,028 and 64,726,864 shares in 2021 and 2020, respectively 112 65 Class B Common Stock, par value $ .001 per share, authorized 1,000,000,000 shares, issued 29,070,192 and 6,886,925 shares in 2021 and 2020, respectively 29 7 Special Warrants, 5,379,822 and 74,835,899 issued and outstanding in 2021 and 2020, respectively — — Additional paid-in capital 2,854,647 2,849,020 Accumulated deficit ( 2,045,343 ) ( 1,803,620 ) Accumulated other comprehensive income (loss) ( 22 ) 194 Cost of shares ( 261,181 in 2021 and 254,066 in 2020) held in treasury ( 3,302 ) ( 3,199 ) Total Stockholders' Equity 813,951 1,050,817 Total Liabilities and Stockholders' Equity $ 9,050,998 $ 9,202,961 See Notes to Consolidated Financial Statements 1 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (In thousands, except per share data) Three Months Ended March 31, 2021 2020 Revenue $ 706,665 $ 780,634 Operating expenses: Direct operating expenses (excludes depreciation and amortization) 292,813 293,921 Selling, general and administrative expenses (excludes depreciation and amortization) 342,330 391,801 Depreciation and amortization 107,363 96,768 Impairment charges 37,744 1,727,857 Other operating expense, net 2,771 1,066 Operating loss ( 76,356 ) ( 1,730,779 ) Interest expense, net 85,121 90,089 Gain (Loss) on investments, net 191 ( 9,955 ) Equity in loss of nonconsolidated affiliates ( 28 ) ( 564 ) Other expense, net ( 807 ) ( 7,860 ) Loss before income taxes ( 162,121 ) ( 1,839,247 ) Income tax benefit (expense) ( 79,935 ) 150,511 Net loss ( 242,056 ) ( 1,688,736 ) Less amount attributable to noncontrolling interest ( 333 ) — Net loss attributable to the Company $ ( 241,723 ) $ ( 1,688,736 ) Other comprehensive loss, net of tax: Foreign currency translation adjustments ( 216 ) ( 104 ) Other comprehensive loss, net of tax ( 216 ) ( 104 ) Comprehensive loss ( 241,939 ) ( 1,688,840 ) Less amount attributable to noncontrolling interest — — Comprehensive loss attributable to the Company $ ( 241,939 ) $ ( 1,688,840 ) Net loss attributable to the Company per common share: Basic $ ( 1.65 ) $ ( 11.60 ) Weighted average common shares outstanding - Basic 146,214 145,614 Diluted $ ( 1.65 ) $ ( 11.60 ) Weighted average common shares outstanding - Diluted 146,214 145,614 See Notes to Consolidated Financial Statements 2 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (In thousands, except share data) Controlling Interest Common Shares (1) Non- controlling Interest Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Treasury Stock Class A Shares Class B Shares Special Warrants Total Balances at December 31, 2020 64,726,864 6,886,925 74,835,899 $ 8,350 $ 72 $ 2,849,020 $ ( 1,803,620 ) $ 194 $ ( 3,199 ) $ 1,050,817 Net loss ( 333 ) — — ( 241,723 ) — — ( 242,056 ) Vesting of restricted stock and other 30,372 — — 11 — — ( 103 ) ( 92 ) Share-based compensation — — 5,685 — — — 5,685 Dividend declared and paid to noncontrolling interests ( 187 ) — — — — — ( 187 ) Conversion of Special Warrants to Class A and Class B Shares 47,121,747 22,337,312 ( 69,459,059 ) — 69 ( 69 ) — — — — Conversion of Class B Shares to Class A Shares 154,045 ( 154,045 ) — — — — — — — Other 2,982 — — — — — — — Other comprehensive loss — — — — ( 216 ) — ( 216 ) Balances at March 31, 2021 112,033,028 29,070,192 5,379,822 $ 7,830 $ 141 $ 2,854,647 $ ( 2,045,343 ) $ ( 22 ) $ ( 3,302 ) $ 813,951 (1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2021. See Notes to Consolidated Financial Statements 3 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (In thousands, except share data) Controlling Interest Common Shares (1) Non- controlling Interest Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Treasury Stock Class A Shares Class B Shares Special Warrants Total Balances at December 31, 2019 57,776,204 6,904,910 81,046,593 $ 9,123 $ 65 $ 2,826,533 $ 112,548 $ ( 750 ) $ ( 2,078 ) $ 2,945,441 Net loss — — — ( 1,688,736 ) — — ( 1,688,736 ) Vesting of restricted stock 21,686 — — — — — ( 87 ) ( 87 ) Share-based compensation — — 4,257 — — — 4,257 Conversion of Special Warrants to Class A and Class B Shares 2,126,591 616 ( 2,127,207 ) — 2 ( 2 ) — — — — Conversion of Class B Shares to Class A Shares 5,915 ( 5,915 ) — — — — — — — Other — — — ( 1,469 ) — — ( 1,469 ) Other comprehensive loss — — — — ( 104 ) — ( 104 ) Balances at March 31, 2020 59,930,396 6,899,611 78,919,386 $ 9,123 $ 67 $ 2,830,788 $ ( 1,577,657 ) $ ( 854 ) $ ( 2,165 ) $ 1,259,302 (1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2020. See Notes to Consolidated Financial Statements 4 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three Months Ended March 31, 2021 2020 Cash flows from operating activities: Net loss $ ( 242,056 ) $ ( 1,688,736 ) Reconciling items: Impairment charges 37,744 1,727,857 Depreciation and amortization 107,363 96,768 Deferred taxes 78,346 ( 152,216 ) Provision for doubtful accounts 5,846 9,428 Amortization of deferred financing charges and note discounts, net 1,519 514 Share-based compensation 5,685 4,257 Loss on disposal of operating and other assets 952 392 (Gain) Loss on investments ( 191 ) 9,955 Equity in loss of nonconsolidated affiliates 28 564 Barter and trade income ( 2,244 ) ( 4,983 ) Other reconciling items, net 260 766 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Decrease in accounts receivable 113,170 143,419 Increase in prepaid expenses and other current assets ( 35,647 ) ( 15,561 ) Increase in other long-term assets ( 3,317 ) ( 1,059 ) Decrease in accounts payable and accrued expenses ( 16,944 ) ( 42,734 ) Increase (decrease) in accrued interest 1,789 ( 9,971 ) Increase in deferred income 18,881 12,439 Increase in other long-term liabilities 544 441 Cash provided by operating activities 71,728 91,540 Cash flows from investing activities: Business combinations ( 230,816 ) — Purchases of property, plant and equipment ( 18,950 ) ( 21,664 ) Change in other, net 442 ( 10,136 ) Cash used for investing activities ( 249,324 ) ( 31,800 ) Cash flows from financing activities: Proceeds from long-term debt and credit facilities — 350,000 Payments on long-term debt and credit facilities ( 13,547 ) ( 162,439 ) Change in other, net ( 264 ) ( 278 ) Cash provided by (used for) financing activities ( 13,811 ) 187,283 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 122 ) ( 524 ) Net increase (decrease) in cash, cash equivalents and restricted cash ( 191,529 ) 246,499 Cash, cash equivalents and restricted cash at beginning of period 721,187 411,618 Cash, cash equivalents and restricted cash at end of period $ 529,658 $ 658,117 SUPPLEMENTAL DISCLOSURES: Cash paid for interest $ 82,833 $ 101,363 Cash paid for income taxes — 735 See Notes to Consolidated Financial Statements 5 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION Preparation of Interim Financial Statements All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to iHeartMedia, Inc. and its consolidated subsidiaries. The accompanying consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. As of January 1, 2021, the Company began reporting based on three reportable segments: ▪ the iHeartMedia Multiplatform Group, which includes the Company's Broadcast radio, Networks and Sponsorships and Events businesses; ▪ the iHeartMedia Digital Audio Group, which includes all of the Company's Digital businesses, including Podcasting; and ▪ the Audio & Media Services Group, which includes Katz Media Group (“Katz Media”), a full-service media representation business, and RCS Sound Software ("RCS"), a provider of scheduling and broadcast software and services. These reporting segments reflect how senior management operates the Company, align with certain leadership and organizational changes implemented in the first quarter 2021 and provide improved visibility into the underlying performances, results, and margin profiles of our distinct businesses. Additionally, as of January 1, 2021, Segment Adjusted EBITDA is the segment profitability metric reported to the Company's Chief Operating Decision Maker for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. Segment Adjusted EBITDA is calculated as Revenue less operating expenses, excluding restructuring expenses and share-based compensation expenses. Restructuring expenses primarily include severance expenses incurred in connection with cost saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle The corresponding current and prior period segment disclosures have been recast to reflect the current segment presentation. See Note 9, Segment Data . The consolidated financial statements include the accounts of the Company and its subsidiaries. Also included in the consolidated financial statements are entities for which the Company has a controlling interest or is the primary beneficiary. Investments in companies which the Company does not control, but exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process. COVID-19 Our business has been adversely impacted by the novel coronavirus pandemic (“COVID-19”), its impact on the operating and economic environment and related, near-term advertiser spending decisions. The Company's revenue in the latter half of the month ended March 31, 2020, through the remainder of 2020 and in the three months ended March 31, 2021 was significantly and negatively impacted as a result of a decline in advertising spend driven by COVID-19, and the Company's management took proactive actions during 2020, which are continuing into 2021, to expand the Company’s financial flexibility by reducing expenses and preserving cash as a result of such impact. 6 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES Act”) was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The provisions of the CARES Act resulted in an increase to allowable interest deductions of $ 179.4 million during 2020. In addition, the Company was able to defer the payment of $ 29.3 million in certain employment taxes during 2020, half of which will be due on December 31, 2021 and the other half will be due on December 31, 2022. As of March 31, 2021, the Company has claimed $ 12.4 million in refundable payroll tax credits related to the CARES Act provisions. As of March 31, 2021, the Company had approximately $ 529.1 million in cash and cash equivalents. While the Company expects COVID-19 to continue to negatively impact the results of operations, cash flows and financial position of the Company for some time into the future, the related financial impact cannot be reasonably estimated at this time. Based on current available liquidity, the Company expects to be able to meet its obligations as they become due over the coming year. Reclassifications and New Segment Presentation Certain prior period amounts have been reclassified to conform to the 2021 presentation. In connection with the organization and leadership changes resulting in the realignment of its reportable segments as discussed above, the Company also determined that all selling, general and administrative expenses incurred by its reportable segments and by its corporate functions would be reported together as Selling, general and administrative expenses. Amounts presented in prior years as Corporate expenses have been reclassified as Selling, general and administrative expenses to conform to the current presentation. Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts reported in the Consolidated Statements of Cash Flows: (In thousands) March 31, 2021 December 31, 2020 Cash and cash equivalents $ 529,134 $ 720,662 Restricted cash included in: Other assets 524 525 Total cash, cash equivalents and restricted cash in the Statement of Cash Flows $ 529,658 $ 721,187 Certain Relationships and Related Party Transactions From time to time, certain companies in which the Company holds minority equity interests, purchase advertising in the ordinary course. None of these ordinary course transactions have a material impact on the Company. New Accounting Pronouncements Recently Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of the Interbank Offered Rate Transition on Financial Reporting to provide optional relief from applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. In addition, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) – Scope, to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective upon issuance and generally can be applied through December 31, 2022. We are currently evaluating the future impact of adoption of this standard. 7 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 – REVENUE Disaggregation of Revenue The following tables show revenue streams for the three months ended March 31, 2021 and 2020: (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Eliminations Consolidated Three Months Ended March 31, 2021 Revenue from contracts with customers: Broadcast Radio (1) $ 358,536 $ — $ — $ — $ 358,536 Networks (2) 115,086 — — — 115,086 Sponsorship and Events (3) 22,393 — — — 22,393 Digital, excluding Podcast (4) — 119,201 — ( 1,894 ) 117,307 Podcast (5) — 38,352 — — 38,352 Audio & Media Services (6) — — 55,137 ( 1,861 ) 53,276 Other (7) 1,399 — — ( 167 ) 1,232 Total 497,414 157,553 55,137 ( 3,922 ) 706,182 Revenue from leases (8) 483 — — — 483 Revenue, total $ 497,897 $ 157,553 $ 55,137 $ ( 3,922 ) $ 706,665 Three Months Ended March 31, 2020 Revenue from contracts with customers: Broadcast Radio (1) $ 461,660 $ — $ — $ — $ 461,660 Networks (2) 134,577 — — — 134,577 Sponsorship and Events (3) 29,348 — — — 29,348 Digital, excluding Podcast (4) — 76,921 — — 76,921 Podcast (5) — 15,855 — — 15,855 Audio & Media Services (6) — — 60,227 ( 1,811 ) 58,416 Other (7) 3,560 — — ( 167 ) 3,393 Total 629,145 92,776 60,227 ( 1,978 ) 780,170 Revenue from leases (8) 464 — — — 464 Revenue, total $ 629,609 $ 92,776 $ 60,227 $ ( 1,978 ) $ 780,634 (1) Broadcast Radio revenue is generated through the sale of advertising time on the Company’s domestic radio stations. (2) Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies. (3) Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent. (4) Digital, excluding Podcast revenue is generated through the sale of streaming and display advertisements on digital platforms and through subscriptions to iHeartRadio streaming services. (5) Podcast revenue is generated through the sale of advertising on the Company's podcast network. (6) Audio & Media Services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast and webcast software and technology and services to radio stations, television music channels, cable companies, satellite music networks and Internet stations worldwide. (7) Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements. (8) Revenue from leases is primarily generated by the lease of towers to other media companies, which are all categorized as operating leases. 8 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Trade and Barter Trade and barter transactions represent the exchange of advertising spots for merchandise, services, advertising and promotion or other assets in the ordinary course of business. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised to the customer. Trade and barter revenues and expenses, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows: Three Months Ended March 31, (In thousands) 2021 2020 Trade and barter revenues $ 31,946 $ 52,678 Trade and barter expenses 27,998 54,998 The Company recognized barter revenue of $ 2.2 million and $ 5.0 million during the three months ended March 31, 2021 and 2020, respectively, in connection with investments made in companies in exchange for advertising services. The following tables show the Company’s deferred revenue balance from contracts with customers: Three Months Ended March 31, (In thousands) 2021 2020 Deferred revenue from contracts with customers: Beginning balance (1) $ 145,493 $ 162,068 Revenue recognized, included in beginning balance ( 39,531 ) ( 80,055 ) Additions, net of revenue recognized during period, and other 59,379 93,308 Ending balance $ 165,341 $ 175,321 (1) Deferred revenue from contracts with customers, which excludes other sources of deferred revenue that are not related to contracts with customers, is included within deferred revenue and other long-term liabilities on the Consolidated Balance Sheets, depending upon when revenue is expected to be recognized. The Company’s contracts with customers generally have terms of one year or less; however, as of March 31, 2021, the Company expects to recognize $ 260.0 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years . Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales. 9 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Revenue from Leases As of March 31, 2021, the future lease payments to be received by the Company are as follows: (In thousands) 2021 $ 1,301 2022 1,194 2023 1,141 2024 965 2025 784 Thereafter 11,175 Total $ 16,560 NOTE 3 – LEASES The Company enters into operating lease contracts for land, buildings, structures and other equipment. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases primarily include land and building lease contracts and leases of radio towers. Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers. Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use assets ("ROU assets") and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively. The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term. The Company tests for impairment of assets whenever events and circumstances indicate that such assets might be impaired. During the three months ended March 31, 2021, the Company recognized non-cash impairment charges of $ 37.7 million, including $ 28.8 million related to ROU assets, and $ 8.9 million related to leasehold improvements as a result of proactive decisions by management to abandon and sublease a number of operating leases in connection with strategic actions to streamline the Company’s real estate footprint as part of the Company’s modernization initiatives. The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment." The following table provides supplemental cash flow information related to leases for the periods presented: Three Months Ended March 31, (In thousands) 2021 2020 Cash paid for amounts included in measurement of operating lease liabilities $ 29,951 30,613 Lease liabilities arising from obtaining right-of-use assets (1) $ 8,276 $ 7,620 (1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the three months ended March 31, 2021 and 2020, respectively. 10 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The Company reflects changes in the lease liability and changes in the ROU asset on a net basis in the Statements of Cash Flows. The non-cash operating lease expense was $ 24.8 million and $ 24.1 million for the three months ended March 31, 2021 and three months ended March 31, 2020, respectively. NOTE 4– PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL Acquisitions On March 31, 2021, the Company acquired Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W. Scripps Company for $ 228.4 million in cash. The assets acquired as part of this transaction consisted of $ 69.7 million in current and fixed assets, consisting primarily of accounts receivable and technology, and $ 190.7 million in intangible assets, consisting primarily of customer relationships, along with $ 167.4 million in goodwill (of which $ 6.9 million is tax-deductible). The Company also assumed liabilities of $ 32.0 million, consisting primarily of accounts payable and deferred tax liabilities. The assessment of fair value of assets acquired and liabilities assumed is preliminary and is based on information that was available to management at the time these consolidated financial statements were prepared. The finalization of the Company’s acquisition accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. Property, Plant and Equipment The Company’s property, plant and equipment consisted of the following classes of assets as of March 31, 2021 and December 31, 2020, respectively: (In thousands) March 31, 2021 December 31, 2020 Land, buildings and improvements $ 378,226 $ 386,980 Towers, transmitters and studio equipment 170,689 169,788 Computer equipment and software 457,279 398,084 Furniture and other equipment 45,644 45,711 Construction in progress 24,249 25,073 1,076,087 1,025,636 Less: accumulated depreciation 250,879 213,934 Property, plant and equipment, net $ 825,208 $ 811,702 Indefinite-lived Intangible Assets The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Multiplatform Group segment. The Company performs its annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. In addition, the Company tests for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired. As a result of the COVID-19 pandemic and the economic downturn starting in March 2020, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses, resulting in a non-cash impairment charge of $ 502.7 million on its FCC licenses. Other Intangible Assets Other intangible assets consists of definite-lived intangible assets, which primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets. These assets are recorded at amortized cost. 11 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value. The Company performed interim impairment tests as of March 31, 2020 on its other intangible assets as a result of the COVID-19 pandemic and economic slowdown. Based on the Company’s test of recoverability using estimated undiscounted future cash flows, the carrying values of the Company’s definite-lived intangible assets were determined to be recoverable, and no impairment was recognized. The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of March 31, 2021 and December 31, 2020, respectively: (In thousands) March 31, 2021 December 31, 2020 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Customer / advertiser relationships 1,656,502 ( 328,818 ) 1,620,509 ( 286,066 ) Talent and other contracts 377,100 ( 98,796 ) 375,900 ( 84,065 ) Trademarks and tradenames 335,861 ( 62,645 ) 326,061 ( 54,358 ) Other 7,651 ( 5,832 ) 31,351 ( 4,840 ) Total $ 2,377,114 $ ( 496,091 ) $ 2,353,821 $ ( 429,329 ) Total amortization expense related to definite-lived intangible assets for the Company for the three months ended March 31, 2021 and the three months ended March 31, 2020 was $ 66.3 million and $ 64.3 million, respectively. As acquisitions and dispositions occur in the future, amortization expense may vary. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets: (In thousands) 2022 $ 258,413 2023 249,317 2024 247,860 2025 216,485 2026 204,474 12 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Goodwill The following table presents the changes in the carrying amount of goodwill: (In thousands) Audio Audio & Media Services Consolidated Balance as of December 31, 2019 $ 3,221,468 $ 104,154 $ 3,325,622 Impairment ( 1,224,374 ) — ( 1,224,374 ) Acquisitions 44,606 — 44,606 Dispositions ( 164 ) — ( 164 ) Foreign currency — 245 245 Balance as of December 31, 2020 $ 2,041,536 $ 104,399 $ 2,145,935 (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Consolidated Balance as of January 1, 2021 $ 1,462,217 $ 579,319 $ 104,399 $ 2,145,935 Acquisitions — 167,406 — 167,406 Foreign currency — — ( 118 ) ( 118 ) Balance as of March 31, 2021 $ 1,462,217 $ 746,725 $ 104,281 $ 2,313,223 As a result of the leadership and organizational changes implemented in the first quarter 2021, as described in Note 1, Basis of Presentation , the Company re-evaluated its reporting units and allocated goodwill to these new reporting units. Refer to Note 9, Segment Data, for additional information on our segments. Goodwill was allocated to these new reporting units based on the relative fair values of these reporting units. Fair value was calculated using the expected present value of future cash flows, and included estimates, judgments and assumptions consistent with those of a market participant that management believes were appropriate in the circumstances. The estimates and judgments that most significantly affect the fair value calculations are assumptions related to long-term growth rates, expected profit margins and discount rates. The Company did not recast prior-period goodwill balances to the new reporting units as it was impractical to do so. Goodwill Impairment The Company performs its annual impairment test on goodwill as of July 1 of each year. The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. As a result of the changes in the Company's management structure and its reportable segments effective at the beginning of 2021, the Company performed an interim impairment test on goodwill as of January 1, 2021. No impairment charges were recorded in the first quarter of 2021 in connection with the interim impairment test. The Company performed an interim impairment test on goodwill in the first quarter of 2020 and recognized a non-cash impairment charge of $ 1.2 billion to reduce goodwill as a result of the COVID-19 pandemic and its adverse effect on the U.S. economy. NOTE 5 – LONG-TERM DEBT Long-term debt outstanding for the Company as of March 31, 2021 and December 31, 2020 consisted of the following: 13 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (In thousands) March 31, 2021 December 31, 2020 Term Loan Facility due 2026 $ 2,075,005 $ 2,080,259 Incremental Term Loan Facility due 2026 446,625 447,750 Asset-based Revolving Credit Facility due 2023 (1) — — 6.375 % Senior Secured Notes due 2026 800,000 800,000 5.25 % Senior Secured Notes due 2027 750,000 750,000 4.75 % Senior Secured Notes due 2028 500,000 500,000 Other secured subsidiary debt (2) 22,169 22,753 Total consolidated secured debt 4,593,799 4,600,762 8.375 % Senior Unsecured Notes due 2027 1,450,000 1,450,000 Other unsecured subsidiary debt 270 6,782 Original issue discount ( 18,020 ) ( 18,817 ) Long-term debt fees ( 21,063 ) ( 21,797 ) Total debt 6,004,986 6,016,930 Less: Current portion 28,628 34,775 Total long-term debt $ 5,976,358 $ 5,982,155 (1) As of March 31, 2021, the senior secured asset-based revolving credit facility (the “ABL Facility”) had a borrowing base of $ 348.5 million, no outstanding borrowings and $ 32.1 million of outstanding letters of credit, resulting in $ 316.4 million of borrowing base availability. As a result of certain restrictions in the Company's debt and preferred stock agreements, as of March 31, 2021, approximately $ 178 million was available to be drawn upon under the ABL Facility. (2) Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2022 through 2045. The Company’s weighted average interest rate was 5.4 % and 5.5 % as of March 31, 2021 and December 31, 2020, respectively. The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $ 6.2 billion as of March 31, 2021 and December 31, 2020. Under the fair value hierarchy established by ASC 820-10-35, the market value of the Company’s debt is classified as either Level 1 or Level 2. Under the terms of the Term Loan Facility Credit Agreement, iHeartCommunications, Inc. ("iHeartCommunications") made quarterly payments of $ 6.4 million and $ 5.25 million during the three months ended March 31, 2021 and 2020, respectively. 14 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Mandatorily Redeemable Preferred Stock As previously disclosed, on March 14, 2018, the Company, iHeartCommunications and certain of the Company's direct and indirect domestic subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court"). On April 28, 2018, the Company and the other Debtors filed a plan of reorganization (as amended, the “Plan of Reorganization”) and a related disclosure statement with the Bankruptcy Court. On January 22, 2019, the Plan of Reorganization was confirmed by the Bankruptcy Court. On May 1, 2019 (the “Effective Date”), in accordance with the Plan of Reorganization, iHeart Operations issued 60,000 shares of its Series A Perpetual Preferred Stock, par value $ 0.001 per share (the "iHeart Operations Preferred Stock"), having an aggregate initial liquidation preference of $ 60.0 million for a cash purchase price of $ 60.0 million. The iHeart Operations Preferred Stock was purchased by a third party investor. As of March 31, 2021, the liquidation preference of the iHeart Operations Preferred Stock was $ 60.0 million. As further described below, the iHeart Operations Preferred Stock is mandatorily redeemable for cash at a date certain and therefore is classified as a liability in the Company's balance sheet. Holders of the iHeart Operations Preferred Stock are entitled to receive, as declared by the board of directors of iHeart Operations, in respect of each share, cumulative dividends accruing daily and payable quarterly. Dividends, if declared, will be payable on March 31, June 30, September 30 and December 31 of each year (or on the next business day if such date is not a business day). During the three months ended March 31, 2021 and 2020 the Company recognized $ 2.4 million and $ 1.8 million, respectively, of interest expense related to dividends on mandatorily redeemable preferred stock. Other than as set forth below, iHeart Operations may not redeem the iHeart Operations Preferred Stock at its option prior to the third anniversary of the issue date of the iHeart Operations Preferred Stock. Upon consummation of certain equity offerings, iHeart Operations may, at its option, redeem all or a part of the iHeart Operations Preferred Stock for the liquidation preference plus a make-whole premium. At any time on or after the third anniversary of the issue date, May, 1, 2022, the iHeart Operations Preferred Stock may be redeemed at the option of iHeart Operations, in whole or in part, for cash at a redemption price equal to the liquidation preference per share. The shares of iHeart Operations Preferred Stock include repurchase rights, pursuant to which the holders may require iHeartMedia or iHeartCommunications to purchase the iHeart Operations Preferred Stock after the fifth anniversary of the issue date. On the tenth anniversary of the issue date, the shares of iHeart Operations Preferred Stock will be subject to mandatory redemption for an amount equal to the liquidation preference. Surety Bonds, Letters of Credit and Guarantees As of March 31, 2021, the Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $ 8.3 million and $ 32.5 million, respectively. These surety bonds and letters of credit relate to various operational matters including insurance, lease and performance bonds as well as other items. NOTE 6 – COMMITMENTS AND CONTINGENCIES The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations. Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts: commercial/contract disputes; defamation matters; employment and benefits related claims; intellectual property claims; real estate maters; governmental investigations; and tax disputes. 15 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Alien Ownership Restrictions and FCC Petitions for Declaratory Ruling The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership to be in the public interest. Under the Plan of Reorganization, the Company committed to file a petition for declaratory relief (the “PDR”) requesting the FCC to permit the Company to be up to 100% foreign-owned. On November 5, 2020, the FCC issued a declaratory ruling granting the relief requested by the PDR (the “Declaratory Ruling”), subject to certain conditions, as described further in Note 8, Stockholder's Equity below. On November 9, 2020, the Company notified the holders of Special Warrants of the commencement of an exchange process (the “Exchange Notice”). On January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules (the “Exchange”). Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock. See “Item 1. Business – Regulation of Our Business, Alien Ownership Restrictions” and “Item 1A. Risk Factors - Regulatory, Legislative and Litigation Risks, Regulations imposed by the Communications Act and the FCC limit the amount of foreign individuals or entities that may invest in our capital stock without FCC approval” of our Annual Report on Form 10-K for the year ended December 31, 2020 for additional information. On March 8, 2021, the Company filed a remedial petition for declaratory ruling (the “Remedial PDR”) with the FCC. The Remedial PDR relates to the acquisition by Global Media & Entertainment Ltd (f/k/a Honeycomb Investments Limited) (“Global Investments”) of the Company’s Class A Common Stock. Specifically, on February 5, 2021, Global Investments, The Global Media & Entertainment Investments Trust (the “GMEI Trust”), James Hill (as trustee of the GMEI Trust), Simon Groom (as trustee of the GMEI Trust) and Michael Tabor (as beneficiary of the GMEI Trust) (together with Global Investments and any affiliates or third parties to whom they may assign or transfer any of their rights or interests, the “GMEI Investors”) filed a Schedule 13D with the SEC, in which the GMEI Investors disclosed beneficial ownership of 9,631,329 shares of the Company’s Class A Common Stock, representing approximately 8.7 % of the Company’s outstanding Class A Common Stock. This ownership interest is inconsistent with the FCC’s foreign ownership rules and the Declaratory Ruling issued by the FCC relating to the Company’s foreign ownership on November 5, 2020, both of which limit a foreign investor in the GMEI Investors’ position to holding no more than 5% of the Company’s voting equity or total equity without prior FCC approval. The Remedial PDR, which was filed pursuant to the rules and regulations of the FCC, seeks (a) specific approval for the more than 5% equity and voting interests in the Company presently held by the GMEI Investors and (b) advance approval for the GMEI Investors to increase their equity and voting interest in the Company up to any non-controlling amount not to exceed 9.99%. The Remedial PDR remains pending before the FCC. Tax Matters Agreement On the Effective Date, the Company emerged from Chapter 11 and effectuated a series of transactions through which Clear Channel Outdoor Holdings, Inc. ("CCOH"), its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “Separation”). In connection with the Separation, the Company entered into the Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and CCOH and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation. The Tax Matters Agreement requires that iHeartMedia and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against certain tax claims related to the Separation. In addition, the Tax Matters Agreement requires that CCOH indemnify iHeartMedia for certain income taxes paid by iHeartMedia on behalf of CCOH and its subsidiaries. 16 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 7 – INCOME TAXES On March 11, 2021 the President signed into law the American Rescue Plan Act, which included provisions on taxes, health care, unemployment benefits, direct payments, state and local funding and other issues. The tax provisions will not have a material impact on the Company’s tax provision calculations. The Company’s income tax benefit (expense) for the three months ended March 31, 2021 and the three months ended March 31, 2020 consisted of the following components: (In thousands) Three Months Ended March 31, 2021 2020 Current tax expense $ ( 1,589 ) $ ( 1,705 ) Deferred tax benefit (expense) ( 78,346 ) 152,216 Income tax benefit (expense) $ ( 79,935 ) $ 150,511 The effective tax rate for the Company for the three months ended March 31, 2021 was ( 49.3 )%. The effective tax rate for the three months ended March 31, 2021 was primarily impacted by the deferred tax expense recorded for the valuation allowance against certain deferred tax assets for disallowed interest expense and net operating loss carryforwards due to the uncertainty of the Company’s ability to utilize those assets in future periods. The effective tax rate for the three months ended March 31, 2020 was 8.2 %. The effective tax rate for the period was primarily impacted by the impairment charges to non-deductible goodwill. The deferred tax benefit primarily consists of $ 125.5 million related to the FCC license impairment charges recorded during the period. NOTE 8 – STOCKHOLDER'S EQUITY Pursuant to the Company's 2019 Equity Incentive Plan, the Company has granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals. Share-based Compensation Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 5.7 million and $ 4.6 million for the Company for three months ended March 31, 2021 and the three months ended March 31, 2020, respectively. In August 2020, the Company issued performance-based restricted stock units ("Performance RSUs") to certain key employees. Such Performance RSUs vest upon the achievement of critical operational (cost savings) improvements and specific environmental, social and governance initiatives, which are being measured over an approximately 18-month period from the date of issuance. In the three months ended March 31, 2021, the Company recognized $ 0.5 million in relation to these Performance RSUs. As of March 31, 2021, there was $ 48.4 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions. This cost is expected to be recognized over a weighted average period of approximately 2.6 years. In addition, as of March 31, 2021, there was $ 1.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on certain performance conditions. Common Stock and Special Warrants The Company is authorized to issue 2,100,000,000 shares, consisting of (a) 1,000,000,000 shares of Class A Common Stock, par value $ 0.001 per share (the “Class A Common Stock”), (b) 1,000,000,000 shares of Class B Common Stock, par value $ 0.001 per share (the “Class B Common Stock”), and (c) 100,000,000 shares of preferred stock, par value $ 0.001 per share (the “Preferred Stock”). 17 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table presents the Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of March 31, 2021: March 31, 2021 (Unaudited) Class A Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized 112,033,028 Class B Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized 29,070,192 Special Warrants 5,379,822 Total Class A Common Stock, Class B Common Stock and Special Warrants issued 146,483,042 During the three months ended March 31, 2021, stockholders converted 154,045 shares of the Class B common stock into Class A common stock. During the three months ended March 31, 2020, stockholders converted 5,915 shares of the Class B common stock into Class A common stock. Special Warrants Each Special Warrant issued under the special warrant agreement entered into in connection with the Reorganization may be exercised by its holder to purchase one share of Class A common stock or Class B common stock at an exercise price of $ 0.001 per share, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, subject to certain exceptions, (a) such exercising holder owning more than 4.99 percent of the Company's outstanding Class A common stock, (b) more than 22.5 percent of the Company's capital stock or voting interests being owned directly or indirectly by foreign individuals or entities, (c) the Company exceeding any other applicable foreign ownership threshold or (d) violation of any provision of the Communications Act or restrictions on ownership or transfer imposed by the Company's certificate of incorporation or the decisions, rules and policies of the FCC. Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and certifications required under the special warrant agreement. The Communications Act and FCC regulations prohibit foreign entities or individuals from indirectly (i.e., through a parent company) owning or voting more than 25 percent of a licensee’s equity, unless the FCC determines that greater indirect foreign ownership is in the public interest. As described further in Note 6 above, on July 25, 2019, the Company filed a PDR requesting FCC consent to exceed the 25 percent foreign ownership and voting benchmarks that currently apply to us. On November 5, 2020, the FCC issued the Declaratory Ruling granting the relief requested by the PDR. On November 9, 2020, the Company sent Exchange Notices to the holders of Special Warrants, notifying them of the Exchange process. On January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules. Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock. See "Part II, Item 1A. Risk Factors - Regulatory, Legislative and Litigation Risks, Regulations imposed by the Communications Act and the FCC limit the amount of foreign individuals or entities that may invest in our capital stock without FCC approval" of this Quarterly Report on Form 10-Q and "Part I, Item 1. Business – Regulation of Our Business, Alien Ownership Restrictions" of our Annual Report on Form 10-K for the year ended December 31, 2020 for additional information. During the three months ended March 31, 2021, stockholders exercised 47,121,747 Special Warrants for an equivalent number of shares of Class A common stock. During the three months ended March 31, 2021, stockholders exercised 22,337,312 Special Warrants for an equivalent number of shares of Class B common stock. During the three months ended March 31, 2020, stockholders exercised 2,126,591 Special Warrants for an equivalent number of shares of Class A common stock. During the three months ended March 31, 2020, stockholders exercised 616 Special Warrants for an equivalent number of shares of Class B common stock. As further described in Note 6, Commitments and Contingencies above, on March 8, 2021, the Company’s Board of Directors (the “Board”) resolved to take certain actions to limit the rights of the GMEI Investors in connection with the Company’s pending Remedial PDR and in order to implement certain conditions required by the FCC. Such actions, included, but are not limited to, suspending all voting rights of GMEI Investors until and unless the FCC releases a declaratory ruling granting specific approval for each of the GMEI Investors to hold more than 5% of the equity and/or voting interests of the Company. 18 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Stockholder Rights Plan On May 5, 2020, the Board approved the adoption of a short-term stockholder rights plan (the “Stockholder Rights Plan”) in order to protect the best interests of all Company stockholders during the current period of high equity-market volatility and price disruption. Pursuant to the stockholder rights plan, the Board declared a dividend distribution of one right on each outstanding share of the Company’s Class A common stock, share of Class B common stock and special warrant issued in connection with the Plan of Reorganization. The record date for such dividend distribution was May 18, 2020. Under the Stockholder Rights Plan, subject to certain exceptions, the rights were generally be exercisable only if, in a transaction not approved by the Board, a person or group acquired beneficial ownership of 10 % or more of the Company’s Class A common stock (or 20 % in the case of certain passive investors), including through such person’s ownership of the convertible Class B common stock and/or special warrants, as further detailed in the Stockholder Rights Plan. In that situation, each holder of a right (other than the acquiring person or group) had the right to purchase, upon payment of the exercise price, a number of shares of the Company’s Class A common stock, Class B common stock or special warrants, as applicable, having a market value of twice such price. In addition, the Stockholder Rights Plan contained a similar provision if the Company was acquired in a merger or other business combination after an acquiring person acquires beneficial ownership of 10 % or more of the Company’s Class A common stock (or 20 % in the case of certain passive investors). The Stockholder Rights Plan expired in accordance with its terms on May 5, 2021 and the rights are no longer outstanding. 19 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Computation of Loss per Share (In thousands, except per share data) Three Months Ended March 31, 2021 2020 NUMERATOR: Net loss attributable to the Company – common shares $ ( 241,723 ) $ ( 1,688,736 ) DENOMINATOR (1) : Weighted average common shares outstanding - basic 146,214 145,614 Stock options and restricted stock (2) : — — Weighted average common shares outstanding - diluted 146,214 145,614 Net loss attributable to the Company per common share: Basic $ ( 1.65 ) $ ( 11.60 ) Diluted $ ( 1.65 ) $ ( 11.60 ) (1) All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Company for the three months ended March 31, 2021 and three months ended March 31, 2020. (2) Outstanding equity awards representing 10.7 million and 8.2 million shares of Class A common stock of the Company for the three months ended March 31, 2021 and the three months ended March 31, 2020, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive. NOTE 9 – SEGMENT DATA As discussed in Note 1, in connection with certain leadership and organizational changes implemented in the first quarter 2021, the Company revised its segment reporting as of January 1, 2021. The corresponding current and prior period segment disclosures were recast to reflect the current segment presentation. Segment Adjusted EBITDA is the segment profitability metric reported to the Company’s Chief Operating Decision Maker for purposes of decisions about allocation of resources to, and assessing performance of, each reportable segment. The Company’s primary businesses are included in its Multiplatform Group and Digital Audio Group segments. Revenue and expenses earned and charged between Multiplatform Group, Digital Audio Group, Corporate and the Company's Audio & Media Services Group are eliminated in consolidation. The Multiplatform Group provides media and entertainment services via broadcast delivery and also includes the Company’s events and national syndication businesses. The Digital Audio Group provides media and entertainment services via digital delivery. The Audio & Media Services Group provides other audio and media services, including the Company’s media representation business (Katz Media) and its provider of scheduling and broadcast software (RCS). Corporate includes infrastructure and support, including executive, information technology, human resources, legal, finance and administrative functions for the Company’s businesses. Share-based payments are recorded in Selling, general and administrative expense. The following tables present the Company's segment results for the Company for the three months ended March 31, 2021 and 2020: 20 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Three Months Ended March 31, 2021 Revenue $ 497,897 $ 157,553 $ 55,137 $ — $ ( 3,922 ) $ 706,665 Operating expenses (1) 393,106 117,542 39,788 57,904 ( 3,922 ) 604,418 Adjusted EBITDA (2) $ 104,791 $ 40,011 $ 15,349 $ ( 57,904 ) $ — $ 102,247 Depreciation and amortization ( 107,363 ) Impairment charges ( 37,744 ) Other operating expense, net ( 2,771 ) Restructuring expenses ( 25,040 ) Share-based compensation expense ( 5,685 ) Operating loss $ ( 76,356 ) Intersegment revenues $ 167 $ 1,894 $ 1,861 $ — $ — $ 3,922 Capital expenditures $ 10,069 $ 5,425 $ 1,047 $ 2,409 $ — $ 18,950 Share-based compensation expense $ — $ — $ — $ 5,685 $ — $ 5,685 Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Three Months Ended March 31, 2020 Revenue $ 629,609 $ 92,776 $ 60,227 $ — $ ( 1,978 ) $ 780,634 Operating expenses (1) 478,004 76,182 42,527 45,560 ( 1,978 ) 640,295 Adjusted EBITDA (2) $ 151,605 $ 16,594 $ 17,700 $ ( 45,560 ) $ — $ 140,339 Depreciation and amortization ( 96,768 ) Impairment charges ( 1,727,857 ) Other operating expense, net ( 1,066 ) Restructuring expenses ( 40,802 ) Share-based compensation expense ( 4,625 ) Operating loss $ ( 1,730,779 ) Intersegment revenues $ 167 $ — $ 1,811 $ — $ — $ 1,978 Capital expenditures $ 13,257 $ 3,574 $ 662 $ 4,171 $ — $ 21,664 Share-based compensation expense $ — $ — $ — $ 4,625 $ — $ 4,625 (1) Consolidated operating expenses consist of Direct operating expenses and Selling, general and administrative expenses and exclude Restructuring expenses, share-based compensation expenses and depreciation and amortization. (2) For a definition of Adjusted EBITDA and a reconciliation to Operating income, the most closely comparable GAAP measure, and to Net income (loss), please see "Reconciliation of Operating Loss to Adjusted EBITDA" and "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA" in Item 2 of this Quarterly Report on Form 10-Q. Beginning on January 1, 2021, Segment Adjusted EBITDA became the segment profitability metric reported to the Company's Chief Operating Decision Maker for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. 21