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Item 7. Management’s Discussion and Analysis

2023-02-28 compared with 2022-02-23 · 216 added, 472 removed, 330 unchanged (68% of the section changed)

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(the "Company," "iHeartMedia," "we," or "us").

Beginning on January 1, 2021, we began reporting based on three reportable segments:

We report based on three reportable segments:

▪ the Multiplatform Group, which includes our Broadcast radio, Networks and Sponsorships and Events businesses;

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▪ the Audio & Media Services Group, which includes Katz Media Group (“Katz Media”), our 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 and align with certain leadership and organizational changes implemented in the first quarter of 2021.

This structure provides improved visibility into the underlying performance, results, and margin profiles of our distinct businesses and enables senior management to better monitor trends at the operational level and address opportunities or issues as they arise via regular review of segment-level results and forecasts with operational leaders.

Additionally, 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.

These reporting segments reflect how senior management operates the Company.

This structure provides visibility into the underlying performance, results, and margin profiles of our distinct businesses and enables senior management to monitor trends at the operational level and address opportunities or issues as they arise via regular review of segment-level results and forecasts with operational leaders.

Our segment profitability metric is Segment Adjusted EBITDA, which is 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 (as defined below) and share-based compensation expenses.

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We have also invested in numerous technologies and businesses to increase the competitiveness of our inventory with our advertisers and our audience.

We believe the presentation of our results by segment provides additional insight into our broadcast radio business and our fast-growing digital business.

We believe the presentation of our results by segment provides insight into our broadcast radio business and our digital business.

We believe that our ability to generate cash flow from operations from our business initiatives and our current cash on hand will provide sufficient resources to fund and operate our business, fund capital expenditures and other obligations and make interest payments on our long-term debt for at least the next twelve months.

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Our Multiplatform Group also generates revenue from network syndication, nationally recognized events and other miscellaneous transactions.

Management looks at our Multiplatform Group's operations’ overall revenue as well as the revenue from each type of advertising, including local advertising, which is sold predominately in a station’s local market, and national advertising, which is sold across multiple markets.

Local advertising is sold by each radio station’s sales staff while national advertising is sold by our national sales team.

Management looks at our Multiplatform Group's operations’ overall revenue as well as from each revenue stream including Broadcast Spot, Networks, and Sponsorship and Events.

We periodically review and refine our selling structures in all regions and markets in an effort to maximize the value of our offering to advertisers and, therefore, our revenue.

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This metric gauges how well our formats are attracting and retaining listeners.

Management also monitors revenue generated through our programmatic ad-buying platform, Soundpoint, and our data analytics advertising product, SmartAudio, to measure the success of our enhanced marketing optimization tools.

Management also monitors revenue generated through our programmatic ad-buying platform, and our data analytics advertising product, to measure the success of our enhanced marketing optimization tools.

We have made significant investments so we can provide the same ad-buying experience that once was only available from digital-only companies and enable our clients to better understand how our assets can successfully reach their target audiences.

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Digital Audio Group

The primary source of revenue in the Digital Audio Group segment is the sale of advertising on the Company’s podcast network, iHeartRadio mobile application and website, and station websites.

Revenues for digital advertising are recognized over time based on impressions delivered or time elapsed, depending upon the terms of the contract.

Digital Audio Group’s contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations.

Through our Digital Audio Group, we continue to expand the choices for listeners.

We derive revenue in this segment by developing and delivering our content and selling advertising across multiple digital distribution channels, including via our iHeartRadio mobile application, our station websites and other digital platforms that reach national, regional and local audiences.

Our strategy has enabled us to extend our leadership in the rapidly growing podcasting sector, and iHeartMedia is the number one podcast publisher in America.

Our reach now extends across more than 250 platforms and 2,000 different connected devices, and our digital business is comprised of streaming, subscription, display advertisements, and other content that is disseminated over digital platforms.

Our strategy has enabled us to extend our leadership in the growing podcasting sector, and iHeartMedia is the number one podcast publisher in America.

Our reach now extends across more than 250 platforms and thousands of different connected devices, and our digital business is comprised of streaming, subscription, display advertisements, and other content that is disseminated over digital platforms.

A portion of our Digital Audio Group segment’s expenses vary in connection with changes in revenue.

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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 software and media streaming, along with research services for radio stations, broadcast television stations, cable channels, record labels, ad agencies and Internet stations worldwide.

Our advertising revenue is highly correlated to changes in gross domestic product (“GDP”) as advertising spending has historically trended in line with GDP.

A recession or downturn in the U.S.

economy could have a significant impact on the Company’s ability to generate revenue.

Beginning in March 2020 and continuing in the following months, we saw a sharp decline in each of our Broadcast radio, Networks and Sponsorships revenue streams as a result of the impact of the coronavirus pandemic (“COVID-19”) and the resulting impact on the U.S.

Although revenues significantly increased for the year ended December 31, 2021 compared to the prior year for the revenue streams of our Multiplatform Group, revenue from this segment has not fully recovered from the impact of COVID-19.

Our Digital Audio Group revenues, including podcasting, have continued to grow each quarter year-over-year during the COVID-19 pandemic.

Our Audio & Media Services Group revenues have decreased from the prior year mainly due to lower political advertising revenue, partially offset by the continued recovery

from the impact of the COVID-19 pandemic.

Refer to Note 1, Summary of Significant Accounting Policies , for more information regarding COVID-19 and its impact on our financial statements.

Economic Conditions

Our advertising revenue is correlated to changes in economic conditions.

The recovery from COVID-19 positively impacted our revenues in the first half of 2022.

However, increasing interest rates and historically high inflation have contributed to a more challenging macroeconomic environment.

This challenging environment has led to market uncertainty

which impacted our 2022 revenue growth, particularly in the second half of 2022.

GDP decreased in the first half of 2022 and increased in the second half of 2022, while there was an increase in GDP in each quarter in 2021.

The current market uncertainty and macroeconomic conditions, a recession, or a downturn in the U.S.

economy could have a significant impact on our ability to generate revenue.

Cost Savings Initiatives

In January 2020, we announced key modernization initiatives designed to take advantage of the significant investments we made in new technologies to build an improved operating infrastructure to upgrade products and deliver incremental cost efficiencies.

Our investments in modernization delivered approximately $100 million of cost savings in the aggregate.

In April 2020, we announced approximately $200 million of incremental in-year operating expense savings initiatives in response to the weaker economic environment caused by the COVID-19 pandemic.

We replicated the majority of those savings in 2021.

We have implemented key modernization initiatives and operating-expense-saving initiatives to take advantage of the significant investments we have made in new technologies to deliver incremental cost efficiencies, including initiatives to streamline our real estate footprint, and we continue to explore opportunities for further efficiencies.

Impairment Charges

As part of our operating-expense-savings initiatives, we have taken proactive steps to streamline our real estate footprint and reduce related structural lease expenses incurred by the Company.

These strategic actions typically result in impairment charges due to the write-down of the affected right-of-use assets and related fixed assets, including leasehold improvements.

For the year ended December 31, 2021, we recognized non-cash impairment charges of $57.7 million as a result of these cost-savings initiatives.

We perform our annual impairment test on goodwill and indefinite-lived intangible assets, including Federal Communications Commission ("FCC") licenses, as of July 1 of each year.

We perform our annual impairment test on our goodwill and indefinite-lived Federal Communication Commission ("FCC") licenses as of July 1 of each year.

As discussed above, the current macroeconomic conditions have led to uncertainty, resulting in slowing broadcast revenue growth and declines in margins as inflation and interest rates have risen.

These factors negatively impacted the key assumptions used in the discounted cash flow models that we utilized to value our FCC licenses and goodwill as of July 1, 2022, resulting in a significant decrease in the fair values of certain of our FCC licenses and reporting units.

Our FCC licenses are valued using a direct valuation approach, with the key assumptions being market revenue growth rates, profit margin, and the risk-adjusted discount rate as well as other assumptions including market share, duration and profile of the build-up period, and estimated start-up capital costs.

This data is populated using industry normalized information representing an average asset within a market.

We obtained recent broadcast radio industry revenue projections, which we considered along with various other sources of data in developing the assumptions used for purposes of performing impairment testing on our FCC licenses as of July 1, 2022.

Considerations in developing these assumptions included the extent of the economic downturn, ranges of expected timing of recovery, discount rates and other factors.

Based on our testing, the estimated fair value of the FCC licenses was below their carrying values.

As a result, in the third quarter of 2022 we recognized a non-cash impairment charge of $302.1 million on our FCC licenses.

The fair values of our reporting units were also reevaluated as of July 1, 2022 as part of our annual impairment assessment and no goodwill impairment was recorded as the estimated fair values of our reporting units exceeded the carrying values of the reporting units’ net assets, including goodwill.

As discussed above, our annual impairment testing resulted in a significant decrease in the fair values of our reporting units.

However, the decrease in fair values did not result in carrying amounts exceeding fair values of our reporting units, accordingly, the annual impairment test did not result in any impairment of our goodwill balance.

The goodwill impairment test requires us to measure the fair value of our reporting units and compare the estimated fair value to the carrying value, including goodwill.

Each of our reporting units is valued using a discounted cash flow model that requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate.

Terminal values were also estimated and discounted to their present value.

Assessing the recoverability of goodwill requires us to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on our budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

There are inherent uncertainties related to these factors and in management’s judgment in applying these factors.

As with the impairment testing we performed on our FCC licenses described above, the deterioration in market conditions and uncertainty in the markets impacted the assumptions used to estimate the discounted future cash flows of our reporting units for purposes of performing the annual goodwill impairment test.

While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our long-lived assets, indefinite-lived FCC licenses and reporting units, it is possible a material change could occur to the estimated fair value of these assets as a result of the uncertainty regarding current economic conditions.

If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.

No impairment was required as part of the 2021 annual impairment testing.

As a result of the COVID-19 pandemic and the economic downturn starting in March 2020, the Company performed interim impairment tests as of March 31, 2020 on its indefinite-lived FCC licenses and goodwill, resulting in non-cash impairment charges of $502.7 million and $1.2 billion on its FCC licenses and goodwill, respectively.

For more information, see Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill, to the consolidated financial statements located in Item 8 of this Annual Report on Form 10-K for a further description of the impairment charges and annual impairment tests.

While we believe we made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our long-lived assets, indefinite-lived FCC licenses and reporting units, it is possible a material change could occur to the estimated fair value of these assets.

If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.

In addition, future interest rate increases could result in future impairments.

Combined Results

Our financial results for the period from January 1, 2019 through May 1, 2019 are referred to as the “Predecessor” period.

Our financial results for the period from May 2, 2019 through December 31, 2019, the year ended December 31, 2020 and the year ended December 31, 2021 are referred to as the “Successor” period.

Our results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with GAAP.

Although GAAP requires that we report on our results for the period from January 1, 2019 through May 1, 2019 and the period from May 2, 2019 through December 31, 2019 separately, management views the Company’s operating results for the year ended December 31, 2019 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison to our results in the years ended December 31, 2021 and 2020.

The Company cannot adequately benchmark the operating results of the period from May 2, 2019 through December 31, 2019 against any of the current or prior periods reported in its Consolidated Financial Statements without combining it with the period from January 1, 2019 through May 1, 2019 and does not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding the Company’s overall operating performance.

Management believes that the key performance metrics such as revenue, operating income and Adjusted EBITDA for the Successor period in fiscal 2019 when combined with the Predecessor period in fiscal 2019 provides more meaningful comparisons to other periods and are useful in identifying current business trends.

Accordingly, in addition to presenting our results of operations as reported in our Consolidated Financial Statements in accordance with GAAP, the tables and discussion below also present the combined results for the year ended December 31, 2019.

The combined results for the year ended December 31, 2019, which we refer to herein as the results for the “year ended December 31, 2019” represent the sum of the reported amounts for the Predecessor period from January 1, 2019 through May 1, 2019 and the Successor period from May 2, 2019 through December 31, 2019.

These combined results are not

considered to be prepared in accordance with GAAP and have not been prepared as pro forma results per applicable regulations.

The combined operating results do not reflect the actual results we would have achieved absent our emergence from bankruptcy and may not be indicative of future results.

Accordingly, the results for the year ended December 31, 2019 may not be comparable to the results for the years ended December 31, 2021 and 2020, particularly for statement of operations line items significantly impacted by the Reorganization and Separation transactions, the impact of fresh start accounting on depreciation and amortization and the impact of interest expense not being recognized while we were in Chapter 11 bankruptcy protection from the Petition Date of March 14, 2018 to May 1, 2019.

As part of our operating-expense-savings initiatives, we have taken proactive steps to streamline our real estate footprint and reduce related lease and operating expenses incurred by the Company.

These strategic actions typically result in impairment charges due to the write-down of the affected right-of-use assets and related fixed assets, including leasehold improvements.

For the year ended December 31, 2022, we recognized non-cash impairment charges of $9.4 million, as a result of these cost-savings initiatives.

Executive Summary

Although our results for the year ended 2021 continued to be impacted by the effects of the COVID-19 pandemic, our revenues increased significantly, including revenue from our Multiplatform segment, which includes our broadcast radio, networks and sponsorship and events businesses.

Digital revenue, including podcasting, continued to grow year-over-year.

Our revenues for the year ended 2022 increased across our Multiplatform Group, Digital Audio Group and Audio & Media Services Group segments as a result of the continued increased demand for digital advertising, including podcasting, as well as the recovery from the macroeconomic effects of COVID-19 and political revenue.

The key developments in our business for the year ended December 31, 2022 are summarized below:

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• Revenue and Segment Adjusted EBITDA from our Digital Audio Group increased $187.3 million and $48.4 million, respectively, compared to 2021.

• Revenue and Segment Adjusted EBITDA from our Audio & Media Services Group decreased $26.8 million and $18.5 million, respectively, compared to 2020.

• Operating income of $154.9 million was up $1.9 billion from Operating loss of $1.7 billion in 2020.

• Net loss of $158.4 million in 2021 decreased $1.8 billion compared to Net loss of $1.9 billion in 2020.

• Revenue and Segment Adjusted EBITDA from our Audio & Media Services Group increased $56.3 million and $36.7 million, respectively, compared to 2021.

• Operating income of $56.9 million was down $98.0 million from Operating income of $154.9 million in 2021 due to the non-cash impairment charge of $302.1 million on our FCC licenses.

• Net loss of $262.7 million in 2022 increased $104.3 million compared to Net loss of $158.4 million in 2021.

• Adjusted EBITDA (1) of $950.3 million, was up $139.2 million from $811.1 million in 2021.

• Cash flows provided by operating activities from continuing operations of $330.6 million increased $114.6 million or 53.1% compared to 2020.

• Cash flows provided by operating activities of $420.1 million increased $89.5 million compared to 2021.

• Free cash flow (2) of $259.1 million improved from $147.2 million in 2021.

The table below presents a summary of our historical results of operations for the periods presented:

(In thousands) Successor Company

Year Ended December 31, %

(In thousands) Year Ended December 31, %

2022 2021 Change

Revenue $ 3,912,283 $ 3,558,340 9.9 %

Operating income (loss) $ 154,857 $ (1,737,624) NM

Net loss $ (158,389) $ (1,915,222) NM

Cash provided by operating activities from continuing operations $ 330,573 $ 215,945 53.1 %

Operating income $ 56,860 $ 154,857 (63.3) %

Net loss $ (262,670) $ (158,389) 65.8 %

Cash provided by operating activities $ 420,075 $ 330,573 27.1 %

Adjusted EBITDA (1)

$ 950,289 $ 811,133 17.2 %

Free cash flow from continuing operations (2)

Free cash flow (2)

$ 259,106 $ 147,201 76.0 %

(1) 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 Income to Adjusted EBITDA” and “Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA” in this MD&A.

(2) For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by (used for) operating activities from continuing operations to Free cash flow from (used for) continuing operations” in this MD&A.

(1) For a definition of Adjusted EBITDA, and a reconciliation to Operating income, the most closely comparable GAAP measure, and to Net Loss, please see “Reconciliation of Operating Income to Adjusted EBITDA” and “Reconciliation of Net Loss to EBITDA and Adjusted EBITDA” in this MD&A.

(2) For a definition of Free cash flow and a reconciliation to Cash provided by operating activities, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities to Free cash flow” in this MD&A.

Results of Operations

For a discussion of our results of operations for the year ended December 31, 2020, including a year-to-year comparison between 2021 and 2020, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021.

The table below presents the comparison of our historical results of operations for the year ended December 31, 2022 to the year ended December 31, 2021:

Successor Company

(In thousands) Year Ended December 31,

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Other operating expense, net 24,998 32,320

Operating income (loss) 154,857 (1,737,624)

Operating income 56,860 154,857

Interest expense, net 341,674 332,384

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Equity in loss of nonconsolidated affiliates (11) (1,138)

Gain (loss) on extinguishment of debt 30,214 (11,600)

Other expense, net (2,295) (3,376)

Loss before income taxes (257,951) (149,998)

Income tax benefit (expense) (8,391) 183,623

Income tax expense (4,719) (8,391)

Net loss (262,670) (158,389)

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The table below presents the comparison of our revenue streams for the year ended December 31, 2022 to the year ended December 31, 2021:

Successor Company

(In thousands) Year Ended

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Consolidated revenue increased $353.9 million during the year ended December 31, 2022 compared to 2021.

The increase in Consolidated revenue is attributable to the continuing growth of our operating businesses and the continued recovery from the macroeconomic effects of COVID-19.

Multiplatform revenue increased $282.2 million, primarily resulting from stronger demand for broadcast advertising compared to the prior year.

Digital Audio revenue increased $360.1 million, driven primarily by continuing increases in demand for digital advertising, including continued growth in podcasting.

Audio & Media Services revenue decreased $26.8 million primarily due to decreases in political advertising revenue, partially offset by the continued recovery from the impact of COVID-19.

The increase in Consolidated revenue is attributable to the growth of our operating businesses and the continued recovery from the macroeconomic effects of COVID-19.

Multiplatform revenue increased $108.2 million, primarily resulting from an increase in political advertising revenue as 2022 was a midterm election year, strengthening demand for broadcast advertising, and the return of live events during the year ended December 31, 2022 compared to 2021.

Digital Audio revenue increased $187.3 million, driven primarily by continuing increases in demand for podcasting and digital advertising.

Audio & Media Services revenue increased $56.3 million primarily due to increases in political advertising revenue and the increase in third-party digital revenue.

Direct Operating Expenses

Direct operating expenses increased $186.9 million during the year ended December 31, 2021 compared to 2020.

The increase in Direct operating expenses was primarily driven by higher variable expenses resulting from our significant increase in revenue, including profit sharing expenses and third-party digital costs, as well as variable national and local event expenses resulting from the return of live events.

Consolidated direct operating expenses increased $155.7 million during the year ended December 31, 2022 compared to 2021.

The increase in Consolidated direct operating expenses was primarily driven by higher variable content costs resulting from our increase in revenue, including talent costs, content costs, profit sharing expenses, third-party digital costs, and production costs related to the return of local and national live events.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses increased $124.3 million during the year ended December 31, 2021 compared to 2020.

The increase in Consolidated SG&A expenses was driven primarily by increased variable employee compensation expenses resulting primarily from higher bonus expense based on financial performance and higher sales commission expenses as a result of higher revenue.

In the prior year the Company did not pay bonuses to the vast majority of employees.

In addition, increased headcount resulting from investments in our digital businesses contributed to the increase in Consolidated SG&A expenses.

These increases were partially offset by lower bad debt expense as well as lower employee compensation and other expenses resulting from our modernization and cost-reduction initiatives.

Consolidated SG&A expenses increased $73.6 million during the year ended December 31, 2022 compared to 2021.

The increase in Consolidated SG&A expenses was driven primarily by higher employee compensation costs related to increased workforce due to investments in key infrastructure to support our growing digital operations, increased sales commission expenses as a result of higher revenue, increased bad debt, and higher trade and barter expenses.

These increases were partially offset by lower variable bonus expense.

Depreciation and Amortization

Depreciation and amortization increased $66.5 million during 2021 compared to 2020, primarily as a result of increased capital expenditures, the impact of acquired businesses, and accelerated amortization of certain intangible assets.

Depreciation and amortization decreased $23.8 million during 2022 compared to 2021, primarily as a result of certain intangible assets being fully amortized, partially offset by increased depreciation of capital expenditures related to IT and real estate optimization initiatives.

Impairment Charges

We perform our annual impairment test on our goodwill and FCC licenses as of July 1 of each year.

In addition, we test for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired.

As part of our operating expense-savings initiatives, we have taken strategic actions to streamline our real estate footprint and related expenses, resulting in impairment charges due to the write-down of right-of-use assets and related fixed assets, including leasehold improvements.

During the year ended December 31, 2021, we recognized non-cash impairment charges of $57.7 million related to certain of our right-of-use assets and leasehold improvements as a result of these cost-savings initiatives.

In the year ended December 31, 2020, we recognized non-cash impairment charges to our goodwill and FCC licenses of $1.7 billion as a result of the adverse effects caused by the COVID-19 pandemic on estimated future cash flows in the first quarter of 2020.

No impairment charges were recorded in 2021 in connection with our annual impairment testing of goodwill and FCC licenses.

We recognized non-cash impairment charges of $302.1 million on our indefinite-lived FCC licenses during the year ended December 31, 2022 primarily as a result of an increase in the discount rate used in our fair value calculations due to higher market interest rates compared to the prior year.

See above under "Impairment Charges" and Item 8, Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill , for further discussion of the impairment charges.

No impairment charges were recorded for our goodwill for the year ended December 31, 2022.

The annual impairment test performed on our goodwill and FCC licenses as of July 1, 2021 did not result in impairment.

In addition, as part of our operating expense-savings initiatives, we have taken strategic actions to streamline our real estate footprint and related expenses, resulting in impairment charges due to the write-down of right-of-use assets and related fixed assets, including leasehold improvements.

During the years ended December 31, 2022 and 2021, we recognized non-cash impairment charges of $9.4 million and $57.7 million, respectively, as a result of these cost-savings initiatives.

Other Operating Expense, Net

Other operating expense, net of $32.3 million in 2021 related primarily to net losses recognized on asset disposals in connection with our real estate optimization initiatives.

Other operating expense, net of $11.3 million in 2020, related primarily to net losses recognized on the disposal of assets.

Other operating expense, net of $25.0 million in 2022 and $32.3 million in 2021, related primarily to non-cash net book losses recognized on asset disposals in connection with our real estate optimization initiatives.

Interest Expense, Net

Interest expense, net decreased $11.4 million during 2021 compared to 2020 primarily as a result of the impact of lower LIBOR rates and the $250.0 million voluntary repayment of our term loan facilities and amended incremental term loan facility in July 2021, partially offset by the issuance of incremental term loans in the third quarter of 2020.

Interest expense, net increased $9.3 million during 2022 compared to 2021 primarily as a result of an increase in LIBOR borrowing rates during 2022, partially offset by the impact of the $250.0 million voluntary repayment made in July 2021 on our term loan credit facilities in connection with a repricing transaction and the 2022 repurchases of $329.6 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $299.4 million in cash.

Gain (Loss) on Investments, net

During the year ended December 31, 2021, we recognized a gain on investments, net of $43.6 million, primarily related to the sale of our investment in the San Antonio Spurs, partially offset by impairments of certain investments.

During the year ended December 31, 2020, we recognized loss on investments, net of $9.3 million, primarily in connection with declines in the values of certain of our investments.

Other Expense, Net

Other expense, net was $15.0 million for the year ended December 31, 2021, which related primarily to the write-off of unamortized debt issuance costs upon our voluntary partial prepayment of our Term Loan Facilities in July 2021, and finance lease termination payments.

Other expense, net was $7.8 million for the year ended December 31, 2020, which related primarily to costs incurred to amend our Term Loan Facility and professional fees.

During the year ended December 31, 2022, we recognized a loss on investments, net of $1.0 million, respectively, in connection with changes in the value of our investments.

During the year ended December 31, 2021, we recognized gain on investments, net of $43.6 million, primarily related to the sale of our investment in the San Antonio Spurs, partially offset by impairments of certain investments.

Gain (Loss) on Extinguishment of Debt

During the year ended December 31, 2022, we recognized a gain on extinguishment of debt of $30.2 million in connection with the repurchase of $329.6 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $299.4 million in cash.

During the year ended December 31, 2021, we recognized a loss on extinguishment of debt of $11.6 million primarily related to the write-off of unamortized debt issuance costs related to the $250.0 million voluntary repayment made in July 2021 on our term loan credit facilities in connection with a repricing transaction and finance lease termination payments.

Income Tax Expense (Benefit)

The effective tax rate for the year ended December 31, 2021 was (5.6)%.

The effective tax rate for the year ended December 31, 2021 was primarily impacted by the increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods.

The effective tax rate for the year ended December 31, 2020 was 8.7%.

The effective tax rate for the year ended December 31, 2020 was primarily impacted by the impairment charges discussed above.

In addition, the Successor Company recorded deferred tax adjustments to state net operating losses and federal and state disallowed interest carryforwards as a result of the filing of 2019 tax returns and certain legal entity restructuring completed during the period.

These deferred tax adjustments were partially offset by valuation allowances adjustments recorded during the year against certain federal and state deferred tax assets such as net operating loss carryforwards and disallowed interest carryforwards due to the uncertainty of the ability to utilize those assets in future periods.

The effective tax rates for the years ended December 31, 2022 and 2021 were (1.8)% and (5.6)%, respectively.

The effective tax rates for both years were primarily impacted by the increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods.

Net Loss Attributable to the Company

Net loss attributable to the Company decreased to $159.2 million during the year ended December 31, 2021 compared to Net loss attributable to the Company of $1.9 billion during the year ended December 31, 2020, primarily as a result of the impairment charge recognized during the first quarter of 2020, the increase in revenue from the continuing growth of our operating businesses and the continued growth from the recovery from the macroeconomic effects of the COVID-19 pandemic.

Net loss attributable to the Company increased to $264.7 million during the year ended December 31, 2022 compared to Net loss attributable to the Company of $159.2 million during the year ended December 31, 2021, primarily as a result of the non-cash impairment of FCC licenses of $302.1 million, partially offset by the increase in revenue from the recovery from the macroeconomic effects of the COVID-19 pandemic in the first half of 2022 and political revenue growth as 2022 was a midterm election year.

Multiplatform Group Results

(In thousands) Successor Company

(In thousands) Year Ended

December 31, %

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(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Revenue from our Multiplatform Group increased $282.2 million compared to 2020, primarily as a result of the continued recovery from the negative impact of the COVID-19 pandemic on our radio business.

The increase in revenue was partially offset by lower political revenue compared to the prior year due to 2020 being a presidential election year.

Broadcast revenue increased $207.4 million, or 12.9%, year-over-year, while Networks grew $18.1 million, or 3.7%, year-over-year.

Revenue from our Multiplatform Group increased $108.2 million compared to 2021, primarily as a result of political advertising revenue and the recovery from the impact of the COVID-19 in the first half of the year.

Broadcast revenue increased $75.2 million, or 4.1%, year-over-year, while Networks revenue was flat year-over-year.

Revenue from Sponsorship and Events increased by $28.7 million, or 17.9%, year-over-year, primarily as a result of the return of live events.

Operating expenses increased $22.2 million, driven primarily by higher variable employee compensation expense including commission and bonus expense resulting from higher revenues and profitability, as well as higher talent and profit sharing fees, both driven by higher revenue, and higher expenses related to the return of live events.

The increase was partially offset by lower bad debt expense as well as lower employee compensation and other expenses resulting from our modernization and cost-reduction initiatives.

Operating expenses increased $85.8 million, driven primarily by higher travel and event costs in connection with the return of live events, increased bad debt, higher trade and barter expense, as well as higher sales commission, talent and profit share costs, all driven by higher revenue.

These increases were partially offset by lower variable bonus expense based on financial performance and by lower rent and utilities as a result of our real estate optimization initiatives.

Digital Audio Group Results

(In thousands) Successor Company

(In thousands) Year Ended

December 31, %

6 unchanged sentences

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Revenue from our Digital Audio Group increased $360.1 million compared to the prior year, led by Digital, excluding Podcast revenue, which increased by $209.2 million, or 56.1%, year-over-year, and Podcast revenue, which increased by $150.9 million, or 148.4%, year-over-year, both of which were driven by increased content and demand for digital advertising.

Revenue from our Digital Audio Group increased $187.3 million compared to the prior year, led by Podcast revenue which increased by $105.9 million, or 42%, year-over-year, driven by higher revenues from the development of new podcasts and growth from existing podcasts.

Digital, excluding Podcast revenue, increased by $81.5 million, or 14%, year-over-year, driven by increased demand for digital advertising.

Digital Audio Group revenues increased as a result of general increased demand for digital advertising, the growing popularity of podcasting, the continued addition of premium content to our industry-leading podcast business and our improving ability to monetize our digital audiences and inventory utilizing our sales force and advertising technology platforms, partially driven by investments in the digital space.

Operating expenses increased $230.2 million in connection with our Digital Audio Group’s significant revenue growth, due to the impact of increased variable employee compensation expense, variable content, talent costs, and third-party digital costs due to higher revenue, as well as increased content and production costs primarily resulting from the development of new podcasts.

In addition, operating expenses increased due to additional headcount resulting from investments in the digital space.

Operating expenses increased $139.0 million in connection with our Digital Audio Group’s revenue growth, including the increase in content and production costs primarily resulting from the development of new podcasts, and higher third-party digital costs due to higher revenue.

In addition, operating expenses increased due to investments in increased headcount and key infrastructure to support our growing digital operations.

Audio & Media Services Group Results

(In thousands) Successor Company

(In thousands) Year Ended

December 31, %

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(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Revenue from our Audio & Media Services Group decreased $26.8 million compared to 2020 due to lower political advertising revenue, partially offset by the continued recovery from the negative impact of the COVID-19 pandemic.

Operating expenses decreased $8.3 million primarily as a result of lower sales commissions due to lower revenues and lower expenses due to our modernization and cost-reduction initiatives.

The comparison of our consolidated results for the year ended December 31, 2020 to the combined results of year ended December 31, 2019 is as follows:

(In thousands) Successor Company Successor Company Predecessor Company Non-GAAP Combined

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2019

Revenue $ 2,948,218 $ 2,610,056 $ 1,073,471 $ 3,683,527

Operating expenses:

Direct operating expenses (excludes depreciation and amortization)

1,137,807 860,313 370,612 1,230,925

Selling, general and administrative expenses (excludes depreciation and amortization)

1,395,010 1,052,484 491,449 1,543,933

Depreciation and amortization 402,929 249,623 52,834 302,457

Impairment charges 1,738,752 — 91,382 91,382

Other operating expense, net 11,344 8,000 154 8,154

Operating income (loss) (1,737,624) 439,636 67,040 506,676

Interest expense (income), net 343,745 266,773 (499) 266,274

Loss on investments, net (9,346) (20,928) (10,237) (31,165)

Equity in loss of nonconsolidated affiliates (379) (279) (66) (345)

Other income (expense), net (7,751) (18,266) 23 (18,243)

Reorganization items, net — — 9,461,826 9,461,826

Income (loss) from continuing operations before income taxes (2,098,845) 133,390 9,519,085 9,652,475

Income tax (benefit) expense 183,623 (20,091) (39,095) (59,186)

Income (loss) from continuing operations (1,915,222) 113,299 9,479,990 9,593,289

Income from discontinued operations, net of tax — — 1,685,123 1,685,123

Net income (loss) (1,915,222) 113,299 11,165,113 11,278,412

Less amount attributable to noncontrolling interest

(523) 751 (19,028) (18,277)

Net income (loss) attributable to the Company

$ (1,914,699) $ 112,548 $ 11,184,141 $ 11,296,689

The table below presents the comparison of our revenue streams for the periods presented:

Successor Company Successor Company Predecessor Company Non-GAAP Combined

(In thousands) Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31, %

2020 2019 2019 2019 Change

Broadcast Radio $ 1,604,880 $ 1,575,382 $ 657,864 $ 2,233,246 (28.1) %

Networks 484,950 425,631 189,088 614,719 (21.1) %

Sponsorship and Events 107,654 159,187 50,330 209,517 (48.6) %

Other 9,370 14,211 6,606 20,817 (55.0) %

Multiplatform Group 2,206,854 2,174,411 903,888 3,078,299 (28.3) %

Digital, excluding Podcast 372,687 231,160 91,695 322,855 15.4 %

Podcast 101,684 42,229 11,094 53,323 90.7 %

Digital Audio Group 474,371 273,389 102,789 376,178 26.1 %

Audio & Media Services Group 274,749 167,292 69,362 236,654 16.1 %

Eliminations (7,756) (5,036) (2,568) (7,604)

Revenue, total $ 2,948,218 $ 2,610,056 $ 1,073,471 $ 3,683,527 (20.0) %

Consolidated revenue decreased $735.3 million during the year ended December 31, 2020 compared to 2019.

The decrease in Consolidated revenue is attributable to the macroeconomic effects of COVID-19, which began to unfold into a global pandemic in early March 2020, resulting in a significant economic downturn due to the shut-down of businesses and shelter-in-place orders, resulting in significant revenue declines impacting most of our revenue streams, primarily as a result of a decrease in broadcast radio advertising spend as a result of the COVID-19 pandemic.

This decrease was partially offset by growth from our digital revenue streams.

Multiplatform Group revenue decreased $871.4 million driven primarily by a decrease in Broadcast radio revenue as a result of the economic impacts of the COVID-19 pandemic.

Digital Audio Group revenue increased $98.2 million, driven by continued growth in both podcasting and digital, excluding podcasting revenues each of which continued to experience increased advertiser demand.

Audio and Media Services Group revenue increased $38.1 million primarily due to an increase in political revenue as a result of 2020 being a presidential election year, partially offset by the effects of COVID-19 on advertising spend.

Direct Operating Expenses

Consolidated direct operating expenses decreased $93.1 million during the year ended December 31, 2020 compared to 2019.

The decrease in Consolidated direct operating expenses was driven primarily by lower employee compensation expenses resulting from our modernization initiatives and cost reduction initiatives taken in response to the COVID-19 pandemic.

In addition, variable operating expenses, including music license and performance royalty fees, decreased in relation to lower revenue recognized during the year.

Variable expenses related to events also decreased as a result of the postponement or cancellation of events in response to the COVID-19 pandemic.

The decrease in Direct operating expenses was partially offset by severance payments and other costs specific to our modernization initiatives, as well as higher content costs from higher podcasting and digital subscription revenue.

SG&A Expenses

Consolidated SG&A expenses decreased $148.9 million during the year ended December 31, 2020 compared to 2019.

The decrease in Consolidated SG&A expenses was driven primarily by lower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic, along with lower sales commissions, which were impacted by the decrease in revenue.

Travel and entertainment expenses also decreased primarily as a result of operating expense saving initiatives put into place in response to the COVID-19 pandemic, as well as trade and barter expenses primarily driven by lower Local trade expenses, which declined in line with lower trade revenue.

The decrease in SG&A expenses was partially offset by costs incurred in relation to our modernization initiatives announced in the first quarter of 2020 and higher bad debt expense.

Depreciation and Amortization

Depreciation and amortization increased $100.5 million during 2020 compared to 2019, primarily as a result of the application of fresh start accounting, which resulted in significantly higher values of our tangible and intangible long-lived assets.

Impairment Charges

We perform our annual impairment test on our goodwill and FCC licenses as of July 1 of each year.

In addition, we test for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired.

As discussed above, as a result of the assumed potential adverse effects caused by the COVID-19 pandemic on estimated future cash flows, we performed an interim impairment test as of March 31, 2020 and we recognized non-cash impairment charges to our indefinite-lived intangible assets and goodwill of $1.7 billion in the first quarter of 2020.

No impairment charges were recorded in the remainder of 2020 in connection with our annual impairment test which was performed in the third quarter of 2020.

We recognized non-cash impairment charges of $91.4 million in the first quarter of 2019 on our indefinite-lived FCC licenses as a result of an increase in our weighted average cost of capital.

See Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill , to the consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K for a further description of the impairment charges.

Other Operating Expense, Net

Other operating expense, net of $11.3 million and $8.2 million in 2020 and 2019, respectively, primarily related to net losses recognized on the disposal of assets.

Interest Expense, Net

Interest expense, net increased $77.5 million during 2020 compared to 2019 as a result of the interest recognized on the new debt issued in connection with our emergence from the Chapter 11 Cases.

During the period from March 14, 2018 to May 1, 2019, while the Company was a debtor-in-possession, no interest expense was recognized on pre-petition debt.

The increase was partially offset by a decrease in interest expense driven by the impact of lower LIBOR rates, as well as the impact of the amendment to the Term Loan Facility in the first quarter of 2020, resulting in a 1.00% reduction in the Term Loan Facility interest rate.

In the Predecessor period, we ceased to accrue interest expense on long-term debt, which was reclassified as Liabilities subject to compromise as of the Petition Date, resulting in $533.4 million in contractual interest not being accrued on pre-petition indebtedness for the period from January 1, 2019 to May 1, 2019.

Loss on Investments, net

During the years ended December 31, 2020 and 2019, we recognized loss on investments, net of $9.3 million and $31.2 million, respectively, primarily in connection with declines in the values of certain of our investments.

Other Expense, Net

Other expense, net was $7.8 million for the year ended December 31, 2020, which related primarily to costs incurred to amend our Term Loan Facility and professional fees incurred in connection with the Chapter 11 Cases.

Other expense, net was $18.2 million for the year ended December 31, 2019, which related primarily to professional fees incurred in connection with the Chapter 11 Cases in the Successor period.

Such expenses were included within Reorganization items, net in the Predecessor period while the Company was a debtor-in-possession.

Reorganization Items, Net

During 2019, we recognized Reorganization items, net of $9,461.8 million related to our emergence from the Chapter 11 Cases, which consisted primarily of the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities.

In addition, Reorganization items, net included professional fees recognized between the March 14, 2018 Petition Date and the May 1, 2019 Effective Date in connection with the Chapter 11 Cases.

See Note 15, Fresh Start Accounting , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.

Income Tax Benefit (Expense)

The effective tax rate for the year ended December 31, 2020 was 8.7%.

The effective tax rate for the year ended December 31, 2020 was primarily impacted by the impairment charges discussed above.

In addition, we recorded deferred tax adjustments to state net operating losses and federal and state disallowed interest carryforwards as a result of the filing of 2019 tax returns and certain legal entity restructuring completed during the period.

The Successor Company’s effective tax rate for the period from May 2, 2019 through December 31, 2019 was 15.1%.

The effective tax rate for the Successor period was primarily impacted by deferred tax benefits recorded for changes in estimates related to the carryforward tax attributes that are expected to survive the emergence from bankruptcy and deferred tax adjustments associated with the filing of the Company’s 2018 tax returns during the fourth quarter of 2019.

The primary change to the 2018 tax return filings, when compared to the provision estimates, was the Company's decision to elect out of the first-year bonus depreciation rules for the 2018 year for all qualified capital expenditures.

This resulted in less tax depreciation deductions for tax purposes for the 2018 year and higher adjusted tax basis for our fixed assets as of the Effective Date.

The Predecessor Company’s effective tax rate for the period from January 1, 2019 through May 1, 2019 was 0.4%.

The income tax expense for the period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consisted of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance.

The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of:

(1) tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence;

(2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence;

(3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence;

and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above.

The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.

Net Income (Loss) Attributable to the Company

Net income (loss) attributable to the Company decreased $13.2 billion to a Net loss of $1.9 billion during the year ended December 31, 2020 compared to net income of $11.3 billion during the year ended December 31, 2019.

The Net loss attributable to the Company for the year ended December 31, 2020 primarily related to the $1.7 billion non-cash impairment charges to our indefinite-lived intangible assets and goodwill recognized in the first quarter of 2020.

In 2019, the Net income attributable to the Company primarily related to the recognition of net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities.

Multiplatform Group Results

(In thousands) Successor Company Successor Company Predecessor Company Non-GAAP Combined

December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31, %

2020 2019 2019 2019 Change

Revenue $ 2,206,854 $ 2,174,411 $ 903,888 $ 3,078,299 (28.3) %

Operating expenses (1)

1,723,449 1,381,073 635,205 2,016,278 (14.5) %

Segment Adjusted EBITDA $ 483,405 $ 793,338 $ 268,683 $ 1,062,021 (54.5) %

Segment Adjusted EBITDA margin 21.9 % 36.5 % 29.7 % 34.5 %

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Revenue from our Multiplatform Group decreased $871.4 million compared to the comparative period in the prior year, primarily as a result of the negative impact of the COVID-19 pandemic on our radio business.

Broadcast revenue decreased $628.4 million, or 28.1%, year-over-year.

The decrease in Broadcast radio revenue was partially offset by a $70.5 million increase in political revenue as a result of 2020 being a presidential election year.

Revenue from our Networks businesses, including both Premiere and Total Traffic & Weather, was also impacted by the downturn, resulting in a decrease of $129.8 million, or 21.1%.

Revenue from Sponsorship and Events decreased by $101.9 million, or 48.6%, primarily as a result of the cancellations of events in response to the COVID-19 pandemic.

Operating expenses decreased $292.8 million, driven primarily by lower employee compensation expenses resulting from our modernization initiatives and cost reduction initiatives taken in response to the COVID-19 pandemic.

In addition, variable operating expenses, including sales commissions, trade and barter expenses and music license fees, decreased in relation to lower revenue recognized during the year.

Variable expenses related to events also decreased as a result of the postponement or cancellation of events in response to the COVID-19 pandemic.

These decreases were partially offset by higher bad debt expense.

Digital Audio Group Results

(In thousands) Successor Company Successor Company Predecessor Company Non-GAAP Combined

December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31, %

2020 2019 2019 2019 Change

Revenue $ 474,371 $ 273,389 $ 102,789 $ 376,178 26.1 %

Operating expenses (1)

343,598 194,366 88,621 282,987 21.4 %

Segment Adjusted EBITDA $ 130,773 $ 79,023 $ 14,168 $ 93,191 40.3 %

Segment Adjusted EBITDA margin 27.6 % 28.9 % 13.8 % 24.8 %

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Revenue from our Digital Audio Group increased $98.2 million compared to the prior year driven by Podcast revenue, which increased by $48.4 million, or 90.7%, year-over-year, driven by continued growth in podcasting, including for both new and existing podcasts, and Digital, excluding Podcast revenue, which increased by $49.8 million, or 15.4%, year-over-year, driven by increased demand for digital advertising.

Operating expenses increased $60.6 million in connection with our Digital Audio Group’s revenue growth, including the impact of variable content and talent costs and third-party digital costs due to higher revenue as well as increased content and production costs primarily resulting from the development of new and existing podcasts.

Audio & Media Services Group Results

(In thousands) Successor Company Successor Company Predecessor Company Non-GAAP Combined

December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31, %

2020 2019 2019 2019 Change

Revenue $ 274,749 167,292 69,362 $ 236,654 16.1 %

Operating expenses (1)

180,081 120,685 55,278 175,963 2.3 %

Segment Adjusted EBITDA $ 94,668 $ 46,607 $ 14,084 $ 60,691 56.0 %

Segment Adjusted EBITDA margin 34.5 % 27.9 % 20.3 % 25.6 %

(1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Revenue from our Audio & Media Services Group increased $38.1 million compared to the comparative period in the prior year primarily due to a $61.8 million increase in political revenue as a result of 2020 being a presidential election year, partially offset by the effects of COVID-19 on advertising spend.

Operating expenses increased $4.1 million primarily as a result of variable costs due to higher revenue, including higher variable compensation expenses.

Revenue from our Audio & Media Services Group increased $56.3 million compared to 2021 due to an increase in political advertising revenue as 2022 was a midterm election year and the increase in third-party digital revenues.

Operating expenses increased $19.6 million primarily as a result of higher employee compensation related to the increased level of political advertising, higher merchandising costs and a new purchase agreement with third-parties for specific inventory spots.

Non-GAAP Financial Measures

Reconciliations of Operating Income (Loss) to Adjusted EBITDA

(In thousands) Successor Company

Year Ended December 31,

Operating income (loss) $ 154,857 $ (1,737,624)

Depreciation and amortization (1)

469,417 402,929

Impairment charges 57,734 1,738,752

Other operating expense, net 32,320 11,344

Share-based compensation expense 23,543 22,862

Restructuring and reorganization expenses 73,262 100,410

Adjusted EBITDA (2)

$ 811,133 $ 538,673

(In thousands) Successor Company Successor Company Predecessor Company Non-GAAP Combined 2

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2019

Operating income (loss) $ (1,737,624) $ 439,636 $ 67,040 $ 506,676

Reconciliations of Operating Income to Adjusted EBITDA

(In thousands) Year Ended December 31,

Operating income $ 56,860 $ 154,857

Depreciation and amortization 445,664 469,417

402,929 249,623 52,834 302,457

Impairment charges 311,489 57,734

1 unchanged sentence

Share-based compensation expense 35,457 23,543

Restructuring and reorganization expenses 100,410 51,879 13,241 65,120

Restructuring expenses 75,821 73,262

Adjusted EBITDA (1)

$ 950,289 $ 811,133

Reconciliations of Net Income (Loss) to EBITDA and Adjusted EBITDA

(In thousands) Successor Company

Year Ended December 31,

Reconciliations of Net Loss to EBITDA and Adjusted EBITDA

(In thousands) Year Ended December 31,

Net loss $ (262,670) $ (158,389)

Income tax (benefit) expense 8,391 (183,623)

Income tax expense 4,719 8,391

Interest expense, net 341,674 332,384

2 unchanged sentences

(Gain) loss on investments, net 1,045 (43,643)

(Gain) loss on extinguishment of debt (30,214) 11,600

Other expense, net 2,295 3,376

6 unchanged sentences

$ 950,289 $ 811,133

(In thousands) Successor Company Successor Company Predecessor Company Non-GAAP Combined

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2019

Net income (loss) (1,915,222) 113,299 11,165,113 11,278,412

Income from discontinued operations, net of tax — — (1,685,123) (1,685,123)

Income tax (benefit) expense (183,623) 20,091 39,095 59,186

Interest expense (income), net (3)

343,745 266,773 (499) 266,274

Depreciation and amortization (1)

402,929 249,623 52,834 302,457

EBITDA $ (1,352,171) $ 649,786 $ 9,571,420 $ 10,221,206

Reorganization items, net — — (9,461,826) (9,461,826)

Loss on investments, net 9,346 20,928 10,237 31,165

Other (income) expense, net 7,751 18,266 (23) 18,243

Equity in loss of nonconsolidated affiliates 379 279 66 345

Impairment charges 1,738,752 — 91,382 91,382

Other operating expense, net 11,344 8,000 154 8,154

Share-based compensation expense 22,862 26,411 498 26,909

Restructuring and reorganization expenses 100,410 51,879 13,241 65,120

Adjusted EBITDA (2)

$ 538,673 $ 775,549 $ 225,149 $ 1,000,698

(1) Increase in Depreciation and amortization for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019 is driven by the application of fresh start accounting, resulting in significantly higher values of our tangible and intangible assets.

(2) We define Adjusted EBITDA as consolidated Operating income (loss) adjusted to exclude restructuring and reorganization expenses included within Direct operating expenses and SG&A expenses, and share-based compensation expenses included within SG&A expenses, as well as the following line items presented in our Statements of Operations:

(1) We define Adjusted EBITDA as consolidated Operating income (loss) adjusted to exclude restructuring expenses included within Direct operating expenses and SG&A expenses, and share-based compensation expenses included within SG&A expenses, as well as the following line items presented in our Statements of Operations:

Depreciation and amortization, Impairment charges and Other operating expense, net.

Alternatively, Adjusted EBITDA is calculated as Net income (loss), adjusted to exclude

Income tax (benefit) expense, Interest expense, net, Depreciation and amortization, Loss (gain) on investments, net, Other expense, net, Equity in loss of nonconsolidated affiliates, net, Impairment charges, Other operating expense, net, Share-based compensation expense, and restructuring and reorganization expenses.

Alternatively, Adjusted EBITDA is calculated as Net loss, adjusted to exclude Income tax (benefit) expense, Interest expense, net, Depreciation and amortization, Gain on investments, net, (Gain) loss on extinguishment of debt, Other expense, net, Equity in loss of nonconsolidated affiliates, net, Impairment charges, Other operating expense, net, Share-based compensation expense, and restructuring expenses.

Restructuring expenses primarily include 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.

Reorganization expenses primarily include the amortization of retention bonus amounts paid or payable to certain members of management directly as a result of the Reorganization.

We use Adjusted EBITDA, among other measures, to evaluate the Company’s operating performance.

5 unchanged sentences

In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry.

Since Adjusted EBITDA is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, operating income or net income (loss) as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies.

Since Adjusted EBITDA is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, operating income or net loss as an indicator of operating performance and may not be comparable to similarly

titled measures employed by other companies.

Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs.

Because it excludes certain financial information compared with operating income and compared with consolidated net income (loss), the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded.

(3) Increase in Interest expense (income), net is driven by the interest recognized on the new debt issued in connection with our emergence from the Chapter 11 Cases.

During the period from March 14, 2018 to May 1, 2019, while the Company was in debtor-in-possession, no interest expense was recognized on pre-petition debt.

Reconciliations of Cash provided by (used for) operating activities from continuing operations to Free cash flow from (used for) continuing operations

(In thousands) Successor Company

Year Ended December 31,

Cash provided by operating activities from continuing operations $ 330,573 $ 215,945

Purchases of property, plant and equipment by continuing operations

(183,372) (85,205)

Free cash flow from continuing operations (1)

$ 147,201 $ 130,740

(In thousands) Successor Company Successor Company Predecessor Company Non-GAAP Combined

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2019

Cash provided by (used for) operating activities from continuing operations (2)

$ 215,945 $ 468,905 $ (7,505) $ 461,400

Purchases of property, plant and equipment by continuing operations

(85,205) (75,993) (36,197) (112,190)

Free cash flow from (used for) continuing operations (2)

Because it excludes certain financial information compared with operating income and compared with consolidated net loss, the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded.

Reconciliations of Cash provided by operating activities to Free cash flow

(In thousands) Year Ended December 31,

Cash provided by operating activities $ 420,075 $ 330,573

Purchases of property, plant and equipment (160,969) (183,372)

Free cash flow (1)

$ 259,106 $ 147,201

(1) We define Free cash flow from (used for) continuing operations ( “ Free Cash Flow ” ) as Cash provided by operating activities less capital expenditures, which is disclosed as Purchases of property, plant and equipment in the Company's Consolidated Statements of Cash Flows.

(1) We define Free cash flow as Cash provided by operating activities less capital expenditures, which is disclosed as Purchases of property, plant and equipment in the Company's Consolidated Statements of Cash Flows.

We use Free Cash Flow, among other measures, to evaluate the Company’s liquidity and its ability to generate cash flow.

3 unchanged sentences

Free Cash Flow is not necessarily a measure of our ability to fund our cash needs.

(2) Cash provided by operating activities from continuing operations for the year ended December 31, 2019 was impacted primarily by an increase of $165.1 million in cash paid for interest.

Our debt issued upon emergence was outstanding from the period of May 2, 2019 to December 31, 2019, resulting in cash interest payments of $183.8 million.

Cash provided by operating activities was also impacted by a $97.9 million increase in cash payments for Reorganization items, which consisted primarily of bankruptcy-related professional fees, as well as payments for settlement of pre-petition liabilities upon our emergence from bankruptcy.

Share-Based Compensation Expense

Historically, we had granted restricted shares of the Company's Class A common stock to certain key individuals.

In connection with the effectiveness of our Plan of Reorganization, all unvested restricted shares were canceled.

Pursuant to our 2019 Incentive Equity Plan ("2019 Plan") we adopted in connection with the effectiveness of our Plan of Reorganization as well as our 2021 Long-Term Incentive Award Plan ("2021 Plan"), we have granted restricted stock units and options to purchase shares of the Company's Class A common stock to our employees and directors.

The 2021 Plan was approved in April 2021.

In connection with its approval, our 2019 Plan was terminated and we are not able to grant future awards under the 2019 Plan.

The terms and conditions of the 2019 Plan continue to govern any outstanding awards under this plan.

Share-based compensation expenses are recorded in corporate expenses and were $23.5 million, $22.9 million and $26.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.

On April 21, 2021, our 2021 Long-Term Incentive Award Plan (the "2021 Plan") was approved by stockholders and replaced the prior plan.

Pursuant to our 2021 Plan, we may grant restricted stock units covering, and options to purchase, shares of the Company's Class A common stock to certain key individuals.

Share-based compensation expenses are recorded in corporate expenses and were $35.5 million and $23.5 million for the years ended December 31, 2022 and 2021, respectively.

In August 2020, we 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 year ended December 31, 2021, we recognized $1.6 million in relation to these performance-based RSUs.

In the year ended December 31, 2020, we recognized $3.4 million in relation to these performance-based RSUs.

As of December 31, 2021, there was $39.6 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions.

Such Performance RSUs vested upon the achievement of critical operational (cost savings) improvements and specific environmental, social and governance initiatives, which were measured over an approximately 15-month period from the date of issuance.

On March 28, 2022, we issued performance-based restricted stock units ("Q1 2022 Performance RSUs") to certain executives.

The Q1 2022 Performance RSUs vest upon the achievement of certain total stockholder return goals and continued service, which are being measured over an approximately 50-month period from the date of issuance.

On May 9, 2022, we issued performance-based restricted stock units ("Q2 2022 Performance RSUs") and restricted stock units ("2022 RSUs") to certain key employees.

The Q2 2022 Performance RSUs vest upon the achievement of certain total stockholder return goals, Adjusted EBITDA goals, Diversity, Equity and Inclusion goals, and continued service.

The Q2 2022 Performance RSUs are measured over a performance period ending December 31, 2024 and vest on the third anniversary of the date of issuance (to the extent earned).

The 2022 RSUs vest upon continued service.

The 2022 RSUs are being recognized ratably over a 3-year period from the date of issuance.

As of December 31, 2022 there was $46.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based solely on service conditions.

This cost is expected to be recognized over a weighted average period of approximately 3.2 years.

In addition, as of December 31, 2022, there were unrecognized compensation costs of $10.2 million from the Q1 2022 Performance RSUs and $12.1 million from the Q2 2022 Performance RSUs related to unvested share-based compensation arrangements that will vest based on performance and service conditions.

These costs will be recognized over a 50-month period from the date of issuance for the Q1 2022 Performance RSUs and over a 3-year period from the date of issuance for the Q2 2022 Performance RSUs.

LIQUIDITY AND CAPITAL RESOURCES

The following discussion highlights cash flow activities during the periods presented:

(In thousands) Successor Company Successor Company Successor Company Predecessor Company Non-GAAP Combined

Year Ended December 31, Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2021 2020 2019 2019 2019

(In thousands) Year Ended December 31,

Cash provided by (used for):

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259,106 147,201

(1) For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by (used for) operating activities from continuing operations to Free cash flow from (used for) continuing operations” in this MD&A.

(1) For a definition of Free cash flow and a reconciliation to Cash provided by operating activities, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities to Free cash flow” in this MD&A.

Operating Activities

Cash provided by operating activities was $330.6 million in 2021 compared to $215.9 million of cash provided by operating activities in 2020.

Cash provided by operating activities increased from $215.9 million in 2020 to $330.6 million in 2021 primarily as a result of an increase in cash flows generated from higher revenues and operating profitability as the Company's businesses continue to recover from the impact of the COVID-19 pandemic.

The increase in cash provided by operating activities was partially offset by changes in working capital balances, particularly accounts receivable, which was impacted by the timing of collections.

Cash provided by operating activities was $215.9 million in 2020 compared to $428.7 million of cash provided by operating activities in 2019.

Cash provided by operating activities from continuing operations decreased from $461.4 million in 2019 to $215.9 million in 2020 primarily as a result of a decrease in Revenue driven by the decline in advertising spend resulting from the economic slow-down caused by the COVID-19 pandemic.

In addition, cash interest payments made by continuing operations increased $169.6 million in 2020 compared to 2019 as a result of interest payments on our debt issued upon our emergence.

The Company ceased paying interest on long-term debt after the March 14, 2018 petition date until the Company emerged from bankruptcy on May 1, 2019.

The decrease was partially offset by changes in working capital balances, particularly accounts receivable, which was impacted by improved collections, and accrued expenses, which was impacted by the timing of payments.

In addition, payments made in relation to Reorganization items, net were $201.2 million lower in the year ended December 31, 2020 compared to the year ended December 31, 2019.

Cash provided by operating activities was $428.7 million in 2019 compared to $966.7 million of cash provided by operating activities in 2018.

The primary driver for the change in cash provided by operating activities was a $258.1 million decrease in operating cash flows provided by discontinued operations, which decreased from a cash inflow of $225.5 million in the year ended December 31, 2018 to a cash outflow of $32.7 million in the year ended December 31, 2019.

Cash provided by operating activities from continuing operations decreased from $741.2 million in 2018 to $461.4 million in 2019 primarily as a result of cash interest payments made by continuing operations, which increased $165.1 million as a result of interest payments on our debt issued upon our emergence compared to pre-petition interest payments made in the prior year.

The Company ceased paying interest on long-term debt classified as Liabilities subject to compromise after the March 14, 2018 petition date.

In addition, cash decreased as a result of cash payments for Reorganization items, including payments for prepetition liabilities and for bankruptcy-related professional fees, upon our emergence from bankruptcy on May 1, 2019.

Such payments for Reorganization items were $97.9 million higher in the year ended December 31, 2019 compared to the year ended December 31, 2018.

Cash provided by operating activities of $420.1 million in 2022 increased from $330.6 million of cash provided by operating activities in 2021 primarily due to an increase in cash flows from operations as the Company's businesses recovered from the impact of the COVID-19 pandemic, continuing increases in demand for podcasting and digital advertising, and an increase in political revenue as 2022 was a midterm election year.

These increases in cash provided by operating activities were partially offset by an increase in payment of bonuses in 2022.

The Company did not pay bonuses to the vast majority of employees in 2021.

Investing Activities

Cash used for investing activities of $129.2 million in 2022 primarily reflects $161.0 million in cash used for capital expenditures.

We spent $119.6 million for capital expenditures in our Multiplatform Group segment primarily related to our real estate optimization initiatives, $21.3 million in our Digital Audio Group segment primarily related to IT infrastructure, $8.2 million in our Audio & Media Services Group segment, primarily related to software, and $11.9 million in Corporate primarily related to equipment and software purchases.

Cash used for investing activities was partially offset by proceeds from the sale of certain properties related to our real estate optimization initiatives.

Cash used for investing activities of $346.8 million in 2021 primarily reflects the net cash payment made to acquire Triton Digital for $228.5 million.

In addition, $183.4 million in cash was used for capital expenditures, reflecting a $98.2 million increase in capital expenditures compared to the prior year.

The increase in capital expenditures relates primarily to incremental spend in 2021 for infrastructure and IT in connection with our real estate optimization and modernization initiatives compared to 2020 which experienced lower capital expenditures as a result of cash flow preservation actions taken in response to the economic impacts of the COVID-19 pandemic.

Cash used for investing activities of $147.8 million in 2020 was driven primarily by capital expenditures of $85.2 million primarily related to IT software and infrastructure, reflecting a $27.0 million decrease in capital expenditures compared

to the prior year as a result of actions taken in response to the COVID-19 pandemic.

In addition, we used $62.1 million of cash to acquire certain strategic businesses including Voxnest which was acquired in the fourth quarter of 2020.

Cash used for investing activities of $334.4 million in 2019 primarily reflects $222.4 million in cash used for investing activities from discontinued operations.

In addition, we used $112.2 million for capital expenditures, primarily related to IT software and infrastructure.

In addition, $183.4 million in cash was used for capital expenditures.

We spent $130.9 million for capital expenditures in our Multiplatform Group segment, primarily related to our real estate optimization initiatives, $23.9 million in our Digital Audio Group segment, primarily related to IT infrastructure, $14.5 million in our Audio & Media Services Group segment, primarily related to software and $14.1 million in Corporate primarily related to equipment and software purchases.

Cash used for investing activities was partially offset by cash provided by investing activities primarily related to proceeds of $50.8 million received mostly from the sale of our investment in the San Antonio Spurs and proceeds from the sale of certain properties related to our real estate optimization initiatives.

Financing Activities

Cash used for financing activities totaled $306.1 million in 2022 primarily due to the 2022 repurchases of $329.6 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $299.4 million in cash.

Cash used for financing activities of $352.1 million in 2021 primarily resulted from the $250.0 million voluntary repayment of our term loan credit facilities in connection with the repricing transaction, and required quarterly principal payments made on our Term Loan Facility and repayment of a subsidiary note payable.

As a result of our voluntary prepayment, our Term Loan Facility no longer requires quarterly principal payments.

Cash provided by financing activities of $241.2 million in 2020 primarily resulted from the net proceeds of $425.8 million from the issuance of incremental term loan commitments, offset by the $150.0 million prepayment on our Term Loan Facility in the first quarter 2020, along with required quarterly principal payments made on our term loan credit facilities.

Cash used for financing activities of $113.6 million in 2019 primarily resulted from the net payment by iHeartCommunications to CCOH as CCOH’s recovery of its claims under the Due from iHeartCommunications Note and settlement of the post-petition intercompany note balance, partially offset by $60.0 million in proceeds received from the issuance of the iHeart Operations Preferred Stock.

Sources of Liquidity and Anticipated Cash Requirements

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $352.1 million as of December 31, 2021, cash flow from operations and borrowing capacity under our $450.0 million ABL Facility.

As of December 31, 2021, iHeartCommunications had no amounts outstanding under the ABL Facility, a facility size of $450.0 million and $26.9 million in outstanding letters of credit, resulting in $423.1 million of borrowing base availability.

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $336.2 million as of December 31, 2022, cash flows from operations and borrowing capacity under our $450.0 million senior secured asset-based revolving credit facility entered into on May 17, 2022 (the "New ABL Facility"), which refinanced and replaced in its entirety the existing ABL Facility (the "Existing ABL Facility").

As of December 31, 2022, iHeartCommunications had no amounts outstanding under the New ABL Facility, a facility size of $450.0 million and $25.0 million in outstanding letters of credit, resulting in $425.0 million of borrowing base availability.

Together with our cash balance of $336.2 million as of December 31, 2022 and our borrowing capacity under the ABL Facility, our total available liquidity 1 was approximately $761.2 million.

On July 16, 2021, we amended the Term Loan credit facilities and voluntarily prepaid $250.0 million of borrowings outstanding under these facilities using cash on hand.

On October 27, 2021, iHeart Operations repurchased all of the iHeart Operations Preferred Stock with cash on hand for an aggregate price of $64.4 million (“Redemption Price”), including accrued dividends, upon obtaining consent from the third party investor.

The Redemption Price included a negotiated make-whole premium as the redemption occurred prior to the optional redemption date set forth in the Certificate of Designation governing the iHeart Operations Preferred Stock.

Subsequent to the transaction, the preferred shares were retired and cancelled and are no longer outstanding.

We continue to evaluate the ongoing impact of COVID-19 on our business.

The challenges that COVID-19 has created for advertisers and consumers have had an adverse impact on our revenue for the twelve months ended December 31, 2021 and have created a business outlook that is less clear in the near term.

Although our results continued to be impacted by the effects of the COVID-19 pandemic, our revenue for the year ended December 31, 2021 increased significantly compared to the year ended December 31, 2020.

We believe that we have sufficient liquidity to continue to fund our operations for at least the next twelve months.

We regularly evaluate the impact of economic conditions, including macroeconomic conditions on our business.

A challenging macroeconomic environment has led to market uncertainty which impacted our 2022 revenue growth, particularly in the second half of the year.

For the year ended December 31, 2022, our revenues increased compared to the year ended December 31, 2021 due to growth in demand for digital advertising and the recovery from the macroeconomic effects of COVID-19 partially offset by market uncertainty from the challenging macroeconomic environment, among other factors discussed in the Results of Operations section of the MD&A.

Although we cannot predict future economic conditions or the impact of any potential contraction of economic growth on our business, we believe that we have sufficient liquidity to continue to fund our operations for at least the next twelve months.

We are a party to many contractual obligations involving commitments to make payments to third parties.

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Our contractual obligations primarily consist of long-term debt and related interest payments, commitments under non-cancelable operating lease agreements, and employment and talent contracts.

In addition to our contractual obligations, we expect that our

1 Total available liquidity defined as cash and cash equivalents plus available borrowings under the ABL Facility.

We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.

primary anticipated uses of liquidity in 2022 will be to fund our working capital, make interest and tax payments, fund capital expenditures, pursue certain strategic opportunities and maintain operations.

We anticipate that we will have approximately $312 million of cash interest payments in 2022.

In addition to our contractual obligations, we expect that our primary anticipated uses of liquidity in 2023 will be to fund our working capital, make interest and tax payments, fund capital expenditures, pursue certain strategic opportunities and maintain operations.

Assuming the level of borrowings and interest rates at December 31, 2022, we anticipate that we will have approximately $381.2 million of cash interest payments in 2023 compared to $342.4 million of cash interest payments in 2022, primarily related to the increase in interest rates, including LIBOR.

Future increases in interest rates could have a significant impact on our cash interest payments.

For a description of the Company's future maturities of long-term debt, see Note 6, Long-Term Debt , and for a description of the Company's non-cancelable operating lease agreements, see Note 7, Commitments and Contingencies .

We believe that our cash balance, our cash flow from operations and availability under our ABL Facility provide us with sufficient liquidity to fund our core operations, maintain key personnel and meet our other material obligations for at least the next twelve months.

In addition, none of our long-term debt includes maintenance covenants that could trigger early repayment.

We fully appreciate the unprecedented challenges posed by the COVID-19 pandemic, however, we remain confident in our business, our employees and our strategy.

We believe that our cash balance, our cash flow from operations and availability under our New ABL Facility provide us with sufficient liquidity to fund our core operations, maintain key personnel and meet our other material obligations for at least the next twelve months.

We acknowledge the challenges posed by the market uncertainty as a result of global economic weakness, the recent slowdown in economic activity, rising interest rates, historically high inflation and other macroeconomic trends, however, we remain confident in our business, our employees and our strategy.

Further, we believe our available liquidity will allow us to fund capital expenditures and other obligations and make interest payments on our long-term debt.

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however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms or at all in the future.

We frequently evaluate strategic opportunities, and we expect from time to time to pursue acquisitions or dispose of certain businesses, which may or may not be material.

In connection with the Emergence, we entered into the following transactions which may require ongoing capital commitments:

We frequently evaluate strategic opportunities.

During the year ended December 31, 2022, we conducted repurchases of $329.6 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $299.4 million in cash, reflecting a discounted purchase price from the face value of the notes.

We expect from time to time to pursue other strategic opportunities such as acquisitions or disposals of certain businesses, which may or may not be material.

Tax Matters Agreement

In connection with the separation (the "Separation") of Clear Channel Outdoor Holdings, Inc.

("CCOH") as part of the Company's Plan of Reorganization, we entered into the Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., Clear Channel Holdings, Inc., 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.

as part of our plan of reorganization, we entered into the Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., Clear Channel Holdings, Inc., and Clear Channel Outdoor Holding, Inc.

(the "Outdoor Group"), to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and the Outdoor Group and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.

1 Total available liquidity defined as cash and cash equivalents plus available borrowings under the ABL Facility.

We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.

The Tax Matters Agreement requires that iHeartMedia and iHeartCommunications indemnify the Outdoor Group and its subsidiaries, 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 the Outdoor Group indemnify iHeartMedia for certain income taxes paid by iHeartMedia on behalf of the Outdoor Group and its subsidiaries.

Sources of Capital

As of December 31, 2022 and December 31, 2021, we had the following debt outstanding, net of cash and cash equivalents:

(In thousands) Successor Company

December 31, 2021 December 31, 2020

(In thousands) December 31,

Term Loan Facility due 2026 $ 1,864,032 $ 1,864,032

$ 1,864,032 $ 2,080,259

Incremental Term Loan Facility due 2026 401,220 401,220

401,220 447,750

Asset-based Revolving Credit Facility due 2023 — —

Asset-based Revolving Credit Facility due 2027 (1)

6.375% Senior Secured Notes due 2026 800,000 800,000

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8.375% Senior Unsecured Notes due 2027 (2)

Other unsecured subsidiary debt 90 6,782

Purchase accounting adjustments and original issue discount (13,454) (18,817)

1,120,366 1,450,000

Other Subsidiary Debt 52 90

Original issue discount (10,569) (13,454)

Long-term debt fees (15,396) (18,370)

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Cash and cash equivalents 336,236 352,129

Net Debt $ 5,386,739 $ 5,296,268

(1) On July 16, 2021, iHeartCommunications, Inc.

("iHeartCommunications") entered into an amendment to the credit agreement governing its Term Loan credit facilities.

The amendment reduces the interest rate of its Incremental Term Loan Facility due 2026 to a Eurocurrency Rate of LIBOR plus a margin of 3.25% and floor of 0.50% (from LIBOR plus a margin of 4.00% and floor of 0.75%).

The Base Rate interest amount was reduced to Base Rate plus a margin of 2.25% and floor of 1.50%.

In connection with the amendment, iHeartCommunications voluntarily prepaid $250.0 million of borrowings outstanding under the Term Loan credit facilities with cash on hand, resulting in a reduction of $44.3 million of the existing Incremental Term Loan Facility due 2026 and $205.7 million of the Term Loan Facility due 2026.

$ 5,077,931 $ 5,386,739

1 On May 17, 2022, we entered into a $450.0 million New ABL Facility, maturing in 2027, which refinanced and replaced in its entirety the

Existing ABL Facility.

For more information about the New ABL Facility, refer to Note 6, Long-Term Debt .

2 During 2022, we repurchased $329.6 million aggregate principal amount of iHeartCommunications, Inc.’s 8.375% Senior Unsecured Notes due 2027 for $299.4 million in cash, excluding accrued interest.

The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $30.2 million.

3 Net Debt is a non-GAAP financial metric that is used by management and investors to assess our ability to meet financial obligations.

Our New ABL Facility contains a springing fixed charge coverage ratio that is effective if certain triggering events related to borrowing capacity under the New ABL Facility occur.

As of December 31, 2022, no triggering event had occurred and, as a result, we were not required to comply with any fixed charge coverage ratio as of or for the period ended December 31, 2022.

Other than our New ABL Facility, none of our long-term debt includes maintenance covenants that could trigger early repayment.

As of December 31, 2022, we were in compliance with all covenants related to our debt agreements in all material respects.

For additional information regarding our debt, refer to Note 6, Long-Term Debt .

Our subsidiaries have from time to time repurchased certain debt obligations of iHeartCommunications, and may in the future, as part of various financing and investment strategies, purchase additional outstanding indebtedness of iHeartCommunications or its subsidiaries or our outstanding equity securities, in tender offers, open market purchases, privately negotiated transactions or otherwise.

We or our subsidiaries may also sell certain assets, securities, or properties.

These purchases or sales, if any, could have a material positive or negative impact on our liquidity available to repay outstanding debt obligations or on our consolidated results of operations.

These transactions could also require or result in amendments to the agreements governing outstanding debt obligations or changes in our leverage or other financial ratios, which could have a material positive or negative impact on our ability to comply with the covenants contained in iHeartCommunications’ debt agreements.

These transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

The amounts involved may be material.

For additional information regarding our debt, including the terms of the governing documents, refer to Note 6, Long-Term Debt , to our consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K.

Exchange of Special Warrants

On July 25, 2019, the Company filed the PDR with the FCC to permit up to 100% of the Company’s voting stock to be owned by non-U.S.

individuals and entities.

On November 5, 2020, the FCC issued the 2020 Declaratory Ruling granting the relief requested by the PDR, subject to certain conditions set forth therein.

On January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into 45,133,811 shares of iHeartMedia Class A common stock, the Company’s publicly traded equity, and 22,337,312 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.

There were 120,270,406 shares of Class A common stock, 21,589,449 shares of Class B common stock and 5,293,069 Special Warrants outstanding on February 18, 2022.

Supplemental Financial Information under Debt Agreements

Pursuant to iHeartCommunications' material debt agreements, Capital I, the parent guarantor and a subsidiary of iHeartMedia, is permitted to satisfy its reporting obligations under such agreements by furnishing iHeartMedia’s consolidated financial information and an explanation of the material differences between iHeartMedia’s consolidated financial information, on the one hand, and the financial information of Capital I and its consolidated restricted subsidiaries, on the other hand.

Pursuant to iHeartCommunications' material debt agreements, iHeartMedia Capital I, LLC ("Capital I"), the parent guarantor and a subsidiary of iHeartMedia, is permitted to satisfy its reporting obligations under such agreements by furnishing iHeartMedia’s consolidated financial information and an explanation of the material differences between iHeartMedia’s consolidated financial information, on the one hand, and the financial information of Capital I and its consolidated restricted subsidiaries, on the other hand.

Because neither iHeartMedia nor iHeartMedia Capital II, LLC, a wholly-owned direct subsidiary of iHeartMedia and the parent of Capital I, have any operations or material assets or liabilities, there are no material differences between iHeartMedia’s consolidated financial information for the year ended December 31, 2022, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same period.

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Capital Expenditures

Capital expenditures for the years ended December 31, 2021, 2020 and 2019 were as follows:

(In thousands) Successor Company Successor Company Successor Company Predecessor Company Non-GAAP Combined

Year Ended December 31, Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2021 2020 2019 2019 2019

Capital expenditures for the years ended December 31, 2022 and 2021 and were as follows:

(In thousands) Year Ended December 31,

Multiplatform Group $ 119,624 $ 130,894

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We lease office space, certain broadcast facilities and equipment.

We have non-cancellable contracts in our radio broadcasting operations related to program rights and music license fees.

Some of our lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for our payment of utilities and maintenance We also have non-cancellable contracts in our radio broadcasting operations related to program rights and music license fees.

In the normal course of business, our broadcasting operations have minimum future payments associated with employee and talent contracts.

These contracts typically contain cancellation provisions that allow us to cancel the contract with good cause.

Typically, the Company experiences their lowest financial performance in the first quarter of the calendar year.

Typically, our businesses experience their lowest financial performance in the first quarter of the calendar year.

We expect this trend to continue in the future.

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Inflation is a factor in our business and we continue to seek ways to mitigate its effect.

Inflation has affected our performance in terms of higher costs for wages, salaries and equipment.

We believe the effects of inflation, if any, on our historical results of operations and financial condition have been immaterial.

Inflation has affected our performance in terms of higher costs for employee compensation, equipment, and third party services.

Although we are unable to determine the exact impact of inflation, we believe the impact will continue to be immaterial considering the actions we may take in response to these higher costs that may arise as a result of inflation.

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The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources.

Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and

estimates, and such difference could be material.

Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material.

Our significant accounting policies are discussed in the notes to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.

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The following narrative describes these critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions.

Allowance for Doubtful Accounts

We evaluate the collectability of our accounts receivable based on a combination of factors.

In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be collected.

For all other customers, we recognize reserves for bad debt based on historical experience for each business unit, adjusted for changes in the agings and in current economic conditions.

If our agings were to improve or deteriorate resulting in a 10% change in our allowance, we estimated that our bad debt expense for the year ended December 31, 2021 would have changed by approximately $2.9 million.

The most significant estimates used by management in accounting for leases and the impact of these estimates are as follows:

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The fair value of our leased assets may be impacted if actual results differ from our assumptions.

Long-lived Assets

Long-lived assets, including plant and equipment and definite-lived intangibles, are reported at historical cost less accumulated depreciation and amortization.

We estimate the useful lives for various types of advertising structures and other long-lived assets based on our historical experience and our plans regarding how we intend to use those assets.

Our experience indicates that the estimated useful lives applied to our portfolio of assets have been reasonable, and we do not expect significant changes to the estimated useful lives of our long-lived assets in the future.

When we determine that structures or other long-lived assets will be disposed of prior to the end of their useful lives, we estimate the revised useful lives and depreciate the assets over the revised period.

We also review long-lived assets for impairment when events and circumstances indicate that depreciable and amortizable long-lived assets 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.

We use various assumptions in determining the remaining useful lives of assets to be disposed of prior to the end of their useful lives and in determining the current fair market value of long-lived assets that are determined to be unrecoverable.

Estimated useful lives and fair values are sensitive to factors including contractual commitments, regulatory requirements, future expected cash flows, industry growth rates and discount rates, as well as future salvage values.

Our impairment loss calculations require management to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.

If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results of operations.

Indefinite-lived Intangible Assets

In connection with our Plan of Reorganization, we applied fresh start accounting as required by ASC 852, Reorganizations , and recorded all of our assets and liabilities at estimated fair values, including our FCC licenses, which are included within our Multiplatform Group reporting unit.

Indefinite-lived intangible assets, such as our FCC licenses, are reviewed annually for possible impairment using the direct valuation method as prescribed in ASC 805-20-S99, Business Combinations .

Under the direct valuation method, the estimated fair value of the indefinite-lived intangible assets was calculated at the market level as prescribed by ASC 350-30-35, Intangibles-Goodwill and Other .

Intangible Assets

Indefinite-lived intangible assets, such as our FCC licenses, are reviewed annually for possible impairment using the direct valuation method as prescribed in ASC 805-20-S99.

Under the direct valuation method, the estimated fair value of the indefinite-lived intangible assets was calculated at the market level as prescribed by ASC 350-30-35.

Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible assets and builds a new operation with similar attributes from scratch.

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Initial capital costs are deducted from the discounted cash flows model, which results in value that is directly attributable to the indefinite-lived intangible assets.

Our key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs, the risk-adjusted discount rate and terminal values.

Our key assumptions using the direct valuation method are market revenue growth rates, profit margin, and the risk-adjusted discount rate as well as other assumptions including market share, duration and profile of the build-up period, and estimated start-up capital costs.

This data is populated using industry normalized information representing an average asset within a market.

On July 1, 2021, we performed our annual impairment test in accordance with ASC 350-30-35, Intangibles-Goodwill and Other , and we concluded no impairment of the indefinite-lived intangible assets was required.

On July 1, 2022, we performed our annual impairment test in accordance with ASC 350-30-35 and we concluded that a $302.1 million impairment of the indefinite-lived intangible assets was required.

In determining the fair value of our FCC licenses, the following key assumptions were used:

• Revenue forecasts published by BIA Financial Network, Inc.

(“BIA”), varying by market, and revenue growth projections made by industry analysts were used for the initial four-year period;

• 2.0% revenue growth was assumed beyond the initial four-year period;

(“BIA”), varying by market, and revenue growth projections made by industry analysts were used for the initial five-year period;

• 2.5% revenue growth was assumed beyond the initial five-year period and 2.0% revenue growth was assumed in the terminal period;

• Revenue was grown proportionally over a build-up period, reaching market revenue forecast by year 3;

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FCC licenses $ 228,765 $ 161,722 $ 264,227

The estimated fair value of our FCC licenses at July 1, 2021 was $2.2 billion, while the carrying value was $1.8 billion.

Given the difference between the carrying values of our FCC licenses and their estimated fair values, an increase in discount rates or a decrease in revenue growth rates or profit margins could result in an impairment to our FCC licenses.

Upon application of fresh start accounting in accordance with ASC 852, Reorganizations , in connection with our emergence from bankruptcy, we recorded goodwill of $3.3 billion, which represented the excess of estimated enterprise fair value over the estimated fair value of our assets and liabilities.

Goodwill was further allocated to our reporting units based on the relative fair values of our reporting units as of May 1, 2019.

As a result of the changes in the Company's management structure and its reportable segments, we performed interim impairment tests 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 carrying value of our FCC licenses at September 30, 2022 after the impairment of $302.1 million was $1.48 billion, while the fair value was $1.50 billion.

Given the difference between the carrying values of our FCC licenses and their estimated fair values, an increase in discount rates, a decrease in revenue growth rates or profit margins, or a decrease in BIA revenue forecasts could result in additional impairment to our FCC licenses.

We review definite-lived intangible assets for impairment when events and circumstances indicate that assets 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.

We use various assumptions in determining the remaining useful lives of assets to be disposed of prior to the end of their useful lives and in determining the current fair market value of definite-lived intangible assets that are determined to be unrecoverable.

Estimated useful lives and fair values are sensitive to factors including contractual commitments, regulatory requirements, future expected cash flows, industry growth rates and discount rates.

We test goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.

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To the extent that the carrying amount of net assets would exceed the fair value, an impairment charge may be required to be recorded.

The impairment testing performed as of July 1, 2022 has resulted in a significant decrease in the fair values of our reporting units.

The fair values of our Multiplatform, Digital, and RCS reporting units exceeded their carrying values by less than 15%.

The discounted cash flow approach we use for valuing goodwill involves estimating future cash flows expected to be generated from the related assets, discounted to their present value using a risk-adjusted discount rate.

Terminal values are also estimated and discounted to their present value.

On July 1, 2021, we performed our annual impairment test in accordance with ASC 350-30-35, Intangibles-Goodwill and Other , resulting in no impairment of goodwill.

On July 1, 2022, we performed our annual impairment test in accordance with ASC 350-30-35, resulting in no impairment of goodwill.

In determining the fair value of our reporting units, we used the following assumptions:

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Our cash flow assumptions are based on detailed, multi-year forecasts performed by each of our operating reporting units, and reflect the current advertising outlook across our businesses.

• Cash flows beyond 2025 are projected to grow at a perpetual growth rate, which we estimated at 2.0% for our Multiplatform and RCS Reporting units, 3.0% for our Digital Audio Reporting unit, and 2.0% for our Katz Media reporting unit (beyond 2029).

• Revenues beyond 2026 are projected to grow at a perpetual growth rate, which we estimated at 2.0% for our Multiplatform and RCS Reporting units, 3.0% for our Digital Audio Reporting unit (beyond 2030), and 2.0% for our Katz Media reporting unit (beyond 2030).

• In order to risk adjust the cash flow projections in determining fair value, we utilized discounts rates between 13% and 16% for each of our reporting units.

Based on our annual assessment using the assumptions described above, a hypothetical 5% reduction in the estimated fair value in each of our reporting units would not result in a material impairment condition.

While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate the estimated fair value of our reporting units, it is possible a material change could occur.

If future results are not consistent with our assumptions and estimates, we may be exposed to impairment charges in the future.

The following table shows the decline in the fair value of each of our reporting units that would result from a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption:

The following table shows the decline in

the fair value of each of our reporting units that would result from a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption:

(In thousands)

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Settlement of uncertain tax positions may require use of our cash.

Litigation Accruals

We are currently involved in certain legal proceedings.

Based on current assumptions, we 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.

Future results of operations could be materially affected by changes in these assumptions or the effectiveness of our strategies related to these proceedings.

Management’s 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.

Insurance Accruals

We currently maintain self-insured retentions for various insurance coverages, including property, casualty, directors and officers, cyber, and media liability.

Accruals are recorded based on estimates of actual claims filed, historical payouts, existing insurance coverage and projected future development of costs related to existing claims.

Our self-insured liabilities contain uncertainties because management must make assumptions and apply judgment to estimate the ultimate cost to settle reported claims and claims incurred but not reported as of December 31, 2021.

If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material.

Share-Based Compensation

Under the fair value recognition provisions of ASC 718-10, Compensation-Stock Compensation , share-based compensation cost is measured at the grant date based on the fair value of the award.

Determining the fair value of share-based awards at the grant date requires assumptions and judgments, such as expected volatility, among other factors.

If actual results differ significantly from these estimates, our results of operations could be materially impacted.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis