What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-02-28 · 169 added, 202 removed, 344 unchanged (52% of the section changed)

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▪ the Digital Audio Group, which includes our Digital businesses, including Podcasting;

▪ 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.

▪ the Audio & Media Services Group, which includes Katz Media, our full-service media representation business, and RCS, a provider of scheduling and broadcast software and services.

These reporting segments reflect how senior management operates the Company.

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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.

We believe that our ability to generate cash flow from operations from our businesses 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.

Certain prior period amounts have been reclassified to conform to the 2023 presentation.

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These variable expenses primarily relate to costs in our programming and sales departments, including profit sharing fees and commissions, and bad debt.

Our content costs, including music license fees for music delivered via broadcast, vary with the volume and mix of songs played on our stations.

Our content costs vary with the volume and mix of songs played on our stations.

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.

The primary source of revenue in the Digital Audio Group segment is the sale of advertising on our 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.

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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.

Our advertising revenue, cash flows, and cost of capital are impacted by changes in economic conditions.

Higher interest rates and high inflation have contributed to a challenging macroeconomic environment since 2022.

This challenging environment has led to broader market uncertainty which has impacted our revenues and cash flows.

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 and cash flows.

Cost Savings Initiatives

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.

We continue to explore opportunities for further efficiencies.

Impairment Charges

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.

Economic uncertainty due to inflation and higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses.

This challenging environment has led to broader market uncertainty, has delayed our expected recovery, and has had an adverse impact on our revenue and cash flows.

This challenging environment could have a significant impact on our financial results.

In addition, the economic uncertainty has had a significant impact on the trading values of our debt and equity securities for a sustained period.

As a result, we performed an interim impairment test as of June 30, 2023 on our indefinite-lived Federal Communication Commission ("FCC") licenses and goodwill.

The June 30, 2023 testing resulted in non-cash impairment charges of $363.6 million and $595.5 million to reduce the FCC license and goodwill balances, respectively.

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

No impairment was required as part of the 2023 annual impairment testing .

We recognized a non-cash impairment charge of $302.1 million on our FCC licenses as part of our 2022 annual impairment testing performed in the third quarter of 2022.

For more information, see Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill for a further description of the impairment charges and annual impairment tests.

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.

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.

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.

For the years ended December 31, 2023 and 2022, we recognized non-cash impairment charges of $6.0 million and $9.4 million, respectively, as a result of these cost-savings initiatives.

Executive Summary

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.

Our revenues for the year ended December 31, 2023 decreased for our Multiplatform Group segment primarily due to lower spending on radio advertising in connection with the uncertain market conditions and a decrease in political revenue as 2022 was a mid-term election year, decreased for our Audio & Media Services Group segment primarily due to a decrease in political revenue, and increased for our Digital Audio Group segment primarily due to increased demand for podcast advertising.

The key developments in our business for the year ended December 31, 2023 are summarized below:

• Consolidated Revenue of $3,912.3 million increased $353.9 million, or 9.9%, during 2022 compared to Consolidated Revenue of $3,558.3 million in 2021.

• Revenue and Segment Adjusted EBITDA from our Multiplatform Group increased $108.2 million and $22.4 million, respectively, compared to 2021.

• 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 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.

• Consolidated Revenue of $3,751.0 million decreased $161.3 million, or 4.1%, during 2023 compared to Consolidated Revenue of $3,912.3 million in 2022.

• Multiplatform Group Revenue decreased $161.8 million, or 6.2%, and Segment Adjusted EBITDA decreased $212.3 million, or 27.7%, compared to 2022.

• Digital Audio Group Revenue increased $47.3 million, or, 4.6% and Segment Adjusted EBITDA increased $39.8 million, or 12.9%, compared to 2022.

• Audio & Media Services Group Revenue decreased $47.6 million, or 15.6%, and Segment Adjusted EBITDA decreased $41.4 million, or 36.7%, compared to 2022.

• Operating loss of $797.3 million decreased $854.2 million from Operating income of $56.9 million in 2022.

2023 included $965.1 million of non-cash impairment charges, primarily related to our goodwill and indefinite-lived intangible assets balances;

2022 included $311.5 million of non-cash impairment charges, primarily related to our indefinite-lived intangible asset balance.

• Net loss of $1,100.3 million in 2023 increased $837.6 million compared to Net loss of $262.7 million in 2022.

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

• 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.

2023 included $965.1 million of non-cash impairment charges, primarily related to our goodwill and indefinite-lived intangible assets balances;

2022 included $311.5 million of non-cash impairment charges, primarily related to our indefinite-lived intangible asset balance.

• Cash flows provided by operating activities of $213.1 million decreased $207.0 million compared to 2022.

• Adjusted EBITDA (1) of $696.6 million was down $253.7 million from $950.3 million in 2022.

• Free cash flow (2) of $110.4 million decreased $148.7 million compared to 2022.

• In addition, we received proceeds of $45.3 million upon the sale of certain broadcast tower sites and related assets;

we are leasing back tower site space under long-term operating leases.

• During the years ended December 31, 2023 and 2022, we repurchased $204.0 million and $329.6 million, respectively, of aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $147.3 million and $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 $56.7 million and $30.2 million for the years ended December 31, 2023 and 2022, respectively.

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

(In thousands) Year Ended December 31,

2022 2021 Change

Revenue $ 3,751,025 $ 3,912,283

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

Operating income (loss) (797,311) 56,860

Net loss (1,100,339) (262,670)

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110,392 259,106

(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.

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

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For a discussion of our results of operations for the year ended December 31, 2021, including a year-to-year comparison between 2022 and 2021, 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, 2022.

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:

The table below presents the comparison of our historical results of operations:

(In thousands) Year Ended December 31,

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Other operating expense, net 4,361 24,998

Operating income 56,860 154,857

Operating income (loss) (797,311) 56,860

Interest expense, net 389,775 341,674

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

Loss on investments, net (28,130) (1,045)

Equity in loss of nonconsolidated affiliates (3,530) (11)

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

Gain on extinguishment of debt 56,724 30,214

Other expense, net (655) (2,295)

Loss before income taxes (1,162,677) (257,951)

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

Income tax benefit (expense) 62,338 (4,719)

Net loss (1,100,339) (262,670)

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Net loss attributable to the Company $ (1,102,660) $ (264,663)

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

The table below presents the comparison of our revenue streams:

(In thousands) Year Ended

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Consolidated results for the year ended December 31, 2023 compared to the consolidated results for the year ended December 31, 2022 were as follows:

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 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.

Consolidated revenue decreased $161.3 million during the year ended December 31, 2023 compared to 2022.

Multiplatform Group revenue decreased $161.8 million, primarily resulting from a decrease in broadcast advertising due to the challenging macroeconomic environment as discussed above and a decline in political advertising, partially offset by an increase in trade and barter revenues.

Digital Audio Group revenue increased $47.3 million, driven primarily by continuing increases in demand for podcast advertising.

Audio & Media Services revenue decreased $47.6 million primarily due to a decrease in political revenue.

Direct Operating Expenses

Consolidated direct operating expenses increased $13.9 million during the year ended December 31, 2023 compared to 2022.

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.

The increase in consolidated direct operating expenses was primarily driven by higher variable content costs, including digital profit sharing costs, third-party broadcast costs, and production costs, as well as higher broadcast music license fees.

These increases were partially offset by lower third-party digital costs in connection with COVID-19 related advertisers, lower employee compensation as a result of cost savings initiatives and lower digital performance royalty fees.

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

Consolidated SG&A expenses increased $63.2 million during the year ended December 31, 2023 compared to 2022.

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.

The increase in consolidated SG&A expenses was driven primarily by higher trade and barter expense, variable bonus expense, and bad debt expense.

These increases were partially offset by a decrease in costs incurred in connection with executing on our cost reduction initiatives and lower sales commissions.

Depreciation and Amortization

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.

Depreciation and amortization decreased $17.2 million during 2023 compared to 2022, primarily as a result of a lower fixed asset base due to properties sold in 2022 in connection with our real estate optimization initiatives and the Q3 2023 tower sale-leaseback transaction described under “Sources of Liquidity and Anticipated Cash Requirements” below, as well as lower amortization expense due to certain intangible assets being fully amortized.

Impairment Charges

Economic uncertainty due to inflation and higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses.

In addition, the economic uncertainty has had a significant impact on the trading values of our debt and equity securities for a sustained period.

As a result, we performed an interim impairment test as of June 30, 2023 on our indefinite-lived FCC licenses and goodwill.

We recorded a non-cash impairment charge of $959.1 million in the second quarter of 2023 to reduce the carrying values of our indefinite-lived FCC licenses and our goodwill to their estimated fair values.

See Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill , to the consolidated financial statements for a further description of the impairment charges.

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

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.

No impairment was required for our goodwill and FCC licenses as part of the 2023 annual impairment testing.

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.

During the years ended December 31, 2023 and 2022, we recognized non-cash impairment charges of $6.0 million and $9.4 million, respectively, as a result of these cost-savings initiatives, primarily related to changes in sublease assumptions for certain operating leases previously determined to be subleased as part of strategic actions to streamline our real estate footprint.

Other Operating Expense, Net

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Interest Expense, Net

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, 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

Interest expense, net increased $48.1 million during 2023 compared to 2022 primarily as a result of an increase in floating borrowing rates, partially offset by the lower outstanding aggregate principal of iHeartCommunications, Inc.’s 8.375% Senior Unsecured Notes due 2027 due to the repurchases of $533.6 million of the notes for $446.7 million in cash made during 2023 and 2022.

Loss on Investments, net

During the years ended December 31, 2023 and 2022, we recognized a loss on investments, net of $28.1 million and $1.0 million, respectively, in connection with changes in the value of our investments.

Gain on Extinguishment of Debt

During the year ended December 31, 2023, we recognized a gain on extinguishment of debt of $56.7 million in connection with the repurchase of $204.0 million aggregate principal amount of iHeartCommunications, Inc.’s 8.375% Senior Unsecured Notes due 2027 for $147.3 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)

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.

Income Tax Benefit (Expense)

The effective tax rates for the years ended December 31, 2023 and 2022 were 5.4% and (1.8)%, 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.

The effective tax rate in 2023 was primarily impacted by the impairment charges to non-deductible goodwill as discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill .

The effective tax rate for 2022 was primarily impacted by the forecasted increase in valuation allowances 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 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.

Net loss attributable to the Company increased to $1,102.7 million during the year ended December 31, 2023 compared to Net loss attributable to the Company of $264.7 million during the year ended December 31, 2022, mainly due to the non-cash impairment charges of $965.1 million recorded in 2023, primarily related to our goodwill and indefinite-lived intangible assets balance, an increase in non-cash impairment charges compared to the $311.5 million recorded in 2022, related to our indefinite-lived intangible asset balance.

Multiplatform Group Results

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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 $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 $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.

Revenue from our Multiplatform Group decreased $161.8 million compared to 2022, primarily as a result of lower broadcast revenue due to the challenging macroeconomic environment and a decline in political advertising as 2022 was a mid-term election year, partially offset by increases in trade and barter revenues .

Broadcast revenue decreased $131.2 million, or 7.0%, year-over-year, while Networks revenue decreased $36.8 million or 7.3% year-over-year.

Revenue from Sponsorship and Events increased $2.4 million, or 1.3%, year-over-year.

Operating expenses increased $50.4 million, driven primarily by higher trade and barter expense in connection with the increase in trade and barter revenues, bad debt expense, third-party broadcast costs, and variable bonus expense, partially offset by lower sales commissions and a decrease in costs as a result of our cost reduction initiatives.

Digital Audio Group Results

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

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 $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.

Revenue from our Digital Audio Group increased $47.3 million compared to the prior year, led by Podcast revenue which increased $49.4 million, or 13.8%, year-over-year, driven primarily by increased demand for podcasting from advertisers, as well as higher trade and barter revenue.

Digital, excluding Podcast revenue, decreased $2.1 million year-over-year, primarily driven by a decrease in COVID-19 related advertisers.

Operating expenses increased $7.5 million primarily driven by higher variable content costs, including digital profit sharing costs and production costs, as well as higher trade and barter expenses, partially offset by lower third-party digital costs in connection with COVID-19 related advertisers and lower digital performance royalty fees.

Audio & Media Services Group Results

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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 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.

Revenue from our Audio & Media Services Group decreased $47.6 million compared to the prior year period primarily driven by a decrease in political revenue.

Operating expenses decreased $6.2 million primarily as a result of lower variable bonus expense.

Non-GAAP Financial Measures

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(In thousands) Year Ended December 31,

Operating income $ 56,860 $ 154,857

Operating income (loss) $ (797,311) $ 56,860

Depreciation and amortization 428,483 445,664

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Net loss $ (1,100,339) $ (262,670)

Income tax expense 4,719 8,391

Income tax (benefit) expense (62,338) 4,719

Interest expense, net 389,775 341,674

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EBITDA $ (344,419) $ 529,387

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

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

Loss on investments, net 28,130 1,045

Gain on extinguishment of debt (56,724) (30,214)

Other expense, net 655 2,295

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

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.

Alternatively, Adjusted EBITDA is calculated as Net loss, adjusted to exclude Income tax (benefit) expense, Interest expense, net, Depreciation and amortization, Loss on investments, net, Gain 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.

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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 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.

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 (loss) 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

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.

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

On February 23, 2023, our Board adopted an amendment to the 2021 Plan, which provided for an increase to the shares authorized for issuance under the 2021 Plan.

At our 2023 Annual Meeting of Stockholders, the amendment was approved.

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 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.

Share-based compensation expenses are recorded in the statement of comprehensive loss as Selling, general and administrative expenses and were $35.6 million and $35.5 million for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023 there was $50.8 million of unrecognized compensation cost related to unvested share-based compensation arrangements.

This cost is expected to be recognized over a weighted average period of approximately 1.9 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.

See Note 9, Stockholders' Equity , for more information.

LIQUIDITY AND CAPITAL RESOURCES

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Operating Activities

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.

Cash provided by operating activities was $213.1 million in 2023 compared to $420.1 million of cash provided by operating activities in 2022.

The decrease was primarily due to a decrease in broadcast radio revenue due to a more challenging macroeconomic environment and a decrease in political revenue as 2022 was a mid-term election year, as well as higher interest expense due to an increase in borrowing rates, and timing of payments.

These impacts were partially offset by lower bonus payments in 2023 compared to 2022.

Investing Activities

Cash used for investing activities of $51.3 million in 2023 primarily reflects $102.7 million in cash used for capital expenditures.

We spent $58.0 million for capital expenditures in our Multiplatform Group segment primarily related to our real estate optimization initiatives and software purchases, $23.2 million in our Digital Audio Group segment primarily related to IT infrastructure, $7.4 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.

These were offset by the proceeds from the disposal of assets, which mainly consists of $45.3 million related to the sale of broadcast tower sites and related assets.

We are leasing back space on the broadcast towers and related assets under long-term operating leases.

Refer to Note 3 - Leases and Note 4 - Property, Plant and Equipment, Intangible Assets and Goodwill for more information.

Cash used for investing activities in 2023 includes $12.7 million of cash paid related to assets acquired in the fourth quarter of 2022.

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.

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 $152.2 million in 2023 primarily due to the 2023 repurchases of $204.0 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $147.3 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 used for financing activities of $306.1 million in 2022 primarily related 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.

Sources of Liquidity and Anticipated Cash Requirements

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.

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $346.4 million as of December 31, 2023, 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 "ABL Facility").

As of December 31, 2023, iHeartCommunications had no amounts outstanding under the ABL Facility, a facility size of $450.0 million and $24.3 million in outstanding letters of credit, resulting in $425.7 million of borrowing base availability.

Together with our cash balance of $346.4 million as of December 31, 2023 and our borrowing capacity under the ABL Facility, our total available liquidity 1 was approximately $772.1 million.

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.

In September 2023, we sold 122 of our broadcast tower sites and related assets for net proceeds of $45.3 million.

We simultaneously leased back space on 121 of the broadcast towers and related assets under long-term operating leases.

We intend to use the proceeds from this transaction to fund working capital needs and for general corporate purposes.

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

A challenging macroeconomic environment has led to market uncertainty which negatively impacted our 2023 revenue and cash flows.

For the year ended December 31, 2023, our revenues decreased compared to the year ended December 31, 2022 due to the decrease in broadcast radio revenue driven 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.

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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 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.

In addition to our contractual obligations, we expect that our primary anticipated uses of liquidity in 2024 will be to fund our working capital, make interest and tax payments, fund capital expenditures, make voluntary debt repayments and pursue other strategic opportunities, and maintain operations.

On June 15, 2023, iHeartCommunications, Inc.

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

The amendment replaces the prior Eurocurrency interest rate, based upon LIBOR, with the Secured Overnight Financing Rate (“SOFR”) successor rate plus a SOFR adjustment as specified in the credit agreement.

The Term Loan Facility margins remain the same with the Term Loan Facility due 2026 containing margins of 3.00% for Term SOFR Loans (as defined in the credit agreement) and 2.00% for Base Rate Loans (as defined in the credit agreement), and the Incremental Term Loan Facility due 2026 containing margins of 3.25% for Term SOFR Loans with a floor of 0.50% and 2.25% for Base Rate Loans with a floor of 1.50%.

Assuming the level of borrowings and interest rates at December 31, 2023, we anticipate that we will have approximately $391.0 million of cash interest payments in 2024 compared to $392.7 million of cash interest payments in 2023, due to the lower outstanding debt balance related to the note repurchases conducted in 2023, largely offset by the increase in floating interest rates during 2023.

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 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 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.

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.

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 for at least the next twelve months.

If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities;

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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.

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.

Subsequent Events

On February 8, 2024, the sale of Broadcast Music, Inc.

("BMI") to a shareholder group led by New Mountain Capital, LLC, was completed.

Based on the Company's equity interest in BMI, the sale resulted in cash proceeds of $101.4 million.

The Company plans to use the proceeds for general corporate purposes, which may include the repayment of debt.

Sources of Capital

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

We had the following debt outstanding, net of cash and cash equivalents:

(In thousands) December 31,

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Asset-based Revolving Credit Facility due 2027 — —

Asset-based Revolving Credit Facility due 2027 (1)

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

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$ 4,868,768 $ 5,077,931

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 .

1 During 2023, we repurchased $204.0 million aggregate principal amount of iHeartCommunications, Inc.’s 8.375% Senior Unsecured Notes due 2027 for $147.3 million in cash, excluding accrued interest.

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2 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.

See above under “Sources of Liquidity and Cash Requirements” for details regarding the amendment to our Term Loan Facility entered into on June 15, 2023.

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

As of December 31, 2023, 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, 2023.

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.

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

As of December 31, 2023, we were in compliance with all covenants related to our debt agreements.

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.

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, refinance, retire, exchange or 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.

Such refinancings, repayments, exchanges or purchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

The amounts involved may be material.

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

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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.

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 Part II, Item 8 of this Annual Report on Form 10-K.

Supplemental Financial Information under Debt Agreements

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Capital Expenditures

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

Digital Audio Group 21,261 23,907

Audio and Media Services Group 8,172 14,515

Corporate 11,912 14,056

Total capital expenditures $ 160,969 $ 183,372

Our capital expenditures were not individually significant and primarily relate to studio and broadcast equipment, leasehold improvements, and software.

Capital expenditures for the years ended December 31, 2023 and 2022 are discussed in the Cash Flows section above.

Holders of shares of our Class A common stock are entitled to receive dividends, on a per share basis, when and if declared by our Board out of funds legally available therefor and whenever any dividend is made on the shares of our Class B common stock subject to certain exceptions set forth in our certificate.

See Note 9, Stockholders' Equity , to our consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K.

See Note 9, Stockholders' Equity , to our consolidated financial statements located in Part II, Item 8 of this Annual Report on Form 10-K.

Commitments, Contingencies and Guarantees

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We lease office space, certain broadcast facilities and equipment.

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.

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.

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Interest Rate Risk

On June 15, 2023, iHeartCommunications entered into an amendment to the Term Loan Facility.

The amendment replaces the prior Eurocurrency interest rate, based upon LIBOR, with the SOFR successor rate plus a SOFR adjustment as specified in the credit agreement.

A significant amount of our long-term debt bears interest at variable rates.

Additionally, certain assumptions used within management's estimates are impacted by changes in interest rates.

Accordingly, our earnings will be affected by changes in interest rates.

As of December 31, 2023, approximately 43% of our aggregate principal amount of long-term debt bore interest at floating rates.

Assuming the current level of borrowings and assuming a 50% change in LIBOR, it is estimated that our interest expense for the year ended December 31, 2022 would have changed by $19.6 million.

Assuming the current level of borrowings and assuming a 100 bps change in floating interest rates, it is estimated that our interest expense for the year ended December 31, 2023 would have changed by $23.0 million.

In the event of an adverse change in interest rates, management may take actions to mitigate our exposure.

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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.

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

Management believes that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.

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

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

Expected lease term :

Our expected lease term includes both contractual lease periods and cancellable option periods where failure to exercise such options would result in an economic penalty.

The expected lease term is used in determining whether the lease is accounted for as an operating lease or a finance lease.

A lease is considered a finance lease if the lease term exceeds 75% of the leased asset's useful life.

The expected lease term is also used in determining the depreciable life of the asset.

An increase in the expected lease term will increase the probability that a lease may be considered a finance lease and will generally result in higher interest and depreciation expense for a leased property.

Incremental borrowing rate :

The incremental borrowing rate is primarily used in determining whether the lease is accounted for as an operating lease or a finance lease.

A lease is considered a finance lease if the net present value of the minimum lease payments is greater than 90% of the fair market value of the property.

An increase in the incremental borrowing rate decreases the net present value of the minimum lease payments and reduces the probability that a lease will be considered a finance lease.

Fair market value of leased asset :

The fair market value of leased property is generally estimated based on comparable market data as provided by third-party sources.

Fair market value is used in determining whether the lease is accounted for as an operating lease or a finance lease.

A lease is considered a finance lease if the net present value of the minimum lease payments equals or exceeds 90% of the fair market value of the leased property.

A higher fair market value reduces the likelihood that a lease will be considered a finance lease.

When the decision is made to abandon a leased property before the expiration of the lease term, we assess whether such property will be subleased.

Judgement is required in determining if a leased property can be subleased, estimated sublease payments to be received and the length of time it would take for the sublease to be obtained.

These assumptions are generally based on historical experience as well as current and expected market conditions using information provided by third-party sources.

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

Intangible Assets

Indefinite-lived 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.

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

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.

On June 30, 2023, we performed an interim impairment test in accordance with ASC 350-30-35 and we concluded that a $363.6 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:

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(“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;

• 2.0% over-the-air revenue growth and 3.0% digital 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;

• Operating margins of 8.0% in the first year gradually climb to the industry average margin in year 3 of up to 18.2%, depending on market size;

• Assumed discount rates of 10.0% for the 15 largest markets and 10.5% for all other markets.

• Assumed discount rates of 10.0% for all markets.

While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate the fair value of our indefinite-lived intangible assets, it is possible a material change could occur.

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The following table shows the decrease in the fair value of our indefinite-lived intangible assets 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:

Impact on the Fair Value of our FCC Licenses due to 100 bps Change in:

Revenue Growth Rate Profit Margin Discount Rate

(in thousands)

Description Revenue

Growth Rate Profit

Margin Discount

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

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.

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.

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

$ 201,609 $ 155,590 $ 222,563

At June 30, 2023, both the carrying value and fair value of our FCC licenses after the impairment of $363.6 million was $1.1 billion.

Consequently, 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 perform our annual impairment test on our goodwill as of July 1 of each year.

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

The fair value of our reporting units is used to apply value to the net assets of each reporting unit.

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.

The impairment testing performed as of June 30, 2023 has resulted in a decrease in the fair values of our reporting units.

The carrying values of our Multiplatform, Digital, and RCS reporting units exceeded their fair values.

The fair value of our Katz Media reporting unit exceeded its carrying value.

The valuation methodology we use for valuing goodwill involves considering the implied fair values of our reporting units based on market factors including the trading prices of our debt and equity securities, and 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, 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:

On June 30, 2023, we performed an interim impairment test in accordance with ASC 350-30-35, resulting in $595.5 million impairment of goodwill.

In determining the fair value of our reporting units, we considered industry and market factors including trading multiples of similar businesses and the trading prices of our debt and equity securities.

For purposes of assessing the discounted future cash flows of our reporting units, we used the following assumptions:

• Expected cash flows underlying our business plans for the periods 2023 through 2027.

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• In order to risk adjust the cash flow projections in determining fair value, we utilized discounts rates between 15% and 18% for each of our reporting units.

There were no significant changes to assumptions used for the 2023 annual impairment test.

No impairment was identified related to our goodwill balance as a result of the 2023 annual impairment test performed during the third quarter.

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:

(In thousands)

Description Revenue

Growth Rate Profit

Margin Discount

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) Impact on the Fair Value of our Goodwill due to 100bps Change in:

Reporting Unit Revenue Growth Rate Profit Margin Discount Rate

Multiplatform $ 241,000 $ 137,000 $ 220,000

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Katz Media 19,000 11,000 18,000

Other 20,000 10,000 20,000

RCS 10,000 5,000 8,000

An increase in discount rates or a decrease in revenue growth rates or profit margins could result in impairment charges being required to be recorded for one or more of our reporting units.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Required information is located within Item 7 of Part II of this Annual Report on Form 10-K, under the heading “Market Risk”.

Required information is located within Part II, Item 7 of this Annual Report on Form 10-K, under the heading Market Risk .

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