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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-09 · 221 added, 96 removed, 295 unchanged (52% of the section changed)

56 unchanged sentences

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.

We continue to explore opportunities for further efficiencies.

During the first half of 2024, we implemented operating expense savings initiatives to change and streamline our organization, increase automation and use of technology, examine our sourcing strategies, and leverage our scale to drive greater efficiency.

We have incurred certain costs in connection with executing on these initiatives 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 lease and operating expenses incurred by the Company.

These strategic actions resulted in impairment charges due to the write-down of the affected right-of-use assets when changes to sublease assumptions occur.

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

We therefore performed interim impairment tests as of June 30, 2024 on our indefinite-lived Federal Communication Commission ("FCC") licenses and goodwill.

The uncertainty surrounding the demand for advertising and the adverse impact on the trading values of our debt and equity securities impacted the key assumptions used in the models that are utilized to value our FCC licenses and goodwill.

As a result, the fair values of certain of our FCC licenses and reporting units have decreased.

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, estimated start-up costs and capital expenditures.

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

We obtained the most recent broadcast radio industry revenue projections for use in our valuation model, as well as various other sources to analyze media and broadcast industry market forecasts and other data in developing the assumptions used for purposes of performing impairment testing on our FCC licenses as of June 30, 2024.

Considerations in developing these assumptions included the expected impact on advertising revenues given the current market uncertainty, ranges of expected timing of recovery, discount rates and other factors.

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

As a result, we recognized a non-cash impairment charge of $304.1 million on our FCC licenses.

The goodwill impairment test requires us to measure the fair value of our reporting units, which is compared to the carrying value of the reporting units, including goodwill.

Each of our reporting units is valued using a discounted cash flow model which 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.

The economic environment resulting from inflation, higher interest rates, and the related uncertainty in the markets negatively impacted the trading values of our debt and equity securities and also impacted certain assumptions used to estimate the fair values of our reporting units for purposes of performing the interim goodwill impairment test.

Based on our valuation analysis, we determined that the estimated fair values of two of our reporting units were below their carrying values, including goodwill, which required us to recognize a non-cash impairment charge of $616.1 million to reduce our goodwill balance.

While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our 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 the magnitude of the impact of current market conditions, as well as the timing of any recovery.

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.

Executive Summary

Consolidated revenues for the first quarter of 2024 decreased due to continued lower spending on radio advertising in connection with continued uncertain market conditions, partially offset by continued increases in demand for digital advertising and by increased political revenues as 2024 is a presidential election year.

Consolidated revenues for the second quarter of 2024 increased due to a continued increase in demand for digital advertising and increased political revenues as 2024 is a presidential election year, partially offset by lower spending on radio advertising as a result of continued uncertain market conditions.

The key developments that impacted our business during the quarter are summarized below:

• Consolidated Revenue of $799.0 million decreased $12.2 million, or 1.5%, during the quarter ended March 31, 2024 compared to Consolidated Revenue of $811.2 million in the prior year's first quarter.

• Multiplatform Group Revenue decreased $35.6 million, or 6.7%, and Segment Adjusted EBITDA decreased $9.9 million, or 11.3%, compared to the prior year's first quarter, respectively.

• Digital Audio Group Revenue increased $15.6 million, or 7.0%, and Segment Adjusted EBITDA increased $14.0 million, or 25.9%, compared to the prior year's first quarter, respectively.

• Audio & Media Services Group Revenue increased $7.8 million, or 12.7%, and Segment Adjusted EBITDA increased $8.4 million, or 54.4%, compared to the prior year's first quarter, respectively.

• Operating loss of $34.7 million improved $14.2 million from $48.9 million in the prior year’s first quarter driven primarily by a decrease in operating expenses, including trade and other variable expenses.

• Net loss of $18.1 million decreased $204.3 million from $222.4 million in the prior year's first quarter mainly due to the $101.4 million gain recognized on the sale of our investment in Broadcast Music, Inc.

("BMI") in the first quarter of 2024 and the income tax benefit recognized during the period compared to income tax expense recognized in the prior year's first quarter.

• Cash flows used for operating activities of $59.3 million decreased from $94.0 million in the prior year's first quarter.

• Adjusted EBITDA (1) of $104.6 million, was up $11.2 million from $93.4 million in prior year's first quarter.

• Free cash flow (2) of $(80.9) million improved from $(133.1) million in the prior year's first quarter.

• Consolidated Revenue of $929.1 million increased $9.1 million, or 1.0%, during the quarter ended June 30, 2024 compared to Consolidated Revenue of $920.0 million in the prior year's second quarter.

• Multiplatform Group Revenue decreased $20.0 million, or 3.4%, and Segment Adjusted EBITDA decreased $58.1 million, or 35.8%, compared to the prior year's second quarter, respectively.

• Digital Audio Group Revenue increased $24.8 million, or 9.5%, and Segment Adjusted EBITDA increased $7.3 million, or 8.6%, compared to the prior year's second quarter, respectively.

• Audio & Media Services Group Revenue increased $4.3 million, or 6.5%, and Segment Adjusted EBITDA increased $5.4 million, or 28.9%, compared to the prior year's second quarter, respectively.

• Operating loss of $909.7 million increased $12.5 million from $897.2 million in the prior year’s second quarter, primarily due to the increase in direct operating expense and SG&A expense as discussed further below, partially offset by the decrease in non-cash impairment charges of $920.2 million recognized in the second quarter of 2024 compared to the $960.6 million of non-cash impairment charges recognized in the prior year period.

The non-cash impairment charges primarily related to goodwill and FCC license impairments in both periods.

• Net loss of $982.0 million increased $99.0 million from $883.0 million in the prior year's second quarter, primarily due to a decrease in deferred tax benefits recorded in 2024 compared to the prior year period.

• Cash flows provided by operating activities of $26.7 million decreased from cash flow provided by operating activities of $56.8 million in the prior year's second quarter.

• Adjusted EBITDA (1) of $150.2 million, was down $41.0 million from $191.2 million in prior year's second quarter.

• Free cash flow (2) of $5.6 million decreased from $34.0 million in the prior year's second quarter.

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

3 unchanged sentences

Net loss (981,989) (882,982)

Cash used for operating activities (59,277) (93,983)

Cash provided by operating activities 26,729 56,772

Adjusted EBITDA (1)

1 unchanged sentence

Free cash flow (2)

(80,859) (133,148)

(1) For a definition of Adjusted EBITDA and a reconciliation to Operating loss, the most closely comparable GAAP measure, and to Net loss, please see "Reconciliation of Operating 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 used for operating activities, the most closely comparable GAAP measure, please see “Reconciliation of Cash used for operating activities to Free cash flow” in this MD&A.

(1) For a definition of Adjusted EBITDA and a reconciliation to Operating loss, the most closely comparable U.S.

generally accepted accounting principles ("GAAP") measure, and to Net loss, please see "Reconciliation of Operating 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 (used for) operating activities to Free cash flow” in this MD&A.

Results of Operations

The tables below present the comparison of our historical results of operations for the three months ended March 31, 2024 to the three months ended March 31, 2023:

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

(In thousands) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Revenue $ 929,092 $ 920,014 $ 1,728,130 $ 1,731,253

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Impairment charges 920,224 960,570 921,732 964,517

Other operating expense, net 572 221

Other operating (income) expense, net 516 (261) 1,088 (40)

Operating loss (909,667) (897,194) (944,375) (946,056)

1 unchanged sentence

Gain (loss) on investments, net (412) (6,038) 91,582 (12,543)

Equity in earnings (loss) of nonconsolidated affiliates (45) 40

Equity in loss of nonconsolidated affiliates (61) (44) (106) (4)

Gain on extinguishment of debt — 22,902 — 27,527

1 unchanged sentence

Loss before income taxes (1,005,948) (979,339) (1,044,718) (1,125,597)

Income tax benefit (expense) 20,662 (76,105)

Income tax benefit 23,959 96,357 44,621 20,252

Net loss (981,989) (882,982) (1,000,097) (1,105,345)

Less amount attributable to noncontrolling interest

(331) 1,488 69 1,385

Net loss attributable to the Company $ (981,658) $ (884,470) $ (1,000,166) $ (1,106,730)

The table below presents the comparison of our revenue streams for the three months ended March 31, 2024 to the three months ended March 31, 2023:

The table below presents the comparison of our revenue streams for the three and six months ended June 30, 2024 to the three and six months ended June 30, 2023:

(In thousands) Three Months Ended

2024 2023 Change

June 30, % Six Months Ended

2024 2023 Change 2024 2023 Change

Broadcast Radio $ 425,490 $ 429,152 (0.9) % $ 784,828 $ 812,390 (3.4) %

9 unchanged sentences

Revenue, total $ 929,092 $ 920,014 1.0 % $ 1,728,130 $ 1,731,253 (0.2) %

Consolidated results for the three months ended March 31, 2024 compared to the consolidated results for the three months ended March 31, 2023 were as follows:

Consolidated revenue decreased $12.2 million during the three months ended March 31, 2024 compared to the same period of 2023.

Multiplatform Group revenue decreased $35.6 million, or 6.7%, primarily resulting from a decrease in broadcast advertising in connection with continued uncertain market conditions and a decrease in non cash trade revenues related to the 2024 iHeartRadio Music Awards, partially offset by an increase in political revenues as 2024 is a presidential election year.

Digital Audio Group revenue increased $15.6 million, or 7.0%, driven primarily by continuing increases in demand for podcast advertising.

Audio & Media Services revenue increased $7.8 million primarily as a result of contract termination fees earned by Katz Media and due to higher political revenue.

Consolidated results for the three and six months ended June 30, 2024 compared to the consolidated results for the three and six months ended June 30, 2023 were as follows:

Consolidated revenue increased $9.1 million during the three months ended June 30, 2024 compared to the same period of 2023.

Multiplatform Group revenue decreased $20.0 million, or 3.4%, primarily resulting from a decrease in broadcast advertising in connection with continued uncertain market conditions, partially offset by an increase in non-cash trade revenues and political revenues as 2024 is a presidential election year.

Digital Audio Group revenue increased $24.8 million, or 9.5%, driven primarily by continuing increases in demand for digital advertising.

Audio & Media Services revenue increased $4.3 million, or 6.5%, primarily as a result of higher political revenue.

Consolidated revenue decreased $3.1 million during the six months ended June 30, 2024 compared to the same period of 2023.

Multiplatform Group revenue decreased $55.6 million, or 4.9%, primarily resulting from a decrease in broadcast advertising in connection with continued uncertain market conditions, partially offset by an increase in non-cash trade revenues and political revenues as 2024 is a presidential election year.

Digital Audio Group revenue increased $40.3 million, or 8.3%, driven primarily by continuing increases in demand for digital advertising.

Audio & Media Services revenue increased $12.1 million, or 9.5%, primarily as a result of contract termination fees earned by Katz Media and due to higher political revenue.

Direct Operating Expenses

Consolidated direct operating expenses decreased $3.2 million during the three months ended March 31, 2024 compared to the same period of 2023.

The decrease was primarily driven by certain lower variable content costs including broadcast profit sharing expense, third-party digital costs in connection with COVID-19 related advertisers, and event costs related to the timing of the 2024 iHeartRadio Music Awards, partially offset by certain higher variable content costs, including higher third-party digital costs and sales commissions related to the increase in digital revenues and an increase in broadcast music license fees.

Consolidated direct operating expenses increased $27.0 million, or 7.6%, during the three months ended June 30, 2024 compared to the same period of 2023.

The increase was primarily driven by higher variable content costs, including higher profit sharing expenses and third-party digital costs related to the increase in digital revenues and an increase in music license fees, as well as an increase in event costs related to the timing of the iHeartRadio Music Awards which was in the second quarter of 2024 and the first quarter of 2023.

Consolidated direct operating expenses increased $23.7 million, or 3.4%, during the six months ended June 30, 2024 compared to the same period of 2023.

The increase was primarily driven by higher variable content costs, including higher profit sharing expenses and third-party digital costs related to the increase in digital revenues and an increase in broadcast music license fees, partially offset by lower broadcast profit sharing expense.

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

Consolidated SG&A expenses decreased $17.7 million during the three months ended March 31, 2024 compared to the same period of 2023.

The decrease was driven primarily by lower non-cash trade expense due to the timing of the 2024 iHeartRadio Music Awards and lower bonus expense based on results, partially offset by an increase in certain costs incurred in connection with executing on our cost savings initiatives.

Consolidated SG&A expenses increased $37.8 million, or 9.6%, during the three months ended June 30, 2024 compared to the same period of 2023.

The increase was driven primarily by higher non-cash trade expense due to the timing of the iHeartRadio Music Awards which was in the second quarter of 2024 and the first quarter of 2023 and an increase in costs incurred in connection with executing on our cost savings initiatives, partially offset by lower bad debt expense and lower bonus expense based on results.

Consolidated SG&A expenses increased $20.2 million, or 2.5%, during the six months ended June 30, 2024 compared to the same period of 2023.

The increase was driven primarily by an increase in certain costs incurred in connection with executing on our cost savings initiatives and higher non-cash trade and barter expense primarily related to the 2024 iHeartRadio Music Awards, partially offset by lower bonus expense based on results.

Depreciation and Amortization

Depreciation and amortization decreased $3.4 million during the three months ended March 31, 2024 compared to the same period of 2023, primarily as a result of a lower fixed asset base due to properties sold in 2022 and 2023 in connection with our real estate optimization initiatives.

Depreciation and amortization decreased $3.7 million and $7.1 million during the three and six months ended June 30, 2024 compared to the same periods of 2023, respectively, primarily as a result of a lower fixed asset base due to properties sold in 2022 and 2023 in connection with our real estate optimization initiatives.

Impairment Charges

During the three months ended March 31, 2024 and 2023, we recognized non-cash impairment charges of $1.5 million and $3.9 million, respectively, 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.

Interest Expense

Interest expense increased $0.1 million during the three months ended March 31, 2024 compared to the same period of 2023, primarily as a result of the increase in floating borrowing rates, largely offset by the lower outstanding aggregate principal of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 due to the repurchases of $204.0 million of the notes for $147.3 million in cash made during 2023.

During the three months ended June 30, 2024 and 2023, we recorded non-cash impairment charges of $920.2 million and $960.6 million, respectively, primarily to reduce the carrying values of our indefinite-lived FCC licenses and our goodwill to their estimated fair values.

During the six months ended June 30, 2024 and 2023, we recorded non-cash impairment charges of $921.7 million and $964.5 million, respectively, primarily to reduce the carrying values of our indefinite-lived FCC licenses and our goodwill to their estimated fair values.

The impairment charges resulted from the economic uncertainty due to inflation and higher interest rates that has had an adverse impact on our results, and has resulted in a significant decrease in the trading values of our debt and equity securities for a sustained period.

See Note 4 , Property, Plant and Equipment, Intangible Assets and Goodwill , to the consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for a further description of the impairment charges.

Interest Expense, net

Interest expense decreased $3.1 million during the three and six months ended June 30, 2024 compared to the same periods of 2023, primarily as a result of the lower outstanding aggregate principal of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 due to the repurchases of $204.0 million of the notes for $147.3 million in cash made during 2023, partially offset by the increase in floating borrowing rates.

Gain (Loss) on Investments, Net

During the three months ended March 31, 2024, we recogn ized a gain on investments, net of $92.0 million due to the $101.4 million gain recognized on the sale of our investment in BMI in the first quarter of 2024, partially offset by declines in the value of certain investments.

During the three months ended March 31, 2023, we recogn ized a loss on in vestments, net of $6.5 million, related to declines in the value of our investments.

During the three months ended June 30, 2024, we recogn ized a loss on investments, net of $0.4 million, related to declines in the value of our investments.

During the six months ended June 30, 2024, we recognized a gain on investments, net of $91.6 million, primarily due to the $101.4 million gain recognized on the sale of our investment in BMI in the first quarter of 2024, partially offset by declines in the value of certain investments.

During the three and six months ended June 30, 2023, we recogn ized a loss on in vestments, net of $6.0 million and $12.5 million, respectively, related to declines in the value of our investments.

Gain on Extinguishment of Debt

During the three months ended March 31, 2023, we recognized a gain on extinguishment of debt of $4.6 million in connection with the open market repurchases of $20.0 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $15.4 million in cash.

There were no repurchases during the three months ended March 31, 2024.

Income Tax Benefit (Expense)

The effective tax rates for the Company for the three months ended March 31, 2024 and 2023 were 53.3% and (52.0)%, respectively.

During the three months ended June 30, 2023, we recognized a gain on extinguishment of debt of $22.9 million in connection with the open market repurchases of $79.9 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $57.0 million in cash.

During the six months ended June 30, 2023, we recognized a gain on extinguishment of debt of $27.5 million in connection with the open market repurchases of $99.9 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375% Senior Unsecured Notes due 2027 for $72.4 million in cash.

There were no repurchases during the three and six months ended June 30, 2024.

Income Tax Benefit

The effective tax rates for the Company for the three and six months ended June 30, 2024 were 2.4% and 4.3%, respectively.

The effective tax rates were primarily impacted by the forecasted 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, as well as by impairment charges to non-deductible goodwill recorded during the second quarter, as discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill .

The deferred tax benefit primarily consists of $77.3 million related to the FCC license impairment charges recorded during the second quarter of 2024.

The deferred benefit was partially offset by deferred tax expense recorded for valuation allowances against certain deferred tax assets.

The effective tax rates for the Company for the three and six months ended June 30, 2023 were 9.8% and 1.8%, respectively.

The deferred tax benefit primarily consists of $92.9 million related to the FCC license impairment charges recorded during the second quarter of 2023.

Net Loss Attributable to the Company

Net loss attributable to the Company of $18.5 million during the three months ended March 31, 2024 reflected a decrease of $203.8 million compared to Net loss attributable to the Company of $222.3 million during the three months ended March 31, 2023, primarily due to the $101.4 million gain recognized on the sale of our investment in BMI in the first quarter of 2024 and the income tax benefit recognized during the period compared to income tax expense recognized in the prior year's first quarter.

Net loss attributable to the Company of $981.7 million during the three months ended June 30, 2024 reflected an increase of $97.2 million compared to Net loss attributable to the Company of $884.5 million during the three months ended June 30, 2023, primarily due to a decrease in deferred tax benefits recorded in 2024 compared to the prior year period.

Net loss attributable to the Company of $1,000.2 million during the six months ended June 30, 2024 reflected a decrease of $106.5 million compared to Net loss attributable to the Company of $1,106.7 million during the six months ended June 30, 2023, primarily due to the non-cash impairment charges of $921.7 million recognized in 2024 compared to the $964.5 million recognized in the prior year period.

Multiplatform Group Results

(In thousands) Three Months Ended

2024 2023 Change

June 30, % Six Months Ended

2024 2023 Change 2024 2023 Change

Revenue $ 575,907 $ 595,944 (3.4) % $ 1,069,370 $ 1,124,957 (4.9) %

4 unchanged sentences

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

Revenue from our Multiplatform Group decreased $35.6 million compared to the prior year primarily due to a decrease in broadcast advertising in connection with continued uncertain market conditions and a decrease in non cash trade and barter revenues related to the 2024 iHeartRadio Music Awards, partially offset by an increase in political revenues.

Broadcast revenue declined $23.9 million, or 6.2%, year-over-year, driven by lower spot revenue, partially offset by an increase political advertising.

Networks declined $5.9 million, or 5.5%, year-over-year.

Revenue from our Multiplatform Group decreased $20.0 million compared to the prior year primarily due to a decrease in broadcast and networks advertising in connection with continued uncertain market conditions, partially offset by an increase in non-cash trade revenue and political revenues.

Broadcast revenue declined $3.7 million, or 0.9%, year-over-year, driven by lower spot revenue, partially offset by an increase in non-cash trade revenues and political advertising.

Networks declined $15.6 million, or 12.8%, year-over-year due primarily to the impact of non-returning advertisers.

Revenue from Sponsorship and Events increased $0.9 million, or 2.4%, year-over-year.

Operating expenses increased $38.1 million, driven primarily by higher non-cash trade expense and live event costs due to the timing of the iHeartRadio Music Awards which was in the second quarter of 2024 and the first quarter of 2023 and higher broadcast music license fees.

Revenue from our Multiplatform Group decreased $55.6 million compared to the prior year primarily due to a decrease in broadcast advertising in connection with continued uncertain market conditions, partially offset by an increase in non-cash trade revenue and political revenues.

Broadcast revenue declined $27.6 million, or 3.4%, year-over-year, driven by lower spot revenue, partially offset by an increase in political advertising and non-cash trade revenues.

Networks declined $21.5 million, or 9.3%, year-over-year due primarily to the impact of non-returning advertisers.

Revenue from Sponsorship and Events decreased 3.8 million, or 5.4%, year-over-year.

Operating expenses decreased $25.7 million, driven primarily by lower non cash trade expense and live event costs due to the timing of the 2024 iHeartRadio Music Awards, as well as lower bonus expense based on results, partially offset by higher broadcast music license fees.

Operating expenses increased $12.4 million, driven primarily by higher non-cash trade expense related to the 2024 iHeartRadio Music Awards and higher broadcast music license fees, partially offset by lower bonus expense based on results.

Digital Audio Group Results

(In thousands) Three Months Ended

2024 2023 Change

June 30, % Six Months Ended

2024 2023 Change 2024 2023 Change

Revenue $ 285,614 $ 260,854 9.5 % $ 524,582 $ 484,250 8.3 %

4 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 $15.6 million compared to the prior year, driven by Podcast revenue which increased by $13.8 million, or 18.0% year-over-year, driven primarily by continued increase in demand for podcasting from advertisers, and Digital, excluding Podcast revenue, which grew $1.8 million, or 1.2% year-over-year, driven by an increase in demand for digital advertising, partially offset by a decrease in COVID-19 related advertisers.

Operating expenses increased $1.6 million primarily driven by higher variable content costs, including higher third-party digital costs and sales commissions related to the increase in revenues, as well as higher merchandising and event costs, partially offset by lower third-party digital costs in connection with COVID-19 related advertisers and lower compensation expense.

Revenue from our Digital Audio Group increased $24.8 million compared to the prior year, driven by Digital, excluding Podcast revenue, which grew $16.9 million, or 10.3% year-over-year, primarily due to an increase in demand for digital advertising, and Podcast revenue which increased by $7.8 million, or 8.1% year-over-year, primarily due to the continued increase in demand for podcasting from advertisers and higher non-cash trade revenue.

Operating expenses increased $17.5 million, primarily driven by higher variable content costs, including higher profit sharing agreements and third-party digital costs related to the increase in revenues.

Revenue from our Digital Audio Group increased $40.3 million compared to the prior year, driven by Podcast revenue which increased by $21.6 million, or 12.5% year-over-year, primarily due to a continued increase in demand for podcasting from advertisers, and Digital, excluding Podcast revenue, which increased $18.7 million, or 6.0% year-over-year, primarily due to an increase in demand for digital advertising, partially offset by a decrease in COVID-19 related advertisers.

Operating expenses increased $19.1 million, primarily driven by higher variable content costs, including higher third-party digital costs and profit sharing related to the increase in revenues, partially offset by lower compensation expense.

Audio & Media Services Group Results

(In thousands) Three Months Ended

2024 2023 Change

June 30, % Six Months Ended

2024 2023 Change 2024 2023 Change

Revenue $ 70,082 $ 65,804 6.5 % $ 139,250 $ 127,155 9.5 %

4 unchanged sentences

(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 $7.8 million compared to the prior year period primarily due to contract termination fees earned by Katz Media and due to higher political revenue as 2024 is a presidential election year.

Operating expenses decreased $0.5 million primarily as a result of a favorable shift in the sales mix toward services.

Revenue from our Audio & Media Services Group increased $4.3 million compared to the prior year period, primarily due to higher political revenue as 2024 is a presidential election year.

Operating expenses decreased $1.1 million, primarily as a result of a favorable shift in the sales mix toward services and a decrease in employee compensation expense.

Revenue from our Audio & Media Services Group increased $12.1 million compared to the prior year period primarily due to contract termination fees earned by Katz Media and higher political revenue as 2024 is a presidential election year.

Operating expenses decreased $1.6 million primarily as a result of a favorable shift in the sales mix toward services and a decrease in employee compensation expense.

Reconciliation of Operating loss to Adjusted EBITDA

(In thousands) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Operating loss $ (909,667) $ (897,194) $ (944,375) $ (946,056)

1 unchanged sentence

Impairment charges 920,224 960,570 921,732 964,517

Other operating expense, net 572 221

Other operating (income) expense, net 516 (261) 1,088 (40)

Restructuring expenses 27,558 10,789 51,161 30,243

4 unchanged sentences

(In thousands) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net loss $ (981,989) $ (882,982) $ (1,000,097) $ (1,105,345)

Income tax (benefit) expense (20,662) 76,105

Income tax benefit (23,959) (96,357) (44,621) (20,252)

Interest expense, net 95,577 98,693 191,092 194,150

4 unchanged sentences

Other expense, net 231 272 727 371

Equity in (earnings) loss of nonconsolidated affiliates 45 (40)

Equity in loss of nonconsolidated affiliates 61 44 106 4

Impairment charges 920,224 960,570 921,732 964,517

Other operating expense, net 572 221

Other operating (income) expense, net 516 (261) 1,088 (40)

Restructuring expenses 27,558 10,789 51,161 30,243

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

Depreciation and amortization, Impairment charges and Other operating (income) expense, net.

Alternatively, Adjusted EBITDA is calculated as Net loss, adjusted to exclude Income tax benefit, Interest expense, net, Depreciation and amortization, (Gain) loss on investments, net, Gain on extinguishment of debt, Other expense, net, Equity in loss of nonconsolidated affiliates, Impairment charges, Other operating (income) 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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We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management.

We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates.

believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates.

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 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 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.

Reconciliation of Cash used for operating activities to Free Cash Flow

Reconciliation of Cash provided by (used for) operating activities to Free Cash Flow

(In thousands) Three Months Ended

Cash used for operating activities $ (59,277) $ (93,983)

June 30, Six Months Ended

2024 2023 2024 2023

Cash provided by (used for) operating activities $ 26,729 $ 56,772 $ (32,548) $ (37,211)

Purchases of property, plant and equipment (21,172) (22,773) (42,754) (61,938)

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$ 5,557 $ 33,999 $ (75,302) $ (99,149)

(1) We define Free cash flow ("Free Cash Flow") as Cash used for 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 ("Free Cash Flow") as Cash provided by (used for) 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.

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

Share-based compensation expenses are recorded in SG&A expenses and were $8.5 million and $10.2 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, there was $51.3 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 1.9 years.

Share-based compensation expenses are recorded in SG&A expenses and were $7.2 million and $9.2 million for the three months ended June 30, 2024 and 2023, respectively.

Share-based compensation expenses were $15.7 million and $19.4 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, there was $44.8 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 1.7 years and assumes Performance RSUs will be fully earned at target.

See Note 8 , Stockholders' Deficit , for more information.

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

(In thousands) Three Months Ended

(In thousands) Six Months Ended

Cash provided by (used for):

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(75,302) (99,149)

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

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

Operating Activities

Cash used for operating activities was $59.3 million during the three months ended March 31, 2024 compared to $94.0 million during the three months ended March 31, 2023.

The change was primarily due to improvement in the timing of receivable collections and timing of payable payments, partially offset by the decrease in broadcast radio revenue and an increase in cash bonus payments in 2024 compared to 2023.

Cash used for operating activities was $32.5 million during the six months ended June 30, 2024 compared to $37.2 million during the six months ended June 30, 2023.

The improvement was primarily due to an improvement in the timing of receivable collections, largely offset by a decrease in revenue from our Multiplatform Group, and an increase in cash bonus payments in 2024 compared to 2023.

Investing Activities

Cash provided by investing activities of $78.0 million during the three months ended March 31, 2024 primarily reflects $101.4 million of proceeds received from the sale of our investment in BMI, partially offset by $21.6 million in cash used for capital expenditures.

For capital expenditures, we spent $11.7 million in our Multiplatform Group segment primarily related to our IT infrastructure and real estate optimization initiatives, $5.4 million in our Digital Audio Group segment primarily related to IT infrastructure, $2.3 million in our Audio & Media Services Group segment, primarily related to software, and $2.2 million in Corporate primarily related to equipment and software purchases.

Cash used for investing activities of $38.4 million during the three months ended March 31, 2023 primarily reflects $39.2 million in cash used for capital expenditures.

We spent $26.4 million for capital expenditures in our Multiplatform Group segment primarily related to our real estate optimization initiatives, $5.8 million in our Digital Audio Group segment primarily related to IT infrastructure, $3.9 million in our Audio & Media Services Group segment, primarily related to software, and $3.1 million in Corporate primarily related to equipment and software purchases.

Cash provided by investing activities of $55.9 million during the six months ended June 30, 2024 primarily reflects $101.4 million of proceeds received from the sale of our investment in BMI, partially offset by $42.8 million in cash used for capital expenditures.

For capital expenditures during the period, we spent $24.6 million in our Multiplatform Group segment primarily related to our IT infrastructure and real estate optimization initiatives, $11.1 million in our Digital Audio Group segment primarily related to IT infrastructure, $4.5 million in our Audio & Media Services Group segment, primarily related to software, and $2.6 million in Corporate primarily related to equipment and software purchases.

Cash used for investing activities of $59.3 million during the six months ended June 30, 2023 primarily reflects $61.9 million in cash used for capital expenditures.

For capital expenditures during the period, we spent $41.3 million in our Multiplatform Group segment primarily related to our real estate optimization initiatives, $11.3 million in our Digital Audio Group segment primarily related to IT infrastructure, $4.8 million in our Audio & Media Services Group segment, primarily related to software, and $4.6 million in Corporate primarily related to equipment and software purchases.

Financing Activities

Cash used for financing activities totaled $3.5 million during the three months ended March 31, 2024 primarily due to distributions to noncontrolling interest holders .

Cash used for financing activities totaled $15.9 million during the three months ended March 31, 2023 primarily due to the repurchases of $20.0 million aggregate principal amount of our 8.375% Senior Unsecured Notes due 2027 for $15.4 million in cash, reflecting a discounted purchase price from the face value of the notes.

Cash used for financing activities totaled $4.8 million during the six months ended June 30, 2024 primarily due to distributions to noncontrolling interest holders .

Cash used for financing activities totaled $74.9 million during the six months ended June 30, 2023 primarily due to the repurchases of $99.9 million aggregate principal amount of our 8.375% Senior Unsecured Notes due 2027 for $72.4 million in cash, reflecting a discounted purchase price from the face value of the notes.

Sources of Liquidity and Anticipated Cash Requirements

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $361.4 million as of March 31, 2024, 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 March 31, 2024, iHeartCommunications had no amounts outstanding under the ABL Facility, a facility size of $450.0 million and $23.2 million in outstanding letters of credit, resulting in $426.8 million of borrowing base availability.

Our total available liquidity 1 as of March 31, 2024 was $788.2 million.

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $364.7 million as of June 30, 2024, 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 June 30, 2024, iHeartCommunications had no amounts outstanding under the ABL Facility, a facility size of $450.0 million and $23.7 million in outstanding letters of credit, resulting in $426.3 million of borrowing base availability.

Our total available liquidity 1 as of June 30, 2024 was $791.0 million.

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

A challenging macroeconomic environment has led to market uncertainty which has continued to negatively impact 2024 revenues and cash flows.

For the three months ended March 31, 2024, our revenues decreased compared to the three months ended March 31, 2023 primarily due to the decrease in broadcast radio revenue, among other factors discussed in the Results of Operations section of the MD&A.

For the six months ended June 30, 2024, our revenues increased compared to the six months ended June 30, 2023 primarily due to revenue growth in our Digital Audio Group, 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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These obligations impact our short-term and long-term liquidity and capital resource needs.

Certain contractual obligations are reflected on the Consolidated Balance Sheet as of March 31, 2024, while others are considered future commitments.

Certain contractual obligations are reflected on the Consolidated Balance Sheet as of June 30, 2024, while others are considered future commitments.

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 2024 will be to fund our working capital and maintain operations, make interest and tax payments, fund capital expenditures, make voluntary debt repayments and pursue other strategic opportunities.

Assuming the current level of borrowings and interest rates in effect at March 31, 2024, we anticipate that we will have approximately $284.2 million of cash interest payments in the remainder of 2024 compared to $291.0 million of cash interest payments during the same period in 2023, primarily due to the lower outstanding debt balance as a result of the note repurchases in 2023, partially offset by an increase in floating interest rates.

Assuming the current level of borrowings and interest rates in effect at June 30, 2024, we anticipate that we will have approximately $196.3 million of cash interest payments in the remainder of 2024 compared to $197.2 million of cash interest payments during the same period in 2023, primarily due to the lower outstanding debt balance as a result of the note repurchases in 2023, partially offset by an increase in floating interest rates.

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

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Summary Debt Capital Structure

As of March 31, 2024 and December 31, 2023, we had the following debt outstanding, net of cash and cash equivalents:

(In thousands) March 31, 2024 December 31, 2023

As of June 30, 2024 and December 31, 2023, we had the following debt outstanding, net of cash and cash equivalents:

(In thousands) June 30, 2024 December 31, 2023

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

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8.375% Senior Unsecured Notes due 2027 916,357 916,357

Other Subsidiary Debt 694 —

Original issue discount (6,003) (7,558)

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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 March 31, 2024, 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 March 31, 2024.

As of June 30, 2024, 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 June 30, 2024.

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

As of March 31, 2024, we were in compliance with all covenants related to our debt agreements.

As of June 30, 2024, we were in compliance with all covenants related to our debt agreements.

For additional information regarding our debt, refer to Note 5, Long-Term Debt .

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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 three months ended March 31, 2024, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same period.

Further, as of March 31, 2024, we were in compliance with all covenants related to our debt agreements.

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 three and six months ended June 30, 2024, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same period.

Further, as of June 30, 2024, we were in compliance with all covenants related to our debt agreements.

Commitments, Contingencies and Guarantees

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

As of March 31, 2024, 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 100 bps change in floating interest rates, it is estimated that our interest expense for the three months ended March 31, 2024 would have changed by $5.7 million.

As of June 30, 2024, 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 100 bps change in floating interest rates, it is estimated that our interest expense for the six months ended June 30, 2024 would have changed by $11.5 million.

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

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Critical Accounting Estimates

There have been no significant changes to our critical accounting policies and estimates disclosed in “Critical Accounting Estimates” of Item 7, Management’s Discussion and Analysis of our Annual Report on Form 10-K for the year ended December 31, 2023.

The preparation of our financial statements in conformity with U.S.

GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period.

On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

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.

Other than the following, there have been no significant changes to our critical accounting policies and estimates disclosed in “Critical Accounting Estimates” of Item 7, Management’s Discussion and Analysis of our Annual Report on Form 10-K for the year ended December 31, 2023.

Economic uncertainty due to 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, and 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 impairment test as of June 30, 2024 on our indefinite-lived FCC licenses and goodwill.

Indefinite-lived Intangible Assets

Indefinite-lived intangible assets, such as our FCC licenses, are reviewed for 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.

Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value.

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, profit margin, and the risk-adjusted discount rate as well as other assumptions including market share, duration and profile of the build-up period, estimated start-up costs and capital expenditures.

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

On June 30, 2024, we performed an interim impairment test in accordance with ASC 350-30-35 and we concluded that a $304.1 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 five-year period;

• 2.0% over-the-air revenue growth and 3.0% digital revenue growth was assumed beyond the initial five-year period and 1.0% 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 16.3%, depending on market size;

• Assumed discount rates of 9.5% for large markets and 10.0% for small 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.

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 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)

$ 123,114 $ 120,132 $ 142,164

At June 30, 2024, the carrying value of our FCC licenses was $809.9 million after the impairment of $304.1 million .

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 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 June 30, 2024 has resulted in a decrease in the fair values of our reporting units.

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

The fair values of our Digital and Katz reporting units exceeded their carrying values.

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 values using a risk-adjusted discount rate.

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

On June 30, 2024, we performed our interim impairment test in accordance with ASC 350-30-35, resulting in a $616.1 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 2024 through 2028.

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.

• Revenues beyond 2028 are projected to grow at a perpetual growth rate, which we estimated at 1.0% for our Multiplatform Reporting unit (beyond 2033), 3.0% for our Digital Audio Reporting unit (beyond 2032), and 2.0% for our RCS and Katz Media Reporting units.

• Profit margins beyond 2028 utilize the 2028 margin implied in the multi-year forecasts.

• In order to risk adjust the cash flow projections in determining fair value, we utilized discounts rates between 17% and 20% for each of our reporting units.

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

Reporting Unit Revenue Growth Rate Profit Margin Discount Rate

Multiplatform $ 127,528 $ 98,208 $ 114,259

Digital 61,541 61,790 58,055

Katz Media 10,342 8,189 9,614

RCS 8,342 4,356 6,684

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

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

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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-Q

Item 2. Management’s Discussion and Analysis