iHeartMedia, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Format of Presentation Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related footnotes contained in Part I, Item 1 of this Quarterly Report on Form 10-Q of iHeartMedia, Inc. (the "Company," "iHeartMedia," "we," "our," or "us"). We report based on three reportable segments: ▪ the Multiplatform Group, which includes our Broadcast radio, Networks and Sponsorships and Events businesses; ▪ the Digital Audio Group, which includes our Digital businesses, including Podcasting; and ▪ the Audio & Media Services Group, which includes Katz Media Group (“Katz Media”), our full-service media representation business, and RCS Sound Software ("RCS"), a provider of scheduling and broadcast software and services. These reporting segments reflect how senior management operates the Company. This structure provides visibility into the underlying performance, results, and margin profiles of our distinct businesses and enables senior management to monitor trends at the operational level and address opportunities or issues as they arise via regular review of segment-level results and forecasts with operational leaders. Our segment profitability metric is Segment Adjusted EBITDA, which is reported to the Company's Chief Operating Decision Maker ("CODM") for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. The Company's CODM is our Chief Executive Officer. Segment Adjusted EBITDA is calculated as Revenue less Direct Operating Expenses and Selling, General and Administrative (“SG&A”) Expenses, excluding Restructuring expenses (as defined below) and share-based compensation expenses. 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 businesses and our current liquidity 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. Description of our Business Our strategy centers on delivering entertaining and informative content where our listeners want to find it across our various platforms. Multiplatform Group The primary source of revenue for our Multiplatform Group is from selling local and national advertising time on our radio stations, with contracts typically less than one year in duration. The programming formats of our radio stations are designed to reach audiences with targeted demographic characteristics. We work closely with our advertising and marketing partners to develop tools and leverage data to enable advertisers to effectively reach their desired audiences. Our Multiplatform Group also generates revenue from network syndication, nationally recognized events and other miscellaneous transactions. Management reviews Multiplatform Group's operations’ overall revenue as well as the revenue from each revenue stream including Broadcast Radio, Networks, and Sponsorship and Events. We periodically review and refine our selling structures in all regions and markets in an effort to maximize the value of our offering to advertisers and, therefore, our revenue. Management also reviews Multiplatform Group's revenue by region and market size. Typically, larger markets can reach larger audiences with wider demographics than smaller markets. Additionally, management reviews our share of audio advertising revenues in markets where such information is available, as well as our share of target demographics listening in an average quarter hour. This metric gauges how well our formats are attracting and retaining listeners. Management monitors revenue generated through our programmatic ad-buying platform, and our data analytics advertising product, to measure the success of our enhanced marketing optimization tools. We have made significant investments so we can provide the same ad-buying experience that once was only available from digital-only companies and enable our clients to better understand how our assets can successfully reach their target audiences. 19 Management also monitors average advertising rates and cost per mille, the cost of every 1,000 advertisement impressions, which are principally based on the length of the spot and how many people in a targeted audience listen to our stations, as measured by an independent ratings service. In addition, our advertising rates are influenced by the time of day the advertisement airs, with morning and evening drive-time hours typically priced the highest. Our price and yield information systems enable our station managers and sales teams to adjust commercial inventory and pricing based on local market demand, as well as to manage and monitor different commercial durations in order to provide more effective advertising for our customers at what we believe are optimal prices given market conditions. Yield is measured by management in a variety of ways, including revenue earned divided by minutes of advertising sold. A portion of our Multiplatform Group segment’s expenses vary in connection with changes in revenue. These variable expenses primarily relate to costs in our programming and sales departments, including profit sharing fees, and commissions. Digital Audio Group 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. Digital Audio Group’s contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations. Through our Digital Audio Group, we continue to expand the choices for listeners. We derive revenue in this segment by developing and delivering our content and selling advertising across multiple digital distribution channels, including via our iHeartRadio mobile application, our station websites and other digital platforms that reach national, regional and local audiences. Our strategy has enabled us to extend our leadership in the growing podcasting sector, and iHeartMedia is the number one podcast publisher in America. Our reach now extends across more than 500 platforms and thousands of different connected devices, and our digital business is comprised of podcasting, streaming, subscription, display advertisements, and other content that is disseminated over digital platforms. A portion of our Digital Audio Group segment’s expenses vary in connection with changes in revenue. These variable expenses primarily relate to our content costs including profit sharing fees and third-party content costs, as well as sales commissions. Certain of our content costs, including digital music performance royalties, vary with the volume of listening hours on our digital platforms. Audio & Media Services Group Audio & Media Services Group revenue is generated by services provided to broadcast industry participants through our Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast software and media streaming, along with research services for radio stations, broadcast television stations, cable channels, record labels, ad agencies and Internet stations worldwide. Economic Conditions Our advertising revenue, cash flows, and cost of capital are impacted by changes in economic conditions. Higher interest rates and inflation have continued to contribute to a challenging macroeconomic environment. This environment has led to broader market uncertainty which has impacted our revenues and cash flows. We are monitoring ongoing developments surrounding international trade that may pressure the advertising budgets of our customers and could impact our financial results in future periods. 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. 20 On July 4, 2025, the U.S. government enacted a sweeping tax and spending reform law known as the One Big Beautiful Bill Act ("OBBBA"), which builds upon and expands the provisions of the 2017 Tax Cuts and Jobs Act and introduces significant changes to the U.S. federal income tax system, effective beginning with the 2025 calendar year. Key provisions of the legislation include the restoration of 100% bonus depreciation, immediate expensing of domestic research and development costs under a new Section 174A, and the reinstatement of the EBITDA-based limitation for the deductibility of business interest under Section 163(j). These provisions were made permanent by the OBBBA. We are currently assessing the impact of the new law on our consolidated financial statements, including the remeasurement of deferred tax assets and liabilities. At this time, we are unable to reasonably estimate the full financial effect of the legislation, but we expect significant reductions in our cash taxes paid. Modernization Initiatives We implemented operating expense savings initiatives during 2024 to streamline our organization and increase automation and the use of technology. These modernization initiatives included headcount reductions and other actions and are anticipated to have approximately $150 million of net savings for full year 2025. We continue to explore opportunities for further efficiencies. 21 Executive Summary Consolidated revenues for the second quarter of 2025 increased due to a continued increase in demand for digital advertising, 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 $933.7 million increased $4.6 million, or 0.5%, during the quarter ended June 30, 2025 compared to Consolidated Revenue of $929.1 million in the prior year's second quarter. • Multiplatform Group Revenue decreased $31.3 million, or 5.4%, and Segment Adjusted EBITDA decreased $7.9 million, or 7.6%, compared to the prior year's second quarter, respectively. • Digital Audio Group Revenue increased $38.2 million, or 13.4%, and Segment Adjusted EBITDA increased $15.7 million, or 17.1%, compared to the prior year's second quarter, respectively. • Audio & Media Services Group Revenue decreased $2.3 million, or 3.3%, and Segment Adjusted EBITDA decreased $0.1 million, or 0.5%, compared to the prior year's second quarter, respectively. • Operating income of $35.4 million increased $945.0 million from an Operating loss of $909.7 million in the prior year’s second quarter primarily due non-cash impairment charges of $920.2 million recognized in the second quarter of 2024. • Net loss of $84.0 million improved $898.0 million from $982.0 million in the prior year's second quarter. • Cash flows provided by operating activities of $6.8 million decreased from cash flows provided by operating activities of $26.7 million in the prior year's second quarter. • Adjusted EBITDA (1) of $156.1 million, increased $5.9 million from $150.2 million in the prior year's second quarter. • Free cash flow (2) of $(13.2) million decreased from $5.6 million in the prior year's second quarter. The table below presents a summary of our historical results of operations for the periods presented: (In thousands) Three Months Ended June 30, 2025 2024 Revenue $ 933,653 $ 929,092 Operating income (loss) 35,370 (909,667) Net loss (83,988) (981,989) Cash provided by operating activities 6,821 26,729 Adjusted EBITDA (1) $ 156,127 $ 150,207 Free cash flow (2) (13,176) 5,557 (1) For a definition of Adjusted EBITDA and a reconciliation to Operating income (loss), the most closely comparable U.S. generally accepted accounting principles ("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 (used for) operating activities to Free cash flow” in this MD&A. 22 Results of Operations The table below presents the comparison of our historical results of operations: (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue $ 933,653 $ 929,092 $ 1,740,754 $ 1,728,130 Operating expenses: Direct operating expenses (excludes depreciation and amortization) 391,194 382,049 747,520 723,409 Selling, general and administrative expenses (excludes depreciation and amortization) 413,082 431,614 793,876 816,758 Depreciation and amortization 90,369 104,356 182,270 209,518 Impairment charges 2,552 920,224 5,407 921,732 Other operating expense 1,086 516 1,745 1,088 Operating income (loss) 35,370 (909,667) 9,936 (944,375) Interest expense, net 100,894 95,577 201,280 191,092 Gain (loss) on investments, net (901) (412) (19,495) 91,582 Equity in loss of nonconsolidated affiliates (51) (61) (1) (106) Loss on extinguishment of debt (263) — (1,460) — Other income (expense), net 1,004 (231) 1,041 (727) Loss before income taxes (65,735) (1,005,948) (211,259) (1,044,718) Income tax benefit (expense) (18,253) 23,959 (153,612) 44,621 Net loss (83,988) (981,989) (364,871) (1,000,097) Less amount attributable to noncontrolling interest (508) (331) (167) 69 Net loss attributable to the Company $ (83,480) $ (981,658) $ (364,704) $ (1,000,166) The table below presents the comparison of our revenue streams for the three and six months ended June 30, 2025 to the three and six months ended June 30, 2024: (In thousands) Three Months Ended June 30, % Six Months Ended June 30, % 2025 2024 Change 2025 2024 Change Broadcast Radio $ 395,789 $ 425,490 (7.0) % $ 736,525 $ 784,828 (6.2) % Networks 107,813 106,591 1.1 % 207,276 208,642 (0.7) % Sponsorship and Events 36,485 39,121 (6.7) % 65,106 66,950 (2.8) % Other 4,511 4,705 (4.1) % 8,669 8,950 (3.1) % Multiplatform Group 544,598 575,907 (5.4) % 1,017,576 1,069,370 (4.8) % Digital, excluding Podcast 189,560 181,093 4.7 % 350,811 329,437 6.5 % Podcast 134,296 104,521 28.5 % 250,332 195,145 28.3 % Digital Audio Group 323,856 285,614 13.4 % 601,143 524,582 14.6 % Audio & Media Services Group 67,736 70,082 (3.3) % 127,059 139,250 (8.8) % Eliminations (2,537) (2,511) (5,024) (5,072) Revenue, total $ 933,653 $ 929,092 0.5 % $ 1,740,754 $ 1,728,130 0.7 % 23 Consolidated results for the three and six months ended June 30, 2025 compared to the consolidated results for the three and six months ended June 30, 2024 were as follows: Revenue Consolidated revenue increased $4.6 million during the three months ended June 30, 2025 compared to the same period of 2024. Multiplatform Group revenue decreased $31.3 million, or 5.4%, primarily resulting from a decrease in broadcast advertising in connection with continued uncertain market conditions. Digital Audio Group revenue increased $38.2 million, or 13.4%, driven primarily by continuing increases in demand for digital advertising, including podcast advertising. Audio & Media Services revenue decreased $2.3 million, or 3.3%, primarily as a result of lower political revenues at Katz Media, as 2024 was a presidential election year, partially offset by an increase in digital advertising. Consolidated revenue increased $12.6 million during the six months ended June 30, 2025 compared to the same period of 2024. Multiplatform Group revenue decreased $51.8 million, or 4.8%, primarily resulting from a decrease in broadcast advertising in connection with continued uncertain market conditions. Digital Audio Group revenue increased $76.6 million, or 14.6%, driven primarily by continuing increases in demand for digital advertising, including podcast advertising. Audio & Media Services revenue decreased $12.2 million, or 8.8%, primarily as a result of Katz Media revenue largely due to lower political revenues, as 2024 was a presidential election year, as well as nonrecurring contract termination fees earned by Katz Media in 2024, partially offset by an increase in digital advertising. Direct Operating Expenses Consolidated direct operating expenses increased $9.1 million, or 2.4%, and $24.1 million, or 3.3%, during the three and six months ended June 30, 2025, respectively, compared to the same periods of 2024. The increase was primarily driven by higher variable content costs, including higher podcast profit share and third-party digital costs related to the increase in digital revenues, partially offset by a decrease in employee compensation cost in connection with modernization initiatives taken in 2024. Selling, General and Administrative Expenses Consolidated SG&A expenses decreased $18.5 million, or 4.3%, and $22.9 million, or 2.8%, during the three and six months ended June 30, 2025, respectively, compared to the same periods of 2024. The decrease was driven primarily by a decrease in costs incurred in connection with executing on our cost savings initiatives, including decreased employee compensation cost due to our modernization initiatives and lower sales commissions related to the decline in broadcast revenue, partially offset by increases in non-cash trade and barter expense and employee benefit expense related to the reestablishment of the 401(k) match program during the first quarter of 2025. Depreciation and Amortization Depreciation and amortization decreased $14.0 million and $27.2 million during the three and six months ended June 30, 2025, respectively, compared to the same periods of 2024 primarily as a result of a lower fixed asset base due to lower levels of capital expenditures. Impairment Charges During the three and six months ended June 30, 2025, we recorded non-cash impairment charges of $2.6 million and $5.4 million, respectively, primarily related to changes in sublease assumptions for certain operating leases intended to be subleased. During the three and six months ended June 30, 2024, we recorded non-cash impairment charges of $920.2 million and $921.7 million, respectively, primarily to reduce the carrying values of our indefinite-lived FCC licenses and our goodwill to their estimated fair values. No impairment related to our indefinite-lived FCC licenses or goodwill was recorded during the three and six months ended June 30, 2025. Interest Expense, net Interest expense increased $5.3 million and $10.2 million during the three and six months ended June 30, 2025, respectively, compared to the same periods of 2024 primarily as a result of an increase in contractual interest rates in connection with the debt exchange transaction that closed in the fourth quarter of 2024. 24 Gain (Loss) On Investments, Net During the three and six months ended June 30, 2025, we recognized losses on investments, net of $0.9 million and $19.5 million, respectively, related to declines in the value of our investments. During the three months ended June 30, 2024, we recognized 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 recogn ized a gain on in vestments, net of $91.6 million, related primarily 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, partially offset by declines in the value of certain investments. Income Tax Benefit (Expense) The effective tax rates for the Company for the three months ended June 30, 2025 and 2024 were (27.8)% and 2.4%, respectively. The effective tax rates for the Company for the six months ended June 30, 2025 and 2024 were (72.7)% 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. The 2024 effective tax rates were also impacted by impairment charges to non-deductible goodwill recorded during the second quarter of 2024. Net Loss Attributable to the Company Net loss attributable to the Company improved $898.2 million to $83.5 million during the three months ended June 30, 2025 compared to $981.7 million during the three months ended June 30, 2024, primarily due to the non-cash impairment charges of $920.2 million recognized in 2024. Net loss attributable to the Company improved $635.5 million to $364.7 million during the six months ended June 30, 2025 compared to $1,000.2 million during the six months ended June 30, 2024. The improvement was primarily due to the non-cash impairment charges of $921.7 million recognized in the second quarter of 2024, partially offset by the $101.4 million gain recognized on the sale of our investment in BMI in the first quarter of 2024. Multiplatform Group Results (In thousands) Three Months Ended June 30, % Six Months Ended June 30, % 2025 2024 Change 2025 2024 Change Revenue $ 544,598 $ 575,907 (5.4) % $ 1,017,576 $ 1,069,370 (4.8) % Operating expenses (1) 448,234 471,644 (5.0) % 851,205 887,925 (4.1) % Segment Adjusted EBITDA $ 96,364 $ 104,263 (7.6) % $ 166,371 $ 181,445 (8.3) % Segment Adjusted EBITDA margin 17.7 % 18.1 % 16.3 % 17.0 % (1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses. Three months Revenue from our Multiplatform Group decreased $31.3 million compared to the prior year primarily due to a decrease in broadcast advertising in connection with continued uncertain market conditions. Broadcast revenue decreased $29.7 million, or 7.0%, year-over-year, driven by lower spot revenue. Networks increased $1.2 million, or 1.1%, year-over-year. Revenue from Sponsorship and Events decreased $2.6 million, or 6.7%, year-over-year. Operating expenses decreased $23.4 million, driven primarily by a decrease in employee compensation cost due to our modernization initiatives, as well as lower sales commissions related to the decline in broadcast revenue, partially offset by an increase in non-cash trade and barter expense. 25 Six months Revenue from our Multiplatform Group decreased $51.8 million compared to the prior year primarily due to a decrease in broadcast advertising in connection with continued uncertain market conditions, as well as lower political revenues as 2024 was a presidential election year. Broadcast revenue decreased $48.3 million, or 6.2%, year-over-year, driven by lower spot revenue. Networks decreased $1.4 million, or 0.7%, year-over-year. Revenue from Sponsorship and Events decreased $1.8 million, or 2.8%, year-over-year. Operating expenses decreased $36.7 million, driven primarily by a decrease in employee compensation cost due to our modernization initiatives, as well as lower sales commissions related to the decline in broadcast revenue, partially offset by an increase in non-cash trade and barter expense. Digital Audio Group Results (In thousands) Three Months Ended June 30, % Six Months Ended June 30, % 2025 2024 Change 2025 2024 Change Revenue $ 323,856 $ 285,614 13.4 % $ 601,143 $ 524,582 14.6 % Operating expenses (1) 216,246 193,744 11.6 % 406,450 364,585 11.5 % Segment Adjusted EBITDA $ 107,610 $ 91,870 17.1 % $ 194,693 $ 159,997 21.7 % Segment Adjusted EBITDA margin 33.2 % 32.2 % 32.4 % 30.5 % (1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses. Three months Revenue from our Digital Audio Group increased $38.2 million compared to the prior year, driven by Podcast revenue which increased by $29.8 million, or 28.5% year-over-year, primarily due to a continued increase in demand for podcasting from advertisers, and Digital, excluding Podcast revenue, which increased $8.5 million, or 4.7% year-over-year, primarily due to an increase in demand for digital advertising. Operating expenses increased $22.5 million, primarily driven by higher variable content costs, including higher podcast profit share and third-party digital costs related to the increase in revenues. Six months Revenue from our Digital Audio Group increased $76.6 million compared to the prior year, driven by Podcast revenue which increased by $55.2 million, or 28.3% year-over-year, primarily due to a continued increase in demand for podcasting from advertisers, and Digital, excluding Podcast revenue, which increased $21.4 million, or 6.5% year-over-year, primarily due to an increase in demand for digital advertising. Operating expenses increased $41.9 million, primarily driven by higher variable content costs, including higher podcast profit share and third-party digital costs related to the increase in revenues. Audio & Media Services Group Results (In thousands) Three Months Ended June 30, % Six Months Ended June 30, % 2025 2024 Change 2025 2024 Change Revenue $ 67,736 $ 70,082 (3.3) % $ 127,059 $ 139,250 (8.8) % Operating expenses (1) 44,015 46,233 (4.8) % 87,540 91,706 (4.5) % Segment Adjusted EBITDA $ 23,721 $ 23,849 (0.5) % $ 39,519 $ 47,544 (16.9) % Segment Adjusted EBITDA margin 35.0 % 34.0 % 31.1 % 34.1 % (1) Operating expenses consist of Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses. 26 Three months Revenue from our Audio & Media Services Group decreased $2.3 million compared to the prior year period primarily due to a decrease in broadcast advertising in connection with uncertain market conditions, as well as lower political revenues as 2024 was a presidential election year, partially offset by increased demand for digital advertising. Operating expenses decreased $2.2 million primarily due to a decrease in employee compensation cost due to our modernization initiatives. Six months Revenue from our Audio & Media Services Group decreased $12.2 million compared to the prior year period primarily due to contract termination fees earned by Katz Media in the first quarter of 2024, a decrease in broadcast advertising in connection with uncertain market conditions, as well as lower political revenues as 2024 was a presidential election year, partially offset by increased demand for digital advertising. Operating expenses decreased $4.2 million primarily due to a decrease in employee compensation cost due to our modernization initiatives. Reconciliation of Operating income (loss) to EBITDA and Adjusted EBITDA (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Operating income (loss) $ 35,370 $ (909,667) $ 9,936 $ (944,375) Depreciation and amortization 90,369 104,356 182,270 209,518 Impairment charges 2,552 920,224 5,407 921,732 Other operating expense 1,086 516 1,745 1,088 Restructuring expenses 19,490 27,558 45,068 51,161 Share-based compensation expense 7,260 7,220 16,289 15,700 Adjusted EBITDA (1) $ 156,127 $ 150,207 $ 260,715 $ 254,824 27 Reconciliation of Net loss to EBITDA and Adjusted EBITDA (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net loss $ (83,988) $ (981,989) $ (364,871) $ (1,000,097) Income tax (benefit) expense 18,253 (23,959) 153,612 (44,621) Interest expense, net 100,894 95,577 201,280 191,092 Depreciation and amortization 90,369 104,356 182,270 209,518 EBITDA $ 125,528 $ (806,015) $ 172,291 $ (644,108) (Gain) loss on investments, net 901 412 19,495 (91,582) Loss on extinguishment of debt 263 — 1,460 — Other (income) expense, net (1,004) 231 (1,041) 727 Equity in loss of nonconsolidated affiliates 51 61 1 106 Impairment charges 2,552 920,224 5,407 921,732 Other operating expense 1,086 516 1,745 1,088 Restructuring expenses 19,490 27,558 45,068 51,161 Share-based compensation expense 7,260 7,220 16,289 15,700 Adjusted EBITDA (1) $ 156,127 $ 150,207 $ 260,715 $ 254,824 (1) We define Adjusted EBITDA as consolidated Operating income (loss) adjusted to exclude restructuring expenses included within Direct operating expenses and SG&A expenses, and share-based compensation expenses included within SG&A expenses, as well as the following line items presented in our Statements of Operations: Depreciation and amortization, Impairment charges and Other operating expense. 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, Loss on extinguishment of debt, Other (income) expense, net, Equity in loss of nonconsolidated affiliates, Impairment charges, Other operating expense, Restructuring expenses and Share-based compensation expense. 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. We use Adjusted EBITDA, among other measures, to evaluate the Company’s operating performance. This measure is among the primary measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and Operating income (loss). 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. 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 (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 loss, the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded. 28 Reconciliation of Cash provided by (used for) operating activities to Free Cash Flow (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Cash provided by (used for) operating activities $ 6,821 $ 26,729 $ (54,123) $ (32,548) Purchases of property, plant and equipment (19,997) (21,172) (39,727) (42,754) Free cash flow (1) $ (13,176) $ 5,557 $ (93,850) $ (75,302) (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. We believe that Free Cash Flow is meaningful to investors because we review cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations. In addition, we believe that Free Cash Flow helps improve investors' ability to compare our liquidity with other companies. Since Free Cash Flow is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, Cash provided by (used for) operating activities and may not be comparable to similarly titled measures employed by other companies. Free Cash Flow is not necessarily a measure of our ability to fund our cash needs. Share-Based Compensation Expense 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 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 $7.3 million and $7.2 million for the three months ended June 30, 2025 and 2024, respectively, and $16.3 million and $15.7 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, there was $21.4 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 1.8 years and assumes Performance RSUs will be fully earned at target. See Note 8 , Stockholders' Deficit , for more information. 29 LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following discussion highlights cash flow activities during the periods presented: (In thousands) Six Months Ended June 30, 2025 2024 Cash provided by (used for): Operating activities $ (54,123) $ (32,548) Investing activities (40,648) 55,871 Financing activities 70,681 (4,816) Free Cash Flow (1) (93,850) (75,302) (1) For a definition of Free Cash Flow and a reconciliation to Cash provided by (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 $54.1 million during the six months ended June 30, 2025 compared to $32.5 million during the six months ended June 30, 2024. The increase was primarily due to the timing of receivable collections and the timing of the payment of payables, partially offset by the timing of interest payments as accrued interest was paid in the fourth quarter of 2024 upon closing of the debt exchange transaction that would have been paid in 2025 under the old debt terms. Investing Activities Cash used for investing activities of $40.6 million during the six months ended June 30, 2025 primarily reflects $39.7 million in cash used for capital expenditures. For capital expenditures, we spent $16.6 million in our Multiplatform Group segment primarily related to our IT infrastructure and real estate optimization initiatives, $10.3 million in our Digital Audio Group segment primarily related to IT infrastructure, $8.4 million in our Audio & Media Services Group segment, primarily related to software, and $4.4 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, 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. Financing Activities Cash provided by financing activities totaled $70.7 million during the six months ended June 30, 2025 primarily due to the $100.0 million borrowed under the $450.0 million ABL Facility (defined below) , partially offset by the quarterly amortization payments on the Term Loans due 2029 and payments reducing our debt premium recorded in connection with the debt exchange transaction completed in the fourth quarter of 2024. 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. 30 Sources of Liquidity and Anticipated Cash Requirements Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $235.9 million as of June 30, 2025, and cash flows from operations. During the three months ended June 30, 2025, iHeartCommunications, Inc. (“iHeartCommunications”), our indirect wholly-owned subsidiary, borrowed $100.0 million under the $450.0 million senior secured asset-based revolving credit facility entered into on May 17, 2022 (the "ABL Facility"). This borrowing was executed as a short-term liquidity management strategy to provide financial flexibility in response to recent market uncertainty. The funds remain available to support working capital requirements and general corporate purposes. As of June 30, 2025, the ABL Facility had a borrowing base of $425.0 million, and $34.3 million of outstanding letters of credit, resulting in $290.8 million available for borrowing following the $100.0 million of outstanding borrowings. Our total available liquidity 1 as of June 30, 2025 was $526.7 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 our revenues and cash flows. For the six months ended June 30, 2025, our consolidated revenues increased compared to the six months ended June 30, 2024 primarily due to revenue growth in our Digital Audio Group, partially offset by lower revenue in our Multiplatform Group, among other factors discussed in the Results of Operations section of this MD&A. Although we cannot predict future economic conditions or the impact of any potential contraction of economic growth on our business, we believe that we have sufficient liquidity to continue to fund our operations for at least the next twelve months. We are a party to many contractual obligations involving commitments to make payments to third parties. 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 June 30, 2025, 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, employment and talent contracts, and music license fees. In addition to our contractual obligations, we expect that our primary anticipated uses of liquidity in 2025 will be to fund fluctuations in working capital, make interest and tax payments, fund capital expenditures, make voluntary debt repayments and pursue other strategic opportunities, and maintain operations. Assuming the current level of borrowings and interest rates in effect at June 30, 2025, we anticipate cash payments to service our debt of approximately $238.4 million in the remainder of 2025. These debt service cash payments include interest, quarterly term loan amortization payments and payments related to the debt premium. The increase in payments is primarily due to quarterly term loan amortization payments, as well as to an increase in interest rates in connection with the debt exchange transaction that closed in the fourth quarter of 2024 . Future increases in interest rates could have a significant impact on our cash interest payments. We acknowledge the challenges posed by market uncertainty as a result of global economic weakness and other macroeconomic and political 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 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; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms or at all in the future. We frequently evaluate strategic opportunities. 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. 1 Total available liquidity is 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. 31 Summary Debt Capital Structure As of June 30, 2025 and December 31, 2024, we had the following debt outstanding, net of cash and cash equivalents: (In thousands) June 30, 2025 December 31, 2024 Asset-based Revolving Credit Facility due 2027 (1) $ 100,000 $ — Term Loan Facility due 2026 5,095 5,095 Incremental Term Loan Facility due 2026 1,500 1,500 Term Loan Facility due 2029 (2) 2,134,995 2,145,724 6.375% Senior Notes due 2026 44,644 44,644 5.25% Senior Notes due 2027 6,983 6,983 8.375% Senior Unsecured Notes due 2027 72,388 72,388 4.75% Senior Secured Notes due 2028 276,868 276,868 9.125% First Lien Notes due 2029 717,588 717,588 7.75% First Lien Notes due 2030 661,285 661,285 7.00% First Lien Notes due 2031 178,443 178,443 10.875% Second Lien Notes due 2030 675,165 675,165 Other subsidiary debt 4,371 5,008 Long-term debt fees (8,109) (8,974) Debt Premium (3) 266,302 289,752 Total Debt $ 5,137,518 $ 5,071,469 Less: Debt Premium 266,302 289,752 Less: Cash and cash equivalents 235,932 259,580 Net Debt (4) $ 4,635,284 $ 4,522,137 (1) On May 22, 2025, iHeartCommunications borrowed $100.0 million under the ABL Facility, the proceeds of which were recorded as cash on the Balance Sheet as of June 30, 2025 . (2) Quarterly amortization payments of $5.4 million (equal to 0.25% of the original principal amount) are required per the terms of the Term Loan Facility due 2029. (3) The difference between the carrying value of the exchanged 5.25% Senior Notes, 4.75% Senior Secured Notes, and 8.375% Senior Unsecured Notes and the principal amount of the 7.75% First Lien Notes due 2030, 7.00% First Lien Notes due 2031 and the 10.875% Second Lien Notes due 2030 was recorded as debt premium and will be reduced as contractual interest payments are made. (4) Net Debt is a non-GAAP financial metric that is used by management and investors to assess our ability to meet financial obligations. 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 June 30, 2025, 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, 2025. Other than our ABL Facility, none of our long-term debt includes maintenance covenants that could trigger early repayment. As of June 30, 2025, 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 . 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, retirements, exchanges or purchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. We or our subsidiaries may also sell certain assets, securities, or properties. These purchases or sales, if any, could have a material positive or negative impact on our liquidity available to repay outstanding debt obligations or on our consolidated results of operations. These transactions could also require or result in amendments to the agreements governing outstanding debt obligations or changes in our leverage or other financial ratios, which could have a material positive or negative impact on our ability to comply with the covenants contained in iHeartCommunications’ debt agreements. These transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. 32 Supplemental Financial Information under Debt Agreements 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 and six months ended June 30, 2025, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same period. Further, as of June 30, 2025, we were in compliance with all covenants related to our debt agreements. Commitments, Contingencies and Guarantees We are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued our estimate of the probable costs for resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. Please refer to “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q. Certain agreements relating to acquisitions provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies generally over a one to five-year period. The aggregate of these contingent payments, if performance targets are met, would not significantly impact our financial position or results of operations. We have future cash obligations under various types of contracts. 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. In the normal course of business, our broadcasting operations have minimum future payments associated with employee and talent contracts. These contracts typically contain cancellation provisions that allow us to cancel the contract with good cause. SEASONALITY Typically, our businesses experience their lowest financial performance in the first quarter of the calendar year. We expect this trend to continue in the future. Due to this seasonality and certain other factors, the results for the interim periods may not be indicative of results for the full year. In addition, we are impacted by political cycles and generally experience higher revenues in congressional election years, and particularly in presidential election years. This may affect the comparability of results between years. MARKET RISK We are exposed to market risks arising from changes in market rates and prices, including movements in interest rates, foreign currency exchange rates and inflation. Interest Rate Risk 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 June 30, 2025, approximately 46% 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, 2025 would have changed by $11.3 million. In the event of an adverse change in interest rates, management may take actions to mitigate our exposure. However, due to the uncertainty of the actions that would be taken and their possible effects, the preceding interest rate sensitivity analysis assumes no such actions. Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment. 33 Inflation Inflation is a factor in our business, and we continue to seek ways to mitigate its effect. Inflation has affected our performance in terms of higher costs for employee compensation, equipment and third party services. Although we are unable to determine the exact impact of inflation, we believe the impact will continue to be immaterial considering the actions we may take in response to these higher costs that may arise as a result of inflation. 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, 2024. CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. This report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, financial position and results of operations, macroeconomic trends including inflation, interest rates and potential recessionary indicators, anticipated income tax benefits from the OBBBA, our expected costs, savings and timing of our modernization initiatives and other capital and operating expense reduction initiatives, debt repurchases, our business plans, strategies and initiatives, benefits of acquisitions and dispositions, our expectations about certain markets and businesses, our expectations regarding the seasonality of our business, expected cash interest payments, future impairment charges and our anticipated financial performance and liquidity. Statements expressing expectations and projections with respect to future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements involve a number of risks and uncertainties and are subject to many variables which could impact our future performance. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Actual future events and performance may differ materially from the expectations reflected in our forward-looking statements. We do not intend, nor do we undertake any duty, to update any forward-looking statements. A wide range of factors could materially affect future developments and performance, including but not limited to: • risks associated with weak or uncertain global economic conditions and their impact on the level of expenditures for advertising; • risks related to advertising revenue fluctuations; • intense competition including increased competition from alternative media and entertainment platforms and technologies; • dependence upon the performance of on-air talent, program hosts and management as well as maintaining or enhancing our brand; • fluctuations in operating costs and other factors within or beyond our control; • technological changes and innovations; • shifts in population and other demographics; • the impact of our substantial indebtedness; • the impact of acquisitions, dispositions and other strategic transactions; • legislative or regulatory requirements; • the impact of legislation, ongoing litigation or royalty audits on music licensing and royalties; • regulations and consumer concerns regarding privacy and data protection, and breaches of information security measures; • risks related to scrutiny of environmental, social, and governance matters; • risks related to our Class A common stock; • regulations impacting our business and the ownership of our securities; and • certain other factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, as updated by other filings with the Securities and Exchange Commission (“SEC”). This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. 34 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Required information is presented under “Market Risk” within Item 2 of this Part I.