Hello, everyone. Thank you for joining us and welcome to the iHeartMedia third quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Andre Hart, Senior Vice President of Investor Relations. Andre, please go ahead.

Good afternoon, everyone, and thank you for taking the time to join us for our third quarter 2026 earnings call. Joining me for today's discussion are Bob Pittman, our chairman and CEO, Rich Bressler, our president and COO, and Mike McGuinness, our CFO. At the conclusion of our prepared remarks management will take your questions. In addition to our press release we have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward-looking statements regarding our financial performance and operating results. These statements are based on management's current expectations and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings, including our recent 8K filing. Additionally, during this call, we will refer to certain non-GAAP financial measures, Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release, earnings presentation, and our SEC filings, which are available in the investor relations section of our website. And now, I'll turn the call over to Bob.

Thanks, Andre, and good afternoon, everyone. In the third quarter, our consolidated revenue was $1.03 billion, up 3.3% compared to the prior year quarter, Thank you for joining us. However, our multi-platform group, which importantly continues to have real strength with the consumer, faced ongoing industry and macroeconomic revenue headwinds that impacted financial results more than anticipated. But we believe many of these multi-platform group revenue challenges are addressable and that the strategic monetization initiatives we have put in place position us to return the multi-platform group back to earnings growth. The shortfall in multi-platform group performance was driven primarily by four factors. and many more. A much more challenging macroeconomic environment than we had hoped for, and one which we expect will continue through the remainder of the year. I will discuss each of these factors in greater detail. I will also outline how we plan to manage our business starting in 2027 when we expect to present podcasting as a separate reporting segment. Turning to our individual operating segments, the Digital Audio Group generated third quarter revenue of $389 million, up 13.8% versus prior year, and within the range of our previously provided guidance of upload teens. The Digital Audio Group generated third quarter adjusted EBITDA of $127 million, down 2.3% versus prior year as it was burdened by higher non-cash marketing expenses. The adjusted EBITDA margin was 32.8%. We'll be right back. and many more. Beyond YouTube, our video podcast content is now distributed across major platforms, including Netflix, Apple, Amazon, Disney+, and Hulu, as well as our own iHeartRadio app, strongly positioning us to participate in this new and important revenue stream. As video and audio podcast consumption continues to grow, we believe we're well positioned to take advantage of both. In the third quarter, digital ex-podcast revenue grew 6.3% compared to prior year, within our previously provided guidance of up mid-single digits, and it continues to be an important growth vector for the company. Turning now to the Multiplatform Group, which includes our broadcast radio, networks, and events businesses. Third quarter revenue was $562 million, down 4.9% versus prior year, and below our guidance range of approximately flat. Excluding the impact of political advertising, Multiplatform Group revenue was down 6.6%. The multi-platform groups adjusted EBITDA was $68 million compared to $119 million in the prior year. Nine cash marketing expenses related to co-marketing partnerships supporting our audiograph platform, which we'll discuss in more detail, drove the majority of the negative impact on our multi-platform groups adjusted EBITDA in this quarter. Now let me expand on the four drivers that negatively impacted the multi-platform groups' performance in Q3. Thank you for joining us. In response to strong political advertising demand, local TV broadcasters created more inventory and therefore held on to a lot of the political advertising dollars that historically would spill over to broadcast radio when TV reached sellout. In fact, according to Ad Impact, approximately 50% of all political spending this cycle was on broadcast television, which is much larger than its typical 15% share of overall advertising spend. and the other factor was that even in audio advertising, a greater percentage of political advertising spend moved to programmatic platforms in this cycle than we had anticipated. While this is in line with the broader transition to programmatic, it happened with political inventory faster than we thought it would. It's important to note that overall in this political cycle, radio share of political advertising is actually lower than radio share of the overall advertising marketplace, exactly the opposite experience of local broadcast TV. While disappointing, both developments reinforce our belief that expanding our broadcast radio programmatic capabilities through our audiograph platform is the right strategic plan. Second, some brands, specifically larger brands, delayed deploying their budgets until after the election for two reasons. Additional clutter combined with the higher commercial loads and the negative environment of wall-to-wall political advertising, not an environment that most general market advertisers are comfortable with. The local TV broadcasters were able to make up for this delayed brand advertising with political advertising. Unfortunately, we did not make up that deficit. Third, we are seeing core radio buying transitioning faster to programmatic, impacting our multi-platform group ahead of our ability to fully participate in the programmatic TAM with the rollout of our audiograph platform. In fact, according to AdExchange, a leading technology industry publication, the percentage of advertising agencies that buy audio programmatically has grown from 41% in 2022 to 82% this year. and many more. And fourth, as mentioned in our Q2 earnings call, we're not immune to macroeconomic issues. And in particular, consumer-facing businesses where fuel volatility and broader inflation are pressuring advertisers' budgets. These macroeconomic issues also contributed to consumer uncertainty, which according to the World Economic Policy Uncertainty Index, recently spiked to an all-time high, dramatically higher than the 9-11, the financial crisis, and even the COVID-19 periods. Thank you very much. The Audio and Media Services Group, which includes our CATS TV, CATS Radio, and RCS businesses, had another strong quarter. Revenue was $82 million, up 22.6% year-over-year, driven primarily by television political, as well as the growth of digital audio and video revenues. Excluding the impact of political revenue, the Audio and Media Services Group's revenue was still up 2.9%. Adjusted EBITDA was $37 million, up 65.9% compared to the prior year. And we have continued to grow adjusted EBITDA over time with a focus on an increasingly meaningful digital business and operating efficiencies. Given the accelerating adoption of audio programmatic and the resulting impact on the multi-platform group, audiograph is more critical than ever to our long-term success. You heard us discuss our Audiograph platform on past calls. Simply put, with Audiograph, we are meeting the advertising community the way they want to buy advertising. Thank you for joining us. Additionally, all the data work associated with Audiograph helps us in providing improved measurement, targeting, and attribution for our non-programmatic advertising as well, closing that gap between broadcast radio and digital media. As we look at the financial opportunity for our programmatic revenue, our expectation is that we'll hit our guidance of $200 million of programmatic revenue for the year, and that in 2027, total programmatic revenue will be approximately $400 million, with approximately $100 million of that total being incremental programs. Broadcast Programmatic Revenue. Furthermore, we're excited about the potential of agentic buying, including new capabilities developed by our Triton digital ad tech platform that enable AI agents to transact directly across the audio advertising ecosystem. Triton recently completed its first agent-to-agent media buy, automating the process from campaign request and negotiation through booking and demonstrating the potential to make audio substantially easier and more efficient for advertisers to buy. I also want to discuss an important change in how we plan to manage and report our business beginning next year. In 2027, we plan to separate our podcasting business from the digital audio group and report them as separate standalone segments. This additional granularity is expected to make it easier for the investor community to fully value all four of our segments and our entire company. Three of our expected four future segments are strong growth businesses, and we think Audiograph and our attribution tools will be an important component to getting our multi-platform group back to growth. Additionally, we're already working on plans for incremental cost efficiencies in 2027, which include leveraging the strategic deployment of AI and other technology solutions to enhance efficiencies through the organization as we have done in the past. As we continue to execute on our strategic goals and opportunities, Rich and I are committed to allocating and optimizing the company's assets to create value for our stakeholders, including the improvement of our capital structure and positioning the company for future growth. And with that, I'll turn it over to Rich.

Thank you, Bob, and good afternoon. Our Q3 2026 consolidated revenue was up 3.3% compared to the prior year quarter and below our guidance of up mid-single digits. As Bob discussed in detail, this was driven by four factors that negatively impacted our multi-platform groups' performance. Our consolidated direct operating expenses increased 4.8% for the quarter. This increase was primarily driven by higher variable content costs, Thank you for joining us. We generated an adjusted EBITDA of $170 million in the third quarter, below our previously provided guidance range of $180 million to $220 million. As we have previously discussed, some of the investment in our proprietary audience database, which is the foundation of our broadcast programmatic and audiograph offerings, takes the form of non-cash co-marketing partnerships to drive engagement with the iHeartRadio digital service. We continue to view these marketing activities as important to the success of our audiograph and broadcasting programmatic initiatives. As a reminder, this is all in support of our efforts to make our broadcast inventory as easy for our advertising partners to transact with as our digital inventory. As Audiograph comes fully to market in Q4, we'll be substantially reducing these co-marketing partnerships. As we've discussed before, the revenue and expense associated with each partnership have zero impact on adjusted EBITDA over time. And as a reminder, the majority of this revenue and expense impacts the multi-platform group segment. Turning now to the performance of our operating segments. In the third quarter, the Digital Audio Group's revenue was $389 million, of 13.8% versus prior year, and within the range of our previously provided guidance of upload teams. The Digital Audio Group's adjusted EBITDA was $127 million, down 2.3% to prior year, driven by higher non-cash marketing expenses. Our Q3 adjusted EBITDA margins were 32.8% compared to 38.1% in the prior year. Within the Digital Audio Group, our podcasting revenue was $174 million, which grew 24.6% year-over-year, and above our guidance of up approximately 20%. Our third quarter Digital Audio Group ex-podcasting revenue grew 6.3% year-over-year to $215 million. Turning now to the multi-platform group, revenue was $562 million, down 4.9% compared to prior year, below our guidance range of approximately flat. Adjusted EBITDA was $68 million, down from $119 million in the prior year quarter, and non-cash marketing expenses related to co-marketing partnerships supporting our audiograph platform drove the majority of the negative impact on our multi-platform group adjusted EBITDA in this quarter. Turning to the audio and media services group, which includes Cats TV, which, as you know, has much higher revenue in political years. Revenue is $82 million of 22.6% year-over-year, driven primarily by television political and the growth of digital audio and video revenues. and many more. At quarter end, our net debt was approximately $4.7 billion. Our total liquidity was $416 million and our cash balance was $140 million, which included $125 million borrowed under the ABL facility. As noted on our prior call on August 10th, we amended and extended our ABL facility. to January 30, 2029. Now let me turn to our guidance for the fourth quarter and the full year. The factors that Bob discussed earlier, which had a negative impact on our Q3 multi-platform group performance, are reflected in our guidance today. Let me give you some context. This is one of the most uncertain periods in the advertising environment that we have managed through, including COVID, which is what makes it difficult for us to narrow the range of our expected results. In Q4, we expect to generate adjusted EBITDA between $135 million and $185 million. Embedded in this guidance is approximately $100 million net negative impact of non-cash marketing. We expect our consolidated revenue to be up mid-single digits compared to prior year. And we expect to generate approximately $130 million of free cash flow in the quarter. We're still closing October, but we expect October revenue to be up mid-teens at approximately flat ex-political year-over-year. Turning to the individual segments for the fourth quarter. We expect the digital audio groups revenue to be up mid-teens year over year, with podcasting revenue expected to be up approximately 20%, and digital ex-podcasting to be up high single digits. We expect the multi-platform groups revenue to be approximately down low single digits compared to prior year. We expect the audio and media services group revenue to be up approximately 30% year over year. Turning to the full year, we are adjusting our full-year adjusted EBITDA guidance to $550 to $600 million and our free cash flow guidance to approximately $50 million. Embedded in our adjusted EBITDA guidance are the following. We expect to generate approximately $200 million of overall programmatic revenue in 2026, up approximately 50% from $135 million in 2025. And as a reminder, we expect our broadcast programmatic revenue trajectory to be similar to the growth we experienced in podcasting revenue. And our adjusted EBITDA guidance also include the benefit of our cost savings programs. Let me provide some additional inputs embedded in our free cash flow guidance. Interest expense will be approximately $440 million. Minimal cash taxes this year and for the next few years as long as the current tax laws are in effect. This is a great outcome and will help us avoid approximately $150 to $200 million of cash taxes over the next three years. Capital expenditures are expected to be approximately $90 million. Cash restructuring expenses will be approximately $50 million. I would also like to remind you that beginning in 2027, we plan to report podcasting as a standalone segment. This change is expected to provide investors with increased insight on an important growth engine for the business. Podcasting comprises 17% of total Q3 revenue and reflects how we plan to manage the business moving forward. Additionally, we expect programmatic revenue will represent a significant financial driver for us next year, with total programmatic revenue expected to be approximately $400 million in 2027, and we expect this to include approximately $100 million of incremental broadcast radio programmatic revenue. Before we turn to Q&A, I want to reiterate that we are laser focused on getting additional cost efficiencies out of the business and optimizing our capital structure to ensure we have the flexibility to continue to invest in our business. Now we will turn it over to the operator to take your questions. Thank you.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Steven Laschak with Goldman Sachs. Your line is open, Steven. Please go ahead.

Hey, great. Thanks for the questions. Maybe two on podcasting for Bob and Rich. I was curious if you could talk a little bit more about the underlying strengths you're seeing in the podcasting business. It sounds like continued strong growth in the fourth quarter, which is slow, so you can unpack maybe a bit more what's driving that between new content, engagement, monetization, or maybe some trends you're seeing in I'm just curious as you look ahead to next year, if you think that level of growth is sustainable at the pipeline of new content or monetization levers change at all as you look ahead into 27 and beyond?

Well, let me start. I think podcasting continues to be very strong for us and also for the industry. And I think it is, we've got a lot of new people coming into podcasting. I will say in most conversations we began with advertisers, podcasting sort of is what they want to talk about the most or leads the way. And that expresses itself in us selling more inventory. I think we're getting better CPMs and expanding our roster of podcasts as well. So sort of hitting on all cylinders there.

Yeah, and the only thing I would add, Stephen, to what Bob said, just picking up in terms of the monetization, is also, you know, and we've talked about this in previously calls, the amount of our revenue that's originated now locally, as opposed to just nationally, which is over 50% of the revenue originated locally. And so that just continues to be growth and a strong part of the business.

Thanks for that. And then just on the breaking out of the podcasting segment, Rich, I was curious if there's anything else you maybe can provide us in terms of financial trends. It's helpful to get the breakout for revenue in the quarter, but if we're thinking about the margin profile of the business on a go-forward basis or if there's any, say, revenue wreck or cost wreck changes that we should be thinking about into next year, any worth highlighting? Thank you.

No, and again, thank you for the question. No, nothing, you know, if you go back and just looking back a number of years when we created the DAG segment, why we created is because the digital part of our business, including podcasting, including streaming, websites, reselling some third-party CCTV, was becoming an overall bigger part of the business. And now, just with the passage of time, and you've all asked us this, rightfully so, is we need to know more about the podcasting business and not just financially, as I pointed out in my remarks, has become a bigger part of the business. So just the right time to break that out and provide insight and nothing else to add at this point in time in terms of your questions, any more detail, but obviously there'll be more to come on that. Great, thank you.

Your next question comes from the line of Aaron Watts with Deutsche Bank. Your line is open, Aaron. Please go ahead.

Hi, everyone. Thanks for having me on. I've got a few questions, if I may. I guess first, Rich, a clarifier on your full year guidance, EBITDA guidance of $550 to $600 million. How should we think about that adjusted for the negative $100 million of trade and barter that you took in the fourth quarter?

Well, I'll let you all do the calculation. We said, obviously, that includes or is, you know, impacted by the $100 million of trade and barter that's coming in the fourth quarter. And we also, I think, gave you some indications in terms of or guidance from a revenue standpoint for each of the segments for Q4 out there. And I think we previously stated on a number of times that this point for trade and barter, which is primarily, again, the investment in our non-cash marketing expenses, is primarily related to the multi-platform group. At the same point in time, just to reiterate, one of the reasons as we look into 2027, as you've all asked us, is to talk about when are we going to start to see some tangible, more tangible results coming in in terms of broadcast programmatic and incremental tangible results. So just to reiterate what we said is we are said we expect 2027 total programmatic revenue to double from 200 to 400 million dollars and within the 400 million dollars We've estimated $100 million of incremental broadcast programmatic.

Let me add one thing, just a reminder. Our broadcast inventory comes with a higher EBITDA margin. So for us, pushing that revenue stream has more impact on the bottom line than the revenue may suggest.

Okay, got it. And Rich, sorry to interrupt. Not to belabor this, but was this a change in methodology with the way you're talking about kind of the full year guide? Like, were you not excluding the trade and barter before and now you are? I guess, should we be adding back 100 million?

Yeah, we were. That's a good clarifying question. No, we were expecting the trade and barter before. That's not, I'm going to go back to The remarks that we made in terms of the environment. The reason why this guidance and the range for the guidance in terms of really goes back to the point in terms of the political numbers that we talked about not being what we expected them to be. And I think the reminder that political is our highest margin business. and so when you fall short on political, it significantly impacts your dividend number more than other categories do. And as we said, the overall uncertainty in the environment, which is just a nothing, I think we would all agree on this with the midterm elections. We would just, you know, we highlighted the non-cash marketing just as a way to, you know, again, a deeper, In terms of giving people a deeper understanding, and I think also if you even look on page six of the investor deck, one of the things you've all been asking for is some more details, and we've now provided more details on page six of the investor deck that you can look at.

I think one of the things, too, I think on the political advertising is the big surprise for us was how much money was spent in TV, that about 50% of the entire political expenditures were broadcast television. We did not anticipate that. I think it had a big impact on us. And what's interesting about it is that if you do the quick analysis of it, TV advertising turns out not to be a strong indicator for whether a candidate won. And in fact, as TV spend, as a percentage of media spend rose, the percentage chance of winning the campaign actually fell. So for us, we were out of position on that. We got less than our normal share of revenue through the political process. And again, TV was the major beneficiary of that.

Okay. Thank you for all that. And last question around trade and barter, I promise for now. How should we be thinking about this going forward? I know you had previously spoken about those partnerships kind of Ratcheting Back as we go into 2027. Is that still the right way for us to be thinking about it? Will the quarter-to-quarter timing impacts lessen from where they've been over the past year?

Yeah, Aaron, it's Mike. Now that we've launched Audiograph, we're no longer pursuing these partnerships. They've obviously accomplished what was intended, as Rich mentioned before. with the $100 million of incremental revenue we talked about with next year. So what you'll see is the expense, as you'll see, you know, as part of the guide, as part of the slides that Rich mentioned, the expense will roll off a big portion of that into Q4, and it's a small portion to 27, and then we'll be done with that, you know, over the next quarter or two.

Okay, got it. And then last question for me, and thank you again for all the time, but just Thinking about Audiograph, now that it's kind of up and running and gaining traction and obviously you're optimistic about next year, what are some of the early kind of feedbacks that you're getting from either the ad partner side or DSPs in the initial launch and the evidence that you're collecting so far that gives you confidence in that 100 million of incremental broadcast radio programmatic in 2027?

Well, I think first and foremost, as we've done some campaigns now, they've achieved their goals, performed better than the old way of doing radio advertising, and are achieving their goals and becoming competitive with digital for them, and they're able to access them the same way they are able to access their digital media. So that's accomplished. I think now our goal is just to get The advertisers that are programmatic that have not considered us because they basically spent programmatically to come aboard so that we can get the incrementality of that revenue.

Yeah, and just one thing. We have, and I've mentioned this a number of times before, and you've heard it. Obviously, we've been in market running real campaigns on it. We are generating revenue now. It is immaterial. and for next year, again, the reason why is that in terms of us feeling comfortable is based on the numerous campaigns that we've been running with advertisers as Bob highlighted, the success of those campaigns coming out of the digital budgets that are there and so we're very, very, very pleased with that.

Yeah, let me add one more thing is

Why would anyone care to put radio into the digital budget? Because you can't get much reach in digital audio without radio.

Unlike video, unlike TV, radio is still by far the big reach in audio. You know, 90-plus percent reach on broadcast radio is contrasted with the ad-supported digital players where no one is greater than about 20 percent reach. So it becomes essential if you're really going to do a successful audio campaign to put radio in there. The problem has been that you've not been able to access radio off of your DSPs and the way in which you're accustomed to buying your media.

Thanks again, guys. Appreciate it.

Thank you.

Your next question comes from the line of Sebastiano Petty with JP Morgan. Your line is open, Sebastiano. Please go ahead.

Hi, thank you for taking the question. Guys, I'm just trying to double-click on these trade and barter expenses. I think last call you talked about it declining in the back half of the year, and here we have a $100 million impact in the fourth quarter. And so what's the visibility or confidence that we should be thinking about this actually declining as we go into 2027? When will it not be back? Yeah, go ahead, Mike.

Yeah, for sure. You'll see Sebastiano on the slide, slide six. I mean, so, you know, we're no longer entering into these partnerships. So that's why you see the expense, you know, $180 million of expense kind of rolling out into versus $80 million of revenue. This is all trade and barter. So you have $100 million headwind year over year. And then there'll be about $40 million that rolls off into 27. This should be completely resolved by Q1 at the latest Q2. And because we've accomplished what we needed to accomplish with the launch .

And the one thing I would just add, I want to go back to, you know, this and the previous question, it was, you know, something that was we anticipated and baked into our forecast for the recent, you know, in terms of making just highlighting it now is because of the uncertainty on the revenue side embedded in our forecast going back to, again, you know, political, the advertising uncertainty, all the points we've been covering that it became just, you know, obviously in terms of the impact on the Q4 and the full year numbers, it's bigger just from when you look at percentage of the total, but it was always baked into the guidance.

Yeah, let me add one more thing in a specific answer to your question. When we said we're rolling it off at the end of the year, that means we're rolling off doing the deals, but what you're seeing now is the impact of them.

Okay, that's helpful. And as we think about maybe from a dollar perspective, I mean, Is the programmatic revenue, is this incremental revenue that you bring in? Is this just, you know, is there an increased share of wallet from your partners or is this just more allocation towards programmatic? Just trying to think about the growth curve from 200 to 400 next year and how that maybe impacts the total iHeart revenue piece.

I think when you look at digital, what you're looking at is just increasingly the way in which people are buying digital. When you look at broadcast, that means we are basically getting into the digital TAM, which was our goal here. So our expectation is that the 100 million of broadcast programmatic will be mostly incremental. And that's to us obviously has been the driving force about why to get into it. And I'll again point out that the Broadcast Programmatic will come with a much higher margin than the non-broadcast programmatic for us.

Okay, and lastly, just in video podcasting, I think you said it continues to trend well. New TAM for you guys. Any help thinking about incremental opportunities there with your existing partners and, you know, maybe additional licensing fees or maybe expansion into other platforms or just, you know, maybe... and many other prospective partners. Thank you, guys.

Yeah, there are two ways to do it. One is that we now can sell video advertising where it plays. As you know, in podcasting, we play across basically all available platforms. Video is not quite that universal, but we're pushing it out to other platforms. And then you're correct that in some cases, we have actually licensed it to others, Disney+, Hulu, Netflix, That continues to go well. I'll remind you that when Netflix licensed a group of podcasters, one podcast accounted for 40% of all the video views. That was The Breakfast Club, Charlemagne and The Breakfast Club, which is one of our podcasts. It's done so well that they actually turned it into a live daily show, the only live daily show on Netflix. We've had real success there. We think we're just beginning to see the birth of this. and we have high expectations for it.

Thank you both.

Thanks.

Great. Thank you, Sebastian. Let me just pause for a second, make sure there's no other additional questions, operator. Well, if not, first of all, thank you everybody on behalf of the entire, Bob, myself, the entire iHeart management team. For listening, we are available for questions anytime. And thank you again.

This concludes today's call. Thank you for attending. You may now disconnect.