Clear Channel Outdoor Holdings Inc (CCO) 2016 Q2 法說會逐字稿

Ladies and gentlemen thank you for standing by. Welcome to the 2016 second-quarter earnings conference call for iHeartMedia and Clear Channel Outdoor Holdings Inc.

(Operator Instructions)

As a reminder, today's call is being recorded. I will now turn the conference over to your host, Eileen McLaughlin, Vice President Investor Relations.

Thank you for joining our 2016 second-quarter earnings call. On the call today are Rich Bressler, President, Chief Operating Officer and Chief Financial Officer and Brian Coleman, Senior Vice President and Treasurer. We will provide an overview of the second-quarter 2016 financial and operating performances of iHeartMedia, Inc. and its subsidiaries: iHeartMedia Capital One, LLC and iHeartCommunications, Inc., Clear Channel Outdoor Holdings, Inc., and Clear Channel International, BV.

For purposes of this call, when we describe the financial and operating performance of iHeartMedia, Inc., that also describes the performance of its subsidiaries, iHeartMedia Capital One, LLC and iHeartCommunications, Inc. After an introduction and a review of the quarter we will open up the line for questions.

Before we begin I would like to remind everyone that this conference call includes forward-looking statements. These statements include management's expectations, beliefs, and projections about performance and represent management's current beliefs. There can be no assurance that management's expectations, beliefs, or projections will be achieved or that actual results will not differ from expectations.

Please review the statements of risk contained in our earnings press releases and filings with the SEC. Pacing data will also be mentioned during the call. For those of you not familiar with the pacing data, it reflects orders booked at a specific date versus a comparable date in the prior period, and may or may not reflect the actual revenue growth rate at the end of the period.

During today's call we will provide certain performance measures that do not conform to generally accepted accounting principles. We provided schedules that reconciled these non-GAAP measures with our reported results on a GAAP basis, as part of our earnings press releases and the slide presentation, which can be found on the Investor Section of our websites iheartmedia.com and clearchanneloutdoor.com. Please note that our two earnings releases and the slide deck on our websites are integral to our earnings presentation. They provide a detailed breakdown of foreign exchange and non-cash compensation expense items as well as segment revenues in OIBDAN among other important information.

For that reason, we ask that you view each slide as Rich comments on it. Also, please note that the information provided on this call speaks only to management's view as of today August 4, and may no longer be accurate at the time of a replay.

With that, I will now turn the call over to Rich Bressler.

Thank you Eileen and good morning everyone. Thanks for joining us. We are pleased with the results we have achieved this quarter, with iHeartMedia extending its growth momentum, Americas Outdoor improving its operating performance and International Outdoor delivering an overall increase in revenues.

We are continuing to execute on the right strategies to efficiently leverage our growing capabilities as a multi-platform, 21st century media and entertainment Company. And we keep investing and strengthening our businesses, enhancing our offerings to consumers and developing innovative marketing solutions for advertisers and agencies, while maintaining our focus on tight operating and financial discipline.

Today's earnings call marks my third anniversary here at iHeartMedia and it's gratifying to see how much progress the Company has made and how much more we can achieve with the opportunities ahead of us. For example, at iHeartMedia, we continue to benefit from favorable trends in how consumers are using the media. As we have highlighted to you before, broadcast radio remains the US's biggest and most stable medium, reaching 93% of all American adults 18 and over, and radio's reach among millennials is nearly as high at 92%.

Compare broadcast radios reach of 93% to TV's reach of 88% of American adults over 18 and just 78% reach for millennials versus radios 92% reach for millennials. Further, only about half of the people ages 18 to 24 now watch broadcast TV in prime time. And the 93% reach of broadcast radio is even higher than smart phone's reach of 77% of Americans 18 and over.

Importantly, smart phones also help us extend our reach through iHeartRadio and our stations' websites. In fact, we reach over a quarter billion listeners every month and are one of only a few media players in the US with a reach over 200 million people per month, along with Facebook and Google. This extraordinary reach gives us the ability to create dynamic new platforms like digital, social, and live events.

Not only has broadcast radio maintained its impressive reach for nearly 50 years, but recent Nielsen data shows that broadcast radio's time spent listening was up in the first quarter over the previous year. Let me repeat that: broadcast radio time spent listening was up in 2016's first quarter, year over year. And the continuing trend among consumers is to spend more and more time out of home, which we believe strongly benefits both our radio and outdoor businesses.

A new joint analysis, re-released earlier this year with Mediavest Spark indicates that audio and out-of-home advertising, delivered the strongest opportunity to influence consumer purchasing decisions shortly before they happen when compared to print, TV, digital video, search, and social media. We know that audio has nearly three times the impact of digital video and two times the impact of TV across all stages of the purchase journey.

All this underscores the valuable scale and depth of the reach that radio and outdoor provides marketers. We are focused on monetizing these promising opportunities as the media and entertainment Company with the largest reach of any broadcast radio or TV outlet in America. We believe it is critical to do business with advertisers in the same way that the digital advertising industry does today.

Our goal is to provide marketers with a frictionless programmatic solution that looks and feels like buying digital advertising to them and integrates seamlessly into their planning and buying systems, but we give them the enormous reach of broadcast radio in iHeartMedia, truly the best of both worlds.

In April, we started offering automated and data infused ad buying for the first time to our advertisers across our broadcast radio stations. And further advancing our goal, in the past quarter we have expanded this capability with the launch of the first programmatic private marketplace for digital radio in the United States. This marketplace allows select agencies and brands to access iHeartRadio's premium inventory using a combination of first- and third-party data segments to target their audiences among iHeartRadio's millions of dedicated listeners.

That's because we were able to use data from the 88 million registered iHeartRadio listeners and extrapolate that over the quarter billion listeners we reach each month. With audios already significant and growing role in the lives of today's consumers, this new marketplace reflects our commitment to evolving and increasing the ways that marketers can reach and influence their target audiences.

At the same time, we continue to grow the scope and quality of content you provide to our listeners. Just this week, we announced a renewal and extension of our partnership with Rush Limbaugh. Rush is the most listened to national radio talk show host in America.

Our long-term, multi-platform agreement, reflects the Rush Limbaugh Show's status as the top-rated program in premier network's industry-leading talk lineup of nationally syndicated properties. Rush continues to deliver impressive results for affiliates and a wide range of advertisers by providing an unmatched connection to millions of loyal fans. We are proud to continue our partnership with Rush and look forward to sharing many more years of success.

This quarter we added two other new collaborations that are also great examples of our commitment to quality content. We are partnering with NBC News to enable iHeartMedia's 24/7 News Network the worlds largest radio-only news source to provide its 1,000 affiliated radio stations and iHeartMedia's more than 850 broadcast stations, with hourly newscasts and access to other NBC News broadcast coverage.

In addition, iHeartRadio will feature NBC News Radio, that will carry their same national and international news content, as well as primetime specials, political events, and breaking news reports. We are excited about our recent partnership with We Work, to create a new live station on iHeartRadio called Work Radio, that features an original mix of music and exclusive content centered on entrepreneurship and creating your life's work. Work Radio is now streaming across all of We Work's locations and will also be available through the iHeartRadio app and website.

At both America's and International Outdoor, we're streamlining the business to focus on our core markets and strategies. We are also making investments in innovative digital technologies and winning new contracts for prime display locations that provide the flexible and creative solutions our marketing partners need to reach consumers.

Americas Outdoor's results this quarter benefited from its new leaner operational structure. And our launch of one of the largest out-of-home media installations available in the Los Angeles area and a major airport contract win in Minneapolis-St. Paul, will help contribute to future revenues. International Outdoors overall revenue increased, but we are facing challenges in certain markets that are affecting results such as the loss of the London Bus Shelter contract.

That said, we are optimistic about the continued success of Adshel Live and our other initiatives in the UK. We are making substantial inroads in Spain with the win of new contracts in Madrid and Barcelona, which start in the second half of this year.

Of course, identifying critical consumer trends and launching strategic growth initiatives is one thing. Making sure that our potential marketing partners know about them, is just as vital. Earlier this summer, both iHeartMedia and Clear Channel Outdoor participated in the prestigious Cannes Lions International Festival of Creativity. At the week-long festival, we were showcased our portfolio of products, media platforms, content, creativity, technological innovation, and personalities to the world's biggest global brands and agencies in advertising, creative, and media.

For the third year in a row iHeartMedia served as the festival's official radio sponsor, while Clear Channel International was the official sponsor of the Outdoor Lions awards for the seventh consecutive year and took home four bronze Lions. We are excited about the future of all of our businesses. With consumer trends running our way as we continue to drive our growth.

Our core strategies are crafted to maximize the power of sound, the power of outdoor, the power of social, the power of data, the power of mobile, and the power of our national and local brands, as well as our industry leading personalities.

Now let's turn to slide 4 and review our key financials. This quarter, we have included operating income in our discussion on a consolidated-segment basis in addition to OIBDAN. As part of our GAAP results discussions, I will also talk about our results in adjusting FX and excluding the impact of the nine non-strategic Americas Outdoor markets that we sold in January to improve comparability in this year's quarter results to the prior years. I will refer to these results as adjusted. Additionally, in this discussion, I will refer to direct operating and SG&A expenses as expenses.

Consolidated revenues increased 1.2% in the second-quarter, driven primarily by growth at iHeartMedia. Adjusted revenues were up 3.3%, with iHeartMedia up 3.2%%, Americas Outdoor up 4.6% and International Outdoor up 2.2%. Operating income was down $159 million due to the $99 million gain recognized in the second quarter of 2015 related to our sale of the radio towers, and the $57 million loss recognized in the second quarter of 2016, upon the sale of the Company's Outdoor business in Turkey.

This loss on sale included a $32 million cumulative foreign exchange adjustment. Adjusted OIBDAN grew 3% to $484 million. This performance highlights our financial and operating discipline and provides us with the flexibility necessary to continue to manage our capital structure in a prudent manner and allows us to keep evaluating opportunities to strengthen our balance sheet and businesses. I will provide additional detail on these results as we discuss each segments financial performance later in this presentation. Now let's read view our key non-financial highlights.

Moving to slide 5. At iHeartMedia, we continue to focus on being everywhere our listeners want us to be with the products and services they expect. With over a quarter billion monthly listeners in the US and over 85 million social followers, iHeartMedia has the largest reach of any radio or television outlet in America. Serving over 150 markets through 858-owned radio stations.

Through the success of our multiple platforms, based on the power of our broadcast and radio assets, we've been able to increase iHeartRadio's registered users 23% year over year to reach 88 million as of June 30, 2016. We hit that milestone faster than any other digital radio or music service. Our total listening hours continue to grow, up 16% in the quarter. With mobile listening accounting for 73% of total digital listening.

And our downloads and uploads exceeded 1 billion, at quarter's end. To build on the success of our digital-radio platform and because we know how the advertising industry is doing business these days, we are now, as I mentioned earlier, offering digital radios first programmatic private marketplace.

Live events continue to be an important part of our sales strategy, as they enable us to offer a number of unique marketing solutions to advertisers and agencies, while strengthening consumer relationships. They also provide great promotion and brand-building opportunities for our stations, as well as additional promotional opportunities and exposure for the artists we work with so closely.

In addition to being a significant differentiator in sales, branding, and promotions, events are an important revenue driver for us also. This quarter included the iHeartRadio Music Awards, the iHeartCountry Festival and the iHeartRadio Summer Pool Party.

During our first-quarter earnings call, I spoke about the iHeartRadio Music Awards, which took place on April 30. As I mentioned, it was broadcast to millions, with a live TV multicast as well as a live simulcast on iHeartMedia broadcasting stations, and iHeartRadio digital and mobile platform, generating 115 billion social media impressions. To put that in perspective, the 2016 Oscars generated 46 billion social impressions and the 2016 Grammys generated 33 billion social media impressions.

The third-annual iHeartCountry Festival hosted country music's biggest superstars on April 30 and was streamed live on iHeartRadio.com, Watch AT&T, and at iHeartMedia country radio stations, aired on the AT&T audience network on May 13 through DirecTV and U-verse, and became a dominant social media topic throughout the festival weekend. The 2016 iHeartRadio Summer Pool Party, took place on May 21 at the Fountain Blue in Miami Beach, and was streamed live on cwtv.com and iHeartMedia mainstream contemporary hit radio, rhythmic contemporary hit radio and hot AC stations nationwide. #iHeartpoolparty trended number one on Twitter, and on June 1 the show aired on the CW network for the fourth consecutive year.

Turning to Outdoor on slide 6. At both Americas and International Outdoor, with folks done offering the creative marketing solutions and flexibility that our advertising partners want in order to reach consumers who are increasingly spending more time out of home.

In the Los Angeles area, we are watching a series of seven new wallscapes and four large vertical bulletins at the much anticipated Sunset Millennium property, located in the heart of the Sunset Strip in West Hollywood. The bulletins are from 60 feet to almost 90 feet high and 20 feet wide and the wallscapes were even larger.

And those listeners in the New York metropolitan area may have noticed a presence of iHeartRadio's nationally recognized logo on one of the city's most iconic billboards, atop the old Rupert Icehouse, overlooking the Triborough RFK Bridge leading into Manhattan. The new billboard is over 8,000 square feet, the size of 12 roadside billboards and is visible for miles.

The billboard will display a digital LED screen that promotes iHeartMedia's iconic New York City-based radio stations as well as upcoming events. In addition, we signed a new 10-year partnership to install and manage state-of-the-art digital assets and terminal-wide digital networks in the Minneapolis-Saint Paul International Airport.

At International Outdoor, we have added 528 new digital displays in the quarter. And due to the success of Clear Channel's UK Adshel Live network we plan to extend that network of state-of-the-art digital screens.

Our team in Spain turned in a very successful start to the year. They were awarded a multi-year contract to manage Madrid's street furniture. The street furniture will incorporate 1,610 advertising panels into the urban environment, 300 of which will be the most innovative modern street furniture digital displays in the world, now making us a major player in Madrid. And the team also recently won contracts to manage Barcelona's outdoor street furniture advertising, increasing our presence in the Barcelona area.

Now lets review our segment financials. Starting with iHeartMedia on slide 7. As you can see, iHeartMedia has extended its growth momentum, with revenues up 3.2% and excluding political up 3%. Our results this quarter, reflect our growing audiences and progress across broadcast radio and digital.

During the quarter, we staged the three tent-pole events I covered earlier. As you may remember, the iHeartRadio Music Awards was included in the first quarter of 2015 results and so a small portion of our revenue increase in this quarter is due to timing.

Traffic and weather continues to be a valuable marketing solution for advertisers as they appreciate the value of advertising during our traffic and weather reports. And as I mentioned, earlier our 24/7 News Network will be collaborating with NBC News to bring new content to its affiliated radio stations, iHeartMedia's broadcast stations and iHeartRadio.

The advertising categories with the strongest year-over-year dollar growth in the quarter, included medical and healthcare, food and beverage, and restaurants and entertainment. Once again we outperformed the radio sector as measured by Miller Kaplan.

Expenses were up 2.8%, related primarily to variable compensation, investments in our sales capabilities, higher content and programming costs related to higher revenues and an increase in spending for strategic revenue and efficiency cost. Operating income was up 3.6%, and OIBDAN was up 4%.

Now let's review our third-quarter pacings. These pacings are just a snapshot in time and certainly do not include everything we do as a Company. iHeartMedia's third-quarter pacings through the end of last week are up 1.7%.

Just as a reminder, historically the majority of political advertising revenues will be in the fourth quarter. As we look at this quarter and the rest of the year, we are in the same advertising marketplace right now as many other air-based companies that you have been hearing from. We have the same questions as to how a number of factors will affect the marketplace.

The Olympics, the uncertainty around the November presidential elections, the continuing trend of advertising being placed closer to the airing date, and the general overall uncertainty about the country's economic prospects. Having said that, we continue to focus on driving advertising revenue in whatever environment we find ourselves in and at the same time we remain laser focused on vigorously managing our cost base.

Now on to slide 8, Americas Outdoor. With the sale of nine non-strategic US markets now closed, the Americas Outdoor team has nailed the focus fully on it's core strategic market and on executing their strategy. Their ability to streamline operations and simplify the buying process to efficiently deliver innovative campaigns and leverage their assets, is improving our results.

Revenues were down 4.6% due to the sale of the non-strategic markets in FX. More importantly, adjusted revenues were up 4.6%. Revenue growth was driven primarily by digital billboards. Our ability to continue to invest in digital and monetize these billboards has been a significant contributor to our growth in the quarter, both from new and existing deployments, in addition to improvements in occupancy rates. The airports we recently added, such as the Minneapolis-St. Paul and the two DC area airports we discussed last quarter, have also expanded our offerings for advertisers.

And our printed bulletins are growing across both local and national with higher rates of occupancy. The categories that contributed most to the growth included automotive, travel and transportation, and beer and wine. Expenses were down 4.4%, resulting largely from the sales of the non-strategic markets and foreign exchange fluctuations.

Adjusted expenses were up 3.9%,due to higher variable site lease and compensation expense related to increased revenues and a higher property tax expense. Operating income declined 3.6%, primarily as a result of selling the non-strategic markets. More importantly, adjusted OIBDAN was up 5.6%, due to the increase in revenues as well as our focus on financial discipline.

As for our third-quarter pacings, which again reflect just one point in time and are adjusted for the sales of the nine non-strategic markets and foreign exchange, they are up 0.8%.

Turning to slide 9 and our International Outdoor financials. At International Outdoor, our revenues were up just over 1% and after adjusting for the impact for foreign currency exchange of $3 million, revenues increased slightly more than 2%.

Growth is being driven once again by strength in Australia, particularly with the success of our digital investments there, as well as in France and China. Offsetting that slightly was the decline in the UK. Even though the UK revenues were down, resulting from the loss of the London Bus Shelter contract, I would point out that our team there has done a tremendous job in maintaining their strong relationships with the UK agencies and boosting growth in other areas, such as our successful Adshel Live displays while carefully managing expenses.

Expenses were up 2% on a reported basis and grew 2.9% after adjusting for foreign exchange. The increase in expenses is attributed primarily to higher site lease, production and compensation expenses related to higher revenues, as well as greater office expenses in China and the UK, partially offset by lower site lease expense in the UK.

Operating income increased 4.5%, due primarily to lower depreciation and amortization expense. OIBDAN was basically flat after adjusting for FX.

Our third-quarter pacings for International Outdoor are up 3.7%. Once again, pacings are a point in time metric. As you would expect, there is an inherent level of volatility week to week. Also these paces have not been adjusted to exclude the impact of the loss of the London Bus contract.

Before we go on to the rest of the slides, I would like to add a few comments on CCI's BV's results. CCI BV's consolidated revenues were flat at $319 million. The impact from foreign exchange rates was $4 million. CCI BV's operating loss in the quarter was $39 million, as compared to operating income of $17 million in the prior-year's quarter. The decline, was mainly due to the previously mentioned $57 million loss on the sale of the Outdoor business in Turkey.

On slide 10, we show some of the items in the quarter that affected year-over-year comparability. The impact of foreign exchange rates drove decreases in both consolidated revenues and consolidated expenses by $6 million and $5 million respectively. As I mentioned earlier, these results have been adjusted for the impact of selling the non-strategic Americas Outdoor markets.

As you can see, these markets generated $27 million in revenue along with $14 million in expenses in the second quarter of 2015. In addition, at iHeartMedia we generated $7 million of political advertising revenue compared to $5 million last year. Katz, our media representation business included in other, delivered approximately $3 million of political advertising revenue this quarter versus only $1 million last year.

Turning to slide 11. Capital expenditures for the six months ended June 30, 2016 was $124 million compared to $125 million last year. The majority of the capital is being invested in our international markets, as we continue to win new contracts and expand our digital displays and grow our street furniture business.

Moving to debt on slide 12, we continue to stay focused on maximizing the value of our business and improving our capital structure and liquidity to the capital markets and strategic transactions. As of June 30, iHeartMedia, Inc.'s debt was $28.8 billion. I said earlier we continue to pursue growth on the top and bottom lines across our business segments, while taking disciplined proactive steps to address our capital structure needs, interest expense payments, and liquidity needs.

On July 15, as we have done in the past, we repurchased $383 million aggregate principle amount of iHeartCommunication's 10% senior note, due 2018 for an aggregate purchase price of $222 million. In combination with the $120 million we purchased in 2014, the Company has now repurchased nearly 60% of the original $850 million issue and reduced cash interest expense by over $50 million a year.

Debt repurchases remains a component of our strategic plan to strengthen our capital structure. Back to the slide, our consolidated weighted average cost of debt was a 8.5% as of June 30, flat with year end. We expect cash interest expense for the full year 2016 to be $1.8 billion.

As you will see on the next slide, as of June 30, 2016, consolidated cash totaled approximately $952 million. After deploying $222 million to repurchase $383 million in senior notes, pro forma cash position would be approximately $730 million. In 2016, we have $193 million in senior notes maturing.

In 2017, our asset base revolver matures but we expect to be able to extend the revolver before it's maturity in December of that year. As of June 30, 2016 we have $230 million in borrowings outstanding under our revolver.

Now we'll turn to our balance sheet information the debt ratios on slide 13. As I just mentioned, iHeartMedia's consolidated cash totaled approximately $952 million on June 30 and our secured leverage ratio was 6.6 times.

Clear Channel Outdoor ended the quarter with $440 million of cash, with its senior-leverage ratio of 4.0 times and its consolidated leverage ratio of 7.6 times. The largest use of cash for iHeartMedia during the six months ended June 30, was interest expense which totaled $874 million. Clear Channel Outdoor used cash of $179 million for interest and paid dividends totaling $754 million.

So before opening it up for questions, I want to thank you again for joining us this morning. We continue to strengthen our position as a leading 21st century multi-platform media entertainment Company. We are pleased with the progress that we've made in building out our capabilities in broadcast, outdoor, events, mobile, social, and digital. Our Companies' efforts have been enhanced by our embrace of digital as opposed to diminished by it, as other media companies have been.

These platforms provide us more opportunities to connect with our consumers on a daily basis. Our brands also present truly unique opportunities for advertisers, agencies, and brands to engage with the right audiences at the right time, with the right message, and the right level of cost efficiencies, which we believe no other major media company can match. We believe that both radio and outdoor are underutilized and undermonetized by advertisers.

And we are taking aggressive steps to change that since one of our biggest growth opportunities lays in more effectively monetizing our existing portfolio of assets. We are more mobile than what is traditionally considered to be mobile. Our social footprint makes us one of the leading social media companies in the US that does not own its own platform and the concerts, award shows, and other major events we stage have positioned us as one of the top live-event companies in the US. Our investments are paying off and we are pleased with the growth we have shown this quarter.

Now let's open up the line for questions.

Thank you.

(Operator Instructions)

Our first question is from the line of Avi Steiner.

Thank you for taking the questions.

First one -- hopefully an easy one -- I assume, based on some commentary in 10-Q there was legal expenses in the second quarter in corporate, but if you could tell us what those were so that might give us a sense of what those onetime costs were?

Hi Avi, it's Rich, good morning.

We don't break out the legal expenses by number. But you can assume -- everybody is aware that we've had some litigation activity in the second quarter and some of that litigation activity currently, and that's where all the work resulted in increased legal expenses.

Okay, thank you.

The 10% note balance, if our math is right, is now $347 million. Does this give you comfort with respect to how the auditors may look at your financial position in the coming year-end filing?

Well, certainly I feel better. $347 million reasons why we should feel better. There's still several hundred million outstanding and we will continue to work to address that. But I think we made a significant step in repurchasing more than half of the remaining balance of the 2018 notes and reduced cash interest expense in doing so. So, capturing some significant discount, reduced cash interest expense -- certainly feel better about where we stand today.

That is helpful.

And then, as I model it, nerd-wise here, you didn't generate free cash flow this quarter in what historically has been a lower-interest, higher-EBITDA quarter, so curious if there are liquidity sources we may not be thinking about that you can pull? Or some assets held or something that otherwise may help in the back half as we sink through the rest of the year?

We are a big Company. We have lots of assets and we continue to evaluate what is optimal for the Company. We continue to invest in the Company when appropriate and have assets that are worth more to someone else than they are to us. We may divest those assets. So -- a big Company, lots of operations. I would say that we continue to evaluate what we have. And, sure, there can be liquidity levers in the future. Just look at what we have done in the past and you've seen the Company be pretty creative in optimizing its balance sheet.

Okay, that's fair. I'm going to end it on this one and thanks again for the time.

I think Rich had mentioned debt repurchases being a component of your strategic plan to strengthen the cap structure you obviously bought in those 10%s, but curious if your view of what you wanted to accomplish last year with the capital structure has changed, given the higher prices we are looking at on some of the junior debt securities today?

I think there are a couple of components to rightsizing the capital structure. And Rich would certainly want me to say first and foremost the focus is on operations in continuing to grow EBITDA. I don't make any money for the Company but I can work on the capital structure side. I do think there are opportunities to capture discount, to reduce cash interest expense, but you can read our trading levels today versus where they were in Q1 and know as well as I do that prices have gone up and thus the opportunities are less.

But that does not mean there aren't opportunities; we may just have to think about them a little bit differently. Be a little choosier about what we select to do. Be a little more patient. We continue to have constructive dialogue with investors that are willing to have constructive dialogue. That led to an opportunity, post Q2, that we talked about, and we will continue to have those discussions and deploy our excess liquidity in the best ways that we view possible.

Hey, Avi, it's Rich.

The one thing I'd say in summary, too, I think wraps up a bunch of your questions: we are, and I think it's evidenced by the results, as Brian alluded to, continuing the focus driving the operations of the Company in the environment that we operate in; continue to outperform the marketplace, and at the same time we are looking to optimize the capital structure.

If you go back, I noted upfront, this is my third year today -- probably like almost to the day, anniversary here -- and if you look at the optimization and the capital structure, you pointed out a couple, recently -- both if you go back a number of years, what the sale was, facilities, Outdoor stock, or back to the Australian, New Zealand, JV, that we had the radio interest in, that I think we did a good job of monetizing, to recently selling the nonstrategic assets for the Outdoor company, the nine markets (technical difficulty). So you can rest assured that's a daily (inaudible) the other day to drive operations and then we optimize the balance sheet on a daily basis.

Thank you very much for the time and answers.

Our next question is from the line of Jason Kim.

Good morning guys. Thank you for taking my questions.

First on the political revenue side, I noticed it early in the year, but I wanted to get your updated thoughts about the outlook for 2016? What are you seeing, what are you hearing out there in terms of your political revenues outlook as we get closer to November?

Look, it is early in the political cycle, as we all know. I don't know anything more than we all read, including what we all read and heard this morning in the papers. I think the only thing we do know, it's been not only an exciting but a pretty unpredictable election cycle, in terms of what we can control.

And just also as a reminder, the bulk of our political revenue, as we've always said all year, is going to come in Q4 of this year. We are very confident in our DC-based political sales team. We've talked about this a couple of times in the last few quarters: we hired a political media veteran, Kenny Day, and he and his team are doing an outstanding job, and we have pretty high expectations. (inaudible), there's expectations, they have done a great job in leveraging that, mobilizing our local (inaudible) campaigns -- not just the national campaigns, but also the local campaigns, and targeting the specific demos that we need to reach.

I can say here with confidence that we think we are well-positioned to maximize our share of political ad spending. Clearly it has been a little bit slower. (inaudible) I think you -- (inaudible) national election year and even in the first quarter. It is pretty normal for spending to slow down -- at least what we have seen over time before conventions. And as I repeat, historically the majority of spending occurs in the fourth quarter, so we continue to be optimistic based on the selling machine that we've built, led by Kenny Day.

Thanks for that.

When we look at your CCU Americas segment margins, has there been a lot of changes in your revenue composition that would put your core margin profile much lower than they were pre-recession? Your segment margins in DCC Americas were as high as mid 40% before the downturn and now they are more in the high 30% range. Is that just a function of lower revenues from peak levels? Or have there been any changes to the composition of revenues? I just wanted to get a sense of what the medium- to long-term margin profile can look like for CCOA going forward?

Sure. It is a couple of different things. First and foremost -- and we talked about this before with Scott Wells, Bob McEwen, the rest of the Outdoor team, and I think, six to nine months ago when we made -- a year ago we made changes (inaudible), we talked about that we would start see improvement. And I think if you look at the numbers today, delivering on an apples to apples basis, ex-FX, revenue growth in Americas Outdoor US of 4.6%, OIBDAN growth of 5.6%, we feel good about that.

And so that's also why (inaudible), we are continuing to challenge our working with the Outdoor marketing team on streamlining this organization. And like I said, they've done an outstanding job in the last six months and we see it starting to manifest itself in the numbers. You add to that -- so that's from the pure operating standpoint; there has been some change in mix. Remember that we lost -- we still are down on the LA digital boards. So although we have 50 digital boards around the LA market and we've been able to convert about 80 of the digital boards in LA back to print temporarily. So we are trying again to get the best out of that asset mix that we can right now. But we are still down in digital boards and we are not up to where we need to be.

By the way, I will mention -- this is an aside -- we have a great new offering, which I pointed out in the earnings conversation, we have 11 new building wallscapes in both (inaudible) at Sunset Millennium premier real estate projects in West Hollywood. So we feel great about that. And we also, by the way -- last piece is, we also bought transit contracts that we have had in the past, which operated slightly lower margins. So -- longwinded answer because it is a mixed bag. But I think you should feel good about the team and the direction of the business.

Got it, and then just one question for Brian on the balance sheet. Given the lower amount of that outstanding or coming view of 2018, what is your current thought process regarding picking vantage of liability management transactions other than your new debt in maturities?

Good question.

I've always kind of had the position you don't want to create a liquidity problem where you otherwise didn't have one. So having some of the 2018 stack taken out certainly is helpful. We still need to focus on liquidity first, and make sure that we are comfortable with respect to the investments we want to make and making sure our operations flow smoothly between now and our debt maturities. And making sure that we can adequately address our 2016 and 2018 debt maturities.

So again -- one, I want to keep an open mind and look at all opportunities. We feel a little better about 2018; there are some maturities and of course we've got the 2016 maturities as well. Both we think are manageable, but we want to make sure that we don't create that liquidity event. So a kind of a non-answer, but it is a balance we look at. Marginally think we feel better about 2018 and perhaps that opens up some opportunities. But we never want to forgo the security that we feel in our liquidity position.

Thank you.

Our next question is from the line of Lance Vitanza.

A couple of questions for me.

The first on core trends. I found your comments around the outlook a little bit ambiguous in that you refer to other broadcasters. From my perspective, most broadcasters seem to feel pretty good about where things stand. So are you saying that, despite the limited visibility, you feel good about where the company is headed in the back half of the year? That would seem to fit with the rest of the commentary. But when you got to the pacings it was a little bit hazy to me.

I think Lance, two separate things, right?

As I always point out, and I know you guys are I'm sure tired of hearing me say this, but pacings are just a snapshot in a given point in time. And my only point on bringing up late-placing advertising, is I think we are all seeing in the media industries. And I followed, and obviously talking to everybody else in the media industry and looking at all the earnings releases as well as ones that just came out as early as this morning, I think it is two things. One is, we are all experiencing later-placing media, which I think goes to the point about pacings being just a given point in time. And then I think the other piece out there is just about the general comment. There are lots of factors affecting it. So I don't think what I'm saying -- and quite frankly am sure what I'm saying is no different than what you're hearing from the rest of the media industry that is out there.

You know we are all dealing with the election and the uncertainty around that. We are all dealing with the Olympics and the uncertainty around that. We are all looking at what is happening with GDP growth and we are looking at both here and what happens outside the United States because of CCI. So I think the only point that you are hearing me say is, there are lots of moving pieces here when you think about the future.

Some of them are in our control and some of them are out of our control. But the one thing, as I pointed out in my opening remarks, laser-focused on driving revenue in this environment and in any environment we operate in, we're laser-focused in managing our cost base to maximize the revenue and bring the most down the EBITDA, OIBDAN line, because there is no confusion here as we are going to drive the operating results of the Company.

And we continue to like our position. We continue to like our assets. I noted that we outperformed the industry again in terms of when you look at Miller Kaplan. And in terms of the relevance of the medium -- just the last thing I'll tell you, because you've brought up comparing us by the media companies -- if you look at our operating performance over any given time, again, as I noted in my opening remarks, we stack up very well in the operating [department] compared to anybody else in terms of just looking at everybody's North American results.

Our broadcast ratings are up on a year-over-year basis, which is great. Our digital ratings are up significantly, even higher than our broadcast ratings were up, just to be clear. I think if you look at our TV ratings, which were fundamentally -- we continue to outperform from a ratings basis (inaudible) increase. And as a reminder, we continue to reach 93% of US adults, 92% millennials from radio reach. While TV reach continues to be below its historic high of 95% and it's down to 88% of adults and is down to 78% of millennials.

So the bottom line is, more adults and millennials are reached by AM/FM radio than any other medium. The one thing that is interesting that came out this morning for everybody on the phone, there is a piece that just came out today you probably have not seen in Media Post. And the title of the article is Millennials Love Radio. So I would invite you all to go read that, and if you need help getting it, Eileen can make sure you get a copy of it. But I think it just really in one page points out the relevance and the strength of radio to the millennial age group.

That is a good segue. I wanted to ask you about that. Those are wonderful statistics about your reach and among millennials in particular. Clearly a disconnect between those numbers and the perceptions in the markets. When you go in to pitch business, though, are the ad buyers -- are they surprised by these numbers? Do they push back on these numbers? Or is this widely understood at this point?

First of all, I would take exception to, when you say: not understood in the marketplace; let's just talk about in terms of the marketplace. One is, just to be clear, these are not like some other companies put out self-generating numbers. These are all Nielsen numbers that are out there. So the relevance of the medium to the consumer, to the listener, getting our product to the listener wherever they are, which is what our job is. And to drive the ratings and then drive the monetization of those ratings -- I don't think there's any confusion from the consumer standpoint in the marketplace out there, as evidenced by the listening numbers and as evidenced by our ratings that are up year over year.

I don't think there's any misconception from the talent, whether there are DJs [in the job] -- whether it's Elvis or Ryan or Big Boy or all of our guys. The relevance of our DJs are special sauce: your best friend next to you in the car, which is what we are. And the engagement of our audience. I don't think there's any confusion there. I think I pointed this out in the opening remarks -- take a look at the iHeart Radio music awards this year. We had 115 billion -- 115 with a B, billion -- social impressions. To put that in context, the Grammys had about 30 billion, a little over. The Academy Awards had about 40 billion, so we had almost four times the Grammys, three times the Academy Awards -- which again shows you how engaged our audience is with our stations and shows you how engaged people are with the medium.

Then when you go to the advertising side, which is, again, our biggest source of upside, is with all of our success, we are still wildly undermonetized, which I have said before. Nielsen says on average we are a 6 to 1 ROI. So for every dollar an advertiser gives us on average, return on investment -- just hard facts, without everything else -- on average we get 6 to 1 back. And you can see by our results and our outperformance, we are continuing to work through and work with advertisers and continuing to drive results out there.

The good news is, we have all of the operating results to drive the advertising revenue and also we have a lot of upside here. Do I wish we were further along? Sure, but I think again if you go back -- as I said, this is my three-year anniversary -- you can go back over time and look at the progression, and since Bob and I have been here running this Company -- with the rest of the outstanding management team that we have, if you go back and look at operating results translating into revenue, you would continue to see steady progress.

That's great, I appreciate the explanation. Just to be clear -- I was talking about confusion in the capital markets, not the other markets. But in any case I appreciate the clarification.

One last question for me -- and I apologize if I missed this, but Brian -- how did you finance the purchase of the 10%s? Did you use existing cash or did you wind up borrowing against or selling some of the Outdoor common stock at Broader media? Thank you.

We used cash.

Existing cash?

That is correct.

Okay. And how much cash does that leave in unrestricted subsidiaries? Do you have that number available?

I don't think we disclosed what is in unrestricted subsidiaries. There is a machination you can go through the balance sheet. The segment disclosure that we have, you can estimate what non-guarantor cash, and you can back out Outdoor and that gives you non-guarantor, non-outdoor cash; and that is a proxy that people use for the cash and the unrestricted subs. It is not a bad way to estimate what cash is in unrestricted subs. But we don't disclose assets or update assets that are an unrestricted subsidiary.

Thank you.

Our next question is from the line of Marci Ryvicker.

Good morning. It's Stefan on for Marci.

I'd like to dig into the pacings a little bit. At Outdoor, it sounds like Americas is decelerating. Are there any comparability items here?

No. Again, I'm going to say what I've said in my opening remarks, and what I just got done answering the question before. Pacings are a snapshot in the period of time. They do not include everything we do is a Company. (inaudible) have been adjusted for the sale of that nine nonstrategic assets that are out there. And again, as an overarching comment, there is more advertising being placed in month, in quarter, closer to the time that the advertising is shown.

Okay. And then on the international pacings, do those include the new Spain contracts for the street furniture?

Yes, but there's nothing -- those are brand-new, so they are not significant at this point in time.

Okay, and then is there any way for digital to be broken out for Outdoors America or at iHeart? What percentage of revenues?

We don't break it out, and we don't -- we break out the number of digital boards, which we have mentioned. But we don't break out because we don't look at our business that way. We are selling results to advertisers and that's what advertisers are focused on. So we don't break out separately the [digits] results in any of the segments of our Company.

Great, thank you.

The next question is from the line of Aaron Watts.

Everyone, thanks for taking the questions.

One for Brian and one for Rich. Brian, quickly -- what is the plan for the bonds you have repurchased? Will they remain at the unrestricted sub? And then also, will they be canceled or retired or remain outstanding?

We have not canceled those bonds, but obviously reserve the right to do so going forward. But obviously, once you do that you cannot undo it. So I don't know that there has been a long-term determination on what to do with the bonds, but currently they remain outstanding at the unrestricted sub.

Okay. And then Rich, this one for you. The 16% gains in iHeart Radio certainly seems like a positive data point. I'm just curious about your monetization efforts around that increase listening on that platform? And then also maybe you could talk about the ad load on iHeart Radio as well?

I'm not sure what the question is on the ad load. We achieved -- and thank you for saying that about the 16% gains we achieved -- also noted the highlight we achieved 88 million iHeart Radio registered users as of the end of June, which is 23% growth on a year-over-year basis. We've had over 1 billion downloads and uploads of our product, so we feel great about that. Again, on the monetization front, as I've said, we continue to do a good job on the monetization front in terms of monetizing our listening. At the same time, our greatest opportunity is, we are wildly undermonetized based on the effectiveness of the medium, which I went through a little bit before, I think in response to Lance's earlier question.

Okay, great. Thank you.

We have no further question in queue at this time.

Operator, thank you very much. Thank you everyone for joining and we appreciate all of your questions; and if you have any follow-up questions please give me a call or call Brian. Thank you.

Thank you. Ladies and gentlemen, that does conclude your conference. We do thank you for joining while using AT&T executive teleconference. You may now disconnect. Have a good day.