Clear Channel Outdoor Holdings Inc (CCO) 2016 Q3 法說會逐字稿

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

(Operator Instructions)

As a reminder, this conference is being recorded.

I will now turn the conference over to your host, Eileen McLaughlin, Vice President, Investor Relations. Please go ahead.

Good morning and thank you for joining our 2016 third-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'll provide an overview of the third-quarter 2016 financial and operating performances of iHeartMedia Inc. and its subsidiaries: iHeartMedia Capital One LLC; 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; iHeartCommunications, Inc and Clear Channel Outdoor Holdings, Inc. After an introduction and a review of the quarter, we'll open up the line for questions.

Before we begin, I'd like to remind everyone that this conference call includes forward-looking statements. These statements include Management's expectations, beliefs and projections about performance and represents 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 risks 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 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 reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release and the slide presentation, which can be found on the investor section of our website, iheartmedia.com and clearchanneloutdoor.com.

Please note that our two earnings releases and the slide deck on our website, www.iheartmedia.com and www.clearchanneloutdoor.com 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, operating income and 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 views as of today, November 9, 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.

This quarter we delivered growth of both iHeartMedia and International Outdoor, with Americas Outdoor's year-over-year comparisons impacted by the sale of nine non-strategic markets we completed in the first quarter of 2016. We are committed to transforming ourselves into a digital and data-rich Company built on the strength and power of our broadcast radio and outdoor assets, both of which benefit from the continuing out-of-home trends and the demand for mass-reach media in a world of dwindling TV reach.

We're also transforming how advertising is bought and sold, moving from the model of traditional media company to the digital advertising market, to our investments in programmatic buying platforms and research analytics tools. Our investments are enhancing all our businesses, allowing us to use our assets for our marketing and advertising partners while maintaining our tight operating and financial discipline.

The trends in how consumers are using media continue to advance our strategy. As America's largest and most stable medium, radio reaches 93% of adults over 18 compared to TV's reach of 87%. Radio is the number-one reach medium in the US. Radio is also the leader among millennials ages 18 to 34 where radio's reach is 92% versus 89% for smartphones, with TV a distant third at 77%. For teens ages 12 to 17, radio reaches 95% compared to live TV's 86%.

These are very impressive statistics, especially given that some have alleged radio is losing strength with the younger generation, but the evidence to the contrary is very compelling and you can see why we are excited about the future of radio. Not only has broadcast radio maintained its impressive reach for nearly 50 years, but radio usage was up 6% in the third quarter compared to a year ago per Nielsen audio. The average daily time spent listening to AM/FM radio was up both in the first and second quarters this year as compared to the same time periods last year.

At iHeartMedia, our broadcast radio stations achieved an all-time high in the US this quarter, with monthly reach of 269 million people over the age of six. Although this fluctuates seasonally and due to special events, our broadcast radio reach is still larger than either Google or Facebook in the US, as well as any other media outlet, including TV.

In another continuing trend, consumers are still spending more and more time out of home. This obviously benefits our radio business as well as our outdoor businesses, especially since about two-thirds of radio is consumed out of home, making it more mobile than what is traditionally considered to be mobile.

As a matter fact, about two-thirds of what people think of as mobile media is consumed in the home. That's why we believe we are well-positioned to capitalize on this increasing consumer mobility. All of these favorable trends give us the base on which to continue to grow our radio broadcasting, digital, social, mobile and events platforms as a fully-integrated solution for our marketing and advertising partners.

In a major step forward, as a multi-platform 21st century media and entertainment company, and as a leader in the digital audio space, we've announced that we are reimagining live radio with our two new on-demand services, iHeartRadio Plus and iHeartRadio All Access. Both are set to debut in January, 2017.

This marks the first time that on-demand functionality will be used to enhance the radio experience, unlike existing services which are only music collection offerings. Also, for the first time ever, when listeners hear a new or favorite song on the radio, they will be able to instantaneously replay the song and even save it directly to a play list for each radio station in our digital platform.

Because iHeartRadio's new services are the only ones using on-demand functionality to make radio even better, we believe it furthers iHeartRadio's important mission of partnering with artists in the music industry, presenting more opportunities to grow revenues. With iHeartMedia's massive reach, we have the ability to drive awareness of our new on-demand services on a national scale to a large new audience, the same way we built the incredibly successful iHeartRadio brand.

84% of iHeartRadio's users do not currently subscribe to an on-demand service, and now for the first time may be interested in subscribing to a service that provides them with the best of live radio, combined with easy-to-use on-demand functionality that they can connect directly to their new music collection. Something no other service has the assets to offer. Already, months ahead of our launch, iHeartRadio has reached license agreements with Universal Music Group, Sony Music Group, Warner Music Group and a number of independent record labels and distributors.

In September, we hosted the sixth annual iHeartRadio Music Festival. The iconic weekend-long concert event included some of the biggest names in music across all genres, with performances by U2, Sting, Drake, Britney Spears, Sam Hunt, Twenty One Pilots, Ariana Grande, Pitbull and Usher. This year's festival generated nearly 11 billion social impressions, nearly 50% more than last year's event and more than double the number of social impressions with the 2016 big game halftime show. In addition, #iHeartFestival trended at number-one on Twitter worldwide on both nights of the festival.

This past weekend we hosted third annual iHeartRadio Fiesta Latina. We celebrated the best in Latin music and generated 3.7 billion social impressions, over 2.5 times more than we generated last year.

One of the hosts of this year's Fiesta Latina was Hispanic radio legend Enrique Santos, with whom we have joined forces in a unique Hispanic initiative to develop programming and content for iHeartMedia across its multiple platforms. He is now Chairman and Chief Creative Officer of our new iHeart Latino division.

With radio's weekly reach among Hispanic adults at 97%, the highest of any demographic, this new alliance recognized the increasing importance in size of US Hispanic population, both Spanish- and English-speaking, and it builds on Santos' high profile within the Latino community as a top-rated on-air talent, trusted source, social and media influencer, content creator and community spokesperson and leader.

At iHeartMedia, with our sound point programmatic network, at Katz, with Expressway from Katz, the programmatic network to the benefit of the entire radio industry and at Clear Channel outdoor, we are building the kind of data-rich, automated programmatic platforms that enables us to rightfully take our place in the forefront of media. Our audience size and ease of programmatic buying give our Company a unique position with advertises in both radio and outdoor, and we anticipate it will open up digital revenue streams as well.

At both America's and International Outdoor, we continue to realign our resources to expand or digital out-of-home networks, launch new research analytics tools and invest in building programmatic buying platforms. At Americas Outdoor, we remain encouraged by our strategic and ongoing investments in speed to market through emerging technologies, mobile data analytics and new assets.

Earlier this year we launched RADAR, the out-of-home advertising industry's first suite of solutions for audience planning, attribution and measurement that leverages aggregated and anonymized data from respected third-party providers. When we introduced RADAR to marketers and advertisers in February, we began with just 11 audience segments in 10 major markets. Since then we have added over 700 different audience segments ranging from NFL fans to groups of people who love quick service restaurants. As of September, we've expanded RADAR into 31 total markets, including 19 of the top-20 DMAs.

As you can imagine, the marketplace reaction to the sophisticated advertising solution that capitalized on the footprint of our portfolio of assets in the US has been strong. In fact, one retail client leveraged RADAR with its out-of-home campaign to lift store visits by over 25%.

In the UK we've announced Trace, a tool that tracks the consumer purchase journey and allows both media planners and advertisers to explore how best to engage their target audiences at the right time in the right place with the right message. So we are confident that our core strategies will make the most of the power of audio, the power of outdoor, the power of social, the power of data, the power of mobile and 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. Before we get started I want to point out that as part of our GAAP results discussion, I will also talk about our results adjusting for foreign exchange and excluding the impact of the non-strategic markets we sold in the first half of 2016. We believe this will improve the comparability of our results to the prior years. I will refer to these results as adjusted. Additionally, I will refer to direct operating expense and SG&A expenses as expenses.

Consolidated revenues were down slightly in the quarter as compared to the prior year, with growth of both iHeartMedia and International Outdoor, offset by declines at Americas Outdoor contributed to the impact of the non-strategic markets we sold in the first quarter. Adjusted revenues were up 1.9% with iHeartMedia up 1.2%, Americas Outdoor up 1.1% and International Outdoor up 3.5%.

Operating income was up 12.1% and adjusted OIBDAN was up 7%. I will provide additional detail on these results as we discuss each segment's financial performance later in this presentation.

Now let's review our key non-financial highlights, moving to slide number 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, that is more than even Facebook or Google have in the US on a monthly basis. As well as 85 million social media followers, iHeartMedia has the largest reach of any radio or television outlet in America, serving over 160 markets with over 850 owned radio stations in iHeartRadio.

Through the successes of our multiple platforms, based on the power of our broadcast radio assets, we have been able to increase iHeartRadio's registered users 22% year over year, to reach close to 92 million as of September 30, 2016. We hit that milestone faster than any other digital radio or music service.

Our total listening hours continue to grow, increasing 8% in the quarter, with mobile listening accounting for 74% of total digital listening. Our downloads and uploads surpassed 1.1 billion at quarter's end.

As you know, we host several tent-pole events during the year to build on the success of our audio assets and they continue to be an important embedded part of our sales strategy. That's because they have a positive impact on advertising consumer relationships, as well as provide great promotion and brand building opportunities for our stations. We're leveraging these events as a significant differentiator from the sales, branding and promotion perspective and these events continue to drive revenues.

As I told you earlier, we hosted our sixth annual iHeartRadio Music Festival in Las Vegas in September, which generated close to 11 billion social impressions, and #iHeartFestival trended at number-one on Twitter worldwide on both nights of the Festival. The Festival was broadcast live on iHeartMedia stations across 150 markets and live streamed both nights on the CW networks through CWTV.com and the CW app. The CW network also added the Festival as a TV special on October 6 and 7.

Underscoring the continuing success of our live events, we have announced the return of two of our most successful events, the iHeartRadio Jingle Ball 2016 Tour presented by Capital One and the iHeartRadio Music Awards. The iHeartRadio Jingle Ball 2016 presented by Capital One, the holiday season's iconic music event, will stop in 12 cities. The iHeartRadio Music Awards will take place on March 5, 2017 at the historic Forum in Los Angeles, and again, will be televised on TBS, TNT and TrueTV and simulcast on iHeartMedia stations nationwide and iHeartRadio.

Turning to Outdoor on slide 6. At both Americas and International Outdoor, we focused on offering the creative marketing solutions and flexibility that our advertising partners want to reach consumers who are increasingly spending more time out of home. Our investments in innovative digital technologies provide the flexibility and creative solutions our marketing partners need to reach consumers.

This quarter, we sold over 900 new digital displays for an end-of-quarter total of 1,082 across 28 markets in North America and over 9,000 digital displays in our international markets. Americas Outdoor has continued to expand its footprint in airports with the renewal of the contract for the Hartsfield-Jackson Atlanta International Airport, which was just named the world's busiest airport for the 18th consecutive year.

Additionally, we have secured new contracts at Roanoke-Blacksburg Regional Airport in Southern Virginia and at Punta Cana International Airport in the Dominican Republic. In the UK, we have announced that we will begin converting 500 telephone boxes in London we bought last year into brand-new phone boxes featuring Wi-Fi, interactive local maps and pay phone services. International Outdoor took over the rights to market more than 800 display sites in Lucerne, Switzerland.

Now let's review our segment financials, starting with iHeartMedia on slide 7. iHeartMedia revenues were up 1.2% and excluding political, up 0.4%. In addition to the increase in political revenues, growth in broadcast radio and digital advertising was driven primarily by our network businesses including our traffic and weather business and our premier network syndication business, as well as higher revenues related to our events, including the iHeartRadio Music Festival.

The increase in revenue was partially offset by lower local broadcast radio advertising revenues. As other companies have stated, we feel the Olympics had an unfavorable impact on revenues in the quarter.

Although political was a significant contributor to our growth this quarter, the total dollars being spent on political are substantially below 2012 spending due to lower presidential campaign spending 2016 versus 2012. While we have had great traction with senate, congressional and statewide ballot campaigns, presidential ad spending still drives the market.

We believe we deliver a truly differentiated value proposition for advertisers and this has contributed to our revenue growth in the quarter. Traffic and weather, reaching 99% of commuters in America, continues to be a valuable marketing solution for advertisers as they appreciate the value of advertising during our traffic and weather reports.

Premier networks, which includes an industry-leading talk lineup of nationally syndicated properties, benefited from the tumultuous political season. The success of our events, including the iHeartRadio Music Festival held in September, continued to be an important embedded part of our sales strategy. The advertising categories with the strongest year-over-year dollar growth in the quarter included political, medical and healthcare, entertainment, food and beverage and home building, home improvement.

Expenses declined 5.3%, which includes the impact of the renegotiation of certain contracts. Excluding this impact, expenses were up just over 1%, with increases related to higher content and programming costs related to increased revenues, events and continued investments in our sales team, partially offset by a decline in trade and barter expenses. Operating income was up 14% and OIBDAN was up 11.8%.

Now let's review our fourth-quarter pacings. These pacings are just a snapshot in time and certainly don't include everything we do as a Company. iHeartMedia's fourth-quarter pacings through the end of last week are up 2%.

As you can see from our most recent pacing data, political revenue has been disappointing, coming in lighter than we expected. We are seeing some non-political advertisers reducing or delaying their spending due to the uncertainty created by the unusual presidential election campaign, which we believe has had a dampening effect on the fourth quarter to date. With the election now, over we hope this uncertainty is now behind us.

Now on to slide 8, Americas Outdoor. Revenues were down 7% due to the sale of the nine non-strategic markets we sold in the first quarter and foreign exchange. Adjusted revenues were up 1.1%.

Our ability to continue to invest in digital billboards and monetize these billboards has been a significant contributor to our growth in the quarter from both new and existing deployments in addition to improvements in occupancy rates. Our local business continues to deliver strong performance, but this was somewhat offset by softness in our national sales due in part, we believe, to the Olympics as I just mentioned.

Our Latin American operation had a strong quarter, resulting primarily from the Olympics in Brazil. The categories that contributed the most to this growth included beverage, beer and wine, travel and transportation, automotive, entertainment and technology.

Expenses were down 5.3% due primarily to the sales of non-strategic markets. Adjusted expenses were up 1.6% due to high direct operating expenses in Latin America, attributed to increased revenues and higher variable site lease expenses related to new airport contracts.

Adjusted OIBDAN was up 0.3%, slightly less than revenue growth due to the geographic mix of revenues and up-front costs from the new contracts. As for the fourth quarter pacings, which again reflects just one point in time and are adjusted for the sales of the non-strategic markets and foreign exchange, they are up 1.2%.

Turning to slide 9 and our International Outdoor financials. In International Outdoor reported revenues were up slightly, 0.3%. Adjusting for foreign exchange in addition to Turkey, which, as you know, we sold in the second quarter of this year, revenues were up 3.5%. This is a strong performance given these results included the impacts from the loss of the London bus shelter contract and the uncertainty in the market due to Brexit.

The team generated growth across the businesses with the continued strength of our digital strategy and new contracts and increased digital inventory in several countries, including Australia, Italy, Spain and Sweden. As I mentioned earlier, growth in these markets was partially offset by the UK.

Expenses are down 0.6% on a reported basis and up 3.2% after adjusting for foreign exchange and the sale or Turkey. The increase in expenses is primarily attributed to higher site leases and production expense attributed to increased revenues. Operating income was up 71%. Included in operating income is a $4.5 million decrease in depreciation and amortization due to the disposal of our businesses in Turkey and from intangible asset becoming fully amortized.

Adjusted OIBDAN was up 5.6% after adjusting for FX on the sale of Turkey. The improvement is due to improved operating leverage as we continue to focus on tight operating discipline.

As announced on October 24, Clear Channel Outdoor International sold its interest in Australian out-of-home media company Adshel to joint venture partner APN News and Media for a purchase price approximately $204 million. Following the successful Adshel partnership for almost 20 years, this transaction presented a very compelling exit opportunity for Clear Channel Outdoor, allowing us to focus even more on our core markets.

Now onto our fourth-quarter pacings for International Outdoor, which were up 6%. Once again, pacings are a point-in-time metric and as you would expect, there's an inherent level of volatility week to week. As we stated before, we have not adjusted our pacing data to exclude the impact of the loss of the London bus contract. However, the pacing data does exclude both Turkey and Australia.

Before we go on to the rest of the slides, I would like to add a few comments on CCIBV's results. CCIBV's consolidated revenues were flat at $285 million. The impact from foreign currency exchange rates was $6 million. CCIBV's operating loss in the quarter was $13 million as compared to $12 million in the prior year's quarter.

On slide 10 we show some of the items in the quarter that affected year-over-year comparability. Fluctuation in foreign exchange rates affected primarily our International Outdoor business by reducing both revenues by $6 million and expenses by $5.9 million. The Americas Outdoor markets we sold generated $27.9 million in revenues and $14.5 million in expenses in the third quarter of 2015.

In the same quarter, Turkey generate $4.9 million in revenues and $5.2 million in expenses. At iHeartMedia we generated $10.8 million of political advertising revenues compared to $4.3 million last year. Katz, our media representation business included in other, delivered $7 million in political advertising revenue this quarter versus just over $1 million last year.

Turning to slide 11. Capital expenditures for the nine months ended September 30, 2016 totaled $201 million compared to $193 million last year. The majority of the capital is being invested in our international market as we continue to win new contracts, expand our digital displays and grow our street furniture business.

Moving to slide 12. As we stay focused on maximizing the value of our business, we continue to explore opportunities to strengthen our capital structure and provide us with additional liquidity. As we have said previously, our over-arching objective is to position the Company for long-term growth and success, and we are working deliberately to advance a number of initiatives to help us achieve this goal.

For example, on October 4, we announced the successful completion of a consent solicitation to holders of outstanding 14% senior notes through 2021. The achieved amendment allows us to increase the aggregate principal amount of senior indebtedness by $500 million, providing us with more flexibility to address our capital structure needs.

As of September 30, iHeartMedia Inc's debt was $20.5 billion, $266 million lower than year end. The decline is due in large part to the $383 million aggregate principal amount of iHeartCommunications 10% senior notes through 2018 purchased at $222 million, another initiative taken to improve our capital structure.

iHeartMedia's consolidated weighted-average cost of debt was 8.5% as of September 30, flat with year end. We expect cash interest expense for the full-year 2016 to be $1.8 billion.

Now I will turn to our balance sheet information and the debt ratios on slide 13. iHeartMedia's consolidated cash totaled approximately $543 million at September 30, and our secured leverage ratio was 6.6 times and total leverage of 11.4 times. Clear Channel Outdoor ended the quarter with $394 million of cash with a senior leverage ratio 4.0 times and consolidated leverage ratio at 7.5 times.

The largest use of cash for iHeartMedia during the nine months ended September 30, was interest expense which totaled $1.434 billion. Clear Channel Outdoor used cash of $272 million for interest and paid dividends totaling $755 million.

Before opening it up to 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 and entertainment company. We are pleased with the progress that we've made in building out our capabilities across all platforms, including broadcast, outdoor events, mobile, social and digital. Specifically, we have benefited from our embrace of digital.

Our brands offer a truly unique opportunity for advertisers, agency and brands to engage with the right audiences at the right time with the right message and at the right level of cost efficiency. We believe that both radio and outdoor are unutilized and under-monetized by advertisers, and we're taking steps to change that. Because one of our biggest opportunities is to more effectively monetize our existing portfolio of assets. In a world of declining and fragmenting options, the mass market reach of both radio and outdoor creates unique opportunity for our Company.

We are more mobile than what's traditionally considered to be mobile. Our social footprint makes us one of the leading social media companies in the US that doesn't own its own platform. The concerts, award shows and other major events we stage have positioned us as one of the top live event companies in the US. All of these platforms and our ability to execute across them, provide us more opportunities to connect with our consumers on a daily basis than any other media company.

Now let's open up the line for questions.

(Operator Instructions)

Avi Steiner, JPMorgan.

Thanks for the questions. I have a couple of operational, if I may, and then a couple of balance sheet bigger picture ones. First one on the operational side, I saw on the expenses, came in better than we were looking for on the iHeartMedia side. What was behind that?

And you noted in your remarks and in the release that a change of terms in connection with contract renegotiations, what is that? Is that a one-time item? Or a trend we should expect going forward?

Hey, Avi, it's Rich. Thank you for the question. You guys have heard me say this for years on quarter after quarter. I think everybody has heard is the constant focus on expense management, financial discipline. And we're always, as a Company, due to our size and scale and commercial relationships, always renegotiating contracts. So again, just doing our jobs.

We negotiated some contracts in this quarter. We got some financial benefit for those renegotiations. That's what you see in the numbers in terms of the decreasing expense. That's a little bit of an aberration, I think, this quarter overall, so I don't expect to see that type of improvement every quarter.

So I think if you go back to what the margins have been in the first six months of the year, we're going to continue to focus to expand those margins. We did get a larger benefit which is why I called it out this quarter than we've had in previous quarters. But again, we're always negotiating contracts so I'm not going to say you're not going to see it again. But as we continue to do our job and it's large, we'll call it out.

That's helpful. And then [Sydney] operational seemed -- I know it's early but can you sized the opportunity of what the streaming app may mean? And how to think about that from a cost side, royalty and otherwise?

Well, it is early. And to take a step back, what we've done with our on-demand service, first and foremost we built it internally so I think you should all be aware of that. And to put it in perspective in terms of what it is and is not, this is really -- think about this as really radio plus and that's why it's got the name.

We're reinventing live radio and for the first time ever we're taking radio and we're adding demand functionalities that improves the radio experience. And unlike other services, so when you think about this, I know you're probably trying to compare with other services out there, think about this as a service that can only approach on demand much different than the other services which can only approach on demand through a music collection or offering.

So from our standpoint and the fact that we have deals that we've already announced in music, Universal, Sony, all of them have been great partners and a bunch of other independent labels out there. So from that standpoint, I don't think you can see any real change to our margins or cost basis.

But back on what the service is and why you guys and why I think everybody should be excited about it, and we are excited about it, because it's the first time we can have goods and divide between the music, discovering music collection service. And you can listen -- you have a new song, a favorite song on the radio, for the first time ever they can instantly replay that song and even save it directly to a play list. Again, why we are so excited about this, we're the only ones that can do it because we're the ones that can bring demand functionality to the mass market and using these way from live radio.

Great. And if I could turn to the balance sheet for a couple, we have your pro forma cash balance post the Adshel sale at about $750 million, if my math is right. Can you talk about your comfort with your current liquidity level in light of your year-end cash needs, particularly the 5.5% note maturity? And how you think about liquidity through the first quarter of 2018? And relatedly, have you determined the use of the Adshel sale proceeds yet?

Hi, Avi, it's Brian. I'll address your question and if I miss anything I'm sure you can remind me of what I missed. I think that the first part of the question really has to do with our near-term liquidity situation. And I do think we have been very deliberate about actions that we've taken to ensure that we have sufficient liquidity in the near term.

Our broader goal, though, is to make sure that we have sufficient liquidity to fund the runway to our 2019 maturities. So it goes beyond just operational needs over the next quarter, maturity of 2016s, addressing the 2018s. And I think, in order to give some comfort with that, we need to continue the good work that we've done in exercising various liquidity levers. That would include the renewal of the ABL, which has a December 2017 maturity but rolls current in December of 2016. So I do think that we feel good today but still have some wood to chop and we'll continue to focus on that.

You did mention the proceeds from the sale of our Australian Outdoor business. Those proceeds are currently at Outdoor. Outdoor's made no determination on what to do with those proceeds. Of course it would be subject to the Board of Outdoor should they choose to do anything such as distribute those proceeds. So it is in the system, it is at Outdoor, but no determination ultimately has been made at this point in time with respect to those proceeds. Did I get your question?

You did. And you've touched on what would have been part of my next one, so I'll just go into it. Can you talk about your comfort on extending the receivables-based facility beyond the maturity of the 10% notes? And then on the consent that you, I think Rich referenced in the opening remarks, allowing for an incremental $500 million of senior borrowing capacity, Brian, can you confirm that it would allow you to borrow incremental amounts under your RBF as defined as senior debt and possibly at Outdoor as well?

Yes. First on the ABL, I'm fairly comfortable with our ability to renew that facility. It is a separate class of collateral, it's a different market. We've renewed it once already. I think our current investors have become very comfortable that the radio/media entertainment receivables that back that facility.

I do think there was a nuance you alluded to that we ought to think about a little bit. And that is as we renew that would there be springing maturities in front of some of our large debt towers? So I do think we want to resolve, or largely resolve the 2018 maturity. I don't think 2016 is in the mix. And we've done a lot of work. Of the $850 million of the original outstanding amount, we only have $347 million left. We need to resolve that anyway.

So I think ABL is definitely something that can be renewed. I do think that it would make sense to renew it once the 2018 maturity is addressed in one form or the other. That leads into timing. And I'll tell you that we strive to, around facilities going current, to renew them. I think in this case there's less stress around that because of our comfort with renewing it.

And I think the fact that we've got to make sure that we've addressed the 2018s before we go out with that renewal. So that's the issue on the ABL. There was a second part to your question that I'm not sure I remember.

I threw a lot in there. If you could talk about the consent that I think Rich highlighted to everyone in his opening remarks, that (multiple speakers).

Yes, I do remember, thanks, Avi. That's correct. Borrowings under the ABL are senior indebtedness. So getting the additional $500 million of capacity under the 2021 notes does enable us to borrow more under the ABL.

Put another way, the most restrictive covenant governing borrowing of the ABL is no longer the 2021 note indenture. It is actually the borrowing base now. So we did free up capacity there.

And that consent and that amendment enables us to borrow additional senior debt wherever in the capital structure it is. We've talked about the ABL, but it could be senior notes at the parent or at the subsidiaries.

Okay. I'm going to leave it with this, if I can. You talk about your platform often. MSG has made investment in Town Square, small size, very different platform perhaps. But can you talk about the strategic value, Rich, that you and Bob see to your event in radio asset base?

Sure, Avi. Just think about all of our events whether we do approximately 20,000 events a year and they range in everything from the major events that many of you on this call are aware of, which is the iHeart Music Festival to the event we just had last weekend which is the iHeart Latina that I commented on. Really the summary is that they continue to be an important part of our embedded sales strategy in the Company.

They have a positive impact from an advertising standpoint. A number of our very large advertisers now originally started with us advertising our events and then expanded their relationship in terms of the year-round basis. And so that's great, positive relationship on all the consumers relationship.

And finally, they provide a great promotion and brand-building opportunities for our station. And so we wind up leveraging these events as a significant differentiator, as I just pointed out, on sales, branding, promotion. And they continue to drive revenues and they're profitable.

I mentioned it's interesting just go back to what I highlighted in the script and just pointed out again, the sixth annual iHeartRadio Music Festival in Las Vegas in September, third weekend every year, it'll be the third weekend again next year in September, we generate close to $11 billion social impressions. And that's nearly 50% more than last year's event and more than double the number of social impressions which I commented on in the script, in my opening remarks, for the 2016 Big Game halftime show.

And as we (inaudible) back to the iHeart Music Awards, this year the first week -- and not this year, being 2017, I'm sorry. And last year we are at April, the end of March, we had 115 billion social impressions, which is about three times the size of the Academy Awards and about four times size of the Grammys. And the social impressions are a great indicator of how engaged our audience is. That's what you should take of those.

I think when you take a step back, take all the facts I gave you, look at our results, look at our advertising base, look at who our advertisers are and where they started from, it continues to be a cornerstone of who we are as a Company, and will continue to be.

Okay, thanks.

Jason Kim, Goldman Sachs.

Okay, great, thank you. Starting off, again, on the margin side. On the corporate expense, that line item was actually a little bit higher than what we had in our estimates. Anything going on there in terms of one-time impact? And how should we think about that in the corporate expense item going forward?

Jason, thanks for the question. Nothing in particular. Again, we had some variable expenses related to compensation plans. We had some higher employee healthcare cost benefits. And we had some higher professional fees. But nothing in particular that I would call out.

Again, we continue whether it's still Avi's earlier question, whether it's the question you also talked about with our new on-demand service, and as I said we developed it internally, whether it's the corporate expenses, they continue to emphasize, we are laser-focused as I tell you and I think any of our 20,000 employees in this Company will tell you, we're laser-focused on financial discipline and we'll continue to be.

Okay. And then on the Australian Outdoor business that was intra-quarter, did you disclose what that margin profile was for that business? Is it similar to what CC International is as a whole?

No, I don't think we've broken out -- the answer is we have not broken out. We don't break out any of that individual countries and territories of what the margin profile is of the business. No.

Okay. The a couple questions for Brian. I'm going to follow up on the liquidity question from a little bit more of a nuanced angle. In terms of the cash that is sitting on your consolidated balance sheet, how do you assess the amount of cash that is in CCO versus at the parent level, as you think about your liquidity needs and then some of your debt maturities becoming current on the balance sheet?

Do you actually have to move the cash to parent well ahead of time? Or is it having an amount of cash at various entities, including CCO, still okay for the time being as you think about the current liabilities and the year-end-related activities from an annual audit perspective?

Again, the cash at Outdoor, even though iHeart is a 90% owner of Outdoor, Outdoor is a separate entity, has separate governance, has a separate Board, has independent Directors. So I, as treasurer of iHeart or an auditor, I don't think it automatically look to cash at Outdoor and say that's readily available liquidity to the parent.

That being said, we are 90% owners and so do have a claim on that cash. But again, without the Board having declared a distribution, or if the cash is not swept up to the inter-company note agreement, I don't think, as a liquidity manager, I don't want to speak on behalf of the auditors, but as somebody looking at from an audit perspective, that cash can be absolutely counted on until it becomes available to the parent.

So we have to make sure that we have other liquidity levers that we can look at, can exercise upon and stay focused on the liquidity at iHeart. And that really includes cash on iHeart's balance sheet, in iHeart's back account, or available under iHeart credit facilities.

Okay. And then just one housekeeping question. If I remember correctly in the fourth quarter of last year, the international business had a $11 million expense for some accounting related stuff. So we should think about that as a comparison issue that we think about fourth-quarter EBITDA for international business?

Yes, that was unique and should not recur this year.

Okay, sounds good. Thank you.

David Phipps, Citi.

Hi, thank you for taking my questions. We've gone through a couple of questions and maybe you can talk a little bit about the Australian asset sale. Did you consolidate 100% of the sales and EBITDA within that business?

Yes.

Okay. And then is there anything strange about the October 24 date? Is that about a normal half quarter? Is there any political, anything unusual going on in the sales from that business?

No.

Okay. And could you talk a little bit about some of the -- I get a lot of investor questions about iHeart potentially raising debt at Broader Media. Can you address that?

Sure, I think the way to think about it is the Company continues to look at and consider all of our various liquidity and liability management opportunities. We have value in the unrestricted subsidiary Broader Media and as we think about liquidity and liability management opportunities, that would include using that value in one form or another to execute a transaction.

Fair enough. Another question I'm often asked is are you able to dividend the proceeds of the Australian asset sale out of CCO at this time?

I talked about the Board has to make the decision. You may be talking about a contractual limitation.

Yes.

We have contractual capacity. There is sufficient RP capacity at Outdoor to make the distribution, should the Board so determine.

Okay, fair enough. And then finally, could you state what your plans are for the 5.5% notes due in 2016? Are you going pay them with cash? Are you going to try to refinance them?

I think we're going to preserve all our options and do what's best for the Company. I know we're getting close to maturity. I know a lot of folks would like to know definitively what we're going to do. But that's a lot of liquidity and so the Company wants to preserve its options. We won't close options off until we actually have to.

Don't mean to be cryptic here, but we continue to look at all the things that we can do with respect to all our note maturities and if we can preserve liquidity, we will. If it doesn't make sense to do so then we will do what's best for the Company.

Okay. And then finally, back on the radio margins, was there anything unusual about the radio margins and political ads to the radio margins in the quarter materially? Or should we expect a little bit of that you've taken out some core costs out of your radio business at this point?

There's nothing, I'm just thinking about what I've already said a couple times in previous questions. As I mentioned earlier, again, we continue to focus on the discipline on radio margins. We did have some renegotiations of some contracts, negotiations of contracts, which we always do the quarter.

This quarter we had a little bigger benefit than we normally have so we called it out separately. You should not expect to see that type of benefit going forward. There's nothing particularly special about the political margins overall in the quarter, no.

All right, thank you. Those were my questions.

Lance Vitanza, Cowen.

Hi, thanks for taking the questions. I think I have two. The first is back on the contract renegotiations that gave the big cost benefit, could you talk about what buckets of expense those were associated with, was it personnel, network, occupancy? Any color there would be helpful.

And then my second question would be if you could provide some granularity around network revenues that look like those were strong, stronger than we might have expected, and I'm trying to put that in context with Cumulus's report last night that suggested that despite their comping down on network, that they thought they actually took some share, which suggests that the overall industry is contracting. And if you could comment on that, I would appreciate it.

Sure, thanks, Lance. On the first one, no, I'm not going to share any more details on the contract renegotiations. And again, quite frankly, with a Company of this size and scale from a revenue basis, earnings basis, an employee basis, we are always renegotiating contracts within quarters. As I said, this one happened to be we had one that was a little bit bigger, but we're always negotiating contracts. It's kind of a way of life.

With respect to the revenues and broadcast, just back to what I said in my opening remarks, and I won't comment on Cumulus, they'll comment on their own business, but we had growth in broadcast, radio and digital advertising. That was driven, as you pointed out, by our network business. And really, if you look at it, and I think I highlighted earlier, the traffic and weather business and the premier networks and the patient business, as well as higher revenues related to our events for the iHeart Music Festival. That's really what drove everything.

And just as a reminder, premier, and we talk about political, but we do have the industry-leading talk lineup of national and syndicated properties. And they clearly benefited from the political season and everything that went on. We've got Rush and we've got Sean Hannity and we've got Glenn Beck and we've got a big range of nationally syndicated talk personalities. And we saw the benefit of that this quarter.

Got you. Thanks, that's helpful, appreciate it.

Aaron Watts, Deutsche Bank.

Hi, thanks for getting me in. One radio, on Outdoor question. I'll start with Outdoor. Looking at Americas Outdoor, I think you remarked that national sales were a weaker spot, in part owing to the Olympics impact. That's been a problem area in the past. How comfortable are you that in 3Q it was tied to the Olympics and not lingering issues with customers?

Thanks for the question, Aaron. As an overall comment, and I'll tell you in general for advertising for Q3, the Olympics clearly had an impact for us. Quite frankly, probably a bigger impact than we thought, particularly in the month of July. And if you looked at our results on a monthly basis, July was the weakest month of the three for the quarter. And August strengthened significantly from July and then September performed nicely also.

But it was a combination of the Olympics and then you couple that with the uncertainty which I commented on and I think you probably heard from a lot of other companies commenting this week, the election outcome. And clearly advertisers, at least our belief is that advertisers were holding back.

And then when you turn specifically to your question on US Outdoor, we continue to be pleased with the progress we're making on US Outdoor, particularly on the local business. We haven't seen any change, to hit your question head on, to the fundamentals, as our business, if you looked at where I was looking for the full year not just the month or the quarter, the full year continues to perform well.

The national business was softer this quarter than it was the first six months of the year. And as I mentioned we really attribute that to the presidential election campaign uncertainty and the Olympics. But overall, we think the business and the Management Team continues to perform exceedingly well.

Okay, that makes sense. Then on the radio side, I was curious if you have any data showing how many of your 92 million iHeartRadio users are also traditional terrestrial listeners? I suppose I'm asking if iHeartRadio is complementary to your terrestrial offerings or a substitute, and what financial impact that could have one way or the other.

I think the evidence here is, as I said, we have, if you go back to, again, some of the opening remarks and some of the things you heard me talk about, we reach 269 million people on a monthly basis. We're the largest reach medium in the United States, we're bigger than Google, we're bigger than Facebook.

We have got 92 million, as you pointed out, registered users. So about a third of our broadcast audience also registers for digital. But in total, it's about 5% of our listeners overall. But remember, all of digital is only about, all of digital, whether it's Pandora, Spotify, any of the digital services, only total about 10% of listening.

But most importantly, and I believe I commented this earlier also in the script, it's additive. Because if you look at it, broadcast listening in the third quarter this year was up about 6% on a year-over-year basis. So we're seeing it's at an all-time high. As I also like to point out, I think in the last year or so, the number-one selling media in the United States, which most people don't focus on, is headphones.

So as I would say, don't take my word for it, just walk down the street in whatever major city you're in and you'll see people, what do people have, they have got headphones. As a reminder, there's 1 billion, 1 billion, radios in the United States and still 93% of millennials are listening to radio. And 88%, 89% have smart phones. I think it's about 75%, 77% watch television. And then when you go to 15 to 24 year olds, it's about 50% watch ad-supported television.

So this industry has never been in better shape. Our optimism for the future about radio has never been higher. And our big challenge and big opportunity, we continue to be severely under-monetized. Even with our great financial results, we're still providing a great value to the advertiser and that's really where our upside is.

Thanks, Rich.

And with that, I would like to thank you all for joining us today and look forward to speaking to you all soon.

And also, this is Eileen, I'll be available as well as Brian to take your calls during today or tomorrow if there's any questions that we weren't able to answer on the call today. Again, thank you very much. Goodbye.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation, for using AT&T Executive Teleconference Service. You may now disconnect.