Clear Channel Outdoor Holdings, Inc. (CCO) Q3 2016 Earnings Report, Transcript and Summary

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. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] And 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 I, LLC; iHeartCommunications, Inc.; Clear Channel Outdoor Holdings, Inc.; and Clear Channel International B.V. 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 I, LLC; and 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 of our performance and represent management's current belief. There can be no assurance that management's expectations, belief or projections will be achieved, or that actual results will not differ from expectation. 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 the pacing data, it reflects orders booked at a specific date versus the 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 result on a GAAP basis as part of our earnings press releases and the slide presentation, which can be found on the Investors 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 view 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 iHeartRadio 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 build on the strength and power of our broadcast radio and outdoor assets, both of which benefit from the continuing out-of-home trends and 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 volume platforms and research analytics tools. Our investments are enhancing all our businesses. Allowing us to use our assets for marketing and advertising partners, while will maintaining our tight operating and financial discipline. And 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 number one for reach media in the U.S. Radio is also the leader among millennials, ages 18 to 34 were radio's reach is 92% versus 89% for smartphones with TV a distant third at 77%. And 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 was 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 for Nielsen audio, and the average daily time spent listening to AM/FM radio was up in the first and second quarters this year as compared to the same time period last year. At iHeartMedia, our broadcast radio stations achieved an all-time high in the U.S. 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 U.S. as well as any other media or outlet including TV. And 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 platform as a fully integrated solution for our marketing and advertising partners. In a major step forward as a multiplatform 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 playlist 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 and 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 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 over the service has the assets to offer. And are ready months ahead of our launch, iHeartRadio 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 including some of the biggest names in music across all genres with performances by You Tube, Sting, Drake, Britney Spears, Sam Hunt, Twenty One Pilot, 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 sides of the festival. And 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 two and half 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 and 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 radios weekly reach among Hispanic adults and 97% the highest of any demographic, this new alliance recognize the increasing importance in size of U.S. Hispanic population both Spanish and English speaking. And a build on Santos high profile within the Latino community as a top-rated on-air talent trusted source, social immediate influencer, content creator and community spokesperson and leader. And 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 a clear channel outdoor, we are building the kind of data rich automated problematic platforms that enables us to rightfully take our place in the forefront immediately. Our audience size and ease of programmatic buying give our company unique position with advertises in both radio and outdoor and we anticipate that we will open up digital revenue streams as well. And both Americas International Outdoor, we continue to realign our resources to expand our 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 introduce 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. And as of September we 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 capitalize on the footprint of our portfolio of assets in the U.S. 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 U.K., we've announced Trace, a tool that tracks consumer purchase journey and allows both media planners and advertisers to explore how best in case their target audiences at the right time in the right place with the right message. And so we are confident that are core strategies will make the most of power of audio, the power of outdoor, the power of social, the power of data, the power of mobile and the power of national and local brands, as well as our industry leading personalities. And now let's turn to slide four 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 result adjusting for foreign exchange and excluding the impact of the nonstrategic 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 I iHeartMedia and International Outdoor offset by decline at Americas Outdoor attributed to the impact of the nonstrategic 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 of 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 segments financial performance later in this presentation. Now I'd like to review our key non-financial highlights, moving to slide number five. 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 U.S., that is more than even Facebook or Google have in the U.S. 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, and our downloads and uploads surpassed the 1.1 billion at quarter's end. As you know, we host St. Paul 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 and 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 is 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 had 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 in 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 TruTV and simulcast on iHeartMedia stations nationwide and iHeartMedia Radio. Turning to Outdoor on slide six. At both Americas and International Outdoor, we've 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. And our investments in innovative digital technologies provide the flexibility and create solutions our marketing partners need to reach consumers. This quarter, we installed over 900 new digital displays for an end of quarter total of 1,082 across 20 markets in North America and over 9,000 digital displays in our international markets. Americas Outdoor's continue 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've secured new contracts at Roanoke-Blacksburg Regional Airport in Southern Virginia, and the Punta Cana International Airport in the Dominican Republic. In the U.K., we have announced that we'll begin converting 500 telephone boxes in London we bought last year into brand new phone boxes featuring Wi-Fi, interactive welcome maps and pay phone services. And International Outdoor took over the rights to marked more than 800 display sites in the CERN Switzerland. Now let's review our segment financials starting with iHeartMedia on slide seven. 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 a network businesses including our traffic and weather business and our Premiere Networks' 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. And as other companies have stated, we feel the Olympics had an unfavorable impact on revenues in the quarter. Although, political is 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've had great traction with Senate Congressional Statewide Ballot campaigns, Presidential ads 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. And Premiere Networks', which include an industry leading talk lineup of nationally syndicated properties benefited from tumultuous political season, and the success of our events including the iHeartRadio Music Festival held in September continue to be an important embedded part of our sales strategy. The advertising categories were the strongest year-over-year dollar growth in the quarter included political, medical and healthcare, entertainment, food and beverage and homebuilding, 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 high content of programming costs related to increase revenues, events and continued investments in our sales team partially offset by 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 certainly don't include everything we do as a company. I 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 later than we expected. And 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. But with the election now over we hope this uncertainty is now behind us. Now on to slide eight, 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 America 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 contributed to increase 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 upfront cost from the new contracts. As for the fourth quarter pacings, which again reflect just one point in time and are adjusted for the sales of the non-strategic markets in foreign-exchange, they are up 1.2%. Turning to slide nine on 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 including 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 U.K. Expenses are down 0.6% on a reported basis and up 3.2% after adjusting for foreign exchange in the sale of Turkey. The increase in expenses is primarily attributed to higher site lease and production expense attributed to increase revenue. Operating income was up 71% included in operating income is $4.5 million decrease in depreciation and amortization, due to do the disposal of our businesses in Turkey and from intangible assets 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, the joint venture partner APN News and Media for a purchase price of approximate 24 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 inherent level of volatility week-to-week. As we've 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'd 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 generated $4.9 million in revenue 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 of 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. Majority of the capital is being invested in our international markets 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 value of our business, we continue to explore opportunities to strengthen our capital structure and provide us with additional liquidity. As we've said previously, our overall key objective is to position the company for long-term growth and success and we are working deliberately to advance in a number to initiatives us achieve this goal. For example, on October 4th, we announced the successful completion of [indiscernible] to holders of outstanding 14% senior notes in 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 30th, iHeartMedia Inc. 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 in 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 30th, 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 30th 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 the senior leverage ratio 4.0 times and consolidated leverage ratio at some 7.5 times. The Largest use of cash for iHeartMedia during the nine-month ended September 30, was interest expense which totaled $1.435 billion. Clear Channel Outdoor used cash of $272 million for interest and paid dividend totaling $755 million. So before opening 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 and we're 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 underutilized and undermonetized by advertisers and we're taking steps to change that, because one of our biggest opportunities is to more effectively monetizing our existing portfolio of assets. In a world of declining and fragmented options, the mass market reach of both radio and outdoor creates unique opportunity for our company. And we are more mobile than that traditionally considered to be mobile, and our social footprint makes us one of the leading social media companies in the U.S. that doesn't 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 U.S. All of these platforms and our ability to execute cross 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.

Thank you. [Operator Instructions] We will go to Avi Steiner of JPMorgan. Please go ahead.

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, as I saw the expenses came better than we were looking for in the iHeartMedia side. What was behind that? And you noted on – in your remarks and in the release about the change of terms in connection with contract negotiations, what is that, and 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's heard is, the constant focus on expense management, financial discipline and they're going to be -- and we always has a company just of our size and scale and commercial relationships for always renegotiating contracts, so again, just doing our jobs, renegotiating some contracts in this quarter. We've had some financial benefit for those renegotiations. That's what you see in the numbers in terms of decreasing expense. That's a little bit of an operation. 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 look kind of what the margins have been in the first six months of the year we're going to continue to focus to expand those margins. But we did get a larger benefit which is why called it out this quarter then we've had in previous quarters. But again, we're always negotiating contracts until, I can say, you're not going to see it again, but just as we continue to do our job and then Scott will call it out.

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

Well, look, it is early. And just 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 just to put it in perspective in terms of what it is and is not, this is really, think about this is really radio plus and that's why it's got the name. And 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 get public services out there, think about this is a service that can only approach on-demand much different than the other services, which can only approach on-demand to a music collection or offering. So from our standpoint and the fact that we have deals that we've already announced, during music Universal, Sony, all of have been great partners in a bunch of other independent labels out there. So from that standpoint, I don't think you'll see any real change to our margins or costs basis. But back on what the services and why you guys like the others should be excited about it and we're excited about it, because it’s the first time within goods and divide between the music, discovering music collection service and you can listen to a new song that's on the radio for the first time ever that you can instantly replay that song and even say that directly, to playlist. And again, while we're so excited about this, we are the only ones that can do it because we're the only ones that can bring demand functionalities to the mass market in the ease of use way from Live radio.

Great. And then if I can 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 year end cash needs, particularly the 5.5 note maturity? And maybe how you think about liquidity through the first quarter of 2018? And relatedly, have you determined 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 miss. I think the first part of the question really has to do with our near-term liquidity situation, and I do think we've 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 toward 2019 maturity. So it goes beyond just operational needs over the next quarter, maturity of 2016s addressing the 2018, and I think in order to get 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 as of December 2017 maturity, but also occur in December of 2016. And so I do think that we feel good today but still have some way 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 Outdoor. Outdoors made no determination on what to do with those proceeds and, of course, it would be subject to the Board of Outdoor, should they choose to do anything such as distributor those proceeds. So it is in the system, it is Outdoor, it is at Outdoor, but no determination, ultimately has been made at this point in time with respect to those process. 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 receivable base facility beyond the maturity of a 10% notes? And then on the consent that you think, I think Rich reference in the opening remarks allowing for an incremental 500 million of the senior borrowing capacity, maybe Brian, can you confirm that it would allow you to borrow incremental amount under your RBS as defined as inter-debt and possibly at Outdoor as well?

Yeah. So, 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 renewed it once already. I think our current investors have become very comfortable that the radio -- media entertainment receivables that backed up facility. I do think there was a new once you alluded to that we have 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, of the original outstanding amounts, we only have $347 million left. We need to resolve that anyway. And so I think the 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 and that kind of 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 just because of our comfort with renewing it. And I think the fact that we've got to make sure that we've address the 2018 before we go well with that renewal. So that's the issue on the ABL. What was the second part of your question I'm not sure I remember?

I through a lot in there, but if you could talk about the content that I think Rich highlighted to everyone in his opening remarks that --

Yeah, I do remember. Thanks Avi. Yeah. That's correct. I mean borrowings under the ABL are senior indebtedness. And so getting the additional $500 million of capacity under the 2021 notes does enable us to borrow more under the ABL. I'll put another way, the most restrictive covenant governing borrowing the ABL is no longer the 2021 notes 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 subsidiary.

Okay. I'm going to leave it with this if I can. You talk about your platform often. MSG has made investments 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 radio asset base?

Sure, Avi. Just think about all of our events where there will be approximately 20,000 events a year and they range in everything from the major events that many of you on this call know which is the iHeart Music Festival, to the event we just had last weekend which is the iHeart [indiscernible] that I commented on. Really kind of 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 advertiser's standpoint and number of our really large advertisers now originally started with us advertising in our events and then expanded their relationship in terms of the year around basis, and so that's great, positive relationship on all our 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 on sales, branding, promotion, and they continue to drive revenues and they are profitable. I mentioned its interesting just go back to what I highlighted in the script and just to point it out again, the Sixth Annual iHeartRadio Music Festival in Las Vegas on September 3rd week in every year -- of the third week 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 in number of social impressions were I commented on the script for the -- in my opening remarks for 2016 they gave halftime show. And as we lined about the iHeartRadio Music Awards that this year, the first week and last year it’s been -- 2017, I'm sorry -- and last year at April, the end of March we had a 115 billion social impressions which is about three times the size of the Academy Awards and about four times the size of the Grammys. And the social impressions are just a great indicator of how engaged our audience is and that's what you should take it out. So I think when you take a step back, take all the facts I gave you and look at our results, look at our advertising days, look in who our advertisers are, where they started from, it continues to be a cornerstone of who we are as the company and will continue to be.

Okay. Thanks.

Thank you. Next we will go to Jason Kim, Goldman Sachs. Please go ahead.

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

Yeah. 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 due to all these earlier question, whether it's the question. You also talked about with our new on-demand service and as I said we're developing internally, whether it's corporate expenses or discontinued effort size, 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 will continue to be.

Okay. And then on the Trillium outdoor business that was still in your quarter, did you disclose what the margin profile was for that business? Is it similar to what CC International as a whole?

No, I don't think we broken out. The answer is, we have not broken out and we don't break out any of our individual countries and territories, about what the margin profile is in a business. No.

Okay. And then, maybe a couple of questions for Brian. So 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 to 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 just having the amount of cash out there as entities, including CCO, still okay for the time being as you think about the current liabilities and year-end related activities from an annual audit perspective?

Well, look, again, the cash at Outdoor, even though iHeart is a 90% owner of Outdoor. Outdoor is a separate entity, it's has separate governance, has separate board, it 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 we 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, yeah, I don't think as a liquidity manager, and 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 bank account are 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 that we should think about that as a kind of a comparison issue that we think about fourth quarter EBITDA for international business?

Yeah. That was unique and should not recur this year.

Okay. Sounds good. Thank you.

Thank you. Next we'll go to David Phipps, Citi. Please go ahead.

Hi. Thank you for taking my questions. Going through a couple of questions and may be you could talk a little about the Australian asset sale. Did you console data 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 half the quarter that we've been – a normal half quarter, is there any political or anything unusual going on 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 the transaction.

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

We talked about the Board has to make the decision.

Correct.

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 determined.

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

Well, look, 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 and we won't close options off until absolutely we have to. So don't need 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 anything – if we can preserve liquidity we will. If it doesn't make sense to do so then we're going to – we'll 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 ad to the radio margins in the quarter materially, or should we expect a little bit of – that you've taken out some core cost out of your radio business at this point?

Well, I'm – there's nothing – I'm just thinking about what I've already said a couple of times in the 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 some contracts, which we always do in 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 are my questions.

Thank you. And we'll go to Lance Vitanza with Cowen. Please go ahead.

Hi, thanks for taking the questions. I think I have two. The first is, just back on the contract renegotiations that give the big cost benefit, could you just talk about what buckets of expense those were associated with personnel, network, occupancy? Any kind of color there would be helpful. And then my second question would be, if you could provide some granularity around network revenues, it 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 they thought they actually took some share, which suggests that the overall industry is contracting, and if you could comment on that I'd would appreciate it?

Sure, thanks, Lance. So, on the first one, no I'm not going to share any more details on the contract renegotiations, and again quite frankly with the company of the size and scale from the revenue basis, earnings basis, an employee basis, we are always negotiating contracts within quarters. As I said this one happened to be, we have one of the 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 [indiscernible] they will come on their own business, but we had growth in broadcast radio and digital advertising that was driven as you pointed out by network business. And really, if you look at it, and I think I've highlighted earlier, the traffic and weather business and the Premiere Networks' in the patient business as well as higher revenue related to our events for the iHeart Music Festival. Even that's really what drove everything. And just as a reminder Premiere, we talk about political, but we do have the industry leading talk lineup of national indicative properties excuse me and they clearly benefited from the political season and everything that went on. We've got Rush and we've got show in shorthanded and we've one bank and we've got big range of national syndicate talk personalities and we saw benefit of that this quarter.

Got you. Thanks. That's helpful I appreciate it.

Okay.

Thank you. And we do have something from Aaron Watts, Deutsche Bank. Please go ahead.

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

Yeah. Thanks for the question guys. So as an overall comment and I'll tell you just 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 a result of a monthly basis July was the weakest month for the quarter and August is strengthened significantly from July and then perform nicely also. But it was a combination of the Olympics and as we couple that with the uncertainty which I commented on and I think you probably heard from a lot of other company commenting this week on the election outcome and clearly advertisers at least our belief is that advertisers were holding back. And then we return specifically to your question on U.S. Outdoor, we continue to be pleased with the progress we are making on U.S. Outdoor particularly on the local business. We haven't seen any change I think really to hit your question head-on to the fundamentals as our business as you look at – we are always looking just the full-year not just a month or 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 attribute that to the Presidential Election campaign uncertainty and the Olympics. But, although looking at the business and the management team continues to perform exceedingly well.

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

Well, look, I think the evidence here it is, as I said, we have -- if you go back to -- again some of the opening remarks and some things you've heard me talk about, we reached 269 million people on a monthly basis with the largest reach within the United States, we are bigger than Google, bigger than Facebook. We've got 92 million, as you pointed out, registered users, so about a third of our broadcast audience also registers are 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 its Pandora's Spotify, any of the digital services only totaled 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 our listening is at an all-time high. I would also like to point out, I think, in the last year or so we've been number one seller in media device in United States which most people don't focus on is headphones and so I would say don't take my word for it, just walk down the street in whatever major city you are in and you'll see people -- lot of people have, they've got headphones. As I reminded there is 1 billion radios in the United States and still 93% of millennials are listening to radio and that 88%, 89% have smartphones. I think it's about 75%, 77% watch television and then we get the 15 to 24-year-olds its about 50% watch ad supported television. So this industry has never been in a better shape. Our optimism for the future about radio has never been higher and our big challenge and big opportunities -- we continue to be severely under monetized even with great financial results. Still providing great value to the advertiser and that's really where our upside is.

Thanks Rich.

And with that, I'd 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 is Brian to take your calls during today or tomorrow, if there's any questions that we won't able to answer on the call today. Again, thank you very much. Good bye.

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