Clear Channel Outdoor Holdings, Inc. (CCO) Q4 2016 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the 2016 Fourth Quarter and Full Year Earnings Conference Call for iHeartMedia and Clear Channel Outdoor Holdings, Inc. [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 fourth quarter and full year 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 fourth quarter and full year 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 the purposes of this call, we described the financial and operating performance of iHeartMedia, Inc. that also describes the performance of its subsidiaries, iHeartMedia Capital I, LLC, iHeartCommunications, Inc., and Clear Channel Outdoor Holdings, Inc. After an introduction and a review of the quarter, we will open up the line for questions. Before we begin, I would like to remind everyone that this conference call includes forward-looking statements. These statements include management’s expectations, beliefs and projections about performance and represent management’s current beliefs. There can be no assurance that management’s expectations, beliefs or projections will be achieved or that actual results will not differ from expectations. Please review the statements of 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 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 provide schedules that reconciled these non-GAAP measures with our reported results on a GAAP basis, as part of our earnings press releases and the earnings conference call presentation, which can be found on the Investors section of our websites, iheartmedia.com and clearchanneloutdoor.com. Please note, there are two earnings releases and a slide presentation are available on our websites, www.iheartmedia.com and www.clearchanneloutdoor.com and are integral to our earnings conference call. 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, February 23 and may no longer be accurate at the time of the replay. With that, I will now turn the call over to Rich Bressler.

Thank you, Eileen and good morning everyone. Thanks for joining us. We are pleased with our performance in 2016. Our consolidated revenues, operating income and OIBDAN were all up in the quarter and the full year. Over the past 5 years, our iHeartMedia segment has successfully transformed from a broadcast radio company into a multiplatform 21st century media and entertainment company, evidenced by our achieving 15 consecutive quarters of year-over-year revenue growth. We believe very few U.S. media companies have come close to that benchmark. In addition, both operating income and OIBDAN at our iHeartMedia segment were up in the fourth quarter and the full year. At Americas and International Outdoor, our results were impacted by the sale of certain markets and businesses. Excluding the impact of these sales and foreign exchange rates, revenues and OIBDAN for both Americas and International Outdoor were up in the fourth quarter and the full year. As you can see from these top line results, we are continuing to drive strong momentum across the company by investing in new digital technologies, creating innovative new products, focusing on data as a key asset of our businesses, interacting with our advertisers in new ways and aligning our industry leading assets around our most promising opportunities. Through our investments in our broadcast, outdoor, mobile, social, digital, live events data and programmatic platforms, we are building the scale necessary to compete in the world that is more and more defined by our advertisers do business in the digital edge. And we are well positioned to benefit from the favorable trends in consumer media usage and advertiser demand for mass-market reach, especially with the reach of television continuing to decline. In addition, consumers continue to spend more and more time out-of-home, which strengthened both our radio and outdoor businesses. It often surprises people that radio is the number one consumer reach media in the U.S., reaching 93% of adults over 18 compared to TV’s reach of 87%. And radio has maintained that reach for almost half a century. This story says basically the same with younger audiences, including millennials. In fact, among millennials, ages 18 to 34, radios reaches 92%, followed by smartphones at 89% and TV lagging in third place to 77%. Radios reach among teens, ages 12 to 17 is 95% versus live television, which has declined 86% and more than double Facebooks at 43%. This reach among teens and millennials is a great indication of the promising future of radio in contrast to other traditional media. And total broadcast radio usage is still growing, up 7% in 2016, year-over-year. At iHeartMedia, our broadcast radio stations reach over a 0.25 billion people over the age of 6 in the U.S. each month, greater than Google, greater than Facebook as well as TV or any other media outlet. That’s because radio is in the companionship business, whether it’s music, talk, news or sports, all of which includes strong on-air personalities, who connect with listeners, we are building the kind of close personal relationships with our listeners that no other media can match. In a time of enormous fragmentation brought about by technology and social media, radio was one of the few ways that bring people together as a community. To build on the power of this community experience, we deeply integrate our broadcast radio with its massive reach with our other media platforms, including iHeartRadio’s 96 million registered users, our social media with its 143 billion social impressions in 2016 and our more than 20,000 events annually. In fact, our national tentpole events have taken on an iconic status, such as the iHeartRadio Music Awards, the iHeartRadio Music Festival and the iHeartRadio Jingle Ball Tour presented by Capital I. For the second straight year, we partnered with Capital I to present the 2016 Jingle Ball Tour. Through this partnership, Capital I leveraged the full range of iHeartMedia’s assets from national and local radio to digital promotions and onsite event branding and capitalized on our iconic on-air personalities and social media to amplify all of the pop culture moments. And so we connect all the dots for our consumers as well as our advertising and marketing partners. Last month, we officially expanded iHeartRadio, our all-in-one streaming music and live digital radio service, to include two new on-demand subscription services, iHeartRadio Plus and iHeartRadio All Access, powered by Napster. This is an example of how we can add on additional products with small incremental cost and participating new revenue streams. With iHeartRadio Plus and iHeartRadio All Access, you can now just push a button to instantly replace songs from our live radio stations and save those songs directly to playlist. These are the only services that bridged the gap between radio discovery and music collections. Both of these new on-demand services are built around real radio music discovery. While other music services are based on a music collection experience descended from recorded music formats, such as LPs and CDs. The answers to prove our services, is radio. Turning to more of our industry-first initiatives, iHeartMedia and our Outdoor businesses are building out our data-rich analytics capabilities of our programmatic ad-buying solutions. These platforms simplify and enhance the ad-buying process for our advertisers, making it look and feel like buying digital advertising to them. Last spring, iHeartMedia started offering automated and data-infused ad-buying across our broadcast radio stations through sound point. Our programmatic solution that enables planning and buying at the scale of broadcast radio with the targeting and ease of digital. And in June, we launched the first programmatic private marketplace for digital radio in the U.S. that allows agencies and brands to access iHeartRadio’s inventory with the same capabilities. For both our digital and broadcast platforms, what’s most important to our advertising partners is that they can now buy specific audiences using our new smart audio data products. And we have built and launched the programmatic network marketplace for the broadcast radio industry, Expressway from Katz, for other radio companies to use. We have also been leading the development of data rich analytics capabilities and programmatic ad-buying solutions for our outdoor businesses. As you know, Americas Outdoor rolled out our data and analytics tool, RADAR in early 2016. Then in the fourth quarter, we launched the industry’s first programmatic out-of-home buying solution in the U.S. Our new programmatic buying platform taps into RADAR’s mobile data driven audience insights to give markets the unique ability to buy digital out-of-home inventory with the same sophisticated buying solutions that come to expect. And earlier this week, AdWeek named Americas Outdoor as one of the top mobile innovators of 2016, recognizing our groundbreaking work to launch RADAR and its integration into our new private marketplace programmatic buying solution. And just last month, International Outdoor became Europe’s first out-of-home media company to deliver a full programmatic ad-buying solution. The initial launch was in Belgium. And International Outdoor plans to continue the rollout of its programmatic capabilities across Europe, including a March launch in UK. Now let’s turn to Slide 4 and review our key financials. Before we get started, I want to remind you 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 markets and businesses we sold in 2016. We believe this improves the comparability of our results to the prior year. I will refer to these results as adjusted revenues and adjusted OIBDAN and I will refer to the direct operating and SG&A expenses as expenses. Overall, our business has performed well during the year, benefiting from our transformation into a digital and data rich company, built on the strength and power of our broadcast radio and outdoor assets. Starting with the fourth quarter, consolidated revenues increased slightly as compared to the prior year, with growth at iHeartMedia partially offset by declines at Americas Outdoor and International Outdoor, as a result of the markets and businesses we sold in 2016. Adjusted revenues increased 5%, with iHeartMedia up 4.5%, Americas Outdoor up 3.1% and International Outdoor up 6.2%. Operating income increased 41.1% and adjusted OIBDAN grew 6.4%. For the full year, consolidated revenues increased slightly, while adjusted revenues grew 3.4% with iHeartMedia up 3.6%, Americas Outdoor up 3.2% and International Outdoor up 2.2%. Operating income increased 30.9% and adjusted OIBDAN grew 6.1%. I will provide additional detail on these results as we discuss each segment’s financial performance later in this presentation. Moving to Slide #5, iHeartMedia’s key non-financial highlights, as noted earlier, iHeartRadio hit a new milestone of 96 million registered users at year’s end, an impressive 21% increase over 2015. Our total listening hours increased to 11% year-over-year. This is in addition to the increase in our broadcast radio usage. Mobile listening accounted for 74% of total iHeartRadio listening. And iHeartRadio’s cumulative downloads surpassed 1.3 billion, including updates, as of December 31. We also announced the coming integration of iHeartRadio to more devices across in-home connectivity, including Google Home and Samsung Family Hub, in addition to Amazon’s Alexa. And as I mentioned, we launched iHeartRadio Plus and iHeartRadio All Access as add-ons to our free iHeartRadio service. As you know, iHeartRadio has achieved its exceptional growth in registered users faster than any other radio or digital music service and even faster than Facebook. The growth was built on the strength of our more than 850 broadcast radio stations across the country and that strength is to a large part to the connection our listeners have with our industry leading personalities. Ryan Seacrest, for example, makes his broadcast radio presence on KIIS FM, LA, the cornerstone of his extensive entertainment presence. And other iconic personalities, from Elvis Duran on Z100 and the Breakfast Club on Power 105.1 FM in New York, the Big Boy on Real 92.3 Station LA, Enrique Santos on TU 94.9 in Miami and Bobby Bones on National’s WSIX-FM connect personally everyday with millions of listeners. On our talk stations, last year’s dramatic presidential campaign drove listeners to personalities like Rush Limbaugh and Sean Hannity increasing their respective ratings over 20%. All of these amazing talents are also syndicated reaching audiences nationwide and further extend their reach through other media platforms like podcast, social media and endorsements to build even stronger bonds with both our audiences and advertisers. Our tentpole events continued to contribute to our revenue growth, as I will highlight later in the presentation. In addition to providing great promotion and brand building opportunities for our stations, we are able to leverage these events as a significant differentiator from the sales, branding and promotion perspective to drive revenues. During the fourth quarter, we hosted the iHeartRadio Jingle Ball Tour, which included events in 12 cities. And the tour generated 11 billion social impressions, almost 3x the number of social impressions around this month’s Big Game Halftime Show. At the end of January, we hosted the second annual iHeart80s Party. It celebrates on the most beloved music icons of the 80s and was broadcast live on iHeartMedia’s Mainstream AC, Hot AC and Adult Hits radio stations nationwide. On March 5, we will be hosting the iHeartRadio Music Awards at The Forum in Los Angeles. It will be televised live across targeted networks on TNT, TVS and truTV as well as simulcast on iHeartMedia stations nationwide and iHeartRadio. And we announced that the iHeartCountry Festival, once again will be held in Austin on May 6, bringing together country music’s biggest superstars for the fourth straight year. It will be aired over iHeartCountry’s 145 broadcast radio stations nationwide that reach more than 98 million listeners aged 12 and over monthly. That makes iHeartCountry’s stations the largest country broadcast radio group in America. Turning to Outdoor on Slide 6, our digital investments continue to be a key driver of revenue growth for both Americas Outdoor and International Outdoor. We installed a total of 82 digital billboards in our North American markets over the full year, for an end of year total of 1,113 across 28 markets in North America. In our international markets, we installed almost 3,600 digital displays over the full year for an end of year total of more than 9,600 digital displays across all of our international markets. And as I pointed out earlier, we continue to expand our programmatic platform in Americas Outdoor’s most recent announcement of the first automotive programmatic out-of-home buying solution in United States. In the pilot campaigns, digital market as the media buys, we are able to target distinct audience segments and bid on digital outdoor advertising space, making the board smarter and easier to buy. And as I mentioned earlier, AdWeek named Americas Outdoor as one of the top mobile innovators of 2016. This incredible honor for the team recognized their first to market launch of RADAR, our third-party mobile analytics for planning, attribution, measurement and retargeting. Further, AdWeek honored how Americas Outdoor has integrated RADAR into its private marketplace programmatic solution that makes target audience segment buying possible on digital out-of-home in near real-time. In addition, at Americas Outdoor we extend our contract at the Nashville International Airport and at the Austin-Bergstrom International Airport. At International Outdoor, we became the first out-of-home media company in Europe, to deliver full programmatic ad-buying capabilities with the launch of our new service in Brussels in January. Their first iteration focuses on trading its digital inventory on automated guaranteed basis giving media buyers the ability to reserve a fixed buying of inventory at a fixed price. By offering solutions based on audience that are using buying tools and technology with which media buy is already familiar, International Outdoor programmatic solutions greatly simplifies the process of buying out-of-home. The next International Outdoor market of automotive buying capabilities will be the UK, where we are able to use our programmatic platform to leverage our extensive digital inventory. In International Outdoor businesses in France has renewed its contract in the City of Leon, the 7 years to operate out-of-home advertising across the city’s buses, bus shelters, tramway and metro. To be honest, metro system is the second largest in France after Paris. Now let’s review our segment financials. Starting with iHeartMedia on Slide 7, as I noted earlier, this is the 15th consecutive quarter of year-over-year revenue growth of iHeartMedia, an exceptional accomplishment given the overall radio industry’s performance as well as other media companies over the same time period. And it clearly demonstrates the success of iHeartMedia’s transformation into a leading 21st century multiplatform media and entertainment company. During the fourth quarter, iHeartMedia revenues increased 4.5%, up over 2%, excluding political. And once again, we outperformed the radio market as measured by Miller Kaplan. Growth in our broadcast radio and digital advertising business were driven primarily by political ad revenues. As we noted last quarter, although political spending was the significant contributor to revenue growth, it continued to be at level substantially below 2012 due to lower Presidential campaign spending. Other contributors to revenue growth in the quarter included trade and barter as well as events. As I just mentioned, our tentpole events are an important and better part of our sales strategy and the success of these events continued to drive revenues as they did in this quarter with the iHeartRadio Fiesta Latina and the iHeartRadio Jingle Ball Tour. The advertising categories with the strongest year-over-year dollar growth in the quarter included, in addition to political, homebuilding improvement, entertainment, media and all. Expenses increased 6.2% during the quarter driven in large part by increased programming and content costs, investments in national and digital sales capabilities as well as advertising and promotion. Operating income increased 2.1% and OIBDAN grew 2% in the fourth quarter. For the full year, revenues increased 3.6%. Excluding political revenues, revenue grew 2.5%. In addition to political revenues growth in our broadcast radio and digital advertising was driven primarily by our traffic and weather businesses and events as well as trade and barter. Expenses were up 2% for the full year. As you may recall, our third quarter expenses included the $33.8 million benefit resulting from the renegotiation of certain contracts. Operating income was up 7.4% and OIBDAN increased 6.3% for the full year. Now, let’s review our first quarter pacing for 2017. As you have heard me say before, these pacings are just a snapshot in time and certainly don’t include everything we do as a company. iHeartMedia’s first quarter 2017 pacings through the end of last week were up 2% compared to the first quarter of 2016, that included political advertising. Now on to Slide 8, Americas Outdoor Financials. In the fourth quarter, revenues were down 4.7% due to the 9 non-strategic markets we sold in the first quarter. Adjusted revenues were up 3.1% with our local businesses continuing to deliver strong performance. Our investments in digital boards continue to be significant contributor to our growth in the quarter as well as the new airport contracts in our Latin American operations, the categories that contributed the most to this growth included business services, travel and transportation, banking, and tech, some of the largest as well as emerging tech companies in using out of home illusive millennial audience. Expenses were down 2.8% in the fourth quarter due to the sales of the non-strategic markets. Adjusted expenses were up 4.2% due primarily to higher variable site lease expenses for the new airport contracts. Operating income was down 3% and adjusted OIBDAN increased 1.6%. For the full year, revenues were down 5.2% resulting from the sale of the non-strategic markets and foreign exchange. On an adjusted basis, revenues were up 3.2%, with growth attributed to digital boards as well as new airport contracts and higher revenues in Latin America. Expenses were down 4.2% for the full year due to the sale of the non-strategic markets. Adjusted expenses increased 3.4%, resulting primarily from higher site lease expenses attributed to increased revenues. Operating income was down 5.4% for the full year and adjusted OIBDAN increased 2.8%. In addition to the 9 non-strategic markets we sold in the first quarter of 2016, we recently closed the sale of our Indianapolis market for $41 million in cash and certain assets in Atlanta. As for our first quarter pacings for 2017, which again reflect just one point in time and are adjusted through the sales of the non-strategic markets and foreign exchange, they are up 1.2%. Turning to Slide 9 and our International Outdoor financials. As you know, in October, Clear Channel Outdoor International sold its interest in Australian out-of-home media company, Adshel, to our joint venture partner APN News and Media. So, our reported results in the fourth quarter were impacted by this sale, with revenues declining 7%, but adjusted revenues increased 6.2%. The increase in revenues was driven in large part by investments we have made in our digital network combined with new contracts in Spain, China, Sweden, Italy and Belgium. This was somewhat offset by low revenues in the UK, due to the London bus shelter contract not being new. Expenses during the quarter were down 10.8% on a reported basis and up slightly on an adjusted basis. As you may recall, in the fourth quarter of 2015, we recorded a $14 million correction to our results in the Netherlands. Excluding this correction, our adjusted expenses would have been up about 6% due primarily to higher site lease and production expenses related to higher revenues. Operating income increased 12.6% during the fourth quarter and adjusted OIBDAN grew 25.2%. Excluding the adjustment in 2015 that I just mentioned, adjusted OIBDAN would be up about 7%. On a full year basis, revenues declined 2.3% as a result of the sale of our businesses in Turkey and Australia as well as foreign exchange. Adjusted revenues increased 2.2% due to growth across most of our markets, including China, Italy, Spain, Sweden, France and Belgium resulting primarily from new digital assets and new contracts. This growth was partially offset by the loss of the London bus shelter contract. Expenses for the full year were down 3.4% and adjusted expenses were up less than 1%. Operating income increased 21.8% and adjusted OIBDAN grew 8.4%. As I noted, the full year 2015 results were affected by an adjustment related to prior periods in the amount of $11 million. Our 2017 first quarter pacings for International Outdoor were up 4.5%. Once again, pacings are at a point in time metric. And as you would expect, there is an inherent level of volatility week-to-week, the pacing that has been adjusted to exclude the businesses we sold in 2016. Included in our appendix on Page 24 are the revenues and expenses for each quarter of 2016 for the businesses we sold in 2016. Before we go on to the rest of the slides, I would like to make a few comments on CCIBV’s results. For the fourth quarter, CCIBV’s consolidated revenues totaled $304 million. The impact from foreign exchange rates was $16 million. CCIBV’s operating income in the quarter was $168 million as compared to $39 million in the prior year’s quarter. For the full year, CCIBV’s consolidated revenues were $1.169 billion. The impact from foreign exchange was $35 million. CCIBV’s operating income for the full year was $101 million as compared to $24 million in the prior year. On to Slide 10, this slide highlights the items impacting comparatibility of our results. I won’t read through all the numbers. But as you can say, our International Outdoor operations were affected by foreign exchange fluctuations of about 5% from both revenues and expenses in the fourth quarter and about 3% for both revenues and expenses in the full year. And as I have said, both our Americas and International Outdoor businesses were impacted by the sales of certain markets and businesses over the year. In addition, political revenues had significant impact on the revenues reported by iHeartMedia and Katz Media. Turning to Slide 11, capital expenditures for 2016 totaled $315 million, slightly higher than last year’s $296 million. As you can see on the slide, the majority of the capital is invested in our Outdoor businesses and primarily in the international markets to fund our investments in digital and new contracts. In 2017, we expect capital expenditures to be in the range of $300 million to $325 million. Moving to debt on Slide 12, while staying focused on maximizing the value of our business, we continue to explore opportunities to strengthen our capital structure. As we have said previously, our overarching objective is to position the company for long-term growth and success. We are working deliberately to advance a number of initiatives to help us achieve this goal. Earlier this month, we completed our exchange offer to holders of iHeartCommunications’ 10% senior notes due 2018 for the newly issued 11.25% priority guaranteed notes due 2021. We have exchanged $476.4 million in notes including $241.4 million held by iHeartCommunications subsidiaries. As of December 31, iHeartMedia Inc.’s debt was $20.4 billion $356 million lower than year end 2015. The decline is due in large part to the purchase of $383 million aggregate principal amount of iHeartCommunications’ 10% senior notes due 2018 for $222 million in July 2016. iHeartMedia’s consolidated weighted average cost of debt was 8.5% as of December 31, consistent with the prior year. Cash interest expense for the full year of 2016 was $1.8 billion and we expect cash interest expense in 2017 to be $1.7 billion. Now, I will turn to our balance sheet information and the debt ratios on Slide 13. iHeartMedia’s consolidated cash totaled approximately $845 million at December 31. Our secured leverage ratio was 6.6x with total leverage of 11.4x. Clear Channel Outdoor ended the year with $542 million in cash with its senior leverage ratio of 4x and its consolidated leverage ratio at 7.8x. The largest use of cash for iHeartMedia in 2016 was interest expense, which totaled $1.8 billion. Clear Channel Outdoor used cash of $368 million for interest and paid dividend totaling $756 million. Before opening up for questions, I want to thank you again for joining us this morning. We continue to build our momentum as a leading 21st century multiplatform media and entertainment company. We made great progress in developing industry leading data rich analytics capabilities and programmatic ad buying solutions for both our iHeartMedia and Outdoor businesses and we continue to create new products both consumers and our advertising partners such as adding our new on-demand services to iHeartRadio. And throughout 2016 both Americas and the International Outdoor focused on winning new contracts in our core markets, while building comprehensive digital solutions for our marketing and advertising partners. As we told you before, with radio’s strong and consistent performance with the consumer and outdoor’s continuing leadership as a mass reach vehicle we believe that both radio and outdoor underutilized and under-monetized. So, we continue to reach out to advertisers, agencies and brands to show them how they can engage with the right audiences at the right time with the right messages and the right tools. Our unique mass market reach, which gives our advertising partners a great advantage in the world of fragmenting new options and our new digital and data tools, just increased the value of that reach. In addition, our platforms and our ability to integrate them provide our advertising partners with more opportunities to connect with consumers daily to any other media company. iHeartMedia uses a master branch strategy to increase the value of its radio stations and other brands. Pixar is a great example. The Pixar brand works with its movie brands like Toy Story and the Pixar master brand enhances the movies appeal. In our case, our broadcast stations use the iHeartRadio master brand to identify themselves and that increases the value of this individual station brands in the minds of both advertising and consumers and the strength of our iHeartRadio master brand also helps us to build the success of our live events in digital businesses. That’s what makes us confident. We will continue to 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 the power of our national local brands as well as our industry leading personalities. Now, let’s open up the line for questions.

[Operator Instructions] Okay. And our first question comes from the line of Avi Steiner. Please go ahead.

Thank you. Good morning. The mix of your business and balance sheet question if I may, the first one, Rich, maybe you can discuss the launch of iHeartPlus All Access offerings, any usage metrics you can give us there and how they may contribute in 2017?

Sure. Thanks, Avi and good morning everybody. Look, it’s really – we have already been – we were in data, I think it’s everybody knows for a month and we officially launched right around January 1, so it’s way too early. The reception clearly has been positive. And just to remind everybody on the call and I suspect that I will take just a minute or so and talk about iHeartPlus and iHeart All Access, which are our new on-demand subscription services just to allow yourself for everyone are all in one streaming music and live digital service and we include two of those iHeartPlus and iHeartRadio Plus and iHeartRadio All Access. And the way I think to think about and put in context, this is an example of how we can add on additional products at extremely small incremental cost that allows us to participate in new revenue streams. And from a functionality standpoint, you can now just push a button and I would encourage you all to sign up and subscribe to those and we will have them, because you have to just push the button to instantly replay songs from our live radio stations and you can directly save those songs to your play list. And this is the only service out there that can bridge the gap between radio and music collections and both of these new on-demand services, both of on-demand services building on real radio, filled around music discovery, while the other music services are based on music collection experience and that’s where we decided from recorded music formats, such as LPs and CDs. So, that’s the way to think about. You think about the other services out there, they are really decided upon things like LPs and CDs and think about ours is really enhanced radio. From a cost basis, either in the fourth quarter or going forward, the cost involving expansion as I alluded to a second ago with minimal that didn’t have material effect in our margins whatsoever. And it’s really just a great example at how we can add on the additional product, how we can create additional value for our listeners, that’s small incremental cost that allows to participate in new revenue streams. And again, unlike some of our other competitors whose models realized totally and their business model realized totally on the streaming services, these are expansion of our services and expansion of our brands.

Okay, great. And then given it’s helpful to your liquidity, just shifting to balance sheet here, can you talk about your comfort around extending the receivables base facility into ‘18 given the actions you have taken on the 10?

Sure, Avi. I think the company views it. It’s probable that we can extend the ABL. I think we disclosed that in our public filings and we will continue to work toward the goal of extending the ABL.

Great. And maybe getting to a bigger one here, so in the December 20 8-K and then again today the company noted its exploring global refinancing alternatives and I want to make sure, at least I understand or think about it correctly that is it fair to say it’s holistic and that the goal here is to create the sustainable capital structure that both reduces outstanding debt to be well below what one may view it as enterprise value to create real equity value here. And relatedly and perhaps more importantly to turn the structure materially free cash flow positive, I know those are words that I can define, but related to allow you to invest in the business?

Well, Avi, I feel like you have given me the answer instead of the question. The way that I would look at it is this, the ultimate goal of any type of holistic restructuring will be a sustainable capital structure. As Rich would tell you, we have experienced several quarters of consecutive operational growth, but we need to address our capital structure as well an increase in free cash flow generation to the reduction of cash interest as a way to get there, but I don’t want to get into the specifics. I think that general statement holds true. I think that’s consistent with the disclosures that we have made. And I think that’s what we look to going forward.

Yes. And Avi, the only thing I would add, I agree with Brian, I think you kind of gave us your answers before you gave us the question. But look, if you go back over not just this year, but in years and years themselves, we have been here Bob, myself and the rest of the management team. We have understood that our responsibility first and foremost is to create value for all of our stakeholders and we continue to do that everyday in addition to operating the business and that will continue.

Great. And I will leave it on this and I will make it much more shorter, but I did not see the same language in the CCO 10-K around restructuring, et cetera. Is it safe to say that the focus here is going to be confined entirely to the parent level debt? And thanks for the questions.

Hi. We are talking about iHeart in our disclosures. We are talking about iHeart in the questions and answers. There is no – there has been no discussion or disclosure around CCOH.

Terrific. Thank you.

Our next question comes from the line of Marci Ryvicker from Wells Fargo. Please go ahead.

Thanks. Rich, when you talked about the outdoor business, do you mention a lot of things that you did not mention to static billboards, you talked about airports, you talked about digital, so can you talk about the health of the static billboard business both in the fourth quarter and maybe as it relates to the first quarter pace. And then on the iHeart side, just any thoughts on the competitive marketplace post the announcement of the Entercom-CBS Radio transaction?

Well, look on the outdoor – on the outdoor side, I think you saw our fourth quarter results, you saw our first quarter pacing, I think in the last couple of days, you have seen some of the people that were also in the business come out with our results and we have – it looks like, we will continue to perform well and continue to outperform. So the fundamentals are good. I am not going to comment on any specific thing with respect to any individual boards whether it’s static or digital. But what we continue to be encouraged by, all the investments that we are making, taking advantage of emerging, technologies, mobile data analytics and we get that word a lot. [indiscernible] in terms of data, data analytics, data infuse, programmatic, different platforms, I can get to look to the results that companies are having. And I just kind of, our point to the bottom line results and you know at Outdoor America we hold that data analytics tool, RADAR in early 2016 and look forward to launch what I believe is the industry’s first programmatic out-of-home buying solution. The programmatic solution taps into RADAR’s mobile data driven audience insights which gives marketers and our advertisers unique ability to buy digital out-of-home inventory with the same sophisticated buying that they currently expect in the same sophisticated buying the way the world is going. You couple that with our local business is delivering a strong performance. Scott Wells, Bob McEwen, the rest of the management team is doing a great job. And we are also seeing the improvement from our national business, which when we go back to the third quarter, we had some decline in the third quarter. And November and December picked up nationally and the teams have executed on a number of large digital campaigns. And so far in the first quarter of 2017 large national advertiser renewals are going well, but we are only here in mid-February. So I always put a little bit of cautionary, because those are early in the year, but feel really good about the team and the business and their execution. I think you have seen that manifest itself in the fourth quarter and our first quarter pacing.

And on the radio portion?

Well, I am sorry, on radio, I apologize. On radio, look we think it’s great. Bob and myself just had great respect for David Field, the leadership piece he provided Entercom. He has been a great partner with us. As you know, radio is now the biggest reach media. And this the merger – the proposed merger that David is leading is another important validation of the value of radio and the value of audio. And we are looking forward to continue to work with Dave and his team to help move advertisers and marketers discover the full and unique panel of radio, the effectiveness of radio and to bring more money and advertising dollars to the radio market. So we only feel very, very good about the proposed deal and we are always thrilled that’s going under David’s leadership.

Thank you.

And our next question comes from the line of Jason Kim with Goldman Sachs.

Hi, good morning. Thank you for taking my questions. To start off, how should we think about the border revenue and expense line for ‘17 and also corporate expense has also been at a higher level, is this more or less related to your balance sheet related activities or is there a higher level of spending that is more of a norm going forward?

Yes. Let’s talk about, first mentioned, these are largely investment in the businesses that we might have otherwise made in used cash. And so as we have done in the past, we welcome modern trade opportunities with growing companies that we can strategically and I think that’s the key point along with that could help our – that could help us. We made investments in the companies by acquiring equity interest in exchange for advertising, which is providing the future, while each of these deals were different. The future benefits we expect to receive in these investments include the share of revenue, very often into – excuse me, include a share of technical services that helps to drive our operating businesses. And in terms as they include voices [ph], which enable us to influence the product roadmap. And therefore enable us to improving our products and our product roadmap. And by the way, it’s one of ways, just to point out, which I mentioned in the opening remarks, I mentioned in my quarterly release, we are incredibly proud, Bob and myself and quite frankly the entire team. This is a team effort that we had here for 15 consecutive quarters. And we have got 15 consecutive quarters with the balance sheet, that we have, that you all know it’s actually about and having that growth, I don’t think is pretty much any other media company and maybe many companies in the market, that have 15 consecutive quarters of revenue growth. And to do that, we have got to use our assets. We will do best and get the most out of them and doing border and trade deals, one of the ways we get, the best out of our assets. And just the last thing, I would tell you is really common practice in our industry. So with respect to – on your second question, with respect to your corporate expenses, really the increase in corporate expenses is related in part to additional spending on our professional fees, as you would expect with everything we have going on.

It makes sense. And then a couple of housekeeping questions, at the end of the quarter you had $55 million in your current assets line as assets held for sale, does that number base going to get converted to cash as part of the special dividend payment from CCO in the first quarter?

Just repeat that question again.

Yes. In other words, at the end of the year, on the current assets line, there was $55 million recorded as a – in current assets – assets held for sale…?

Those are just the CCOA markets that were held for sale. That’s all.

Right. So they will become, so that you sold those assets and now therefore they will just become cash?

Yes. That’s correct.

Okay. And then maybe one for Brian, for the special dividend or the one-time dividend of CCO paid to the parent or the shareholders in the first quarter, did you use the general RP basket, which I think was about [indiscernible] or did you use any of the reinvestment carve-outs?

The distribution from those asset sales used the general RP basket.

So a lot of it was used for reinvestment carve-outs?

The asset sales, once the sale of the current outdoor, they could be used to be reinvested or they can be distributed. In this case, if they are distributed, it uses the RP. So, I think we are targeting apples-and-oranges. I mean if they were reinvested then they wouldn’t have been distributed.

Got it. Thank you.

Our next question comes from Lance Vitanza from Cowen.

Hi. Thanks guys and congrats on the quarter. Two quick housekeeping items and then I got a couple of other more substantive questions, but I missed the radio pacing number, could you repeat that for me?

The radio pacing number is plus 2%.

Plus 2%, okay. And then I got the outdoor pacings, those are, I heard pro forma for asset sales, but those are on a local currency basis, is that the way you disclose those?

Yes.

Okay, great. And then so turning to iHeartRadio app, great to see registered users and total listening hours continue to grow, I guess maybe that answers the question, which is as registered users continue to grow, are they users themselves and it’s sort of individual basis, are they becoming more or less active, is there anyway to know, is the listener our per registered user going up as well as just total registered users and total listener hours and more generally, how do you think about the value of a registered user and I mean presumably, it’s based on some level of engagement and I guess I am just trying to figure out how we can kind of track that?

Well, I am not sure in terms of where you are going with a lot of question. Remember, we are working to do just to take a step back from an iHeartRadio standpoint is we are looking to follow the consumer. That’s why I said, this is not about technology. And then we connect our advertisers with our consumers. As I said, we rank the relation – we rank the relationship with them. And the way you should track what I would invite you to do, because I can give you – I went through in my opening remarks and I think we went through in the press release, we have got 96 million registered users to the point. We are growing 21% year-over-year. iHeartRadio’s cumulative downloads reached plus 1.3 billion including update in total listening hours were up 1% year-over-year. So if you think about that in one word that also is a more engagement. If you look at our, just as a reminder, if you look at our social impressions, as you come out of Jingle Ball, we had 11 billion social impressions through our Jingle Ball, which is over 3x social impressions that Big Game had a number of weeks ago. As you look at our social impressions as a company, we had 143 billion or so social impressions last year in 2016, 143 billion, that’s a staggering number. Thinking about the iHeart Music Awards last year, we had this year’s a week from this week and a week from the Sunday out in LA in The Forum, but if you go back to 2016, to put it in context, we had 115 billion social impressions for the 2016 iHeart Music Awards. The 2016, a category what had about 40 billion social impressions. We had 115 billion. The 2016 GRAMMY Awards had about 30 billion social impressions. And so I think, you should look at all these things as and what’s important to advertisers and important to our marketing partners is how do you engage consumers, how is it a two-way interaction, that’s what drives the effective advertising. That’s why on a return on investment basis, we are at 6 to 1 advertising when television and other digital products are pretty much somewhere between 1 to 1 and 2 to 1. So I would suggest that’s the way that you should track it. And then you look at iHeart Plus and I think when Avi’s first question, I don’t want to bore everyone or repeat everything of that, but again the latest thing about iHeart Plus is that’s in other way, that we are following up consumers, it’s an extension of our brand at a very minimal cost, it doesn’t had a dramatic effect on our margin. Another way to engage our consumers and quite frankly, as I said, we are doing this in a way that nobody else can do it that we can offer everything other on-demand services can do. So it will make us to service extremely unique and very different and nobody else can do is the ability to tie on-demand functionality and music collecting seamlessly. And again for those of you that haven’t used it I would encourage you use it to wide radio, because it makes easy for use deployment collective favorite music. And for example, if you are listening to a great song on the radio, all you do is push the single button on the front page, you can instantly replay that live song using save it like on the playlist.

That’s actually really helpful. Thank you so much.

And we have a question from the line of Aaron Watts with Deutsche Bank.

Guys, thanks. Just two questions for me. I guess first Rich, you alluded this earlier, but to be clearly on the streaming offerings across the board, that unlike some of your peers that are burdened with very highest costs of content, you believe based on your agreements with labels and publishers you can scale profitably and in a margin enhancing way. And I guess secondly, you also talked about CBS and Entercom earlier, you have been involved in various transactions on the outdoor side, how do you see 2017 playing out in terms of M&A activity for the industry, new FCC Chair, new President and do you see further opportunities for iHeart and Clear Channel to monetize assets within your portfolio worldwide?

Well, look, in terms of the new on-demand service, I am not going to get into any details other than to say, we have – we just had great, great there are true partnerships with the recorded music industry. And whether that’s everybody from Lucian and Michele and the team at Universal to Steve Cooper and the team of Warner Music and Doug and the team at Sony and Danny Gross [ph] and just everybody, within the music industry. So they have been great partners. They understand about the dive that we bring in terms of adding on additional products. They understand about our ability to work with them. They add value for our listeners and small incremental costs and we see new revenue stream. So just could not feel better about our position and partnership within the music industry. In terms of 2017, one of the benefits of about being old and kicking around aspects of this industry for a long time is not you predict anything. So look, I am not going to predict what’s going to happen in terms of M&A industry, I am not going to predict what’s going to happen with new FCC Chair. I do think you have made some very positive comments from an FCC standpoint in terms of being proactive, in terms of radio. And Bob and myself and I assume the rest of the industry we all feel very good about that. And look, overall for 2017, I feel good about where we stand. As we said, we ended the year – we are pleased where we ended the year. I think you saw in our top line results, the first quarter of this year, I think overall, we are pleased where we stand in January. I think December maybe when we posted – other companies out there are seeing the same pattern, January and February has been a little bit weaker and March is a little bit stronger. But you know, but overall we are looking forward to the deal.

Thank you.

Operator, we can just take one more call. And we will have to finish for today.

Certainly, our last question comes from the line of David Phipps with Citi.

Hi. Thank you for squeezing me in. Could you talk about your advertising business, as you mentioned some of your competitors did a lot worse in the first quarter and they cited some issues with national advertising, can you talk about how iHeart was able to do much better than that?

Sure David. Look, I am going to go back to the fact and I know it sounds a little bit like a broken record, but it’s good to keep repeating those that’s the benefit, that’s what the advertising business is all about. You continue to reinforce the message. And that’s what we do. We have had – we have had 15 consecutive quarters of growth. And one is first and foremost, we always believe obviously in our way doing outdoor business and we are committed and we have seen this now for a number of years. And so I don’t think it’s any action that we are committed to transforming ourselves into a digital and data rich company both on the strength and power, in this case of broadcast radio. And we are benefiting quite frankly from the demand from mass reach media, in a world of the dwindling TV reach. And I think we all look at the same statistics, we all look at the reach of radio both among adults 18 plus, among millenials, among teens over 90% and we see that television is down below 80% on its reach for millenials. And just as a reminder, there are three reach mediums that reach more 200 million people in the United States, there is Facebook, there is Google and there is ourselves and we are the biggest at almost at over approximately a quarter of a billion people we reach. So I think it starts with that and it starts with our investments that we have been making for years. We have recognized that there is a transformation and those of you that follow the advertising industry, you are well aware that there is a transformation in terms of how advertising is bought and sold. And we are investing to make sure that we are at the forefront that’s one field and we are making investments in our programmatic buying platforms. We are making investments in our analytics tools. And you take that with our audience size and the ease of the programmatic tools. And then you have a company, in iHeart that’s in unique position in advertisers and radio and we anticipate that that’s going to enable us to really open up more digital revenue and more digital revenue streams as well. So I think that’s the differentiating factor, which is really our ability to create those national campaigns with national reach as well as local campaigns. And the example I will use this time, but it is the first time in the prepared remarks which our hope helps crystallize to everybody is Pixar. And if you think about it, equate the iHeart brand to the Pixar brand and then if you think about Pixar does a lot of movies and maybe something like Toy Story finding Nemo and think about operations in Toy Story and finding our individual radio stations Z100 of KIIS or any of our individual stations sitting under that iHeart umbrella. And that’s why we are so uniquely positioned and that’s why we continue to outperform and that’s what you see the results.

Just two quick follow-ups, would you expect Katz Media to grow organically in 2017, so ex-political. And then how do you think that SG&A expenses will run through the year?

So on Katz Media, the answer is I do not expect them to grow organically, because it’s a non-political review. So, if you go back historically particularly because of the Katz TV side of the business, I do not expect them to grow organically. And on expenses, I would look to – if you look in overall basis with everything I just talked about and we have to look at our margins on an annual basis, with everything I just talked about in terms of the investments that we have been making as a company, we still have some slight margin improvement on an annual basis and I suspect you will continue to see that.

Just to clarify on the Katz Media, if we ex out the political would we grow organically?

I am not going to comment on that. I am not going to comment on that separately.

Okay, thank you.

Alright. Operator, thank you very much. I want to thank everybody for joining us this morning. And as Brian and I will certainly be available for any questions you have over the next few days. Thank you.

Ladies and gentlemen, that does conclude our conference today. We would like to thank you for your participation and for using AT&T Teleconference. You may now disconnect.