iHeartMedia, Inc. (IHRT) Q2 2015 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the 2015 Second Quarter Earnings Conference Call for iHeartMedia, Inc. and Clear Channel Outdoor Holdings, Inc. At this time all phone lines are in a listen-only mode. Later we will conduct a question-and-answer session with instructions given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. I will now turn the conference over to your host, Effie Epstein, Head of Investor Relations. Please go ahead.

Good morning and thank you for joining our 2015 second quarter earnings call. On the call today are Rich Bressler, President, Chief Operating Officer and Chief Financial Officer; and Brian Coleman, Senior Vice President and Treasurer. We'll provide an overview of the second quarter 2015 financial and operating performances of iHeartMedia, Inc. and its subsidiaries, iHeart Capital I, LLC and iHeartCommunications and Clear Channel Outdoor Holdings. For purposes of this call, when we describe the financial and operating performance of iHeartMedia, Inc., that also describes the performance of its subsidiary, iHeart Capital I, LLC and iHeartCommunications. 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 or 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 revenues booked at a specific date versus the comparable date in that 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 schedule to reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases and the slide presentation, which can be found on the Investors section of our website, iheartmedia.com and clearchanneloutdoor.com. Please note that our two earnings releases and the slide presentation provide a detailed breakdown of foreign exchange and non-cash compensation expense items as well as segment revenues and OIBDAN. Please note that the information provided on this call speaks only to management's viewed as of today July 30 and may no longer be accurate at the time of the replay. With that, I will now turn the call over to Rich Bressler.

Thanks, Effie. And good morning, everybody. Once again, as Effie mentioned, you can find our presentation slides on our website. We continue to strengthen our position as a leading media and entertainment company bringing together advertisers and consumers in creative ways across our entire platform broadcast radio, outdoor, mobile, social events, digital and TV. I'm right at my two-year anniversary at iHeartMedia Inc. range and I couldn't be more proud of the incredible progress that our team has made to build momentum across each of our businesses, all our products have strong financial discipline. At today's iHeartMedia, Inc. we offer what we believe is a truly differentiated value proposition for advertisers built on the power of sound and the power of outdoor and capitalizing upon the consumer trend of spending more time out of the house. We are bringing both the outdoor business and our iHeartMedia business into the digital age to the development of data and excuse me, data infused solutions for advertisers that we believe will provide the efficiency and ease of automated buying while freeing up our sales people to do what they do best, create relationships that extend beyond traditional ad buy. iHeartRadio, we are mobile of scale and continue to leverage the power of our on-air personnel we use to engage with consumers serving as their companions and trusted sources of information. And at outdoor, we are using technology to further amplify our mass reach. You have heard us say many times that we are one of a kind media company and we are. There is simply no other company that can do what we do. At the recent Festival of Media Global Awards in Rome, iHeartMedia is named Best Media Vendor of the Year in recognition of our work within the advertising community. Radio presents a huge opportunity for advertisers to connect with consumers through audio. In fact, radio has always been a leading mobile and social medium. It just happened to exist long before the new digital and social categories emerge. Think about it. Radio is the original mobile medium. And today, 66% of the usage of what is generally referred to as mobile is consumed in the home whereas radio is the opposite. Two-thirds of its usage is out of the home, delivering on the true promise of mobile as an advertising vehicle. In Nielsen's latest total audience report, radio is highlighted as the number one reached medium among adults and millennials in the U.S. with over 90% weekly reach. TV's total reach is down to 87% among adults and brought down to 76% among millennials, significantly lagging radio's 93% reach and even falling behind smartphones, which have 80% reach among millennials. So the facts are there. With our strength across broadcast, mobile, social and digital, we believe we and our advertising partners are extremely well-positioned to take advantage of all of these partners. We also continue to strengthen our national business by attracting major advertisers across a variety of consumer categories to our platform. [ph] Chevy, United Healthcare, Bacardi, and Shreya Pharmaceuticals to name a few. During the quarter, we hosted our annual iHeartRadio Country Festival and iHeartRadio Ultimate Pool Party both of which attract the key advertisers and artists, and had a powerful presence on social media. Events continue to be an important embedded part of our sales strategy, as they have a positive impact on advertising and consumer relationships, as well as great promotion and brand building through our stations. We are leveraging these events as a significant differentiator from a sales, branding, and promotion perspective. We have also seen consumer engagement across our platforms continue to grow. In addition to our other cross-platform strength, we have become a significant social player generating billions of social impressions with our events and garnering almost 75 million social followers from just Facebook and Twitter alone. Radio continues to engage audiences across the country, as evidenced by strong broadcast ratings growth in April, May, and June, yet we believe it is still significantly under-monetized within the advertising media mix particularly relative to other traditional media like TV This puts us in a great position, it is in addition to building and selling new products, one of our biggest growth opportunities is better monetizing our existing portfolio of assets. Our strong consumer engagement and unmatched reach combined with the results of the ROI study conducted by Nielsen Audio and Nielsen Catalina Solutions that showed a six to one return on radio advertising dollars, are important data points in demonstrating radio's power as we continue to close the gap between radio's consumer scale and engagement and its much lower share of advertising spend. On the outdoor front, we continue to innovate both in our Americas and international businesses. We reached millions of people through our global footprint, including more than 640,000 display in over 40 countries, with over 1,200 digital billboards in North America and over 5,000 visual displays in our international markets. With the growth of social media and mobile and the fact that 70% of consumers time is spent out of home, more and more advertisers demand the flexibility to coordinate their outdoor spend with real time events and product launches throughout the year. Back in June, Ad age of our campaign was up earlier, which launched an attractive game our largest digital screens inside bus shelters in San Francisco and Silicon Valley. In the article, a buy is director of global brand management and integrated marketing, say their goal was to reach as many decision makers and influencers in Silicon Valley they could, and to quote an interactive bus shelter game was different to anything a buyer has every tried, unquote. Also the campaigns we've launched on our digital billboard on Times Square demonstrate the powerful value proposition of outdoor. We've demonstrated most recently through our work with Coke and their Share a Coke campaign, that Outdoor represents the convergence of the mobile, social, digital and physical world. The campaign was activated through Twitter, with peoples tweets populating on the board in real time. Hashtag, coke my name was mentioned in a 110 countries. And the social conversation was dominated by younger audience, 58% of the campaign's social activity has generally purchased by 17 years old and younger. Back in June, Bob and I joined our Outdoor team in France at the Cannes Lions International Festival of Creativity. This year the Grand Prix award went to the superb Apple's World Gallery campaign, which was presented on our displays all over the globe. I believe this campaign truly highlights the value of Outdoor. It delivers real brand, fame, and provides, I particularly like the top 10 in the campaign one of the world's most contemporary brand with original advertising unit. We continue to build on the power of sound, the power of outdoor, and the power of mobile consumers to create even stronger marketing solutions for our partners. Now let's turn to slide four, I review our key financial highlights. We've been to drive financial success as evidenced by another quarter shown top and bottom line growth to the company. As we did in the last couple of quarters, when discussing our financial results on this call, I would reported all results excluding the impact of FX, as the strengthening of the dollar against the other major currencies we transact has affected compatibility of our numbers on a reported basis. You can find our reported numbers in our earnings releases and SEC filings. In addition, as we noted our press release, our OIBDAN calculation excludes the incremental lease expense from the sales-leaseback transactions related to our Fayetteville and San Antonio office buildings. In the second quarter, revenues were 2% with increase about 4% iHeart Media, 2% an International outdoor and 1% and an American Outdoor. OIBDAN was 3% driven by increase of 3% at iHeartMedia and 2% Americas Outdoor, slightly offset by a small decrease of 1% in International outdoor order demand. This is the fourth quarter in a row where EBITDA was up on a consolidated basis when excluding FX impact. I'll go into more detail about each segment's financial performance a bit later in the call. Now, let's review our key non-financial highlights. Starting with slide five at iHeartMedia, we announced some great partnerships this quarter. On the technology side, we continue to focus on making our entire company as advertiser friendly and data driven as possible. We partnered with marketing and analytics technology company Unified to aggregate and unlock the massive data that's generated by iHeartMedia Radio, mobile, live events, digital and social media [ph] oriented. Data driven solutions are transforming the way we deliver new value to our marketing partners, providing the ease, measurability, and precision of digital marketing at the incredible scale of work. We believe this is step towards putting us on par with major digital players. Unified will allow us to leverage big data in new ways that make our portfolio of products, personalities, content and technology platform some of the most powerful marketing vehicles available today. As we mentioned earlier, radio is a truly mobile medium, programmatic is already an important and expected method of ad buying in the digital space. Through our partnership with Jelly, Unified and AdsWizz we can bring broadcast radio into that world at scale like no other digital providers can offer. On the distribution side, we continue to focus on being everywhere the consumer expects to find us. Earlier this week, we partnered with Snapchat to launch iHeartRadio Discover Channel, we took one of the slots made available in Snapchat, replaced Warner Music and Yahoo with iHeartRadio on BuzzFeed. Snapchat Discover embraces the power of storytelling through easy, immediate, and mobile platform. Snapchat chose us to be their sole integrated music brand, and it's one more data point about the success of iHeartRadio, and the transmission of us as a company. This is a great platform by iHeartRadio's short-form content which features unparalleled access to artists and celebrities. Other partnerships include the launch of iHeartRadio as the first live streaming radio application, available on AT&T's U-verse TV, as well as working with Virgin America to bring branded music stations curated by iHeartRadio to the airline's customers to its award-winning Red in-flight entertainment system. We also announced that we extended and expanded our agreement with Ryan Seacrest. Bob and I are fortunate that we're partnered with Ryan for a long time and its impact on iHeartMedia continues to grow. Ryan is a deeply creative innovator, who is one of the Americas best known and most trusted influencers, and we have a significant presence across all our assets for broadcast radio, for social, events, digital and television initiatives. We couldn't be more prudent that we will continue to play a critically important role with our partners. We continue to deliver the record setting growth at iHeartRadio, surpassing 70 million registered users faster than any other radio or digital music service, even faster than Facebook. Total listening hours also continues to grow, increasing 23% year-over-year in the second quarter. Over 60% of our listeners tuning to iHeartRadio through mobile devices. Consumers are becoming increasing mobile and we continue to take this message to advertisers to help them understand why radio should become a bigger part of their medium mix, and why they should be asking themselves, what did our company stand strategy. Moving to Outdoor on slide six. Through various initiatives, we continue to provide advertisers and agencies with opportunities to use out-of-home advertising to test creative boundaries and created the deeper sense of engagement with consumers. Like I mentioned earlier, our digital footprint continued to grow across our portfolio, with over 1,200 digital billboards in North America and over 5,000 digital displays in other international markets. An International Outdoor, our France team recently won the contract of one of the largest supermarket and mall chains in France, Carrefour, which was started in January of 2015. This complements our existing malls business in France and further strengthened our position with retail operators. In the Americas early this week, we announced that Bob McCuin will join us President of Sales. Bob brings extensive experience leading media sales organizations, most recently as SVP, Sales for Townsquare Media, where he developed a cross platform sales organization leading local, regional, and national sales growth in all channels. In addition to a strong regional experience, Bob was previously VP of Sales for New York Radio Cluster where he oversaw the sales and digital operations. With Bob's strong existing relationship with iHeartMedia team and extensive experience working across digital and live events, will be able to more easily use the benefit of the entire company to drive opportunities for our Clear Channel Outdoor enterprises and how Americas Outdoor reaches its full potential. We also announced the launch of our in-airport TV network, ClearVision at Denver International Airport. ClearVision is an away-from-home television broadcaster delivering a top-tier entertainment, news, sports, and weather programming mix to airports throughout the U.S. Denver International is the sixth airport to join the program. ClearVision will be deployed throughout the three airport concourses and will give out because of the ability to target their marketing campaigns to specific airline gate areas throughout the airport. Our team continues to focus on superior execution to deal with both new and organic growth across the portfolio. Now, let's review our financial segments. Starting with iHeartMedia on slide seven. Second quarter revenues were up 4% year-over-year, driven by strength across our businesses. We move core local and national broadcast advertising revenue, on traffic and weather businesses as well as our syndication business and events. In addition, we once again outperformed the regular track there as measured on lower capital. Our strong performance across the board is a testament to the unique value proposition of iHeartMedia versus our advertising partners. The advertising category with the strong as year-over-year growth included auto, medical and healthcare along with financial services. Moving to expenses, our expense is about 5% in the quarter, primarily resulting from higher dense production cost to due timing of some bottom and trade expense when its revenue was recognized in the past quarters as well as higher sales compensation expense including commissions. As you know we continue to grow our national business and as such our high additional national sales people who join our team. From a content cores perspective, our music license fees and royalty payments are up year-over-year driven by the growth in listening hours on iHeart ratings. As you heard me say time and time again financial discipline, tight expansion adding key priority strides, as well as driving more dollars through the bottom line, OIBDAN was up 3% year-over-year, our fourth consecutive quarter of OIBDAN growth and iHeartMedia. Now let's review our third quarter pacings. These pacings are just a snapshot in time and certainly don't include everything into those company. Our third quarter pacings in iHeartMedia till the end of last week are pacing up 3.3%, keep in mind that last year was the political year and we had approximately $10 million of political advertising revenue in the third quarter of 2014. In the past we've also provided what we call core station pacing as a proxy for broadcast radio performance. As our focus continues to be a multi-platform solutions for advertisers, lines are getting increasingly blurred between local, regional and national spending across all disciplines Spot, Network, Events and Digital. At both a local and national level, our sales people are selling integrated packages for advertisers, so we believe that the iHeartMedia overall pacings number is the best representation of our performance, as such we will not provide core station pacings going forward. Turning to Americas Outdoor on slide eight. Our quarterly revenues were 1% driven by our growth in digital billboards as well as new revenue from our Times Square Spectaculars business. Our local performance was strong in the quarter, but there was still weakness in national, especially related to our static boards and [indiscernible] Under the leadership of our American Outdoors team, we are continuing to revitalize the organization, and although there is still much to be done, we have already – we already have come a long way under Scott's leadership, and the hiring of Bob McCuin is another positive step in realizing our full potential. As a reminder, last quarter we announced our Latin American operations into our Americas Outdoor segment. Latin American revenue was down 2% year-over-year with growth in Mexican shareholding offset by decreased ad spending in Brazil relative to last – relative to last year during 2014 World Cup. Expenses at Americas Outdoor were down $1 million in the quarter and OIBDAN increased 2%, our third consecutive quarter of the OIBDAN growth. Our top categories in the quarter include a business services, electronic equipment, and retail. As far pacings, which again we’ve got purchased a one point time, our third quarter pacings were up 1.2%. We are free to see particular strength across August and September on all fronts local, national, and digital. Turning to slide nine, our International delivered another quarter of top line growth with revenues up 2% this quarter driven by Europe, specifically in Italy, France, Sweden, and Norway, as well as growth in Australia. Our growth was partially offset by weakness in the UK, which we believe was partially driven by the national elections. Our performance was particularly weak in April and May, but we were back into positive territory in June, setting us up with good momentum for Q2. Overall, we believe that UK advertising market is healthy and our continued focus on execution will help us deliver results. Expenses grew 3% in the quarter driven by higher variable costs, driven by higher revenues, as well as higher compensation expense. We have grown our sales team, the key markets, in a couple of last year, that help us fuel to future growth. When we are also adding some head count in the quarter. As a result, the increase in expenses offset our revenue growth resulting in a 1% decline in our OIBDAN year-over-year. Our third quarter pacings for International outdoor are up 2.4%. Europe is particularly strong led by Italy, UK and Ireland as well as Norway. Once again, pacings are at a point in time metric. And as you'd expect, there's an inherent level of volatility week-to-week. On slide 10 we show some of the items that affected year-over-year comparability. On consolidated expenses, we incurred approximately $7 million of costs related to strategic revenue and efficiency initiatives in the second quarter compared to about $21 million in the second quarter of 2014. In addition, our second quarter OIBDAN includes $9 million of legal expenses compared to $4 million of such expenses in the prior year. Of the $9 million, slightly more than half is related to CRB proceedings. And those are included in our corporate expense line. On the iHeartMedia side, we closed on our previously announced sale of the majority of our Tower portfolio. And as a result, are no longer generating co-location revenues from tenants. For reference, last year, we generated approximately $2.7 million of tenant revenue in the second quarter. Excluding these co-location revenues, iHeartMedia top line growth would have been 4.6% year-over-year in the second quarter. Turning to slide 11, capital expenditures for the quarter were approximately $68 million compared to $74 million last year. The decrease is largely driven by a reduction of our corporate CapEx year-over-year as well as lower spending at Americas Outdoor. Moving to debt on slide 12. We are staying focused on maximizing the value for our business by continuing to improve our capital structure and liquidity in capital markets and strategic transactions. As of June 30, iHeartMedia's debt – iHeartMedia, Inc's debt net of cash totaled approximately $20 billion. During the second quarter, we repaid $120 million that was bought under the receivables based credit facility during the first quarter of 2015. With no significant debt maturities until 2018, we can continue focusing on growing the top and bottom line across our business segments and taking disciplined proactive steps to address our capital structure needs, interest expense payments, and liquidity needs. Our weighted average cost of debt is 8.4% as of June 30 compared to 8.1% as of December 31, 2014. Now, let's turn to our balance sheet information and the debt ratios on slide 13. iHeartMedia cash totaled approximately $387 million at June 30, and our secured leverage ratio was 6.4 times. As I mentioned earlier, we completed the first closing of our previously announced sale of a portion of our tower portfolio in early April. In connection with the first closing, the company sold 367 tower sites and related assets in exchange for $369 million of proceeds. We also completed the second closing on July 15 with sale of an additional nine tower sites for approximately $6 million. Simultaneously with the first and second closings, we entered into lease agreements for the continued use of the towers and we expect no operational impact. As I mentioned earlier, our OIBDAN calculation excludes approximately $5.7 million incremental lease expense from those tower sale leaseback transaction as well as the sale with that transaction of about two office building in San Antonio. Clear Channel Outdoor ended the quarter with a $130 million in cash, with a senior leverage ratio of 3.6 times and its consolidated leverage ratio at 6.6 times. So before opening up for question, I want to thank you all for joining us this morning to our call. We are pleased with our second quarter results and the solid track record of growth we've driven. Our focus continues to be on realizing the full value of our multiplatform assets. Through our order of assets, talent, engaged audiences, and growing data capabilities, we believe we create a truly powerful platform for advertisers, agencies, and brands to engage with the right of earnings at the right time, at a level of cost efficiency no other major company can offer. Thank you very much again for joining us. Now, let's open up the lines for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Avi Steiner. Your line is open. Avi, we can't hear you. Let's go ahead with to the second question. We'll come back to Avi.

Thank you. The next question comes from the line of Jason Kim. Your line is open.

Hey. Thanks. Good morning, guys. I got a couple of questions. So really over the past couple of quarters, we have seen some dramatic divergence in how your Media and Entertainment segment is performing, compared to most others in the radio sector. How sustainable is this trend in terms of iHeart continuing to outperform your peers. You've talked about your multiplatform approach and highlighting that iHeart as a brand in a much more holistic way to national advertisers. What inning are we in, I mean in terms of you guys cornering or your fair share of national ad dollars and your expectations for continuing to outperforming your peers?

Thanks, Jason, and good morning, everybody. Well, before – you're right – other than to say, I think, we're in a very, very early innings here. As you heard us say before Bob and myself, that we are significantly on the monetized, that's it for the most monetized medium in the United States. And our platform is unique, but maybe just to take a setback about if the industry itself and I alluded to this in my opening comments, and you just – just a little couple data points, when Nielsen came out with the total audience report, which I think maybe we've seen just to reiterate those points, on a weekly reach basis, we are, and in all my years of being in this business, and I am also have been kicking around this a long time. We have never seen stuff like digital radio, now we reach 93% of the weekly reach, televisions were 87%, smartphones reach 70%. So we are the vast, biggest national medium, and that may surprise you, and then when you take those numbers and go down to millennials, radio is still at 93%, TV drops, okay, drops to 76% and actually smartphones are ahead of TV at 80%. So first and foremost if you look at all the trends that are going – that are going through the right way. And then you take look at our channel, we're trying to capitalize on the brands that we built that's really speaks to the mission ahead to deliver the most engaged audiences through live content, through our DJ, through our programming against every platform and device and look I'm sure many of you I talked about it a little bit in my opening remarks, and then you talk about our International guys just came up with our national dedicated Snapchat, and the press that was there, and I alluded to some of the stuff in the earnings, and pulled out, and then Wired magazine came out in the last day and said this is going to quote what they said, "today's instant messaging company, this is Snapchat, the instant messaging company is all about new content partners that discover news for them, and the reasons seem pretty clear, it's all about the end with those millennials too, that's be an iHeartRadio what the kids like". So, I think you look at the industry trends, I think you look at people like BuzzFeed are saying, I think you look at the fact that we have our 75 million followers. [Advertisement] So it think when we – I think you look at our 75 million Facebook followers, and Twitter followers. I think if you look, when we thought about being undermonetized, the Neilson ROI study, which again is a trip on six to one on average. Again, three straight ROI, for every dollar of advertiser spend, they get an average $6 back. If you look at all of the trades and advertising, they talk about CCB two to one, they talk about maybe Facebook being two to one, they talk about a lot of digital plays being a $1 or under a $1 to one 1. So, all the stats, in terms of the ability to monetize, grow audience or all in our favor, which is why I said we are under monetize and then you couple that with listening, listening – we came out with listening numbers for April, May and June, and our listening numbers were up significantly out of broadcast basis, for the months of April, May and June. So, you combine all that, it's about execution for us. And I think you've seen in the number of core, it's a growth that we have. We're beginning to execute and we will continue to execute on that. And the last thing I would say is, I purposely didn't get local pacing information here. And otherwise, we get increasingly blurred between local, regional, national spending across all disciplines. Spot, digital events and we're well positioned, taking everything I just had in terms of our liberal in social engagement. The listening numbers I just said, the significant increases in April, May and June, to offer advertising solutions across the board, trends advertisers and again, on an ROI basis. So, if advertisers make money, we make money.

And our next question comes from the line of Avi Steiner. Your line is open.

Hey, Avi Steiner again. Can you guys hear me?

Yeah. We can hear you.

Thank you. Okay. Thanks for taking the questions. I have about four, and couple of them hopefully pretty brief. Just to be clear on the consolidated M&A pacings, 3.3, that did not include the $10 million political you referred to? And if so, do we think about that as having come in late in the quarter last year? And then I've got three more. Thank you.

Well, I'm not sure about the second one. We don't do pacings with and without political. So I'll just state it frankly, so we just gave you an absolute pacing number.

Okay. I'll go on to the next thing, quick nerve question. Can you talk about how you accounted for the Tower sale. I'm also trying to understand why we're excluding the lease expense. I know you touched on that but can you just go over that one more time? And the proceeds that you got in, did you get the full 369? And was there any holdback or the throw of that. And then I've got two more. Thank you.

Sure. Look on the Tower sale and we've talked about this, but happy to mention again. We continue to look – evaluate all our businesses and asset portfolios. And I think if you go back over the last couple years, you look at I think we've done a pretty good job of bearing sales of non-core assets. And by the way we're continuing to do that so there is life around here. This is the way generally Carrefour assets without impacting our operations. And because the transaction has no effect on our operations or on the Tower sale. We exclude the incremental lease expense more internal, external measurement of all demand in order to make consistency and compatibility. Again, this was really kind of prime and simple. It was a way for us to un tap – a way for us to un tap an attractive cost to capital. And I firmly said that before.

Okay. Moving on. Can we talk about perspective outdoor contracts for a second. So you mentioned France, which sounds like a win. There were some positive press. And I know you're not going to want to speculate, but if you can help us it would be great. There's some positive press around Los Angeles and then or maybe help us with the timing of the rate of release and then there was some press around the UK, which at least reflect a loss, but would have been negative for your guys had you won perhaps and also the underground contract coming up next year. So if can you talk about perspective potential win from outdoor, that would be great. Thank you.

Sure. Effie, I was hoping you could help me on this timing in LA, I'm never going to predict the time, but look, we continue to work really on legislating solutions and I think productively that a lot of our digital boards are back on within the LA City limits, and over the last six months, we completed our three public hearings and allowing digital billboards in the city of LA. We expect a couple more here before the City Council votes on the ordinance and based on everything we know as of today that's likely to be in the fourth quarter of this year. We've been very consistent, since the start of this journey that this process takes time. We're not sitting on our hands, we're keeping up our people in, so we're selectively keeping permit to revert some of the boards back to traditional model static signs, we've converted approximately 80 boards to date, 18, those numbers in front of me, 62 are up, over our existing digital places. Not a meaningful expense quite frankly from our perspective and the parallel stuff so we can all the work with the legislative process. And this is a real quick reminder, we have almost 40 digital boards in the LA metro area. So that's on the U.S side, on the International side, you know International Outdoor I think yesterday, just about one thing about America, and MPA, and then about London, and the London contract we've been actively about in the process there's not been a formal announcement from the transport to run that its already so it is really now color I can provide at this point. This is in the side the office, so we had a great win with our a great team in France, you know that we won the contract of a largest supermarket and mall chain in France, I mentioned that in our opening remarks, the Carrefour, that's up in January 2016, which complements our mall business in France. On Americas Outdoor, our U.S MPA contract New York the state, I think the obvious is critical our home market and this is an opportunity that we take very seriously.

Okay. Great. And I'm going to end it with this, and thank you, and apologize for the mix up in getting. But your debt has been trading below where you, I think, last came into the markets to buy, I'm curious how you think about those potential opportunities, and how you think about your liquidity generally, but we said today. Thanks a lot for the time.

Yeah. Thanks, Avi. This is Brian. Yeah, let me talk about this every quarter. But, as you pointed out, we've seen – we've seen a particular dislocation in trading levels particularly at some of senior debt, and we're watching that. And I wanted to be consistent with I think the statement that was made in the past, and that is we won't to be opportunistic with respect to urging the markets and potentially repurchasing debt, and at the end of last year, I think, we purchased $177 million, as we are feeling good about the liquidity position as we're making that a priority. And so, we continue to look at our liquidity. We continue to take actions to increase that liquidity, as they can win it's appropriate to do so, the Tower deal that we closed last quarter was a great example. And then, we're balanced that with capital markets and capital management opportunities. What I can tell you today is, we continue to look at opportunities, but we don't want to create liquidity of debt today that doesn't currently exist. So, I would characterize like that and we'll continue to focus on liquidity, but that look at capital management opportunity.

And our next question comes again from the line of Jason Kim.

Great. Thank you. I know this question comes up from time to time, but I wanted to ask a question regarding your views on owning all of your, three of your major segments together. Are there any significant synergies on having all the business segments under one umbrella, whether it was being radio, Americas Outdoor, and International Outdoor.

I'm sorry, I'm not sure I understand the question. If the question is you know in terms of operating U.S. outdoor and international outdoor, William Eccleshare, who is our CEO for the international business, goes over in car business, and then he and his team have done a phenomenal job in running that business. When you back to UK, earlier this year and really to focus a full kind of effort in driving those businesses, I think we've had four quarters or five quarters in a row of growth, top line growth there and do you think it's different to paid opportunity there in the 2017, so major companies have to operate, we go there with a full time focus. We've got now a full time focus, with Scott Wells, with Bob McCuin as I mentioned earlier, we're really, really proud about the off coming in both on his background and everything he accomplished it comes where, coupled with his history with us at iHeart and his ability to really hit the ground running, it's really not an overlap from an advertiser standpoint in terms of advertiser if you look at the path one. So we thought that the business would benefit from senior leadership quite frankly on a full time basis. On an iHeart Radio standpoint remember the benefit we have in iHeart, we are in multiplatform, fundamentally and we're driving our business, we're a multiplatform company. Our platform is unique as I think I answered when I said the first question. If anything what's happening and the reason we didn't get local pacing from this call again, is that lines are continuing to work, in and out there, and the advertisers are looking, and buying advertising this continuing to blur. I mean, it's interesting, as you look at this quarter, we have strength across the board, both local and national were up, local was up after more than five consecutive quarters of decline for us, and although the industry remained I think relatively weak in Q2, our goal would be the local revenue is a the testament to the unique value proposition of iHeartMedia that we and our advertising partners and another driver of our traffic and weather business, our syndicated business and our wench business overall. So, I think again if you look at what's happening in the world, if you look at the way consumers consume product, they don't care whether it's a digital or broadcast, they just want anywhere where they are. If you look at the way the advertisers are buying products, they want multiplatform solutions out in the drive results, I mean drive ROI results. It's interesting when we talk about frequently and its worth reminding ourselves, is that, if you look at two-thirds of our listening is out of the home, just as a reminder. Yeah, radio is the most mobile medium method and you put that in context, it's just the opposite, two-thirds of the way mobile is used inside on the home right now. Once you think that people always forget, all the time, with that 80% of the mobile usage is done via Wi-Fi. So, just when you put that all together, our ability to do, the consumers going two-thirds outside the home, there’s think again to continue to explode in our [indiscernible] operator's one multi-platform company.

Okay. That makes sense. And then in the past, you don't give a specific guidance, but any directional comments you can share with us in terms of your margin expectations for balance of the year?

No, of course for your – and those of you, Bob and I and historically now, I mean the rest of them and the team has done a great job here. It's with Bob and I and the rest of our whole operating committee and I heard Moody in our leadership in the U.S. and outside the U.S. So we're going to continue to watch perhaps we're going to continue to look for margin expansion, so we fully expect our margin expansion. We are spending on revenue efficiency initiatives in 2015 as we've identified opportunities to improve our business further. How much and where we spend will be driven by our Eaton business. in the first half of the year, the scores are down to $16 million down compared to what we had 2015 but we just hired head of digital ad sales in kind of built on, and that's going to work with already great team Jeff Howard, we hired some of the political asset in Cannondale as we approach our 2016 and the elections out there. So we're always going to be opportunistic while we see longer side of the revenue, but at the same point in time, as the business change we'll continue to need to look to maximize our efficiencies and operate in a more efficient way.

Our next question is coming from the line of Lance Vitanza. Your line is open.

Hey, guys. Nice job on the quarter. I wanted to ask you about the iHeart Radio app and I'm just looking historically and through Q1 registered user growth had been slowing as the platform expands, while total listener growth had been accelerating as engagement expands, that's kind of the pattern that we would have thought we'd see going forward, but obviously in the second quarter you returned to accelerating growth on both of those line items. My question is, is that sustainable or was there a sort of -- was there something a blip in 2Q numbers in terms of the registered user growth or do we think we can keep that going? And on the listener hour growth front, should we expect growth to continue to accelerate or are we sort of hitting a peak year in your view?

Look, we're really happy. We're really happy with our growth. Our total listening hours continue to grow. In the second quarter, our TOH was up 23%. If you look at and by the way, TOH is up and I think if you just look at it, the general area of listening, listening is exploding across the board. Again, go back to the earlier stats I said that came off from Nielsen in the first quarter in terms of the mass market medium that's out there for radio in terms of engagement with radio we're still at 93%, let's say with millenials by TV is down to 76% and smartphones are at 80%. But in general, listening is exploding, the on-air listening is up very strongly. Streaming is up over 50%, podcasts are up over 75%. Concerts, festivals are up over 30% on air. So it is all about content. It's being about what the consumers want to be. And we continue to grow our total listening hours as well as registered users. And we're – we just continue to look to capitalize on that and our differentiation in the market space quite frankly is our content. One of the things we announced this quarter is we extended our deal with Ryan Seacrest. That was very important to us. And whether it's Bobby Bones or whether it's Elvis Duran as we're seeing coming in this morning or Sean Hannity talking about the elections, we are bringing consumers what they want. We have Big Boy Now on the LA on Real. We combine them. We got The Breakfast Club. So if you look at the place we have in hip hop. So it's just constantly bringing consumers what they want where we want. And just as a reminder, when you look at all the stats on audience, and we have to be in this place. We're number one with Hispanics. We're bigger than Univision Television. We're number one with Afro-Americans. We're bigger than BET. And we've tied with Facebook for millennials. And so that's the case. So what's been great for us is that the consumers are loyal to the brands they love. And so by extending our reach to all the devices and products 00:44:42 they want to find us. Again, we get to engage with them through broadcast, social mobile events and digital. And again as I said in my remarks and not to grow in tower, we are the original social medium out there. We just happened to come along before these terms like digital and social were invented. And it's the reason why radio we assume today is about like 93%. And if you go back into the 1970s radio listening was up probably at 93%. It's an amazing stable medium. But I think people are really just starting to begin to take notice of its stability and its effectiveness which goes back to one of the earlier question is, where do you think you are in the days of monetization. And as I say, I think one of the most under-monetized medium in the United States.

Okay. Thanks a lot.

Your next question comes from the line of Marci Ryvicker. Your line is open.

Thanks. Few questions on the outdoor summit. Rich, I think you said in Q2 the Americas national was pretty weak, but it has turned positive in the third quarter. So just wonder if still there is anything under that change? And then, in terms of new senior management, I think you guys are pretty much done. Can you just talk about what the primary focus is going to be with regards to operations and for casual priorities? Thanks.

Sure. So, one thing and I believe I said Marci on your question turning to remarks. We're seeing some real strength in September and October and we see, you heard when I talked about the pacing number, I'm sorry August and September, I apologize. We're seeing some real strength, middle August, September there. So we feel good about that. I'm not going to comment anything detail on that mark-by-mark. We're seeing strength there. And looking back on the management front, as I mentioned earlier, we've got, Scott just came in last quarter as CEO. Our new president of Ad Sales Bob McCuin, we really feel very strong now, we have the right leadership in place. We have a great team there with Rocky Sisson who will continue with all of us, he's done a great job and Gene Leehan, well and the rest of the team to realize the full potential of America job to a business. And by the way, under Scott's leadership, we've done a couple of missions, just to go down at level. We've put in the client solutions team, the team of account executives who work directly with the CMOs of the client with alongside of the agencies to drive dollars into the sectors to maximize value. We've done the digital operation center, which gives us 24/7 coverage to drive digital campaigns from the center. And again, you're seeing that. I think you're starting to see that momentum that comes back into the business. And in terms of priorities, our job is to really allocate capital, get the growth back international that we're starting to see and get back to the historical performance and the historical margins that we know are in the outdoor business in the U.S.

Thank you.

And the next question comes from the line of Tracy Young.

Hi. Two questions on iHeart and then one on outdoor. Does not capital include both radio and events? And also are there any big events to highlight for Q2 in your pacing?

Well, no capital includes everything like connections to events. So I think from your perspective includes everything. Yeah, remember, what we use our events for our events are our focal points for – our events are really a important better part of our sales strategy, okay. So just to reiterate, again, the strategy is not turn events into individual profit centers, but to really use these tent poles as important ways to differentiate ourselves from sales, from branding, from promotional perspective, and include them as an important element in our most very important relationships. And also just I'll take a second and run everyone. In addition, we talk about a lot of tent pole events, we actually do – and our tent pole events I'm sorry, we talked about our Tempo Event from award show, we talked about Jingle Balls. We actually do 20,000 local events that include our news parties and other events across the U.S. And these events just have an incredibly positive effect on our advertising relationships. And quite frankly, our advertiser 00:49:05 to our advertiser partners. I mean, that's really, everything we're talking about today I should point out, they not only benefit us, they benefit all of U.S. stakeholders in the company. But they really benefit our advertising partners as well as the advertising agencies to work with them and their clients and help our advertisers around the scope of advertising dollars more effectively. And these events are an important part of that and they prove to be excellent way for us to penetrate new advertisers and brands, introduce them to our platforms as well as really get repeat advertisers back like Macy's and Pepsi and StateFarm and MasterCard. They're really just great examples of advertisers that continue to be with us as partners.

Okay. Thanks. And you also mentioned Carrefour, is there any way that we should think about that as we think about our numbers going forward for 2016?

Nothing really new right now. We were the incumbent in Carrefour and just feel great about that partnership and great about that one.

Okay. Thank you.

That concludes the Q&A portion of our call. Thank you every one for joining back.

And thank you, everybody. Really appreciate the questions very, very. Bob and I then the rest of senior management team, really appreciate the support and will be here for any other questions. Thank you very much.

Ladies and gentlemen, that does conclude the presentation here for today. We do thank you for your participation and for using our executive teleconference service. Today's conference will be available for reply from 10:30 AM today through August 30. You may access this replay by dialing 1-800-475-6701 and entering the access code of 364667. International dialers may access the same replay by dialing 320-365.