iHeartMedia, Inc. (IHRT) Q2 2016 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the 2016 Second Quarter Earnings Conference Call for iHeartMedia and Clear Channel Outdoor Holdings, Inc. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, today's call is being recorded. I would now turn the conference over to your host, Eileen McLaughlin Vice President, Investor Relations. Please go ahead.

Thank you for joining our 2016 second quarter earnings call. On the call today are Rich Bressler, President, Chief Operating Officer, and Chief Financial Officer; and Brian Coleman, Senior Vice President and Treasurer. We'll provide an overview of the second quarter 2016 financial and operating performances of iHeartMedia, Inc. and its subsidiaries: iHeartMedia Capital One, LLC and iHeartCommunications, Inc., Clear Channel Outdoor Holdings, Inc., and Clear Channel International BV. For purposes of this call, when we describe the financial and operating performance of iHeartMedia, Inc. that also describes the performance of its subsidiaries: iHeartMedia Capital One, LLC and iHeartCommunications, Inc. After an introduction and a review of the quarter, we will open up the line for questions. Before we begin, I would like to remind everyone that this conference call includes forward-looking statements. These statements include management's expectations, beliefs, and projections about performance and represent management's current belief. 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 the pacing data, it reflects orders booked at a specific date versus the comparable date in the prior period and may or may not reflect the actual revenue growth rate at the end of the period. During today's call, we will provide certain performance measures that do not conform to Generally Acceptable Accounting Principles. We provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases and the slide presentations which can be found on the Investor Section of our website iheartmedia.com and clearchanneloutdoor.com. Please note that our two earnings releases and the slide deck on our website are integral to our earnings presentation. They provide a detailed breakdown of foreign exchange and non-cash compensation expense items as well as segment revenues 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, August 4, and may no longer be accurate at the time of a replay. With that, I will now turn the call over to Rich Bressler.

Thank you, Eileen, and good morning, everyone. Thanks for joining us. We're pleased with the results we've achieved this quarter. With iHeartMedia extending its growth momentum, Americas outdoor improving its operating performance, and International outdoor delivering an overall increase in revenues. We are continuing to execute on right strategies to efficiently leverage our growing capabilities as a multi-platform 21st century media and entertainment company. And we keep investing in strengthening our businesses, enhancing our offerings to consumers, and developing innovative marketing solutions for advertisers and agencies while maintaining our focus on tight operating and financial discipline. Today's earnings call marks my third anniversary here at iHeartMedia and it's gratifying to see how much progress the company has made and how much more we can achieve with the opportunities ahead of us. For example, at iHeartMedia, we continue to benefit from favorable trends and help consumers in this media. As we highlighted to you before, broadcast radio remains the U.S.'s biggest and most stable media reaching 93% of all American adults 18 and over and radio's reach among millennials is nearly as high at 92%. Compare broadcast radio's reach of 93% and TV's reach of 88% of American adults over 18 and just 78% reach for millennials versus radio's 92% reach for millennials. Further only about half of the people aged 18 to 24 now watch broadcast TV in primetime. And the 93% reach of broadcast radio is even higher than smartphone's reach of 77% of Americans 18 and over. Importantly, smartphones also help us extend our reach to iHeartRadio and our stations websites. In fact, we reach over a quarter billion listeners every month and are one of only a few media players in the U.S. with a reach over 200 million people per month along with Facebook and Google. This extraordinary reach gives us the ability to create dynamic new platforms like digital, social, and live events. Not only has broadcast radio maintained its impressive reach in nearly 15 years but recent Nielsen data shows that broadcast radio's time spent listening was up in the first quarter over the previous year. Let me repeat that, broadcast radio time spent listening was up in 2016s first quarter year-over-year and the continuing trend among consumers is to spend more and more time out of home, which we believe strongly benefits both our radio and outdoor businesses. A new joint analysis we released early this year with media best heart indicates that audio and out of home advertising deliver the strongest opportunity to influence consumer purchasing decisions shortly before they happen when compared to print, TV, digital video, search, and social media. And we know that audio as nearly three times the impact of digital video and two times the impact of TV across all stages of the purchase journey. All this underscores the valuable scale and depth of the reach that radio and outdoor provides marketers. And we're focused on monetizing these promising opportunities as the media and Entertainment Company with the largest reach of any broadcast radio or TV outlet in America. We believe it is critical to do business with advertisers in the same way that the digital advertising industry does today. Our goal is to provide marketers with a frictionless programmatic solution that looks and feels like buying digital advertising to them and integrate seamlessly into their planning and buying systems. But we give them the enormous reach of broadcast radio and iHeartMedia truly the best of both worlds. In April, we started offering automated and data-infused ad buying for the first time to our advertisers of course our broadcast radio stations. And further advancing our goal in the past quarter we've expanded this capability with the launch of the first programmatic project marketplace to the digital radio in the United States. This marketplace allows select agencies and brands to access iHeartRadio's premium inventory using a combination of first and third-party data segments to target their audiences among iHeartRadio's millions of dedicated listeners. That's because we were able to use data from 88 million registered iHeartRadio listeners and extrapolate that over the quoted billon listeners we reach each month. With audios already significant and growing role in the lives of today's consumers, this new marketplace reflects our commitment to evolving and increasing the ways' that marketers can reach and influence their target audience. At the same time, we continue to grow the scope and quality of content we provide to our listeners. Just this week we announced a renewal and extension of our partnership with Rush Limbaugh. Rush is the most-listened-to national radio talk show host in America. Our long-term multi-platform agreement reflects The Rush Limbaugh Show's status as the top rated program in Premiere Networks' industry leading talk lineup of nationally syndicated properties. Rush continues to deliver impressive results for affiliates and a wide range of advertisers by providing an unmatched connection to millions of loyal fans. We're proud to continue our partnership with Rush and look forward to sharing many more years of success. This quarter, we added two other new collaborations that are also great examples of our commitment to quality content. Web partnering with NBC News enable iHeartMedia's 24/7 News Network, the world's largest radio-only news source, to provide its 1,000 affiliated radio stations and iHeartMedia's more than 850 broadcast stations with hourly newscast and access to other NBC News broadcast coverage. In addition iHeartRadio will feature NBC News Radio that will carry the same national and international news content, as well as primetime specials, political events, and breaking news reports. And we're very excited about our recent partnership with WeWork to create a new live station at iHeartRadio called Work Radio that features an original mix of music and exclusive content sent it on entrepreneurship and creating your lives work. Work Radio is now streaming across all of WeWork's locations and will also be available to the iHeartRadio app and website. And both in Americas and international outdoor we're streamlining the business to focus on our core markets and strategies. We're also making investments in innovative digital technologies and winning new contracts for prime display locations that provide the flexible and creative solutions our marketing partners need to reach consumers. Americas outdoors results this quarter benefited from its new linear operational structure and our launch of the one of the largest out of home immediate installations available in the Los Angeles area and a major airport contract win in Minneapolis-St. Paul will help contribute to future revenues. International outdoors overall revenue increased, but we are facing challenges in certain markets that are affecting results such as the loss of the London bus shelter contract. That said we are optimistic about the continued success of Adshel Live and our other initiatives in the UK. And we're making substantial inroads in Spain with the win of new contracts in Madrid and Barcelona would start in the second half of this year. Of course, identifying critical consumer trends and launching strategic growth initiatives is one thing. Making sure that our potential marketing partners know about them is just as vital. Earlier this summer, both iHeartMedia and Clear Channel Outdoor participated in the Prestigious Cannes Lions International Festival of Creativity. At the week-long festival, we showcased our portfolio of products, media platforms, content, creativity, technological innovation, and personalities to the world's biggest global brands and agencies in advertising, creative, and media. For the third year in a row, iHeartMedia served as the Festival's official radio sponsor while Clear Channel International was the official sponsor of the Outdoor Lions Awards for the seventh consecutive year and took on four Bronze Lions. We are excited about the future of all of our businesses, with consumer trends running our way, as we continue to drive our growth. Our core strategies are crafted to maximize the power of sound, the power of outdoor, the power of social, the power of data, the power of mobile, and the power of our national local brands, as well as our industry leading personalities. Now let's turn to Slide 4 and review our key financials. This quarter, we have included operating income in our discussion on the consolidated and segment basis in addition to OIBDAN. As part of our GAAP results discussions, I will also talk about our results adjusting for FX and excluding the impact of the nine non-strategic Americas outdoor markets that we sold in January to improve compatibility of this year's quarterly results to the prior years. I will refer to these results as adjusted. Additionally in this discussion, I will refer to direct operating and SG&A expenses as expenses. Consolidated revenues increased 1.2% in the second quarter driven primarily by growth at iHeartMedia. Adjusted revenues were up at 3.3%, as iHeartMedia were up 3.2%, Americas outdoor up 4.6%, and International outdoor up 2.2%. Operating income was down $159 million due to the $99 million gain recognized in the second quarter of 2015 related to our sale of the radio towers and the $57 million loss recognized in second quarter of 2016 upon the sale of the company's outdoor business in Turkey. This loss on sale included a $32 million cumulative foreign exchange adjustments. Adjusted OIBDAN grew 3% to $484 million. This performance highlights our financial and operating discipline and provides us with the flexibility necessary to continue to manage our capital structure in a prudent manner and allows us to keep evaluating opportunities to strengthen our balance sheet and businesses. I will provide additional detail on these results as we discuss each segments financial performance later in this presentation. Now let's review our key non-financial highlights. Moving to Slide 5 at iHeartMedia we continue to focus on being everywhere our listeners want us to be with the products and services they expect. With over quarter billion monthly listeners in the U.S. and over 85 million social followers, iHeartMedia has the largest reach of any radio or television outlet in America, serving over 150 markets through 858 owned radio stations. And through the success of our multiple platforms based on the power of our broadcast radio assets, we have been able to increase iHeartRadio's registry users to 23% year-over-year to reach 88 million as of June 30, 2016. We hit that milestone faster than any other digital radio and music service. Our total listening hours continue to grow, up 16% in the quarter, with mobile listening accounting for 73% of total digital listening. And our downloads and uploads exceeded 1 billion at quarter's end. To build on the success of our digital radio platform and because we know how the advertising industry is doing business these days, we are now, as I mentioned earlier offering digital radio's first programmatic private marketplace. Live Events continue to be an important part of our sales strategy as they enable us to offer number of unique marketing solutions to advertisers and agencies while strengthening consumer relationships. They also provide great promotion and brand building opportunities for our stations as well as additional promotional opportunities and exposure for the artists we work with so closely. In addition to being a significant differentiator in sales, branding, and promotions, events are an important revenue driver for results. This quarter included the iHeartRadio Music Awards, the iHeartCountry Festival, and the iHeartRadio Summer Pool Party. During our first quarter earnings call, I spoke about the iHeartRadio Music Awards which took place on April 3. As I mentioned it was broadcasted to millions as a Live TV multicast as well as a Live simulcast on iHeartMedia Broadcast stations and iHeartRadio Digital and mobile platform generating 150 billion social media impressions. To put that in perspective, 2016 Oscars generated 46 billion social impressions and the 2016 Grammy's generated 33 billion social media impressions. The Third Annual iHeartCountry Festival hosted Country Music's biggest superstars on April 30 and was streamed live on iHeartRadio.com watch AT&T and at iHeartMedia Country radio stations aired on the AT&T Audience Network on May 13 through DirecTV and U-verse and became a dominant social media topic throughout the festival weekend. The 2016 iHeartRadio Summer Pool Party took place on May 21 at the Fontainebleau in Miami Beach and was streamed live on CWTV.com and iHeartMedia Mainstream Contemporary Hit Radio, Rhythmic Contemporary Hit Radio, and Hot-AC stations nationwide. #iHeartPoolParty trended number one on Twitter and on June 1 this show aired on The CW Network for the fourth consecutive year. Turning to outdoor on Slide 6, at both Americas and International Outdoor with both start offering the creative marketing solutions and flexibilities that our advertising partners want in order to reach consumers who are increasingly spending more time out of home. In the Los Angeles area, we are launching a series of seven new wallscapes and four large vertical bulletins at the much anticipated Sunset Millennium property located in the heart of Sunset Strip in West Hollywood. The bulletins are from 60 to almost 90 feet high and 20 feet wide and the wallscapes were even larger. And those listeners in the New York Metropolitan area may have noticed the presence of iHeartRadio's nationally recognized logo in one of the city's most iconic billboards atop the old Ruppert Ice House overlooking the Triboro RFK Bridge leading to Manhattan. New billboard is over 8,000 square feet, the size of 12 roadside billboards and is visible for miles. The billboard will display digital LED screens that promotes iHeartMedia's iconic New York City based radio stations as well as upcoming events. In addition, we signed a new 10-year partnership to install and manage state-of-the art digital assets and terminal-wide digital networks in Minneapolis-St. Paul International Airport. At International Outdoor we have added 528 new digital displays in the quarter and due to the success of Clear Channel's UK Adshel Live network we plan to expand that network as state-of-the-art digital screens. Our team in Spain turned in a very successful start to the year. They were awarded a multi-year contract to manage Madrid's street furniture. The street furniture will incorporate 1,610 advertising panels into the urban environment, 300 of which will be the most innovative modern street furniture digital displays in the world now making us a major player inventory. And the team also recently won contracts to manage Barcelona's Outdoor Street Furniture Advertising, increasing our presence in the Barcelona area. Now let's review our segment plans. Starting with iHeartMedia on Slide 7, as you can see iHeartMedia has extended its growth momentum with revenues up 3.2% and excluding political up 3%. Our results this quarter reflect our growing audiences and progress across broadcast radio and digital. During the quarter, we stated three full events I covered earlier. As you may remember the iHeartRadio Music Award was included in the first quarter of 2015 results and so a small portion of our revenue increase in this quarter is due to timing. Traffic and weather continues to be a valuable marketing solution for advertisers as they appreciate the value of advertising during our traffic and weather reports. And as I mentioned earlier our 24/7 news network will be collaborating with NBC News to bring new content to its affiliated radio stations, iHeartMedia's Broadcast stations and iHeartRadio. The advertising categories with the strongest year-over-year dollar growth in the quarter included medical healthcare, food and beverage, and restaurants and entertainment. And once again we outperformed the radio sector as measured by Miller Capital. Expenses were up 2.8% related primarily to variable compensation, investments in our sales capabilities, higher content and programming cost, related to higher revenues and an increase in spending with strategic revenue and efficiency cost. Operating income was up 3.6% and OIBDAN was up 4%. Now let's review our third quarter pacings. These pacings are just a snapshot in time and certainly don't include everything we do as a company. iHeartMedia's third quarter pacings through the end of last week are up 1.7%. And just as a reminder, historically the majority of political advertising revenues will be in the fourth quarter. As we look at this quarter and the rest of the year, we are in the same advertising marketplace right now as many other ad based companies that you have been hearing from. We have the same questions as to how number a factors will affect the marketplace, the Olympics, the uncertainty around the November Presidential Elections, the continuing trend of advertising we place closer to the airing date and the general overall uncertainty that the country's economic prospects. Having said that, we continue to focus on driving advertising revenue in whatever environment we find ourselves in. And at the same time, we remain laser focused on vigorously managing our process. Now on to Slide 8, Americas Outdoor with the sale of nine non-strategic U.S. markets now closed, the Americas Outdoor team is able to focus fully on the core strategic market and are executing their strategies. Their ability to streamline operations and simplify their buying process to efficiently deliver innovative campaigns and leverage their assets is improving our results. Revenues were down 4.6% due to the sale of the non-strategic markets and FX more importantly adjusted revenues were up 4.6%. Revenue growth was driven primarily by digital billboards, our ability continue to invest in digital and monetize these billboards has been a significant contributor to our growth in the quarter both on new and existing deployments in addition to improvements and occupancy. The airports, we recently added such as the Minneapolis, St. Paul and the two DC airports we discussed last quarter have also expanded our offerings for traffic. And our printed bulletins are growing across both local and national with higher rates of occupancy. The categories that contributed to the most of the growth included automotive, travel and transportation, and beer and wine. Expenses were down 4.4% resulting largely from the sales of the non-strategic markets and foreign exchange fluctuations. Adjusted expenses were up 3.9% due to higher variable site lease and compensation expense related to increased revenues and a higher property tax expense. Operating income declined 3.6% primarily as a result of selling in the non-strategic markets. More importantly, adjusted OIBDAN was up 5.6% due to increase in revenues as well as our focus on financial discipline. As far our third quarter pacings, which again reflects just one point in time and are adjusted to the sales of the nine non-strategic markets in foreign exchange they are up 0.8%. Turning to Slide 9 and our International Outdoor financials. At International Outdoor, our revenues were up just over 1% and after adjusting for the impact of foreign currency exchange of $3 million, revenues increased slightly more than 2%. Growth is being driven once again by the strength in Australia particularly with the success of our digital investments there as well as in France and China. Offsetting that slightly was the decline in the UK. Even though the UK revenues were down resulting from the loss of the London Bus shelter contract I would point out that our team there has done a tremendous job in maintaining their strong relationships with the UK agencies and boosting growth in other areas such as our successful Adshel Live displays while carefully managing expenses. Expenses were up 2% on a reported basis and were 2.9% after adjusting for foreign exchange. The increase in expenses is attributed primarily to higher site lease, production and compensation expenses related to higher revenues, as well as greater office expenses in China and the UK, partially offset by lower site lease expense in the UK. Operating income increased 4.5% due primarily to lower depreciation and amortization expenses. OIBDAN was basically flat after adjusting for FX. Our third quarter pacings for International Outdoor are up 3.7%. Once again pacings are a point in time metric and as you would expect there is inherent level of volatility week to week. Also these pacings have not been adjusted to exclude the impact of the loss of the London Bus Contract. Before we go into the rest of the slides, I would like to add a few comments on CCIBV's results. CCIBV's consolidated revenues were flat at $319 million. The impact from foreign exchange rates was $4 million. CCIBV's operating loss in the quarter was $39 million as compared to operating income of $17 million in the prior year's quarter. The decline was mainly due to the previously mentioned $57 million loss on the sale of the outdoor business in Turkey. On Slide 10, we show some of the items in the quarter that affected year-over-year comparability. The impact of foreign exchange rates drove decreases in both consolidated revenues and consolidated expenses by $6 million and $5 million respectively. As I mentioned earlier, these results have been adjusted for the impact of selling the non-strategic Americas Outdoor markets. As you can see, these markets generate $27 million in revenue along with $14 million in expenses in the second quarter of 2015. In addition at iHeartMedia we generated $7 million of political advertising revenue compared to $5 million last year. Katz, our media representation business included in other, delivered approximately $3 million of political advertising revenue in this quarter versus only $1 million last year. Turning to Slide 11, capital expenditures for the six months ended June 30, 2016, was $124 million compared to $125 million last year. The majority of the capital is being invested in our international markets as we continue to win new contracts and expand our digital displays and grow our street furniture business. Moving to debt on Slide 12. We continue to stay focused on maximizing the value of our business and improving our capital structure and liquidity through capital markets and strategic transactions. As of June 30, iHeartMedia Inc. debt was $20.8 billion. As I said earlier we continue to pursue growth on the top and bottom lines across our business segments while taking disciplined proactive steps to address our capital structure needs, interest expense payments, and liquidity needs. On July 15, as we have done in the past, we repurchased $383 million aggregate principal amount of iHeartCommunications 10% senior notes in 2018 for an aggregate purchase price of $222 million. In combination with the $120 million, we purchased in 2014 the company has now repurchased nearly 60% of the original $850 million issued and reduced cash interest expense by over $15 million a year. Debt repurchases remained a component of our strategic plan to strengthen our capital structure. Back to the slide, our consolidated weighted average cost of debt was 8.5% as of June 30 flat with year-end. We expect cash interest expense for the full year 2016 to be $1.8 billion. As you will see on the next slide, as of June 30, 2016, consolidated cash totaled approximately $952 million. After deploying $222 million to repurchase 3 million senior notes pro forma cash position would be approximately $730 million. In 2016, we have $193 million in senior notes maturing. In 2017 our asset base revolver matures while we expect to be able to extend the revolver before its maturity in December of that year. As of June 30, 2016, we have $230 million in borrowings outstanding under our revolver. Now we will turn to our balance sheet information and the debt ratios on Slide 13. As I just mentioned iHeartMedia's consolidated cash totaled approximately $952 million at June 30 and our secured leverage ratio was 6.6 times. Clear Channel Outdoor ended the quarter with $440 million of cash with its senior leverage ratio at 4.0 times and its consolidated leverage ratio at 7.6 times. The largest use of cash for iHeartMedia during the six months ended June 30 was interest expense which totaled $874 million. Clear Channel Outdoor used cash of $179 million for interest and paid dividends totaling $754 million. So before opening it up for questions, I want to thank you again for joining us this morning. We continue to strengthen our position as a leading 21st century multiplatform media and entertainment company and we are pleased with the progress that we have made in building out our capabilities in broadcast, outdoor, events, mobile, social, and digital. Our company's efforts have been enhanced by our embrace of digital, as opposed to diminished by it, as other media companies have been. These platforms provide us more opportunities to connect with our consumers on a daily basis. Our brands also present true unique opportunities for advertisers, agencies, and brands to engage with the right audiences at the right time with the right message and the right level of cost efficiencies which we believe no other major media company can have. We believe that both radio and outdoor are underutilized and under-monetized by advertisers. And we are taking aggressive steps to change that since one of our biggest growth opportunities lays in more effectively monetizing our existing portfolio of assets. And we are more mobile than what traditionally considered to be mobile, our social footprint makes us one of the leading social media companies in the U.S. that doesn't own its own platform and the concerts, road shows, and other major events we stage have positioned us as one of the top live event companies in the U.S. Our investments are paying well and we are pleased with the growth we have shown this quarter. Now let's open up the line for questions.

Thank you. [Operator Instructions]. First question is from the line of Avi Steiner. Please go ahead.

Thank you for taking the questions. First one hopefully may be one, I assume based on some commentary in 10-Q there was legal expenses in the second quarter in corporate. But if you could tell us what those were so that might give us a sense of may be what those one-time costs were?

Hey Avi it's Rich. Good morning. So answer to -- so we don't break out other legal expenses by number of both, you could assume and everybody is aware that we've had some litigation activities in second quarter and some of that litigation activity currently and that's what resulted in increase in the expenses.

Okay. Thank you. The 10% note balance from assets right is $347 million, does this give you comfort with respect to perhaps how the orders may look in your financial position in the coming year-end filing?

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

That is helpful. And then kind of as I model it NerdWallet share. You generated or didn't generate free cash flow this quarter in what historically has been lower interest, higher EBITDA quarters, so curious if their liquidity sources we may not be thinking about that you can pull or some assets held or something that otherwise may help in the back half as we think through the rest of the year?

No we are a big company, we have -- we have lots of assets and we continue to evaluate what is optimal for the company. We continue to invest in the company, when appropriate and have assets that are worth more to somebody else than they are to us, we made divested assets. So big company, lots of operations, I would say that we continue to evaluate where we haven't and sure there can be liquidity levers in the future. I think just look at what we have done in the past and we have seen the company do, be pretty creative on optimizing its balance sheet.

Hey that's fair. I'm going to end it on this one and thanks again for the time. I think Richard mentioned debt repurchases being a component of your strategic plan to strengthen cap structure you obviously bought in those 10s. I was curious if your view of what you want to accomplish maybe last year with the capital structure has changed given the higher prices we are looking at on some of the junior debt securities today?

Well I think there is a couple of components that rightsizing the capital structure and Richard certainly wants me to say first and foremost the focus is on operations and continuing to grow EBITDA. I don't make any money for the company but I can work on the capital structure side, I do think no there are opportunities to capture discounts, to reduce cash interest expense, but you can read our trading levels today versus where they were in Q1, you know as well as I do as prices have gone up and thus the opportunities are less. But that doesn't mean there aren't opportunities made us to think about them a little differently, be a little choosier about what we select to do, be a little more patient, we continue to have constructive dialogues with investors that are willing to have constructive dialogues. That led to an opportunity post Q2 as we've talked about and we will continue to have those discussions and deploy our excess liquidity in the best way that we view possible.

No hey Avi, just one thing I would say in summary to I think kind of wraps up a bunch of your questions. We are and I think as evidenced by the results, as Brian alluded to continuing to focus, driving the operations of the company in the environment that we operate in, continue to outperform, continue to outperform in marketplace and at the same time, we are looking to optimize the capital structure and I think if you go back, I think, I noted upfront is my third year today, probably like almost to the day anniversary here. And if you look at the optimization of the capital structure you pointed out a couple of regional book back in number one, the sale of outdoor stock were back to the Australian-New Zealand JV that we had the radio interest in benefiting and doing good job in monetizing to recently selling their non-strategic assets for the outdoor company in nine markets where the growth great for the buyer, growth for the seller, [indiscernible]. And so you could rest assure that's just kind of daily, it's either the other day we drive operations and we get profit margin balance sheet on a daily basis.

Our next question is from the line of Jason Kim. Please go ahead.

Hey good morning guys. Thank you for taking my questions. First on the political revenue side, I know it's still early in the year but just wanted to get your updated thoughts about the outlook for 2016 what you are you seeing, what are you hearing out there in terms of your political revenues outlook as we closer to November?

Well look it's early in the political cycle as we all know or anything more than we already including what we all read and heard this morning in the papers. I think the only thing to do now is being not very exciting but pretty unpredictable election cycle. In terms of what we can control may and just also as we remind that the bulk of our political revenue as we have always said earlier is going to come in Q4 of this year. We are very confident in our Houston-based hotels and we've talked about this a couple of times the last few quarters, we hired a political media veteran Kenny Day, he and his team are just doing an outstanding job and we have pretty high expectations in more than two hotels, limited expectations and they have done a great job in keep broader and mobilizing our local seller consistent campaigns not just the national campaigns but also the local campaigns and targeting specific demo audience reach. And I can say here we are confident that we think we're well positioned to maximize our share of local ad spending. Clearly it's been a little bit slower as you know I think well in your question then the last hold [ph] until election year and even in the first quarter pretty normal for spending. We've slowed down, we've seen other times before convention almost a repeat historically the majority of the spend we encouraged in the fourth quarter, So we continue to be optimistic based on the selling machine that we built led by Henry Davidson [ph].

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

Sure it's a couple of different points. So first and foremost I've talked this about before with Scott Wells, Bob McCuin the rest of the Outdoor team and I think six, nine months ago, when we made -- when we did the changes to doing inside the [indiscernible] between we talked about that we would start to see improvement and I think if you look at the numbers today, delivery on apples-to-apples basis ex-FX revenue growth in Americas Outdoor is 4.6% or demand growth of 5.6%, we feel good about that. And so that's also watching move of continuing to challenge our working with the outdoor market team on streamlining this organization. And like I said I think they've done outstanding job in the last six months and received some manifest itself and your numbers you add to that, so that from an operating standpoint, there has been some change in mix. Remember that we will -- we still are down on the LA, we are still down on the LA digital board and just so although we got 50 digital boards in and around the LA market and we have been able to convert about 80 of the digital boards in LA back to print temporarily, so we are trying again to get the best out of that asset mix that we can right now but we are still down in digital boards and we are not up to where we need to be. Although I will mention this is a side, we've got a great new offering which I pointed out in the script, in the earnings conversation we have seven new wallscapes in both Sunset Millennium Premier real estate project in West Hollywood, so we feel great about that. And we also by the way last piece is we also have forensic contracts that we had in the past which operated slightly lower margins. So longwinded answer of course it's a mixed bag but I think you should feel good about continuing election of the business.

Got it. And then just one question for Brian on the balance sheet given just lower amount of debt outstanding or accounting view in 2018 now, what's your current thought process regarding taking advantage of liability management transactions other than your new debt at maturities?

It's good question, not always. I have always kind of had to position you don't want to create a liquidity problem when you otherwise didn't have one and so having some of the 18 stack taken out certainly it's helpful. But you know we still -- we still need to focus on liquidity first and make sure that we are comfortable with respect to the investments we want to make and making sure our operations flow smoothly between now and our debt maturities and making sure that we can adequately address our 2016 and 2018 debt maturities. So again I want to keep an open mind and look at all opportunities, feel a little better about 2018, there is still some maturities and of course we have got the 2016 maturities as well but we think are manageable but we want to make sure that we don't create that liquidity event. So kind of a non-answer but it's a balance that we look at marginally I think we feel better about 2018 and perhaps that opens up some opportunity but we never want to forego the security that we feel on our liquidity position.

Okay. Our next question is from the line of Lance Vitanza. Please go ahead.

Hi guys. Couple of questions from me, the first on core trends, I found your comments around the outlook, just a little bit ambiguous and that you referred the broadcasters from my perspective most broadcasters seem to feel pretty good about where things stand, so are you saying that despite limited visibility, you feel good about where the company is headed in the back half of the year that would seem to fit with the rest of the commentary but when you got the pacings it just, it was a little bit pleasing to me.

Well so I think Lance two separate things, right. As I always point out and I know you guys I'm sure try to [indiscernible] pacings are just a snapshot in the given point in time. And I would and my only point on bringing up late placing advertising is I think we are all seeing in the media industries and I followed and obviously talking to everybody else in the media industry, we can overview uses as well as the ones that just came out this morning. I think there is two things. One is we're all experiencing later placing media which I think goes to the point about pacing has been just a given point in time. And then I think the other piece out there is just about the general comment, there is lots of factors affecting it, so I don't think what I'm saying and quite frankly I'm sure I'm saying is no different than you're hearing from the rest of the media industry that's out there. We are all going with the election and the uncertainty around that, we all going with the Olympics and the uncertainty around that, we are all looking at what's happening with GDP growth and again we are looking at both here and what happens outside the United States because of CCI. So I think the only point that you hearing me say is there is lots of moving pieces here in terms about the future, some of them are in our control and some of them are out of our control but one thing which I pointed out in my opening remarks, we are laser focused on driving revenues in this environment and in many environments that we operate in. We are laser focused in managing our cost base to maximize the revenue and growing the most down the EBITDA over the down line, because there is no confusion here as we're going to drive the operating results of the company. And we continue to like our position, we seem to like our assets, I noted that we outperform the industry and in terms of when we look at Louis Kaplan. And in terms of the relevance of the medium just last thing I could say as you brought up competitor outside the media companies if you look, I think if you look at our operating performance over any given time again as I noted in my opening remarks, we stack a very, very well operating performance to anybody in terms of just look at everybody's North American results are broadcast relating to lot on a year-over-year basis which is great, our digital ratings were up significantly, the broadcast ratings were up just to be clear. I think if you look at TV ratings which are fundamentally, we continue to outperform from a ratings basis and will increase. And as we remind, we continue to reach 93% of the U.S. adults 93%, 92% of the radio reach, while TV reach continues to be below at historic high 95% and it's down to 88% of adults and it's down to 78% of millennials. So kind of a bottom line, there is more adults and millennials are reached by AM/FM radio than any other medium and the one thing just it's interesting that came out this morning for everybody on the phone, there is a piece in that just came out today probably I haven't seen immediate and the title of the article is millennials love radio? So I would invite you all to go read that and if you need help getting it, I linked to make sure you get a copy of it. But I think it's just nearly in one page points out the relevance and the strength of radio to the millennial age group.

Well that's a good segway, I wanted to ask you about that those are wonderful statistics about your reach and among millennials in particular clearly a disconnect between those numbers and the perceptions in the markets. When you go into pitch business though, are the ad buyers I mean are they surprised by these numbers, do they push back on these numbers or is this widely understood at this point?

Well first of all our case and perception to when you say not understood in the marketplace, so let's just talk about in terms of the marketplace. One is again these will -- just to be clear, these are not like some other companies put out start generate when we do yields and numbers that are out there. And so the relevance of the medium to the consumers, to the listener getting our products to the listener whatever they are which is what our job is and to drive the ratings and then drive the monetization of those ratings, I don't think there is any confusion from the consumer standpoint in the marketplace out there as evidenced by the listening numbers as evidenced by our ratings that are up year-over-year. I don't think there is any misconception from the channel whether they are DJs in job, for us whether it's Elvis or Ryan or big boy or all of our guys relevant of our DJs or special source with best friend next to you in the car which is what we are and the engagement of our audience and I think there is any confusion there, just I think I pointed this out in my opening remarks, take a look at the iHeartRadio Music award this year, we had 115 billion -- 115 billion social impressions and to put that in context the Grammy's had about 30 billion or lower the academy is about 40 billion. So we had almost four times the Grammy's, three times the academy awards which again shows you how we gauge our audience is in our stations and it shows you how we engage people are with the media. And then when you go to the advertising side which is again our biggest source of upside is with all of us success we've so widely under-monetized which as I have said before, Nielsen says on average we're 6 to 1 ROI, so fairly dollar in advertising gives us on average return on investment just hard facts about everything else on average we give 6 to 1 back and you can see by our results and our performance we are continuing to work through and work with advertisers in continuing to drive results out there. And the good news is we have got all the operating results to drive the advertising revenue and also we have a lot of upside here. Why wish we afford a long sure, but I think again if you go back as I said this is my three year anniversary, if you go back over time and you look at the progression on and since Bob and I have been here learning this company, if you go through rest of the outstanding management team that we have, if you go back and look at operating results translating into revenue, operating results translating into revenue, we will continue to see steady progress.

Well and that's great, I appreciate the explanation. Just I was talking about confusion in the capital markets, not the other markets, but in any case I appreciate that the clarification one last question for me and I apologize if I missed this. But Brian, how did you finance the purchase of the tens, did you use, just in case or did you wind up borrowing against your selling some of the outdoor common stock at broader media? Thank you.

Yes, we use cash.

Existing cash?

That’s correct.

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

I don’t think we disclose what’s in unrestricted subsidiaries, I mean there is a imagination you can go through the balance sheets that the segment disclosure that we have and you can estimate what non-hearing forecast and you can back at outdoor and that gives you non-hearing to our non-outdoor cash and that’s a proxy that people use for the cash and unrestricted subs and it's not a bad way to estimate what cash is in our restricted subs but we don’t disclose assets or update assets in our unrestricted subsidiary.

Our next question is from the line of Marci Ryvicker. Please go ahead.

Good morning. It’s Stephan on for Marci. I’d like to dig into the pacings a little bit at outdoor. It sounds like Americas is decelerating. Are there any comparability items here?

No, I mean again I’m going to say what I said in my opinion remarks and I'm going to what I just said answering the question before pacings are snapshot in the period of time, they don’t include everything they do as a company. The future of pacings have been adjusted for the sale of the non-strategic assets that are out there. And again as an overarching comment there is more advertising being placed in months in quarter closure, closure to the time that the advertising is shown.

Okay. And then on the international pacings that those include the news Spain contracts for the street furniture?

Yes, I mean but there not, there is not being -- those are brand new so, they're not significant at this point in time.

Okay. And then is there any way for digital to be broken out for outdoors America or IR, what percentage of revenues?

We don't break it out, and we don't -- we break out the numbers digital board, which we've mentioned, but we don't break out because we don't look at our business that way. We're selling results to advertisers and that's what advertisers are focus on. So we don’t break that separately the digits of results in any of the segments of our company.

And next question is from the line of Aaron Watts. Please go ahead.

Everyone thanks for taking the questions, just one for Brian, one for Rich. Brian, quickly what's the plan for the bonds you’ve repurchase will they remain at the unrestricted sub and then also will they be canceled or retired or remain outstanding?

We have not canceled those bonds. But obviously reserve the right to do so going forward, but obviously once you do that you can't undo it. So I don't know that there is no long term determination on what to do with the bonds, but currently they remain outstanding at the unrestricted subs.

Okay, and then, Rich, just one for you. The 16% gains and iHeartRadio certainly seems like a positive data point, just serious about your monetization efforts around that increased listening on that platform and also maybe you could talk about Ad Board on iHeartRadio as well.

I'm not call clear the question is on the tab load. We did, we achieved I think and thank you for saying that about 16% gains we achieved also noted the highlight we achieved $88 million iHeartRadio registered users as of June – the end of June which is 23% growth on year-over-year and we've had over a billion downloads of uploads of our part. So we feel great about that. And again on the monetization front as I said I think we continue to do a good job on the monetization front in terms of monetizing or listening at the same time our greatest opportunity if we are widely under-monetized based on the effectiveness of the moving which I want to do a little bit before and I think in response to that I can Lance's earlier question.

We have no question in queue at this time.

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

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