With its share price down 56.3% from six months ago and off by 38.2% since February 28 and continued challenges leading to a downward Q1 2023 revenue forecast, iHeartMedia has moved forward with an initiative that CEO Bob Pittman and CFO Rich Bressler told employees in an internal memo distributed Friday is “forcing us to make tough choices on costs and priorities.”
The note, signed by “Bob and Rich,” was sent to the iHeartMedia “team” on Friday. Its contents were confirmed by an iHeartMedia representative contacted by RBR+TVBR. While Pittman and Bressler note that the company has made “great strides” in its business and has built “a leadership position across all audio platforms” thanks to the team’s “extraordinary efforts,” the company is “not immune from the headwinds caused by the economic pressures we read about in the headlines every day.”
That’s why the iHeartMedia leadership team has decided to do everything it can “to get through this difficult economic time while protecting our employee base as much as possible.”
To do that, iHeartMedia is implementing the following “necessary cost savings”:
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Temporarily suspending the 401(k) match starting in iHeartMedia’s next pay period and for future months “until the advertising marketplace improves.” Any contributions made so far in 2023 will not be affected.
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The company “will only be backfilling mission critical roles.”
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The iHeartMedia expenses will be curtailed by “stopping or reducing all discretionary spending, including non-essential T&E, overtime, outside vendor spend, temporary contractors, etc.”
“These measures are part of our proactive plan to keep our company healthy in the economic slowdown and to be fully ready for an economic recovery,” Pittman and Bressler said, concluding their memo by noting their appreciation for team members’ commitment to iHeartMedia, and to the communities and partners its stations connect with. “We are confident we will successfully navigate through this period and be well-positioned for growth when the economic pressures subside,” Pittman and Bressler said.
On February 28, iHeartMedia, the nation’s largest owner of commercially licensed broadcast radio station released fourth quarter earnings reflecting greater EBITDA and higher revenue, compared to one year earlier. Unlike other companies in the media space, it took a small impairment charge in the quarter of $160,000.
On an annual basis, however, iHeartMedia’s net loss widened, growing to $262.67 million from $158.39 million. And, its Q1 2023 consolidated revenue is expected to decrease by approximately mid-single digits, with January down approximately 1%.
While the company says it remains committed to reaching its long-term target of approximately 4x net leverage, net debt stands at $5.078 million. That, combined with the downward revenue forecast, triggered a Wall Street selloff of iHeartMedia shares.
At the Closing Bell on Friday, IHRT, which trades on the Nasdaq GlobalSelect market, was down 9% to $4.31 — a new post-reorganization low for a stock that returned to trading in July 2019 after iHeartMedia emerged from Chapter 11 bankruptcy protection.
Since trading as “IHRT,” shares peaked at $26.93 per share in June 2021.
