Company: IHETW
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001628280-25-051036
Chunk: 86

Company: iHeartMedia, Inc.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 8
Chunk 86
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 and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast software and media streaming, along with research services for radio stations, broadcast television stations, cable channels, record labels, ad agencies and internet stations worldwide.

Economic Conditions

Our advertising revenue, cash flows, and cost of capital are impacted by changes in economic conditions. Higher interest rates and inflation have continued to contribute to a challenging macroeconomic environment. This environment has led to broader market uncertainty which has impacted our revenues and cash flows. We are monitoring ongoing developments surrounding international trade that may pressure the advertising budgets of our customers and could impact our financial results in future periods. The current market uncertainty and macroeconomic conditions, a recession, or a downturn in the U.S. economy could have a significant impact on our ability to generate revenue and cash flows.

23

Modernization Initiatives

We implemented operating expense savings initiatives during 2024 to streamline our organization and increase automation and the use of technology. These modernization initiatives included headcount reductions and other actions and are anticipated to have approximately $150 million of net savings for full year 2025. Early in the fourth quarter of 2025, we implemented additional initiatives, mainly related to headcount reductions, that are expected to generate approximately $50 million of additional annual savings beginning in 2026. We continue to explore opportunities for further efficiencies.

Impairment Charges

We perform our annual impairment test on our goodwill and indefinite-lived Federal Communication Commission ("FCC") licenses as of July 1 of each year. As discussed above, macroeconomic uncertainty, including persistent inflation and elevated interest rates, has contributed to slowing broadcast revenue growth and declines in margins. These factors have negatively impacted the key assumptions used in the discounted cash flow models which are utilized to value our FCC licenses, particularly the industry profit margins used in estimating the market profitability.

Our FCC licenses are valued using a combination of direct and market valuation approaches. Key assumptions in the direct valuation approach include market revenue growth rates, profit margin, and the risk-adjusted discount rate as well as other assumptions including market share, duration and profile of the build-up period, estimated start-up costs and capital expenditures. This data is populated using industry normalized information representing an average asset within a market. We obtained the most recent broadcast radio industry revenue projections as well as various other sources of data in developing the assumptions used for purposes of performing impairment testing on our FCC licenses as of July