Company: IHETW
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001628280-25-051036
Chunk: 119

Company: iHeartMedia, Inc.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 2
Chunk 119
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 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 1, 2025.

FCC licenses valued using a market approach estimate the fair value by referencing recent transactions involving comparable spectrum assets. This method considers observable market data, adjusted for differences in signal strength and market size.

Considerations in developing these assumptions included the expected impact on advertising revenues given the current market uncertainty, ranges of expected timing of recovery, discount rates and other factors. Based on our testing, the estimated fair value of our FCC licenses was below their carrying values. As a result, we recognized a non-cash impairment charge of $208.5 million on our FCC licenses.

The goodwill impairment test requires us to measure the fair value of our reporting units and compare the estimated fair value to the carrying value, including goodwill. Each of our reporting units is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values were also estimated and discounted to their present value. Assessing the recoverability of goodwill requires us to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on our budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these