CC Media Holdings, Inc. Reports Results for 2013 First Quarter

CC Media Holdings, Inc. Reports Results for 2013 First Quarter

• OIBDAN¹grew 3% year over year to $267 million, excluding foreign exchange and divestitures

• Revenue declined less than 1% to $1.3 billion, excluding foreign exchange and divestitures

• Prepaid $847 million Term Loan A due 2014 to enhance financial flexibility

SAN ANTONIO--(BUSINESS WIRE)-- CC Media Holdings, Inc. (OTCBB: CCMO) today reported financial results for the first quarter ended March 31, 2013.

"The strength of our businesses was clear in the company's solid first quarter results, which included growing returns from our strategic investments in key digital assets," Chief Executive Officer Bob Pittman said. "Across the company, we are creating unique, engaging solutions for clients that use our unparalleled multi-platform reach. With our advertisers, we are innovating new ways to use our assets to reach consumers more effectively wherever they are - which is increasingly out of their homes. Rather than staying in their connected homes as once predicted, people are now making more mobile connections than ever before. This trend toward the connected consumer plays to the strengths of Clear Channel in broadcast and digital radio and outdoor displays, and we are beginning to make progress in monetizing it."

"Thanks to our operating discipline, we contained costs and kept building momentum in our outdoor and our media and entertainment businesses during the quarter," said Tom Casey, Executive Vice President and Chief Financial Officer. "We made solid progress in our broadcast, syndication and digital businesses. Our operating leverage in Americas outdoor drove strong results from last year's investments, while International outdoor delivered double-digit topline growth from emerging markets. Companywide, past strategic investments are positively contributing to this quarter's results, and we will continue to be proactive about investing in growth areas and refocusing our Outdoor business in Europe. We were also opportunistic in our capital management and successfully completed a private offering due 2021 to help pre-pay all of our 2014 bank debt maturities."

First Quarter 2013 Results

Consolidated revenues decreased $18 million, or 1%, year over year, to $1.34 billion in the first quarter of 2013 compared to $1.36 billion in the same period of 2012. Excluding the effects of movements in foreign exchange rates¹, as well as an $8 million impact from the divestiture of two businesses during the third quarter of 2012, revenues declined $9 million, or less than 1%.

• Media and Entertainment ("CCM+E") revenues decreased $15 million, or 2%, driven primarily by the traffic business, which continues to reflect integration activities. Offsetting this decline was strength in radio stations, including national and digital operations.

• Americas outdoor revenues rose $6 million, or 2%, on a reported basis and adjusted for movements in foreign exchange rates, driven by higher occupancy and capacity on digital displays, strong growth in posters on new advertisers, and growth in airports.

• International outdoor revenues increased $2 million, or less than 1%, after adjusting for an $8 million revenue reduction due to the divestiture of two businesses during the third quarter of 2012 and a $1 million decrease from movements in foreign exchange rates. More robust economic conditions in emerging markets and certain other geographies were offset by weakened economic conditions in other markets, particularly Western Europe. On a reported basis, revenues decreased $7 million, or 2%, compared to the first three months of 2012.

The Company's OIBDAN¹ increased 2%, or $6 million, to $267 million for the three months ended March 31, 2013 compared to $260 million for the same period of 2012. Excluding the $1 million effect of movements in foreign exchange rates and a $1 million reduction due to the divestiture of two businesses during the third quarter of 2012, OIBDAN increased $8 million, or 3%, to $267 million. Included in the 2013 first quarter OIBDAN of $267 million were $9 million of operating and corporate expenses associated with the Company's strategic revenue and cost initiatives to attract additional advertising dollars to its businesses and improve operating efficiencies. OIBDAN for the three months ended March 31, 2012 included $16 million of such expenses, and also included $19 million of legal and other costs related to Brazil.

The Company's consolidated net loss was $203 million in the first quarter of 2013 compared to a consolidated net loss of $144 million in the same period of 2012 due primarily to lower income tax benefits.

Key Highlights

The Company's recent key highlights include:

Media ± Entertainment

• Partnered with Target in March to launch Justin Timberlake's "The 20/20 Experience" album utilizing Clear Channel's multi-platform assets - including radio, online, mobile, outdoor, entertainment, events, contests and talent relationships. Clear Channel ran a first-of-its-kind live "virtual press conference" across 800 stations at the same time to let Justin Timberlake introduce the album and kick off the exclusive iHeartRadio album release party. It was streamed live on iHeartRadio.com, aired on 175 stations nationwide, rebroadcast on the CW Network and attended by fans selected through a nationwide contest. Clear Channel Outdoor featured a countdown clock to the album release party that appeared on 399 of its nationwide digital billboards, delivering 65 million impressions. In total, the Clear Channel campaign generated more than 600 million unpaid media impressions. In its first week on sale, the album sold 968,000 copies and ranked #1 on the Billboard 200, #1 on iTunes in 89 countries and among Target's top three best-selling albums in the last decade.

• iHeartRadio reached 29 million registered users. First quarter 2013 iHeartRadio total listening hours were up 31% compared to the first quarter of 2012. Mobile represented 55% of iHeartRadio total listening hours during the quarter.

• Announced the third annual iHeartRadio Music Festival for September 20-21, 2013 in Las Vegas. Clear Channel will again partner with Macy's for Macy's iHeartRadio Rising Star -- a campaign designed to spotlight America's emerging musicians with the winner performing at the Festival.

• Announced the second annual iHeartRadio Ultimate Pool Party, presented by Visit Florida, at the Fontainebleau Miami Beach on June 28-29, 2013, featuring performances by Pitbull, Ke$ha, Afrojack, Icona Pop and Krewella. To promote the event, Clear Channel launched a national on-air and online promotion across more than 120 of its mainstream and rhythmic contemporary hit radio (CHR) and Electronic Dance Music (EDM) stations.

• Successfully launched Evolution 93.5 in Miami, the second Electronic Dance Music (EDM) format to utilize programming from iHeartRadio's Evolution channel introduced in November 2012.

• Created local news, traffic and weather "Add-Ins" allowing iHeartRadio listeners to insert local content into their custom radio experience to give them greater convenience and control over their online listening.

• Continued to enter into innovative, market-based agreements with record labels - including eOne, Wind-up Records, and Robbins Entertainment - to share digital and terrestrial revenues, building a sustainable business model to drive the growth of the Internet radio industry. To date, Clear Channel has entered into eleven agreements with record labels representing artists including Taylor Swift, Tim McGraw, Rascal Flatts, Reba McEntire, Mumford & Sons, Evanescence, Creed, and Seether.

Outdoor

• Americas installed 11 new digital billboards for a total of 1,046 across 37 U.S. markets.

• Signed a new 10-year contract for a new installation of four 26-foot LED video towers at the Denver International Airport, providing advertisers with the ability to reach travelers visiting the fifth-busiest U.S. airport.

• Partnered with Transport for London to launch "The Chiswick Towers," a new premium roadside digital advertising site consisting of two architectural steel towers featuring double sided LED screens situated on the M4 between Heathrow Airport and central London, one of the UK's most prominent advertising locations.

• Rolled out 10,000 interactive panels in the UK featuring Near Field Communication (NFC) and QR code mobile technologies, reaching 80% of adults every four weeks. In Sweden, introduced the world's first Near Field Communication (NFC) marketing campaign on a public transit system, featuring a subway car branded to look like a retail store of the mobile operator, Three.

• Clear Channel's Peruvian team created, in collaboration with Peru's University of Engineering and Technology, an award-winning billboard that captures humidity in Lima's desert air and turns it in to drinking water, providing local residents with much needed refreshment.

• Pioneered large-format digital billboard networks in January 2013 in México City with 8 digital billboards and in Lima with 10 digital billboards.

• Clear Channel Airports launched its ClearVision TV network at Dallas Love Field airport in April, featuring local, regional and national sponsors' products and services alongside news, sports and entertainment from major broadcast networks including, for the first time, children's programming.

Certain prior period amounts have been reclassified to conform to the 2013 presentation of financials throughout the press release.

¹ See the end of this press release for reconciliations of (i) OIBDAN for each segment to consolidated operating income (loss); (ii) revenues excluding foreign exchange effects to revenues; (iii) direct operating and SG&A expenses excluding foreign exchange effects to expenses; (iv) OIBDAN excluding foreign exchange effects to OIBDAN; (v) direct operating and SG&A expenses excluding non-cash compensation expenses to expenses; (vi) corporate expenses excluding non-cash compensation expenses to corporate expenses; and (vii) OIBDAN to net income (loss). See also the definition of OIBDAN under the Supplemental Disclosure section in this release.

² The Company's operating expenses include direct operating expenses and SG&A expenses, but exclude non-cash compensation expenses associated with the Company's stock option grants and restricted stock. Corporate expenses also exclude non-cash compensation expenses associated with the Company's stock option grants and restricted stock.

³ During 2012, the Company disposed of two international businesses. For the three months ended March 31, 2012, these businesses contributed $8 million in revenues, $7 million in operating expenses, and $1 million in OIBDAN.

Media and Entertainment

CCM+E first quarter 2013 revenues decreased $15 million, or 2%, compared to the same period of 2012, driven primarily by the traffic business as a result of certain contract losses and lower sales resulting from integration activities, and to a lesser extent by Premiere, whose performance continued to improve over the quarter. Offsetting these declines was strength in the stations, particularly in national and digital revenues.

Operating expenses decreased $14 million during the first quarter of 2013 compared to the same period in 2012. This decline was driven by a decrease in traffic costs and music license fees, partially offset by increased digital costs as well as increased expenses related to the growth of our national advertising program. Expenses in the first quarter of 2013 also reflect a $4 million decrease in expenses related to investments in strategic revenue and cost savings programs.

OIBDANdecreased $1 million, or less than 1%, to $213 million in the first quarter of 2013, including expenses related to investments in strategic revenue and cost savings programs of $1 million.

Americas Outdoor Advertising

Americas outdoor revenues rose $6 million, or 2% compared to the same period of 2012, on a reported basis and adjusted for movements in foreign exchange rates, driven by higher occupancy and capacity on digital displays, strong growth in posters on new advertisers, and growth in airports. Partially offsetting these increases was a decline in specialty business revenues.

Operating expenses fell $4 million, or 2%, to $191 million, on both a reported basis and adjusted for the effects of movements in foreign exchange rates. Expenses decreased due to a favorable product mix with increased sales in our higher margin product lines, and also due to the benefits of past strategic cost initiatives.

OIBDAN, on a reported basis and excluding foreign exchange impacts, grew $10 million, or 12%, to $95 million during the first quarter of 2013 compared to the same period in 2012. First quarter 2013 and 2012 OIBDAN both included approximately $1 million of expenses related to certain investments in strategic revenue and cost savings programs.

International Outdoor Advertising

International outdoor revenues were up $2 million, or less than 1% compared to the same period in 2012, excluding $8 million in revenues due to the divestiture of two businesses during the third quarter of 2012, as well as a $1 million decrease due to movements in foreign exchange rates. More robust economic conditions in emerging markets and certain other geographies were offset by weakened economic conditions in other markets, particularly Western Europe. On a reported basis, revenues decreased $7 million, or 2%, compared to the first quarter of 2012.

Operating expenses fell $8 million in the first quarter of 2013, adjusting for $7 million of expenses due to the divestiture of two businesses during the third quarter of 2012. There was minimal impact during the quarter from movements in foreign exchange rates. Operating expenses declined due to lower variable expenses and rent driven by revenue declines in certain markets, offset by higher costs from new contracts in markets with increased revenue. Operating expenses in the first quarter of 2012 included $18 million of legal and other costs related to Brazil that did not recur in the first quarter of 2013. Operating expenses in the first quarter of 2013 also included an increase of approximately $3 million in investments in strategic revenue and cost savings programs.

International outdoor OIBDAN in the first quarter of 2013 increased $9 million, or 45%, to $30 million, adjusting for a $1 million OIBDAN reduction due to the divestiture of two businesses during the third quarter of 2012 and excluding a $1 million decrease from movements in foreign exchange rates. OIBDAN in the first quarter of 2013 included $5 million of costs incurred for investments in strategic revenue and cost savings programs compared to $3 million included in the first quarter of 2012. On a reported basis, OIBDAN increased 32% to $29 million.

Conference Call

CC Media Holdings, Inc. along with its wholly owned subsidiary, Clear Channel Communications, Inc., and its publicly traded subsidiary, Clear Channel Outdoor Holdings, Inc., will host a conference call to discuss results on May 2, 2013 at 4:30 p.m. Eastern Time. The conference call number is 866-233-3841 (U.S. callers) and 612-234-9962 (International callers) and the passcode is 290477. A live audio webcast of the conference call will also be available on the investor section of www.clearchannel.comand www.clearchanneloutdoor.com. A replay of the call will be available after the live conference call, beginning at 5:30 p.m. Eastern Time, for a period of 30 days. The replay numbers are 800-475-6701 (U.S. callers) and 320-365-3844 (International callers) and the passcode for both is 281432. An archive of the webcast will be available beginning 24 hours after the call for a period of 30 days.

Foreign exchange rate movements decreased the Company's 2013 first quarter revenues by approximately $1 million, and had a minimal impact on direct operating and SG&A expenses, compared to the same period of 2012.

The current portion of long-term debt was $68 million as of March 31, 2013.

Liquidity and Financial Position

For the three months ended March 31, 2013, cash flow used by operating activities was $87 million, cash flow used for investing activities totaled $57 million, cash flow used for financing activities was $354 million, and the effect of exchange rate changes on cash was $5 million, for a net decrease in cash of $503 million.

Capital expenditures for the three months ended March 31, 2013 were approximately $62 million compared to $73 million for the same period in 2012.

During the first quarter of 2013, subsidiaries of the Company entered into the following debt transactions:

Clear Channel Communications, Inc. (a subsidiary of CC Media Holdings, Inc.)

• Issued $575 million aggregate principal amount of 11.25% Priority Guarantee Notes due 2021.

• Repaid 5.75% senior notes at maturity for $312 million.

• Repaid all $847 million outstanding under term loan A under the senior secured credit facilities.

The senior secured credit facilities require Clear Channel to comply on a quarterly basis with a financial covenant limiting the ratio of consolidated secured debt, net of cash and cash equivalents, to consolidated EBITDA (as defined by Clear Channel's senior secured credit facilities) for the preceding four quarters. Clear Channel's secured debt consists of the senior secured credit facilities, the receivables-based credit facility, the priority guarantee notes and certain other secured subsidiary debt. As required by the definition of consolidated EBITDA in Clear Channel's senior secured credit facilities, Clear Channel's consolidated EBITDA for the preceding four quarters of $2.0 billion is calculated as operating income (loss) before depreciation, amortization, impairment charges and other operating income (expense), net plus share-based compensation and is further adjusted for the following items: (i) costs incurred in connection with the closure and/or consolidation of facilities, retention charges, consulting fees and other permitted activities; (ii) extraordinary, non-recurring or unusual gains or losses or expenses and severance; (iii) non-cash charges; (iv) cash received from nonconsolidated affiliates; and (v) various other items.

The following table reflects a reconciliation of consolidated EBITDA (as defined by Clear Channel's senior secured credit facilities) to operating income and net cash provided by operating activities for the four quarters ended March 31, 2013: