CC Media Holdings, Inc. Reports Results for 2012 Fourth Quarter and Full Year

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CC Media Holdings, Inc. Reports Results for 2012 Fourth Quarter and Full Year

  • Annual revenue rose 3% to $6.33 billion, excluding foreign exchange
  • Fourth quarter revenue up 3% year over year, excluding foreign exchange
  • Fourth quarter OIBDAN1grew 2% year over year, excluding foreign exchange
  • Subsidiaries raised $7.5 billion of debt in 2012 for debt repayment, shareholder returns and financial flexibility

SAN ANTONIO--(BUSINESS WIRE)-- CC Media Holdings, Inc. (OTCBB: CCMO) today reported financial results for the fourth quarter and full year ended December 31, 2012.


"We are very pleased with our Company's progress in strengthening our businesses over the past year, and we look forward to continuing our momentum into 2013," Chief Executive Officer Bob Pittman said. "We have put the right management team in place to focus on bringing new advertising dollars to the sector by demonstrating the value of our assets - especially our unique national platform across the media, entertainment and outdoor marketplaces. Moving forward, we will continue to use our unmatched national reach to grow our digital platforms, expand and deepen our relationships with national and local advertisers, launch innovative products and services and stage new and exciting events as only Clear Channel can."

"Despite the slow economic recovery, we delivered a solid financial performance for the 2012 fourth quarter and full year," Tom Casey, Executive Vice President and Chief Financial Officer, said. "At Clear Channel Media and Entertainment, we continued to outpace the competition in national advertising, digital, and total revenues. At Outdoor, the Americas' progress in digital, airports and national advertising was encouraging, while International saw strength in emerging markets. Across the entire company, we remain aggressively focused on realigning our resources toward higher growth areas. 2012 was also an important year for capital markets activity, with $7.5 billion of debt raised at Clear Channel Communications and Clear Channel Worldwide Holdings in four separate transactions. Clear Channel Worldwide Holdings used proceeds for debt repayment and shareholder returns and Clear Channel Communications not only repaid debt but also gained important new flexibility to better manage liquidity and future maturities."

Fourth Quarter 2012 Results

Consolidated revenues increased $44 million, or 3% year over year, to $1.70 billion in the fourth quarter of 2012 compared to $1.65 billion in the same period of 2011. Excluding the effects of movements in foreign exchange rates1, revenues rose $49 million, or 3%.

  • Media and Entertainment ("CCM+E") revenues grew $31 million, or 4%, due to increased political advertising as well as growth of local and national advertising.
  • Americas outdoor revenues rose $5 million, or 1% adjusted for movements in foreign exchange rates, driven by higher digital capacity and increased revenue at airports. On a reported basis, revenues grew $5 million, or 2%.
  • International outdoor revenues decreased $3 million, or less than 1%, adjusting for a $9 million revenue reduction due to the divestiture of two businesses during the third quarter of 2012 and a $6 million reduction from movements in foreign exchange rates. Stronger economic conditions in emerging markets and certain other geographies were offset by weakened economic conditions in other regions, particularly in Europe. On a reported basis, revenues decreased $18 million, or 4%.

The Company's OIBDAN1 increased to $546 million in the fourth quarter of 2012 compared to $537 million in the same quarter of 2011. Included in the 2012 fourth quarter OIBDAN of $546 million were $28 million of operating and corporate expenses associated with the Company's strategic revenue and cost initiatives to attract additional advertising dollars to the business and improve operating efficiencies. The fourth quarter of 2011 included $22 million of such expenses. Also reducing OIBDAN in the fourth quarter of 2012 were $6 million of litigation expenses and $7 million of legal and other costs in Latin America. Excluding the effects of movements in foreign exchange rates, OIBDAN totaled $547 million and grew $10 million, or 2%.

The Company's consolidated net loss was $191 million in the fourth quarter of 2012 compared to a consolidated net loss of $43 million in the same period of 2011. Fourth quarter 2012 net loss included a $240 million pre-tax loss on extinguishment of debt related to refinancing activities.

Full Year 2012 Results

Consolidated revenues increased 1% to $6.25 billion for the full year 2012 compared to $6.16 billion in 2011, driven by growth at CCM+E and Americas outdoor partially offset by International outdoor. Excluding the effects of movements in foreign exchange rates, revenues rose 3%.

  • CCM+E revenues grew $98 million, or 3%, compared to 2011, due primarily to stronger local and national advertising, including political, as well as digital growth driven by the expansion of the iHeartRadio platform.
  • Americas revenues rose $27 million, or 2% adjusted for movements in foreign exchange rates, compared to 2011, from increased digital capacity and increased airport revenues driven by higher occupancy and rates. On a reported basis, revenues also grew $27 million, or 2%.
  • International outdoor revenues were up $11 million, or approximately 1%, after adjusting for a $15 million revenue reduction due to the divestiture of two businesses during the third quarter of 2012 and a $79 million decrease from movements in foreign exchange rates. Stronger economic conditions in emerging markets and certain other geographies were offset by weakened economic conditions in other regions, particularly in Europe. On a reported basis, revenues decreased $83 million, including the effects of movements in foreign exchange rates.

The Company's OIBDAN1 declined 1% to $1.82 billion in 2012 compared to $1.83 billion in 2011. Excluding the effects of movements in foreign exchange rates, OIBDAN was flat. Included in the full year 2012 OIBDAN of $1.82 billion were $76 million of operating and corporate expenses related to the Company's strategic revenue and cost initiatives to attract additional advertising dollars to the business and improve operating efficiencies. OIBDAN for 2011 included $36 million in such expenses. Also reducing OIBDAN in 2012 were $9 million of litigation expenses and $27 million of legal and other costs in Latin America.

The Company's consolidated EBITDA, as defined under its senior secured credit facilities, was $2.033 billion in 2012, up 4% from 2011.

The Company's consolidated net loss totaled $424 million for 2012 compared to a consolidated net loss of $302 million in 2011. Full year 2012 results included a $255 million pre-tax loss on extinguishment of debt related to refinancing activity.

Key Highlights

The Company's recent key highlights include:

Media & Entertainment

  • CCM+E and iHeartRadio ranked first among 18 non-network national TV, video and online media organizations in the 2012 Myers Survey of Advertising Executives on National Media Sales Organizations Report. CCM+E was the #1 provider of multi-platform brand extensions/integrations among digital and non-digital network TV organizations, and was top rated by digital planners and buyers in providing multi-platform integration opportunities among non-network and digital organizations.
  • iHeartRadio reached 23 million registered users, making it the fastest digital service to reach 20 million registered users in Internet history. The iHeartRadio mobile application was included in the Top 20 of iTunes Best of 2012 list, has more than 143 million cumulative downloads/upgrades, and now generates half of its listening through mobile.
  • The second annual iHeartRadio Music Festival in Las Vegas attracted a live audience of more than 20,000 and more than 14 million tuning in from home - delivering record-setting ratings for The CW's exclusive TV broadcast, Yahoo!'s most ever U.S. live streams for a concert and Xbox's record viewership for a live U.S. event, as well as a CCM+E record of more than 1 billion social impressions.
  • The company purchased AM radio station WOR 710 in New York City, which is the Company's first AM station in NYC and another flagship for talk radio.
  • The company purchased 101.7 FM in Boston and launched it as "Evolution 101.7", the first major market station with the Electronic Dance Music (EDM) format. The station utilizes programming from iHeartRadio's Evolution channel launched in November featuring British D.J. Pete Tong.
  • The company entered into innovative, market-based agreements with a number of record labels to share digital and terrestrial revenues, building a sustainable business model to drive the growth of the Internet radio industry.

Outdoor

  • Americas installed 178 new digital billboards for a total of 1,035 across 37 U.S. markets, a 21% increase from 2011.
  • Clear Channel Airport's ClearVision, an innovative in-airport TV network featuring top entertainment, news, music, and sports programming that is accessible from travelers' mobile devices, launched in Raleigh-Durham International Airport and, in February 2013, in Louis Armstrong New Orleans International Airport.
  • In January 2013, Suzanne Grimes, a highly-regarded advertising executive, joined as President & COO for the United States and Canada. Grimes formerly served as President of the U.S. Lifestyles Communities Group at Readers Digest, spent a decade at Condé Nast, and was publisher of TV Guide at News Corp.
  • International increased its digital presence to more than 3,400 displays in 13 countries.
  • Launched the first digital out-of-home network in the outdoor environment in the United Kingdom with 100 screens in central London targeting premium shopping areas.
  • France launched the only scale digital network in the country in 46 premium malls, reaching a quarter of the population every two weeks.
  • International won a major public transportation contract in Norway that went live in January 2013.
  • Strengthened the International leadership team with Mark Thewlis, Executive Chairman of Clear Media (China) and Aris de Juan, Regional President of Latin America, improving Clear Channel's presence in some of the world's fastest-growing advertising markets.

Revenues, Operating Expenses, and OIBDAN by Segment

               
(In thousands)Three Months EndedYear Ended
December 31,%December 31,%
2012  2011  Change2012  2011  Change
Revenue1
CCME$821,472$790,7534%$3,084,780$2,986,8283%
Americas Outdoor343,407337,9252%1,279,2571,252,7252%
International Outdoor 3459,787478,077(4%)1,667,6871,751,149(5%)
Other89,97063,91241%281,879234,54220%
Eliminations (18,300)   (17,879) (66,719)   (63,892)
Consolidated revenue$1,696,336   $1,652,788 3%$6,246,884   $6,161,352 1%
 
Operating expenses 1,2
CCME$480,964$464,0214%$1,863,691$1,825,6192%
Americas Outdoor212,938201,5106%793,585765,3024%
International Outdoor 3356,868362,522(2%)1,384,5691,403,605(1%)
Other45,16743,8063%177,482175,2881%
Eliminations (18,300)   (17,879) (66,719)   (63,892)
Consolidated Operating expenses$1,077,637   $1,053,980 2%$4,152,608   $4,105,922 1%
 
OIBDAN1
CCME$340,508$326,7324%$1,221,089$1,161,2095%
Americas Outdoor130,469136,415(4%)485,672487,423(0%)
International Outdoor 3102,919115,555(11%)283,118347,544(19%)
Other44,80320,106123%104,39759,25476%
Corporate (73,110)   (61,391) (276,877)   (221,801)
Consolidated OIBDAN$545,589   $537,417 2%$1,817,399   $1,833,629 (1%)
 
 

Certain prior period amounts have been reclassified to conform to the 2012 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 resulting in decreases in revenue, operating expenses and OIBDAN of $15 million,$12 million and $3 million, respectively, for the year ended December 31, 2012 and decreases in revenue, operating expenses and OIBDAN of $10 million, $8 million and $2 million, respectively for the quarter ended December 31, 2012.

Media and Entertainment

CCM+E full year 2012 revenues grew $98 million, or 3%, compared to 2011, due primarily to higher national and local advertising sales across the political, automotive, and telecommunications categories. Digital revenues were higher, driven by a 100% rise in listening hours on the iHeartRadio platform, while advertiser event sponsorships were also up. Traffic revenues increased as a result of the acquisition of a traffic business in the second quarter of 2011. Revenue growth was partially offset by declines in national syndication programming sales.

Operating expenses increased $38 million to $1.87 billion in 2012. Savings from lower programming costs were offset by higher sales expenses, digital streaming expenses resulting from increased listening hours, and a $4 million increase in expenses related to investments in strategic revenue and cost savings programs.

OIBDANrose $60 million, or 5%, to $1.22 billion in 2012, including expenses related to investments in strategic revenue and cost savings programs of $22 million in 2012 and $18 million in 2011.

Americas Outdoor Advertising

Americas outdoor revenues, excluding foreign exchange impacts, rose $27 million, or 2%, compared to 2011, driven by higher digital bulletin capacity and higher airport occupancy and rates. Partially offsetting this growth in 2012 was a decline in revenues from traditional bulletins and posters. On a reported basis, revenues increased $27 million, or 2% compared to 2011, including the effects of movements in foreign exchange rates.

Operating expenses, excluding foreign exchange impacts, grew $29 million to $794 million in 2012, including an $11 million increase in 2012 expenses related to certain investments in strategic revenue and cost savings programs. Expenses increased due to personnel costs, growth from the airports business, and higher site lease expenses resulting in part from the deployment of 178 digital billboards during the year. On a reported basis, expenses increased $28 million, or 4%, compared to 2011, including the effects of movements in foreign exchange rates.

OIBDAN, excluding foreign exchange impacts, declined less than 1% to $486 million in 2012, including expenses related to certain investments in strategic revenue and cost savings programs of $15 million in 2012 and $4 million in 2011. On a reported basis, OIBDAN decreased $2 million compared to 2011, including the effects of movements in foreign exchange rates.

International Outdoor Advertising

Adjusting for a $15 million revenue reduction due to the divestiture of two businesses during the third quarter of 2012, as well as a $79 million decrease due to movements in foreign exchange rates, International revenues were up $11 million, or approximately 1%. Revenues increased primarily from new contracts in countries including Australia, China and Mexico where economic conditions were stronger, and in the U.K. which benefitted from the Summer Olympic Games. Revenue increases were partially offset by weakened macroeconomic conditions in certain geographies, particularly in southern Europe and the Nordic countries. On a reported basis, revenues decreased $83 million, or 5%, compared to 2011, including the effects of movements in foreign exchange rates.

Operating expenses, excluding foreign exchange impacts, grew $64 million in 2012, adjusting for $12 million of expenses due to the divestiture of two businesses during the third quarter of 2012 and excluding a $71 million decrease from movements in foreign exchange rates. Operating expense increased due to new contracts and higher personnel costs. This $64 million increase includes a $27 million increase in legal and other expenses in Latin America and a $6 million increase in investments in strategic revenue and cost savings programs. On a reported basis, operating expenses declined $18 million, including movements in foreign exchange rates.

Adjusting for a $3 million OIBDAN reduction due to the divestiture of two businesses during the third quarter of 2012 and excluding an $8 million decrease from movements in foreign exchange rates, International outdoor OIBDAN in 2012 declined $54 million, or 16%, to $291 million. OIBDAN in 2012 includes $27 million increase in legal and other expenses in Latin America, and $19 million of costs incurred for investments in strategic revenue and cost savings programs compared to $13 million included in 2011 OIBDAN. On a reported basis, OIBDAN decreased 19% to $283 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 February 19, 2013 at 4:30 p.m. Eastern Time. The conference call number is 866-254-5936 and the passcode is 281432. 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.

TABLE 1 - Financial Highlights of CC Media Holdings, Inc. and Subsidiaries

           
(In thousands)Three Months EndedYear Ended
December 31,December 31,
2012  20112012  2011
Revenue1,696,3361,652,7886,246,8846,161,352
Operating expenses:
Direct operating expenses650,495635,7892,496,5502,504,036
Selling, general and administrative expenses431,841421,9521,673,4471,617,258
Corporate expenses76,86164,016288,028227,096
Depreciation and amortization189,730192,422729,285763,306
Impairment charges37,6517,61437,6517,614
Other operating income (expense) - net 968    (771) 48,127    12,682 
Operating income (loss)310,726330,2241,070,0501,054,724
Interest expense400,930368,3971,549,0231,466,246
Gain (loss) on m
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