iHeartMedia weighs options for its podcast business, insiders say

Talks are happening, but the company says it is not selling

iHeartMedia, the biggest owner of radio stations in the US, has been in preliminary talks with Moelis & Co. and multiple potential investors about selling a portion or even all of its podcast business, according to people granted anonymity because the discussions are confidential. Those discussions are at an early stage and could end without a deal. Moelis, through a representative, declined to comment.

Earlier this year, iHeart was in conversations with Sirius XM Holdings Inc. regarding a potential sale, Bloomberg reported, but the parties did not reach an agreement.

iHeart's message: podcasting stays core

In an emailed statement, iHeart pushed back: "While we don't generally comment on rumors or speculation, I can tell you that we have no plan to sell our podcasting business," a spokesperson said. "IHeart has built the number one podcast publisher in America, with unmatched scale, premium talent and strong financial performance. Podcasting is a core strategic growth engine for our company, and we continue to invest in expanding its reach and potential, including through video podcasting."

The company's site describes it as the No. 1 podcast publisher worldwide and in the US, with 35.3 million monthly listeners domestically. Among its top shows: Stuff You Should Know, Las Culturistas and Dear Chelsea. Outside of podcasting, iHeart operates radio stations, streams those stations online, and sells advertising through Katz Media Group. iHeartMedia maintains a strategic partnership with Bloomberg Media.

The numbers behind the noise

Podcasting was one of the bright spots in this week's results, posting $174 million in third quarter revenue, a 24 percent increase from a year earlier. On the earnings call, President Rich Bressler said podcasting will be reported as its own segment next year, "which will provide greater insight into its financial performance and make it easier to fully value all four of our segments and our entire company." He added that the change will give investors more visibility into a business that made up 17 percent of revenue in Q3.

Companywide, adjusted EBITDA fell 17 percent from the prior year and missed Wall Street forecasts. The fourth quarter outlook also came in well under analyst expectations.

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Balance sheet strain and stock pressure

iHeart has wrestled with heavy leverage for years, filing for bankruptcy in 2018 and later emerging largely owned by creditors. It still lists $4.9 billion in long-term borrowings, and the shares trade around 66 cents.

Why does that matter? If asset sales are even on the table, balance sheet pressure and a low share price are the backdrop - and podcasting is both growing fast and being split out for clearer valuation.

What this means for your portfolio

There is a gap between the private chatter and the public line: talks are preliminary and may never lead to a transaction, while management insists podcasting is not for sale. Either way, investors now have more to model - a fast-growing unit that contributed 17 percent of Q3 revenue and will soon be reported on its own alongside a company facing tight guidance and a heavy debt load.

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