iHeartMedia, Inc. (IHRT) Earnings Call Transcript & Summary

Okay, good afternoon, everyone. Thanks for joining us. I'm Bryan Kraft. I cover the media sector for Deutsche Bank, and I'm really pleased to introduce Rich Bressler and Bob Pittman. Bob is the Chairman and CEO of iHeartMedia, and Rich is the Chief Operating Officer and Chief Financial Officer of the company. Gentlemen, thanks for joining us this afternoon.

Well, thanks for having us.

Happy to be here, Bryan.

Maybe we could start off with the cyclical side of the story. The past year has been obviously a challenging one for your business. Can you talk about what you're currently seeing as it relates to advertising trends and your outlook for recovery over the course of 2021?

Sure. I think we are, and I think we talked about it on our Q4 earnings call, that we are -- we saw a precipitous decline when the pandemic hit. We've been having a steady climb back out of that in a recovery. We're seeing, I think as we pointed out then, very positive signs. I think it's telling that every time the restrictions are lifted a little bit, that consumer spending and businesses get packed and the consumer is there. So we're feeling good that this is on course. And I think also there's some adjustment to life under the pandemic, which I think has been at the end of the day, getting the economy and advertising back on track. And obviously having the multiple platforms we do, having the geographic diversity we do, and having compared to television, if you think TV and radio produce about the same results for an advertiser at the same weight level, we're about 1/3 the price of TV. So that efficiency, in addition to the effectiveness, becomes a real bonus at this point.

Okay. Great. And what's happened to engagement during the pandemic across both terrestrial and digital platforms? All drive time presumably has suffered for more people working from home. There are also fewer people taking mass transit, and more people moving to the suburbs, and perhaps there's more listening in the home. So if you could help us to understand how all that shakes out, that'd be great.

Well, we looked at the traffic patterns, the usage of the car, and obviously there are a lot of data sources for that. And it looks like the usage in the car is back to pre-COVID levels of usage. We did see a drop primarily in March and April. We got to remember that not everybody stayed home, that this is a country of great diversity in terms of people and their jobs. And also if people were home, they were still driving and using their car, whether it was going to the supermarket or wherever. So we saw shifts in times. Drive time for us appeared to move about 1 hour later in the morning. And as a matter of fact for about 3 or 4 months, our morning shows didn't go off the air at 10, they went off the air at 11 to compensate for that. I think the real news for us, and you hate to say there's any silver lining in something like this pandemic, but one of the things that's helped us is that in the home, the consumer has discovered a lot of new devices they can receive us on. We're now on 250 devices, 250 platform devices. And we have built that over the last 10 years in the iHeartRadio app. If you look forward you'd say, well, that's 5 to 10 years of adoption of this technology. COVID sped that up into months. So we saw this big increase in usage on smart TVs, on video game consoles. And even though it had already been going gangbusters, we saw further increases on the smart speaker as well. We've now up to about 1/3 of the American households have a smart speaker. And to us, that's been the replacement of the clock radio of yesteryear and giving people more opportunities to use and consume radio in the home. And that's been very important to us and, I think, very beneficial.

In response to the pandemic pressures, you worked to reduce costs, in addition to the pre-pandemic cost transformation and modernization plans you had. How much of the cost savings in 2020 represented a permanent reduction in the cost structure versus temporary initiatives? And is there more savings to flow through in 2021? And maybe to wrap up that question, what does all that mean for margins once the revenue side recovers?

Rich, do you want to start that, and I'll jump in?

Sure. Sure, Bob, I will. By the way, one thing just I want to pick up one point on Bob's. First, we talked about creating consumer demand and what's happening. It is interesting, just anecdotally speaking, if you just speak to CEOs of travel companies, you look at what's happening tier 1, tier 2 auto out there, the demand -- that demand is starting to manifest itself right now. And so I think if you just look at airline reservations, hotel reservations, car salespeople moving around, so I just -- I don't think it's so theoretical like [ some demand ] is coming. But I think there's tangible evidence that's coming. It's already there quite frankly, on build. On the cost side, just as a reminder, we sought our -- we announced our cost monetization -- modernization, excuse me, program in the first quarter of last year. That was a $150 million cost program. And we got the bulk of that out for this year in terms of actual dollars, but we also said that we'd hit full year run rate on that by the middle of this year in 2021. And as Bob pointed out, I think the acceleration, both in investments in technologies and efficiencies, is that we're well on track to hit that. Then secondly, we announced, in response to the pandemic, again as a reminder, a $200 million cost program. And that was everything from T&E to improvements in real estate, right down to the fact that all of our senior executives did not take bonuses this year. People had some voluntary cuts. Also in compensation, Bob, in particular didn't take any cash compensation once the pandemic started, and I think mine was down about 75%. And so that's what went into the $200 million. And we've also made a commitment though, because we are more efficient, learning to operate more efficient like a lot of companies in America are, that the bulk of that $200 million or a majority of that $200 million would be permanent as we start to go forward. And then when it comes to margins, we expect that you'll continue to see -- and I expect you'll continue to see significant improvements in the margins as we go forward as a company. I think it's just important to remind everybody that I recall is that the financial characteristics of this business, and I'm sure we'll get a minute to talk about the different segments of this business that we just announced, the operating segments, but the overall financial characteristics of this company in terms of revenue growth, turning into significant EBITDA growth in terms of leverage; great free cash flow characteristics; low working capital; CapEx that you can flex up and down, so minimal required CapEx -- requirements for CapEx that you can flex up and down depending on what's happening with the operating results, that hasn't changed. And so that's why we create so much equity value because of the free cash flow characteristics. And that was true pre-pandemic and is true again now.

Can I just add too to what Rich is saying that again I sort of want to make the point, and I think it was implicit in what Rich said, but this is a business with basically a fixed cost structure. I think we proved during the pandemic that we were actually able to reduce those fixed costs when need be, and we were able to prove that we had that kind of control. But we add revenue back, the margin gets better and better. And I think that's sort of the -- structurally one of the real strong points of this company.

Bob, I just -- one last point. I don't want to belabor it, but we did generate $130 million of free cash flow last year, just to remind everybody in the audience, $53 million in Q4. And that's when I think you look at a lot of advertising businesses with high fixed costs base, without calling out names, I think most people generate close to 0 free cash flow last year. So that also the capability is here.

Okay, great. Can you walk us through, just getting away from the cyclical side a little bit, can you walk us through your strategy to grow iHeart's share of the ad market? The pillars you've put in place to achieve it across content, distribution and technology, and how iHeart is differentiated from other audio platforms?

Yes. We started, if you look at this company 10 years ago when I took over as CEO, we probably -- and Rich and I began this journey together. This company was basically bringing its revenue out of the radio pool of money, out of the radio TAM. Call it today, maybe with the pandemic, down to $15 billion, $16 billion, $17 billion, and that was it. We set about to use that power we have with the consumer and the unique reach we had to build other platforms, so that we become truly a multi-platform company. And we've been, I think, remarkably successful with that. We're the #1 podcaster, the #1 commercial podcast with about a 2:1 lead over the next largest broadcast radio. We're 2:1 over the next largest in terms of audience, 5:1 in digital radio in terms of audience lead. And we built not only the events business over the last 10 years, but over the last year, we really pioneered these virtual events, which have been remarkably successful and have allowed us to mitigate some of the losses from the live event revenue line for the company. We've also built out our social platform. We now reach, I think it's about 250 million social followers, which is 5, 6, 7x the next largest audio company that we have really doubled down on audio. We've diversified. So now we have a good -- and by the way, we then built an infrastructure to sell our advertising, if you will, in more ways than selling spots, which was the way of the past. We took a lesson from the big digital players. We built out our digital analytics capabilities. We call it SmartAudio for broadcast. We've built out those analytics on podcasting and on digital. And we -- with this recent acquisition of Triton, we'll be able to put it all together and be the only audio company with the full stack, tech stack being able to reach across every form of audio, from content all the way to delivering ads on an electronic basis, which is certainly the future. What that's allowed us to do -- and by the way before I get to it, there's one other point, which is I think the advertising agencies are moving from -- thinking about media and silos, to trying to have a unified planning and buying platform, so that they can cross all the media when they plan. So they can cross-use TV, digital, radio, all together. We built the capabilities to push into that. What that's allowed us to do is not only continue to grow share in the $15 billion, $16 billion radio TAM, but now have an opportunity to participate in the $50 billion TV TAM, because of the substitution we could do with TV now and being able to fill the lost reach of TV, being able to add the data and analytics needed, and by the way, being able to add some efficiency that for people that are looking for efficiency, they can't get from TV. And finally SmartAudio now makes our broadcast inventory look like digital inventory for a digital buyer. We also have all of our tremendous digital products as well. So that now allows us to play in the $100 billion TAM for digital. So we've really added $150 billion TAM potential against where we were 10 years ago. And I think the various pieces we put together, we alluded to it. Look, we have a leadership position in content across all audio forms. We have a leadership position in the broadcast and digital distribution of audio in all forms. And now we have the technology platform to deliver those ads, pull them together and go across all the platforms we have, as well as connect to the other platforms that the ad agencies have or others that allow us to participate in a much broader way. So I think we are set up well. I think the pandemic, in a perverse way, caused people to look for efficiencies and open their minds to new things, which I think will probably have a long-term beneficial effect on this company in terms of just advancing people farther along that road of cross-media planning and buying, and also the data and analytics, which again this company has taken a leadership position in. And now that audio is sort of having its day led by podcasting, we are sort of at the forefront of that.

So what's the latest...

Just to add...

Go ahead, Rich, sorry.

No, I just want to add one thing to that again, just because I always like -- just some context to everything that Bob just said, which was summarized so well with the TAMs. If you go back again to just our fourth quarter and you look at our breakout, and we'll talk about the [ safe ] multi-platform, but just in evidence, not just in the words, the fact that we had over $170 million of revenue in Q4, just in Q4 alone $172 million, I think exactly, on what's now the digital segment growing at 53%, which I think is the highest growth rate of any company in digital other than Snap. And the fact that we had 35% margin, and again we can dive deeper into that a little bit later, but it really just accentuates the point that Bob said, that's not just the future. We've proven we've had the assets to start to take advantage of that because those are at different pools than just obviously the broadcast radio pool.

And look, I don't want to drag your question out too long. But I do think what Rich said is very important in the sense that when we look at digital, whereas other people are saying we're going to build the profitability in digital, our digital has already got a better margin than our multi-platform business does. And we have built it to be that, and it's now up to, I think, 25% of our adjusted EBITDA. So we've -- the platform isn't a promise. It's not a promise of profitability. It's profitable. It's meaningful. And it's growing at a rate that, as Rich points out, is competitive with almost any digital player out there.

And can you give us just some of the color on your latest discussions with large advertisers, and how those discussions have evolved as you've gained this wider distribution via digital and with more content with podcast and built out your ad tech solutions? What's that response been? And how have those conversations sort of evolved over the last couple of years up to now?

Well it -- yes, it's interesting. You hit a really good point is our -- the way in which we sell advertising today is really a barbell. It's 2 different approaches. One is we have people who want to buy media. They're looking for impressions. They're looking for gross rating points. Increasingly, that's moving to data and analytics and electronic platforms. We're well positioned for that. I think we've taken a leadership position there. I think even among the traditional TV players, we're ahead of them in terms of having those kinds of capabilities. And then the other end of the barbell are people who want to have a marketing discussion and don't see us as a media partner but see us as a marketing partner, and they are looking for what ideas do you have. We built out 7 or 8 years ago our capabilities and hired the people, put together the organization, built out the tools for us to be able to address those advertisers. Now typically that is not through the -- doesn't start at the media buyer. That starts with a CMO of a client, or it starts with the strategy people at the agency. And we're looking for big ideas. And we've been able to build out some spectacular big ideas. By the way, some of them are event-oriented, which you've heard of, whether it was the recent Living Black or some of the program we just did for International Women's Day. All came about through this kind of collaboration with advertisers and building out some special programs. And so we have, I think, planted both flags. We've made great progress on both. And it's sort of probably 50% of our business today is not somebody calling for avails or wanting to buy media. But 50% is probably us dealing with an idea or a client or a relationship that's not commodity based. I mean when you go to the marketplace for media buys, you're sort of like, "What's your cost per thousand?" When you go to the idea phase, the marketing phase, the value is, "What's the value of that idea?" And that takes us out of commodity products and allows us, I think, to play in a little different pricing game there as well.

That's interesting. I wanted to ask you about the realignment of your management structure and reporting segments. What benefits do you expect to realize from that realignment? And how do you think the new segment disclosure highlights the company's strategy and growth story in digital?

I think when you run companies, you always have a formal structure, and then you have the informal structure. And when the 2 get too far out of whack, you've got to adjust your formal structure. And I think that this change really was an acknowledgment that this company is actually a very big digital player. And I would argue, in many ways, the big digital player certainly profit-wise in the audio space, and that the bets we've made have turned out to be the right ones. So I think from the standpoint of it's an acknowledgment that this is a separate part, that the company is really 2 pieces, that we've been looking at it that way, that we are managing it that way. And I think putting this new management structure in place acknowledged that and the importance of it, and that they both work together. It's synergistic, but they both have their own missions and they need their own focus. I think the secondary benefit has been to the investment community, that I think we've got this spectacular digital business that was just sort of hidden, and you couldn't quite tease it out without all the information. And I think it's so strong that we want people to see it. I mean when one piece of the business gets to be 25% of the earnings and growing at this kind of clip, I think that the investment community deserves to see it, should see it, and I think can appreciate it better by seeing that kind of information. So I think it was really twofold in terms of the business. One is for the actual operation of the business and to better reflect how we're thinking about and operating the business. And the second is the increased visibility and transparency about what we're doing. And again, it's -- as we showed in Q4, it's really good news for us.

I want to just add a couple of things quickly, but really head on in terms of your question. One of the questions you might ask is why now, all right? And as Bob said, because both that misalignment and also just as the sheer size of the business. I would say the second thing that, just to give you a little bit of window and insight, is probably everybody has been very positive about it from us, from a shareholder standpoint. I think people have been pleasantly surprised about 2 major aspects of it in addition to the sheer size. One is the 35% margin. As Bob pointed out, to really highlight that you can have a digital business of size of scale and growing -- and by the way and call it a business. Not to pick on anybody else out there, but some of the big digital players, or some of them don't have profit. So I'm not quite sure how those are businesses at the end. So again, that kind of highlight that 35%. And also in response to shareholders and asking about more transparency, we've always kind of talked about the size of our business. And I think the other important point is our digital business, I'm sorry. We always obviously talked about that our digital business wasn't just podcasting. As we reported, we had 100% podcasting revenue growth in Q4. I think we also talked on, Bob and I did, in the earnings call that we had 126% revenue growth. So you see the momentum continues as well into 2021. And Bob talked about it a little bit and we talked a little bit about the TAMs. But I think there was honestly a perception of iHeart that I don't know, majority if not close to 100% of our revenue and profitability went to podcasting. And I think this highlighted what Bob articulated earlier, I don't have to repeat it, the other digital properties we have that are appealing to advertisers. I would also say in response to the advertising question, interesting reaction from the advertising community. I don't think they quite realized how big our digital business was and the growth rates there. Which obviously just confidence builds on confidence builds on confidence. So that will open new doors for us for advertisers. And the last thing I'll say, I think it will also open new doors for us for prospective shareholders. People that will say, "Gee, if you're not in digital, we really don't want to even look at you as a possibility to invest." Well, we're here. We're in digital, and we've got a great story. And so hopefully whether it's people on this call or other people, it will open up a lot of prospective shareholders for us also.

Okay. I wanted to ask you a question. After terrestrial broadcast radio and the live events business recovers cyclically, and you're back to say, pre-pandemic levels, do you see the multi-platform audio segment continuing to grow the top line? Or should we think about that part of the business more as stable, with the growth really showing up on the digital side? So just really a question about the composition of the growth profile going forward, once you get beyond the cyclical period that we're going through.

Yes, I'm real simple on this stuff, that I think it starts with the consumer and what's happening with the consumer. And if you look at the consumer to broadcast radio, it's remarkably stable. And by the way, it used to be not long ago, that TV was the big-reach medium, and radio was under. TV's fallen, and radio has remained. So I think it's -- and by the way, I think with advertisers looking for increased efficiency, the efficiency of radio has been, I think, tremendous. I mean you look at the story, the well-known story of P&G that made a cutback in marketing spend. But instead of cutting everything back, they relooked at everything. And they took some money out of digital, which they thought they weren't getting a return on. And I think they announced they took 200 million out of digital. And they put it back into radio and outdoor. And P&G went from, I think, not even in the top 200 radio advertisers, to the top 1 or 2 advertisers in about a year. And by the way, the punch line is they had record results. The sales took off. And so I think people see that. And so that gives us great comfort that radio, although it may not -- it's not going to be a grower like digital, that it is a stable business. And then we've got this growth engine on top of it called digital, which I think gives us a pretty good story for the company.

And you guys talked a little bit about this already, but I want to give you the opportunity maybe to address it more directly. How should we think about the longer-term profitability and margin structure of the company as that revenue mix shifts toward digital? Digital margins, it sounds like are above multi-platform already. So just curious how you think about the overall company margin as the digital side grows and we get past the cyclical side. Just any additional color there would be great.

Well, I think the good news of the business is that it's not just mix or where the revenue is coming from. It's just amount of revenue. The incremental margin we have on every revenue stream, major revenue stream we have is far ahead of what our adjusted EBITDA margin is. So every time we add $1 of revenue, we are mathematically improving the margin. And it's the beauty of the high operating leverage business. I mean in a downturn, I think everybody was scared to death of, can you do anything with the cost when the revenue goes down? I think -- I hope we were able to demonstrate that we were able to do it. And as Rich pointed out earlier, we actually were able to send out free cash flow, achieve free cash flow even in a year that where we had the downturn like that. And again, I think we showed that as managers, we have both the will and the capability to reduce those on the downside and on the upside. It's benefit to us, the greatest thing to us is to keep adding top line revenue.

Okay. We'll just continue then. You talked a little bit about podcasting. Bob, I'd love to just get you to talk about your podcasting strategy. Really how have you've been able to take that leadership position in this part of the industry? What do you think the keys are to establishing a sustainable competitive advantage in the future for podcasting?

Well, I think we've sort of got the flywheel going now. How do we get here? Basically through radio advertising. It's amazing how it works. Now I think we also have a spectacular group of creative people doing great products, and we're able to promote them and build them. And if you think about podcasting in the most fundamental terms, it is sort of the Netflix for the audio business. If you think about Netflix, it was really TV on demand. It started with a lot of TV shows being carried there. Now the broadcast networks and the cable networks did not own Netflix, so it would eventually split them out. And the Netflix model was subscription, not advertising. But for us, we view podcasting as sort of radio on demand. It's either programs which are on the radio, or it's radio-like programs. And so we were able to build those out to sort of critical mass. We acquired a company called Stuff Media, which had about 5 million monthly uniques. And then we built another 20 million-plus uniques on top of that using it as the base. The creative people from Stuff Media became the people who run iHeart, as a matter of fact, our iHeart podcasting. As a matter of fact Conal Byrne, who was running that, now stepped up to be the head of our digital segment, the CEO of the digital segment we announced on the earnings call. And so we've been able to use this tremendous power on radio. Remember, we got twice the audience of the next largest radio company. We've got an audience bigger than Google and Facebook in the United States. And we're able to use that advertising, that promotion and the fact that it's adjacent content. It's very similar to what we're doing on the radio. It's a similar experience, very host-driven. And the relationship with the consumer is very much about companionship, keeping people company, that we're able to transition and use that to build it. Well, now that we've got so many hits at our lead. Last year, we were the #1 commercial podcaster. And we passed NPR as the #1 podcaster. And we're continuing, I think, to increase that lead over the other commercial podcasters. And I think that speaks loads to the fact that the strategy was right, that we do have really unique assets that no one else has. We probably, if we had to go out and buy the advertising, it's probably $100 million of advertising, the value that we're able to put against these podcasts. But there's no podcasting company out there that can spend that kind of money and have a business. For us, we're using time. We don't sell anyway, so it has 0 cost to us, but it has tremendous benefit to that. And of course what you find in podcasting, like you do in every form of media, is that if someone's got an idea for a new show, they first start with the biggest. And if they can't do a deal there, then they go to the second biggest. So we get first look at almost everything now, and we're in almost every discussion. So if we didn't do a deal with someone, it's because we thought the deal wasn't economic and we couldn't get it to work for us there.

And how do you think about depth versus breadth as it relates to the content slate for podcasting? Will we continue to see you invest in A-list talent, like you've done in some cases already? And I would love a little more color on what you just said at the end about making sure that any deal that you do is economic. How do you evaluate that?

Well look, we have pretty good discipline on cost. Also since we're #1, we're not desperate. And we are only going to do something that we feel is economically viable for us. And I think at the end of the day, it's just -- I would say Conal Byrne and the crowd are doing a very good job of running the business with a lot of discipline. And we don't see a pressure on it other than continuing to perform. But when you got revenue growing at 100% a year, it allows -- it gives us a lot of opportunities to bring more and more podcasts into the ecosystem. And when you say breadth or depth, the answer is both, that we have the luxury to do both. If you look at the other podcasters in the top 10 or 20 on Podtrac, almost all of them do one thing. They just have a niche, if you will. It's sports or it's news or it's true crime. In our case, we have a leadership position in all of those, and we're continuing to build that out. We're also able to build out with both famous people, well-known people, as well as complete discoveries and stuff we create ourselves internally with no other participants in it. And I think having that kind of diversity gives us a very stable business model and an enormous amount of control over it.

And can you...

I dialed in on the phone.

I think we got -- Rich is -- doesn't know he's on, so they might want to kill him on here if we can tell the engineers if he's not up.

No, Bob...

Are we -- We can hear you. We can hear everything you're saying, Rich. So can you hear us?

Yes.

Okay, good.

All right. I'll proceed, and just jump in, Rich, at any point. Can you talk a little bit about the, I guess, some of the details really on your ad tech platform? You mentioned it as one of the competitive advantages you've established. What are the unique capabilities and advantages that it offers to your advertising clients?

Well, I think in terms of the ad tech platform, we're able to take broadcast radio, digital radio, on demand, podcasting, put it all together, follow the same audiences across all forms of it so it's not silos. No one else can do that. We're able to do electronic trading platforms for both the big enterprise podcast and digital plays as well as the long tail. And again, I don't think anyone else has that kind of capability. We're able to ad serve in streaming. There are very few people have the capability to ad serve into a stream, a live stream. We have that as well as for the on-demand ad serving, which is more common and less difficult to do. And I think having all those pieces in one place, combined with the kind of data and analytics we now have that we've built out through our SmartAudio suite of services, I think gives us the sort of unique position in this business. And as we look forward, I do think just like the cloud business turned out to be a pretty good business for Amazon as sort of a side business -- and by the way, Google also has their data analytics and advertising platform, that actually I think our ad tech platform will over time have its own value. And whereas internationally, we are not buying radio stations internationally. We are, through podcasting, some other programming, taking it internationally. But probably the most significant is we do want to take, and have a plan to take, our whole ad tech platform internationally. So that hopefully what we wind up being is a very efficient and effective platform for the entire audio business, which I think benefits the audio business, I think tightens our relationship with ad agencies, makes us much more at the forefront of what they're doing; and third for us, creates a nice business opportunity for that.

Interesting. And how did the Triton Digital acquisition...

Could I just add to it?

Yes, sure. I'm sorry.

No, I was just going to add one thing to that, and maybe you were going to go to it with Triton, is also what I thought was interesting was that when we announced Triton, people said, back to the point of digital, "Oh my God, you guys are now a digital company." And it's like a little bit, "Well, thank you but no." This started, you remember, for years we've been all these pieces. When we talk about the ad tech platform, I just don't want the perception to be out there that it was just Jelli. I mean we started -- we've had -- when we started SmartAudio and we -- I'm sorry, not just Triton, that we had Jelli, which as Bob talked about, makes our broadcast inventory look like digital. And then we had Radiojar, which allows us to manage digital content. And then we had Unified, which provides cross-platform data reporting. Then we had Voxnest, which allows us to monetize not just the short tail but the long tail, not just for us but for the entire industry. So I just think it's very important to understand we talk about this data platform that we think has tremendous value creation opportunity, both to the company in and of itself, for Bob's example. But it didn't just happen overnight, like okay, here we are just because we bought Triton. Triton was the last major piece of it.

And I think if you look at other players in digital audio, they're all playing in one piece of it. We're the only one that plays in at all. And that we've got these assets which reach across everything from broadcast radio to digital radio to audio on demand to podcasting. And we've got the electronic marketplaces, plus we have the largest sales force in audio. So we've got the combination of both sellers out there and the electronic platform and the ability to pull them together as needed.

I wanted to ask you -- I don't know, Rich, if you want to speak to it. Just the profitability profile for the podcast business as compared to the digital music side and how you see that trending over time.

Well, I can start, and obviously Bob can contribute. Look, we said -- we talked about podcasting has always been -- first of all, I think you used the right word and we've touched upon this a few times. It is profitable today. We're not building towards profitability. Its margins are in excess of our EBITDA margins for the overall company, quite significantly in excess to where the [ overall ] margins today. And by the way, also because I don't want to hide behind just recently coming out of pandemic, they're in excess of our historical EBITDA margins for iHeart, which are higher than the margins have been today. And so I'm not sure people realize that. And then you've got to think about -- we've got a range of product in our podcasting family and podcast universe. We have things like StuffWorks, right, which is the biggest podcast in the history of podcasts. And think about it like homegrown produced, efficiently produced. A great podcast does not have to be expensive. It revolves obviously around having a great host, a great product, a great brand, a great script and the ability to promote the hell out of it. But it doesn't need to be significantly expensive. And then you go to the other range where we have like our JV with Shonda Rhimes, or we have our JV with Will Ferrell, which don't have as high EBITDA margins as something similar like StuffWorks, but a critical part in terms of categories and talent that we have in our podcast universe, and are profitable. These are not like we have anything out there that's a lot least profitable. So it's really the whole range of product contribute to our podcasting profitability and margins. But in total, we're in excess of the iHeart overall margin.

I'd like to jump in here just a minute, because I think you touched on something which I don't think people maybe have focused on. If you look at the streaming music services, the on-demand music services, Apple Music, Spotify, et cetera, they are in essence the retailer for the music business. And the music business takes the lion's share of the revenue again, and they're left with a very small margin. In the case of podcasting, we are both the retailer and we are the creator. So we're the equivalent of Universal Music, Warner Music, Sony Music; and the front end, Spotify, Apple, et cetera. And we get that kind of economics, and we get that kind of control. And I think that is so -- if you sort of separate and say how these businesses look versus each other, podcasting is really in much more like the radio business for us, more like talk radio where we really are in full control of the entire business from start to finish, without someone having to share a big piece of that with someone else.

That's a great point. I want to ask you about your live events business. That's obviously have been sidelined by COVID along with the rest of the industry. What do you think the path and the time line to normalcy will look like for that part of the business?

Well, let me first say I think we were able to step in and turned some of our events into virtual events. And did extraordinarily well with them, looking at either both usage of the live streams and the social impressions for it. And I'll take 2 of the big ones, the iHeartRadio Music Festival and Jingle Ball did very well as virtual events. Podcasting, we just did in January. I actually thought the podcasting virtual event may have been as good or better than the live versions we had done before. And as a result, I think with some other people who are doing, like we are, live events as another platform, they reported they were down 90% in that revenue line. We were down about 50% in Q4, and I think that's a show that we were able to mitigate some of it with the virtual events. Having said that, we are feeling pretty good that our live events will be back up by this fall, and we are counting on that. And I guess anything could change, but as we look at -- and I guess everybody has to make their own determination, looking at trajectory of vaccines, et cetera. We feel pretty good about that.

Okay. Maybe just to spend a minute on the stock. One of the challenges, I think you've had historically is the limited public float. But you recently allow -- announced a conversion of warrants that's going to increase that float substantially. Can you talk more about that?

Rich -- I'll let Rich dig in on that if he wants to. And if he's not on, I will.

Sorry, I had to just dial back in. Can you guys hear me now?

Yes, we can hear you. Did you hear the question, Rich?

Right, I didn't hear the question. No, I didn't, Bob, honestly.

Rich, can you walk us through the warrant conversion you recently did that's going to increase your public float?

Oh sure, sure. So that's -- just as reminder, that's the warrants to convert to the Class A common stock. So we expanded our share count. If you think about it, prior to the warrant conversion, we had about 65 million shares that traded Class A. And now we have about 111 million shares, which trades to Class A. So we've got the bulk of our warrants converted. There's still some out there that have not been converted. There's just certain people have some technical requirements that they couldn't convert the last piece of the warrants. But if you think about it, it increased both the float and the equity market cap of the company almost by about double to where we were before. And that's one of the things, in addition to the operating performance and other aspects, we heard from people was, "Gee, there's not enough liquidity. There's not enough float in the stock." And we think we've now -- we've got an answer to that.

How about on the capital allocation priorities? How does -- where does leverage stand now? What's target leverage? And how are you planning to allocate capital going forward?

Rich, do you want to start? And I'll jump in.

Well -- sure, Bob. Sure. That would be great. So first of all, we haven't given a target leverage. We haven't given any guidance since, as I think people know, since pre-pandemic. We kind of ended the year, this year, net leverage slightly in about the 10 to 1 zone, a little over 10 to 1. We expect to generate significant free cash flow as we go forward into this year in different -- and again, we haven't given details on that. But what we have talked about is we don't expect to be a taxpayer, cash taxpayer of any significance this year still because of our NOLs carryforward. So we feel good about that. And didn't give any details about where we expect to end the year, other than to say we expect to use our free cash flow to pay down debt. We look forward and without giving a specific target leverage ratio, we deleveraged very quickly for all the reasons Bob and I have discussed in this call. And if somebody said to me, "Do you think you can continue the target where you targeted pre-pandemic?" I wouldn't disagree with that statement, quite frankly.

And I think we also, when you say what are our capital allocations, that we do -- delevering is important to us, and it remains a priority for us. I think occasionally we'll find something like Triton, which we think has such an opportunity for us and could be so accretive to the business strategically, that we would say, okay that's worth it. But there are very few things, I think, that will rise to that level that will cause us to do anything, other than put the money where we think it should go, which is delevering.

Okay. Is there...

Yes, and could I just add one more point to that? I'm starting on the capital allocation because I think it's really a good point. I apologize if I'm not hitting it head on. It's something like we talk about with capital in terms of stewards of capital. We've got one focus, and you've heard us say this ad nauseam. And our Board, which is a very strong Board I think as everyone is aware of, has one focus, which is to drive the equity value of the stock, and therefore that's why the generation of free cash flow. And when you look at this, people talk about us as a lever play on the recovery. But that's why the generation of that free cash flow and the delevering kind of quickly create some real significant equity value here overall. And to Bob's point on Triton, but just to mention, if you look at Triton, if you look at Jelli, if you look at Voxnest, if you look at StuffWorks, if you look at all these acquisitions in total over the last number of years, in total, they total about $500 million in cash which obviously I'm not trying to say that it's not significant, but for a company of our size and scale. And each one of those made the rest of the iHeart base that much stronger. But to Bob's point, we don't anticipate anything coming up in that category. But each of these acquisitions are not significant either individually or in total.

Is there anything in the portfolio that could be a potential divestiture candidate? Or do you feel like everything that's there now belongs and you want to hold on to?

I can't think of any.

I think that -- I don't think -- I think -- when we went through our restructuring period, we took obviously a very, very objective sake ourselves and then Board in terms of the word strategic, meaning Jelli is going to add to helping create equity value or not. So I think we've done a -- I think the company has done a nice job on that over the years. So I don't think there's anything significant.

Look, I think it's also though -- and I'm going to take your question just a little farther. I think it's not only capital, but we also look at it and cash but it also goes to operating expense, is I think we're constantly reexamining how we do business and do we need to spend money the same place in the same way we have in the past. Are there the equivalent of elevator starters and operators and switchboard operators or copy room people in our job structure? And we -- and when we announced pre-COVID, that modernization effort, a lot of it was hey, if we started this company today, how will we use technology? And what would that mean for how we're structured? So it was an acknowledgment that the company needs to constantly look at and reimagine how we can do business. And I think COVID has proven to us that there are some jobs or portions of some jobs that can be done remotely, that don't need to be in the office. We don't need the same amount of real estate we did before. We don't need the kind -- human intervention and things, that machines can do it better, that electronic platforms are the future, and we need to use them more and more. So we're constantly looking at making the company more efficient. And I think that has an impact both on CapEx and OpEx and free cash flow.

Okay. We're just about out of time. I don't know if you wanted to make any other really quick closing comments or wrap it up there, Bob and Rich?

Well, I just want to say, I think if you look at this company, this is a company we -- coming out of the restructuring, we're an audio-only company. We believe audio has never been this hot on a macro level that the consumer has sort of lost time, more time for their eyeballs. I mean they're out of time. They -- if you want to watch something on TV, a video, you got to stop watching something else. Audio has been the major beneficiary of -- and I'm not saying this is good, but culturally we've gone from a world where we'd say, "Wow, I got some peace and quiet time," to today when no one wants peace and quiet time, they want to fill up every second of their day. And those activities have not been filled up, you can fill up with your ears. And so audio has this whole listener opportunity, whether it's podcast, broadcast radio, digital radio, by some of the streaming services, et cetera, that we can fill up. And so I think it's a great growth opportunity. And I think for a business like ours, to have that kind of growth opportunity with consumers and to be able to move from one TAM of sort of $15 billion to pick up -- to begin to participate in the $50 billion TV TAM and a $100 billion digital TAM, gives us on the revenue side a real runway and a real opportunity for us to go after.

I think that's probably a great way to end it. So -- go ahead, Rich, sorry.

No, I was just going to apologize to everybody for my video challenges today. So...

Audio breaks, Rich. We don't need a picture.

Video just creates problems, right? Audio's the way.

Yes, yes. Actually, we set it up just like that.

All right. Thank you, Bob. Thank you, Rich. Appreciate it.

Thank you so much.

Thank you, guys. Thank you, everyone.

All right. Bye, everyone. Thanks.