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

Good afternoon. I'm Jessica Reif Ehrlich, Senior Media and Entertainment Analyst at BofA Securities. It's a pleasure to welcome back by iHeartMedia, and to also have both Bob Pittman, Chairman and CEO; and Rich Bressler, COO and CFO. So welcome back to both of you. And I'll get ready to it.

In your third quarter guidance, you forecast 20% revenue growth, despite seeing 26% growth in July and a very strong second quarter. We know from a comp perspective, you have political last year, which should be a headwind in the third quarter, but are there other issues that we should be thinking about or thinking about like the various segments for the current quarter?

Well, I think when you talk about the Q3, that is just a comp issue. As a matter of fact, if you take out political, Q3 would imply about a 27% growth rate, which is greater than the 26% growth rate we saw in July, because there's very little political in July and the comp, and we continue to see improvements each quarter, including compared with '19, and that trend has continued. Rich, I don't know if you want to add to that?

No, Bob, and I think it's a continuation, look it might as the continuation of the trend that we've seen all year, starting with the first quarter, both in terms of multi-platform and in terms of the digital group and in terms of podcasting all the revenue streams, have made significant improvement, and we expect that to continue compared to '19.

Right. Unfortunately, COVID has reemerged, as we all know. Are you seeing any impact on your business? Does it impact back-to-school or recovery in any of the other categories?

We track the consumer really on a daily basis for the purpose of our programmers and/or on our personalities, knowing sort of what's going on out there. And what we see is, we see the consumer is concerned about the Delta variant. But they're also saying, okay, but I'm going to get on with my life. And I think that's probably been the most significant change from earlier in the pandemic. So as a result, I think you go to a restaurant, it's packed. You got a night club, it's packed. You go to a live music event, it's packed. And I think the advertiser is following that consumer. So -- and even for advertisers that are somewhat supply constrained, we found that they're now advertising because they understand that if they don't advertise, they lose the relationship with the consumer, and it's going to be a lot harder to restart the relationship than it is to maintain it. So long answer to a short question, but I don't think we're seeing a lot of impact. And I mean, we're reading the same stuff you read, and not seeing much out there that worries us. We also -- remember, and to just remind you, that no single advertiser is over 2% of our revenue, and those single sector is over 5%. It's also having the great diversity we do in our revenue streams among categories of advertisers, very helpful.

And then, are you seeing any change, like in terms of engagement, whether on broadcasting or in digital platforms?

Well, it's been -- I'm going to hate to say there was any good news about COVID, but there is good news. We've seen the drive time usage go back to sort of pre-COVID levels. And when people were locked in the home, we saw this tremendous increase in listening to what had been before AMF and radio stations on digital devices. And what's interesting is as they return to more normal patterns of being in the car, the usage of those home devices has stayed up. And one of the trends we have been fighting over the past 10 years is the loss of the clock radio next to everybody's bed. Well, Alexa, Roku, smart TV's, et cetera, appear to have filled the void and COVID sort of got them comfortable using them and put it into their mix again.

Interesting. And you have look for broadcasting. You're still recovering back towards the 2019 levels. What needs to happen to the business to return to pre-pandemic levels? Do you think it will? And if you do think if it will, what would you think that could be in 2022?

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

Sorry, I was on mute. Sure. Thanks, Jess. Look, we continue -- you pointed out Jess, and you highlighted, we are continuing to make significant progress. Bob talked about the consumer trend from a revenue standpoint. We may see some progress. And just as a reminder, just to take one step back, we have said that it's a total company, all of iHeart will be back to 2019 EBITDA levels by the end of this year. And we haven't given a projection yet for multi platform. But other than the [indiscernible] progress, I would point out, though, for multi-platform in Q2 on an EBITDA margin basis, we did get back to 30% margins. So we -- our people are saying, when you're stock came back to your historical margins, we did that, and we expect that to continue. And we also saw a significant margin improvement on the digital side also. But we will -- we're absolutely convinced we will back to 2019 levels for multi-platform, which includes broadcast.

And I would that, Jessica. We not only expect to get back there. We expect work to continue to grow. And we think there's some very big factors about why we feel optimistic about radio with this precipitous decline of ad-supported television, the advertiser has been deprived of a great mass reach medium to support their ad campaigns and radio winds up being the last one. And so I think that really makes us feel pretty good. The second thing that makes us feel good about it is we've made the investment over the last number of years into building out the digital capabilities for our broadcast radio, smart audio. So we can talk to the advertiser in a language that's similar to what Facebook and Google have talked to them in. And as we sort of made progress there, the only complaint is, but you don't have one-to-one marketing. Well, now with the change in privacy laws, with Apple pulling back on the mobile ID access, one-to-one marketing is going away. As a matter of fact, even Google that has led one-to-one marketing has said they're going to cohorts. We built smart audio around cohorts. That we can do and do as well as digital. And in some cases, better because we've got this enormous scale. So we think we -- the radio not only is -- becomes important because of reach, sort of playing as radio, but it also fills up some of the problems with television in terms of not only reach but also reaching the light TV viewer. And the third is by adding the digital analytics to broadcast radio, we think begins to let radio penetrate that $160 billion digital TAM, and we only have to take a little bit of that for it to be very good news for radio.

So ['20] was really hard. So thank you for [ staying ] on radio, but podcast is another area that's gained tremendous traction. And before we get to the company specifics, what's your outlook for the industry over the next few years?

Well, we're reading the same thing you do, and you're probably more of an expert on examining the whole marketplace than most people would be. But I think, every time we've tried to project it, we've been low. If you look at the consumer adoption of this, it's been a faster adoption of this than it was streaming audio. It's hot. It continues to be hot. The engagement is sort of off the charts. So our -- and by the way, the CPMs are premium CPMS, it's sort of hard to find the fault with it at this point. And we continue to double down in that area. We're beginning to get the flywheel effect finally, being #1. So when big creator wants to do a podcast, the first stop is the biggest, which is us. And as we widen our gap over #2 and #3, I think that delta becomes even more significant for us. And then finally, of course, the advertisers that are looking for impact and looking for great partners are going to start with number one. And putting that ad tech platform together for audio and unifying audios we have with the Triton piece allows us to service them in even new and better ways and uniquely compared to other players.

Hey Jess, the one thing I may just add, build upon a little bit of what Bob was saying, and speaking about maybe first the industry. So we're already the same projections, and you've heard some research reports, obviously, in our company. But they're talking about this year, the U.S. advertising industry for podcasting, the total industry, approximately, depending on how you read e-market or other people out there of $1.1 billion, $1.2 billion, $1.3 billion. You look into next year, and by the way, if you look a year or so ago and read those estimates, they probably would have be $500 million or $600 million. So the estimates continue to go up. If you look at 2022, a lot of people are projecting, again, not us, third-party research, about it doubling of that advertising revenue. And recently, there's some reports going out for the next 3 or 4 years, they talk about it being a $5 billion -- $4 billion to $5 billion U.S. advertising marketplace. So we're seeing, to your question, great growth and great advertise of receptivity. And the receptivity is based on the level of engagements from a consumer standpoint. I think the stature very interesting, they sound like 80% of all podcast where people start a podcast, we listen all the way through. So they're not skipping the advertising. The advertisements are contextual within the podcast. It's something like 50% listen to every word and all the podcast. So for those of us that have been kicking around this industry for long period of time to Bob's point, we've never even -- now advertising is following as it always follows what consumers do. I don't think any of us have seen a consumer adopt a new medium as quickly and as engaged, maybe most importantly as this one.

How do you think about the different monetization models from wide-scale distribution to explicit content? I mean, everybody is taking a different approach. Is there a strategy that you think will work for us?

Well, the only one that's working today is the broad reach, a mass distribution of podcast and advertisers supported. People are trying other models, but I don't -- I can't see any success anywhere with that. And as a matter of fact, in my experience as a market, I've never seen a case where people have had something for free and to begin to charge for it. Having said that, I also think that it plays to our strength, which as we know how to build mass market products with our broadcast radio alone, we reach over 90% of Americans. So we're able to use that strength and that know-how on podcast. I think it's one of the reasons you've seen such tremendous growth here. And in terms of monetization, which goes to the heart of your model, is advertisers are paying a premium. They're lining up for podcasting. They're paying CPMs that look like OTT. So there's no problem with that model. And by the way, you're seeing a number of podcasters even increasing their inventory and no pushback from consumers on that either. And finally, for us, not only have we got this new electronic marketplace capabilities, which we've put in place within our Triton acquisition, Voxnest, and some of the others. But remember, we've also got almost 2,000 people in our sales organization. We're the largest sales force in audio. And a while back, we decided that our sales force rather than be broken up into silos of selling pieces of what we have, we were going to be able -- we're going to build the technology and train so that our sellers could sell anything, anytime, anywhere. And that has proven to be a big winner for us. And as you say, how do we monetize podcast so well? One of the ways is every seller we have can sell podcasting, not just a podcasting sales force.

Hey, Jess, maybe I could just add one thing, is that it's interesting, if you look at all the growth in podcasting, and you pointed out about what's happening in the industry and we talked about the advertising dollars. But we are growing, and I think we even had a chart in our last earnings release that showed growth in context to give some context compared to everybody else, where there is NPR or [indiscernible] some of the other players, we're growing 7x quicker than our nearest competitor through 2019. So while the whole industry is growing, we're growing now much quicker. And then if you get back to what we just touched upon advertising dollars in the industry and driving advertising revenue, think about that we're going to be able to play in a number of vectors. One is just the increase in the total pool that we just articulated. And 2, because we're outperforming the whole industry will continue to get a bigger and bigger share of those dollars out there. And if you look at our numbers for the first 6 months, I think we did -- and we've disclosed about $93 million of podcasting revenue alone, which is in our digital numbers. And obviously, as we -- as obviously, as we move forward, our biggest quarter as is for most advertising companies is Q4 of the year.

So you both mentioned Triton being an important piece. Is that the final piece of you putting together your entire tests at? And can you talk about like the opportunities for better monetization, in particular, is there any way to quantify the amount of unsold inventory? I know, Bob, you've talked about this in the past. But how much unsold inventory can you sell now as a result of having all these pieces under one roof? And does it also enable you beside selling more imagery, can you get higher CPMs a result?

Well, look, when you say is it the final piece, it's the final piece of what we're doing right now. Hopefully, we're going to be smart enough to be doing other things, and we're continuing to build a lot of things, as you know, Jess because you've covered us for a while, we look very carefully at a by-partner or build analysis on everything we do. We build an awful lot of stuff internally. And I think we've got the base here to build-out. I think what the electronic marketplace allows us to do is we can sell with our 2,000 person sales force, we can sell the big advertisers, marketing solutions, go put together plans. When you focus like that, there are some pieces in the corners, which are in the long tail, which just aren't exciting enough to warrant that kind of conversation, won't rise to the level of I'm going to spend my time on that. But in the aggregate, are very important. I mean, if you -- I'll give you broadcast radio example, which highlights it. Broadcast radio, nobody sells midnight to 6 AM, but it's still a person listening to exactly the same commercial. It's crazy. We don't -- why don't we, because we can sell so many more people efficiently in morning drive or afternoon drive so we tend to run there. Electronic marketplaces are blind to effort. So they can go sell the small podcast. They can sell the episodes deep in the podcast. They can begin to sell things that aren't quite meaningful. And not only do we have some of that available for the electronic marketplace today, but I think we have more inventory we could create if we decide that we can create the inventory and still hold pricing up. And so it allows us to look for a lot of new places to find the revenue. When you ask about, does it help with CPMs? In some ways it can, because it can allow us electronically to go find special things that people will pay a premium for and put it together cost effectively that human beings had to go put that together that way and negotiate that way, it would probably not be worthwhile.

And the additional business, excluding podcasting, is incredibly robust. It was up like 100% -- by more than 100%, 102%, I think, in the second quarter. What are the underlying drivers for that growth? Is it due to increased money spent on your digital streaming platform? Or is there kind of display in social ads? Like what is it that's driving that?

We're now on -- not only do we broadcast on AMFM. We broadcast on over 200 platforms, thousands of devices. So people can find us in new ways and new places. In radio, the -- unlike TV where people sort of say and go on watch TV now for a chunk of time, radio is companionship. People are checking in with it all day long. People typically listen about 7 or 8 occasions at a day. What digital has allowed us to do is add opportunity for more occasions to get people when they were at a place where they couldn't have a radio, they can have access to another device and have access to our products. That's great for our streaming. But we've also -- remember, we're a pretty good player in display advertising. We've got about 150 monthly uniques across all of our station sites and personality sites. So we're able to build that as a revenue stream. We have major news letters as well. And we even provide some digital services to our clients as well as part of the packages. And one of the things we're doing, which has been very successful, as I'll go back to, we've got now a 2,000 person sales force that is trained to sell anything to anybody anytime. So having that extra sales push on the inventory and push on those products, I think, pushes some of the sales as well, and it's something that's unique to this company.

Hey, Jess, the one thing I might just add to what Bob just talked, take away to maybe just to build upon, I just want to go back to the multi platform, the sales force that Bob said, we talked -- you asked about Triton just before. And just to remind everybody, we have the only fully integrated audio tech stack. So we're talking about things today, like when we did your conference a year ago -- 2 years ago, that ability to not just for digital, when you think about digital, but also for broadcast, as Bob pointed out, to work with their major national advertisers, some of our smaller advertisers to plan out in audio solution to monitor that solution, and now we're trying to report on that solution to the advertiser. Nobody else has that period. It's clearly -- when people talk about our future growth and why we're so excited about everything going forward is because these are pieces in place we've never had before. And so that is what's new.

And Rich, can I add to that. And I'll just give you an example. That if somebody comes to us and is interested in a podcast, because of smart audio, we can now find that same audience that they're so interested in the podast in digital and even on broadcast radio, which pushes out the region obviously, for us, sells more platforms. So I think, again, having that seamless approach to being able to pull it all together, also allows us as a broadcast advertiser is interested in the campaign. We're building something with them. We can say also, you can go deep and very specific if you do a podcast about it, too. And in that case, we're even doing branded podcast, which are, in some ways, giant adds for an advertiser.

Right. I mean, your digital business is just phenomenal, right? It's just been incredible assurance. It seems like it's on pace to do roughly $750 million in revenue. But everything you described -- you both just described, this momentum seems more than sustainable. I mean it seems sustainable have gotten better, but let's say, sustainable. Could this be $1 billion by 2023? Or put it another way or asked it maybe another way, how big do you think this will be over the next 3 to 5 years?

Well, I'll let Rich jump in on this. We haven't provided long-term guidance for our digital business. So I don't want to do it now. But I think you can look at the underlying drivers of the digital business as a whole and how we're taking advantage of it and feel pretty good about, I think, what the business we've invested in and what we're getting out of it. And if you look at the assets we have, with the unparalleled reach, the ability to promote and sort of seamlessly across broadcast and digital and connected to the ability to monetize it with all the tools we have, whether it's the sales force or the tax stack. And when you look at the TAM we're selling into, $160 billion TAM, and now you have advertisers going, wait a minute, wait I need a digital strategy for -- I need a digital audio strategy on top of my digital strategy. We turn out to be, I hope, the first stop for the people. So all those things make us feel very good about it. And the fact that we are seeing the successes as we are, gives us confidence that the decisions we've made in the products and the structure we built is indeed working.

Hey, Bob, the only thing I may add, it's interesting, Jess, you and I have talked about this a little bit. We've also heard of this little bit in the past, we [Technical Difficulty] start to follow the consumer trends and consumer habits, which is what we always do. I'm always a little off news, when people sound like I got -- you bought Tritan now you are digital. Well, no, actually, we -- first of all, we have been working with Triton for years as a customer. But whether it's Jelli, which makes our broadcast inventory look like digital or Voxnext or other aspects of our company, this is kind of a culmination of -- in terms of Tritan gathering, as I said, we have put in place for a long period of time. So we're very deep in that. And then go to Bob's point on, we're tapping into $160 billion digital TAM out there. So we don't need to take much money. And again, without commenting on your $750 million or commenting, could this be $1 billion. I think everybody can do the math. It doesn't take much money to have pretty sustainable dramatic growth there. And finally, whether, because we're smart or very, very lucky or a combination of both, we put the assets in place, and I would just want to touch upon something Bob mentioned earlier, to bring it back to this point, to have assets from a digital standpoint and also, by the way, on a broadcast asset standpoint, as Bob mentioned, the half for advertisers 1, 2 and for many. The advertisers being able to build out cohorts. It is interesting now with what's happening with privacy and the way the world is going. People aren't going, that point of going one-to-one in the future, that's not going to happen. It's going to be 1, 2 and inform many 1, 2 will club, want to those cohorts out there. And even when Google came out and people said, okay, we're going to 1, 2 and 4 many, we're like, well, look, that's great. It's a club. It's a group of people. It's a group of people that are of lifeline interest that want to kind of hang together. So as I said, the asset base that we've built over the years, whether smart or lucky, if you look at the way the world is going in advertising, whether it's digital or broadcast and informed data sets, we have that active base to capture the advertising demand.

And I would add to it. I want to give a quick plug here. We did the iHeart Radio Music Festival in 2011, first one. We did it to launch this new digital platform we had called iHeart Radio. And if you see -- the impact of it's pretty easy. In Broadcast radio, we have about twice the audience of the second largest broadcaster. But in digital, we have about a 5x lead. So that's the power of having built these platforms when we did putting the resources behind them to make them really happy and then tying them all together. And I think the financials are showing the economic benefit of some of those decisions.

So you've done an incredible job managing costs throughout the pandemic and actually start to be there. You started before them. But Rich, as you said earlier, you're on track to hit 2019 EBITDA exiting this year. How should we think about longer term margin profile of the business? I mean, you're obviously going to exceed your pre-pandemic levels of the high 20s, but should we be thinking mid-30s over the intermediate term? How would that work out up by segment?

Well, we haven't given -- let me have what we've given in terms of guidance. I mean, we haven't given specific guidance out in terms of the cash specific years. But I mentioned just briefly earlier, you saw that we got back to 30% margins on multi platform. And again, that's without getting back yet to 2019 levels that we talked about earlier. So I do think we've done a nice job on cost. And you're seeing the flow-through as we've always talked about the incremental dollars that come in for the bottom line. And by the way, we'll generate significant free cash flow and significant shareholder value for all of our shareholders, which continues to be our #1 priority. And again, I think you'll continue to see us make improvement there. On the digital margins, we wanted people to the fourth quarter of 2020, where our digital margins were 35%, 36%, as that's what you should be thinking about longer term for the business. And you see we made progress towards that in Q2. We had a couple of little onetime items. The margins were at 27% in Q2, but up from 25% in the first quarter of Q1. And as I said, longer term, we should think about mid- 30s on the digital margins overall.

Got it. I mean in total, you've taken out $300 million of cost between modernization initiatives and restructuring. Are there other positive opportunity to take that cost beyond that?

I'll comment here. We've taken out between the 2 initiatives to be like $100 million in savings on the monetization initiatives. And we said a substantial of $200 million of the initiatives we launched during COVID would be permanent. And that's where I guess, I think your $300 million is. But what Bob and I do every single day, one of our big job is we allocate capital. We're looking for efficiencies. If you had told me at the beginning of COVID, okay, Rich, you guys have to make or you're going to make the majority of that $200 million permanent. I would say, really? I don't think so. But you know what, with the ability, in terms of we all -- the way we're all operating, taking advantage of AI technology, looking at what the current work environment is going to be the way people are going to work. We're dramatically reducing our office footprint in the United States as we're able to work more efficiently. Again, that's in the numbers in terms of reduced rent expense, the way we build out radio studios and take advantage of cloud computing. So I don't ever want to say we're done. I think our job, Bob and my job and the rest of the management team and Mike and the gang is to continue to find ways to do things more efficiently. But by the way, at the same time, invest for the future, continue to feed our winners like we've done with digital, which is creating, as you pointed out, just the extraordinary revenue growth and EBITDA growth we're having in digital.

So let me take the -- that the economy is sort of starting to open up. Are you concerned about costs starting to come back to creep that in?

Jessica, I think if you look at what cost we have, I mean, this is a very operating leverage business. And it's a business that Rich and I before COVID came, we had -- we started this modernization efforts, Rich pointed out, we announced January a year ago. And one of the reasons we did that is because we said, we should take a step back and say we invented this company today, started today, what cost would we need? How will we use technology? And of course, when you do that analysis, you realize any company that's been around as long as we have, has got a lot of legacy expenditures, procedures, operations. And many of the legacy ones aren't actually -- not only are they more expensive, but they slow you down, and they create bureaucracy, and they create steps to get stuff done. So we've been on a tear of really trying to figure out how we use technology to make our operations more efficient. And by the way, the introduction of AI just in terms of music selection. Think of all the programmers we have that thought their job was to pick the music on the radio stations and put it together. And that consumed most of their time. Well, today, we have 3,500 inputs when we make a music decision. We're now using AI to assist us in making those decisions. And now it frees up our programmers to do what they should be doing, which is trying to add the magic to the radio station, focus on the personalities, the contest, the promotions, the imaging, things that make the radio station, the radio station. So I think it has not only got a cost advantage to us, but it's got a quality advantage. And when you say things are returning, do we see cost creeping back in? I mean, other than stuff like, yes, we're going to pay bonuses this year, which, as you recall, most of our executives well without bonuses last year and some things like that, we actually are finding technology, allowing us to take cost out. As Rich says, we're operating differently on a different real estate footprint and different ways of passing information from one to the other, speeding things up and doing it at reduced cost.

Let's go back to advertising. As we said earlier, the market seems to be recovering very nicely. Could you talk about some of the areas that are strongest? Are there any areas that are weak? We know there have been supply chain issues for [indiscernible] or are you seeing differences? I know you don't -- you don't like to see as that national versus local, but any way you can sort of horse out where is the strength in advertising and what's still to come?

Well, I think the surprising thing is that even advertisers who don't have supply, like auto makers are still advertising, because they've all realized that it is a lot more expensive to acquire a customer than as to hang on to one. So unless they intend to be out of business in the future, which they don't, it's cheaper for them to keep advertising. And so we're seeing sort of across the board, people returning from the pandemic low to spending more and more. And I think the idea, even though there's a Delta variant, there's some uncertainty, they're following the consumer. The consumer says, I'm getting back to normal, and I'm getting back to a normal life. My kids are back in school. I'm going to begin to go to restaurants. I'm going out the live concerts, et cetera. And I think that's benefiting everyone in advertising and certainly us.

How much of your advertising sales player cross-platform deals across broadcast, digital, sponsorship, et cetera?

Well, we are -- we haven't announced any numbers, so I don't want to do it here, but we've told you in the past and talked to everybody about the multi-platform sales approach is very important. The fact that we, years ago, began to build out the strategy of any seller, anywhere can sell anything, has really been the core of the multi-platform sale. So when someone comes to us and talks about an event or podcast or digital or broadcast radio, we go, oh, yes, we'll talk to you about that. But let us also talk to you about how these other pieces come together. And being able to add smart audio to it, so we can find that same audience across all these platforms. And now we even have electronic marketplaces with some of the tech stack opportunities we have that can pull it all together and unify it, make that just a stronger opportunity for us and something. I think we're doing pretty well at and continue to do more. And the future is, we don't want to sell an advertiser just one thing, we want to figure out how we bring them into the universe of the products we have. By the way, for their benefit as well as ours.

Right.

Yes. Jess the -- just one quick thing to add. I think the evidence is the fact that we're here talking to you today, you think about the topics we're talking about right, audio, tech stack, digital or digital growth, or podcasting growth, all of these, we wouldn't be able to have this conversation with you or show the numbers that we've shown to date and the numbers that you've projected out, while we're not tapping -- existing and new advertisers who are coming to us for a multi-platform approach. So without giving you the specific details that we haven't talked about publicly, I do think it's a little bit self-evident in our results.

And when you talk about national and local, Jess, the only thing I would point out is that because we now have the capability for any seller to sell anything anywhere, it's sort of hard to classify what something is. If somebody in Jackson Mississippi sells a national ad? Is that national or is that local? So we sort of stopped talking about it that way. And I think it's freed us up to really expand the capabilities of the company.

Right. And then maybe taking this different approach to the advertising like a different side of it. How far along the curve are you in terms of building out a self-serve solution for small advertisers? And what can you say about the size of that pool of small advertise? I mean, that's really kind of what's driven Google as far as where you understand. So how big could that be -- how big is [indiscernible] can it be?

It's not much now and honestly, we sort of put it on the back burner in terms of priorities during the pandemic because we just wanted to get our big advertising back up. But you're exactly right, the opportunity is huge. I think from everything we know, it is -- I think some people have disclosed that Facebook disclosed at 7 million clients, and that's long tail as opposed to us that may have 50,000, 60,000 clients. And those clients are too small for us to have a salesperson call on them and to cost effectively reach for the business, but self-service provides a way for them to come into us. I think the adoption will be sort of at a consumer adoption rate, which means slow, not a B2B adoption rate. But we've got a good product out there making it better every day. And I think as we prioritize it and with time continues to grow and that becomes the way we'll get the long tail as opposed to trying to figure out how you get a seller to make a phone call there cost effectively.

Right. Right. But honestly something I have to -- this is a ministry question. Capital allocation, but you're really in a position where you can start paying down debt. You have a deal of long-term -- sorry, term loans that you can refinance as well. It seems like you're on track to get to force leverage by the end of next year. Could you talk about the priorities once you get to that point, how do you think about share repurchases, M&A?

Well, I think everything that you think about -- and you're absolutely right, we're using our free cash flow and now to pay down debt, which I would say, you look at our capital structure, and paying down debt is creating sort of real equity value for our shareholders. And again, just to repeat that condition about top priority. And when we get down to about 4 to 1, Bob, myself, Mike McGuinness, we'll talk to the Board. And we'll talk to the Board of Directors. And I think many of you know, our Board with whether it's Jay Rasulo, who's our lead director or Brad Gerstner, who runs the Altimeter Fund or Gary Barber, we've got a very sophisticated Board, whose also has the same mission, same goal, which is to drive the stock price. And we'll look at the right way to return money to shareholders at that point. But again, with the idea of driving the value and just to hit head on. I mean, I don't -- if you look at the acquisitions that we've done over the years, I think maybe since Bob and I have been here at iHeart, in total, maybe we've got $500 million of acquisitions in total, including Triton. So our filter is what asset can you buy that will make the rest of the iHeart asset base look -- perform better and stay relevant, and that's always our total. So they will [indiscernible] that they have been relatively tuck-in acquisitions that made iHeart more valuable. I would remind everybody of one piece is we have [indiscernible] in almost $1.5 billion or $1.4 billion in change, debt security that we have a soft call next May. So there's a real opportunity there to refinance that, and that's about a third our interest expense. So we do have that opportunity coming up, which we're very focused on and very mindful off.

Great. With that, I thank for both of you enough. Thank you, Bob. Thank you, Rich and we'll be back for...

Thank you, Jessica.

Thank you.

Great. Thanks everybody.