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

Good morning. So welcome to iHeartMedia, Bob Pittman and Rich Bressler, thrilled to have you guys back.

So let's just kind of dig in. So even if this recession that we've all been hearing about and everyone's forecasting does not materialize. Advertising has been in a recession for at least the past year, if not a little bit longer. How do you define what you're seeing in the current environment? And are you seeing signs of a turnaround?

Well, I think we called -- if you look in the last earnings call, we said we do think it's getting sequentially better through the year. I think most people who have called the recovery are -- you look at the percentage, chances of a recession have suddenly been going down instead of up. We see that same. I think we said in Q3 call -- or the Q2 call, we see the same thing going on now. So we do think it's getting better. And I think for us in the media business, Q4 is always the biggest quarter of the year. It's everybody's biggest sales quarter for most companies. And so I think if people are sitting on the sidelines, this is the quarter which we expect to spend. So sort of double benefit of recovery progressing, and we see the impact of Q4. And I'll also contrast this to the 2020 downturn in advertising, which was sharp precipitous deep, that this has just been sort of a down, but sort of been at a much lower level than you normally see in these. I think it's been dragging on. And I think everybody is -- certainly us are ready for it to come on back. And we said, look, we think next year gets back to a growth year. So when you sort of project when it comes out, that's it.

And it's interesting -- just one thing I might just add, you haven't fully seeded clearly in the numbers, and I don't think anybody can disagree with that, but the tone, it will be interesting, Jess, what you hear at your conference, but the tone of what we're hearing is much more optimistic in terms of conversations, whether they're ad agency holding companies or CMOs and CEOs of advertisers. There's definitely a tone of optimism about spending going to Q4, but particularly for 2024.

And I think one more point which we should make is that I think people also, advertisers, you usually lead the economy. So as soon as they get a little nervous, they're pulling back advertising because it's probably the easiest and quickest way for a company to say, look, until we find out what's going on, let's pull some back. And we saw last year as this sort of began that first 2 months of the quarter wouldn't be nearly as good as the third quarter, meaning they were holding the first couple of months, okay, it's not so bad, put some money in. And it sort of peaked and it's been going the other direction.

And how much visibility do you actually have at this point? How does it compare to normal? Like is it better or worse than it usually is?

Usual what?

The visibility, like how do -- is it a couple of weeks out or?

I think at any time of change, you don't have nearly the visibility you do in stable times. So you can't compare this year to next year directly because of a different behavior. We have less visibility than people who do a one year contract. But again, all the signals we're seeing and all the words we're hearing give us comfort.

Well, one of the things I give you guys a lot of credit for is creating like new revenue streams as well as advertising categories like just the way you can't see a movie on radio, but the way you -- whatever you call them today, VJs, DJs, whatever, your announcer.

Personalities.

Your personalities, they talk about the movies. It's just been really creative. And I'm just wondering, are there any new areas that you can tap into?

We put our feelers out in lots of areas. We have this incredible asset of broadcast radio, which is a -- we grow in 2 ways on broadcast radio. One is we sell it to advertising. The other is we use ourselves to build new products. I mean how did we become the number one podcast publisher, bigger than number two and three combined broadcast radio. How do we make those hit podcast, podcast after podcast because we advertise them on the radio of about 150 gross rating points on a new poding cast, if it's going to be a hit, it will pop. And so for us, it's whether it's Metaverse or it's -- was podcasting, podcasting was like, we didn't know it's going to be big. We were just sort of playing with it and put a little bit out there. and see what grows. So we're always doing that. And I think that's the way you find stuff. And if I knew what it was, we doubled down right now. I don't, but I'm certain that there are new things coming. I mean we built events. We built the number one digital radio app. We built the podcasting and lots of other and probably influencer revenue, mean influencers now, I saw something that it is $25 billion of influencer revenue and probably the biggest influencers actually are those on-air personalities. When Charlamagne tha God talks about something or Elvis Duran or Ryan Seacrest, people go, yes, that means something, right.

One thing I might just add, I think we want to be a little bit careful. I mean, on one hand, if you look at our digital audio group, we're going to do over $1 billion of revenue, look at the numbers, and we said that before, that was 0, 4 or 5 years ago in terms of -- your point, Jess, about creating new revenue streams. But at the same time, we are so under monetized as a company relative to the opportunity, when I'm sure we'll talk about whether it's broadcast or if you just even look at the projections out there, what's going to happen to podcasting revenue in the United States, forget about our numbers, 4 or 5 years from now going from $1.5 billion to $2 billion, wherever people are saying it is today to a $5 billion or $6 billion category. So we have so much opportunity just on the products we've created. Yes, I'm sure we'll create a new product based on consumer habit, but we don't need to create new products to have to be a tremendous growth company.

This is the only company I've been at, where you don't have to create a new product to get your growth. We just have to monetize the products we already have and better. And we know all the studies, whether it's Dentsu or whether it's just the difference in CPM that we're so undermonetized compared to television, for example. If we get halfway there, it's a huge win.

But there is a concern, and it's not just for radio. It's also for linear television that what's been lost in advertising won't come back when the market recovers as new digital platforms gain share. Like what's your response to that? And do you think that your other digital businesses will be able to partially recoup these secular shifts or do you see a potential recovery to sustainable growth in broadcasting?

Can we break that apart?

Yes. A lot of questions in there.

Can I go back in history a little bit, too. I don't think we're suffering like linear TV at all. I think the reason it's not going to come back for linear TV is the audience left. And I think the reason it's going to digital is not because people love digital, but that's where the audience went. And if you look at what happened in TV, because I really do want to get out of being in that category, I was there when we invented those 24-hour cable channels. The reason we invented them is they were a poor man's on demand, that we understood the consumer didn't like to get news at a certain time and cartoons on Saturday morning and music on Friday night. And so we gave them these 24-hour channels so they can pick and choose, I want some news at 3:00, go to the 24-hour news channel. I want some music go to the 24-hour music channel. As soon as you had the ability to actually serve somebody the programs they want on-demand, you knew these networks were doomed because that's not the way the consumer wanted that product. And what's happening today is it's just playing out the way the consumer wants it. The consumer always gets what they want, no matter what it is, eventually, even if it's illegal. I mean they'll -- bootleggers and people smuggling cigarettes or whatever is the consumer gets what they want. And they're getting it in TV and it's hurting linear TV. And radio is a different experience. What we're doing is we're keeping people company. Our mission statement is to give everybody in America friend anytime, anywhere. That need hasn't changed. As a matter of fact, I would argue, it's gotten greater as you -- people feel a little isolated, they love hanging out with that person on the radio. So I don't see any change in the consumer, which would cause me to say, okay, that consumer is going to go away. And if you look at our reach, we reached 90% with our broadcast radio assets, 90% of America, I think the biggest TV network is about 38%. The biggest cable network is probably less than 20%. So we've got the thing that advertisers need, which is people, and we don't have the problem television does.

Okay. So just building on that, like with respect to radio, can you maybe talk about some of the specific ad tech features that you plan to implement to better monetize radio?

Yes. I think you've hit the nail on the head. The issue with radio is we got way out of whack with how advertisers want to buy media. And they don't want to buy a bunch of spots. They don't want to buy it the way they did 20 years ago. They are looking for audiences. They're looking for targetability to those audiences. They're looking for attribution. They want to trade, a number of them want to buy and sell on an automated platform. And so we put those pieces together. We bought Triton a few years ago, sort of the final piece of putting the ad tech together. And we are in the progress now of working with the advertisers to get into their unified buying systems, the idea that they're going to have silos, we're going to buy some TV, we're going to buy some radio, is an old concept that soon they're going to be, what's the most efficient way to spend my money to maximize the dollars I have in advertising. So they're going to have algorithms and computers looking at that to make the decision, that will be beneficial to us. Today, 31% of the usage, daily media usage is audio, it's 9% of advertising dollars. As long as a human being is making that decision, what human being is going to say, I'm going to take it from 9% to 15%. People go, well, you can't change it that much. When an algorithm makes the decision, no one's going to be looking at that. It's going to spit something out. We know the algorithm is going to take into account how much is the usage. Dentsu just did a study about, okay, how much is the attention because maybe you could argue, well, paying are attention to radio as much as they are TV, turns out it's more attention to a radio and audio broadcast radio had on audio than they are to their video, their hot, new, highly valued video on-demand and OTT. So the inputs that the algorithm is going to have, we know are very, very positive for us. So we know the quicker the industry moves to algorithms making decisions, the better it's going to be for broadcast radio because it's so undervalued. I mean, 20 years ago -- 25 years ago, radio and TV were about the same CPM. When I took this job about a decade ago, TV was twice as expensive. Today, it's 4x as expensive because as the audience has declined, they've held their rate much better than you would have expected, therefore, do the math, is the CPM goes up. Radios had no degradation of audience, so we've not had the opportunity to boost the CPM like that.

And the one thing I might just add, Jess, is we talk about and Bob alluded to like our audio tech stack and people saying, yes, yes, I know you have that. I know you have your own tech stack. But I'm not sure there's a real appreciation. And I think the ad industry, particularly the holding companies is just getting that appreciation about the ability to plan a campaign, monitor a campaign, report out on a campaign automatically exactly like the big digital players can do. But we're not doing 1-to-1. We're doing 1, 2 and 4 many. We're doing 1 to cohorts, and we've built about 800 cohorts so far. And I would say that there's nobody else out there in all the broadcast, not just audio broadcast that has that capability. And we've also said publicly, we are moving towards what we don't have today, but will in the not-too-distant future, programmatic buying for broadcast out there, which nobody else is going to have today also. And if you speak to any of our mutual people we know that run the big holding companies, they will say, from a broadcast standpoint, that ability to do programmatic automated buying and selling, not to race to the bottom, but to raise from an efficiency standpoint is kind of the Holy Grail. And you'd hear that from all of our mutual friends and CEOs.

By the way, the Dentsu study, and I know you looked at it, said the efficiency of radio was 10x what it is for television.

So just a more general question on advertising, though. Can you just give us some color on, are there any categories that are performing better, that are performing worse? Where are you seeing different trends from larger advertisers versus smaller? Any difference in the markets? Like just some color on the overall market because we're not getting very much.

Yes. For us, as we've talked about before, because we reach 90% of Americans, therefore, we've got a really diverse group of advertisers that come in. So there's no single category that's more than 5% of our advertising, no single advertiser more than 2%. And so that gives us a lot of stability in terms of the different sectors performance. And I think we haven't seen anything different than you read in the press about who's doing well and who's not doing well, and we're sort of following along with the same thing. Insurance isn't great these days. And auto has actually done quite well.

Yes. And pharmaceuticals, they doing good.

And pharmaceuticals are very well also. It's been a growth category for radio.

Tremendous.

So in your third quarter guidance, you forecast a mid-single-digit revenue decline, but it's actually a low single digits. And if you take out political, so kind of stable with second quarter trends. What are the swing factors that would drive you either above or below the guidance range? And what is your current outlook contemplate in regard to just the overall macro environment?

We're sitting here and not going to make any different news and we're sitting here in middle of September. And we continue to feel comfortable of their overall guidance. I don't see anything in terms of the swing factors effective very much. I'll go back to what I said earlier, you are kind of hearing, again, a little bit more of an optimistic tone in the discussions, which hasn't materially affected any of our numbers out there or any way we're thinking about numbers. But again, Bob touched upon this earlier, as we look into 2024, which as a reminder, is a presidential political year and we can talk about that for a minute also, we've said very publicly, we expect to return to historical growth. And everybody can -- we haven't put an absolute number out there. But if you kind of look at where generally, I think people have us targeted for EBITDA for this year. And then you think about historically what election years have done, our record year for the whole company in a presidential election year was $170 million of revenue in the last presidential election year and to give a little bit of context in the last non-presidential election year, we did $100 million -- in 2022, we did $130 million of revenue. And prior to that, the record had been about $100 million of revenue. So we have no reason to believe 2024 is not -- again, we haven't given guidance, but we have every reason to believe it will be very strong. And just as a reminder, the revenue, the EBITDA conversion on presidential revenue or I'm saying election revenue is very strong, like our highest conversion of revenue to EBITDA, and it's also a neat category because we get the cash upfront. It's the only category that we get the cash upfront. So I think however you triangulated when you started out the conversation with, Jess, and Bob commented on in terms of the views about the economy, not just us, but what we're hearing and what the CEOs and big banks are saying, coupled with the election year, I think on any circumstance, it shapes up to be a very strong year for us.

Right. And then one thing which you've done a great job and way before we started -- before COVID, and before this recession or potential recession. You've done a great job on cost, and you started cutting cost years ago. As you look out, you manage expenses well, are there any other buckets or any other areas that you think you can tap into?

Well, look, I -- and you know me, and Bob and I for a long period of time, we are -- and people say these words, but we really do wake up every day and constantly challenge each other what would this company look like if we build the cost base today from ground zero, from the bottom up. And again, that's not like [indiscernible]. I know it's not realistic, but it's a really good way to think about every dollar you spend. And we announced our $75 million program this year for 2024. By the way, on top of the couple of hundred million dollars we announced a few years ago. We started implementing that program in the second quarter of this year. But we are always looking in terms of how to make the company more efficient, how to bring more to the bottom line. Now everybody is talking about AI which on one hand, obviously, it's a great opportunity on that -- everybody is saying about the opportunity, whether it's on the efficiency side or it's on the creative side also. And rest assured, we're looking heavily at both of those. But at the same time, what I would say, we've been doing a pretty good job and thank you for saying that on the cost about taking advantage of technology for years. We've been in terms of whether it's building out our radio stations and the stations themselves and how much we put in the cloud and what our station looks like today versus how we monitor what we play on the air for people and what consumers are listening to, but now it's called -- I smiled to myself, now it's called AI technology, but effectively, it was AI, 2 or 3 years ago, we would do it but we just didn't call it AI technology.

Well, I also want to add on the AI front. I think this is going to be huge game changer in terms of cost and quality. I mean I think back to doing business before the Internet and before there was a computer, and you go, wow, how could we get anything done, I have mail on my desk that was literally 2 feet high. It's put in separate colored folders for what I needed to sign immediately. I mean it was crazy the way we did business. We had a switchboard operator. We had a copy room of manager that if you needed something copy, you hand it to someone and they would copy it. If I needed a computer run, I went to the computer center. And then a couple of days later, they gave me back a run on that perforated computer paper. It is -- and I think we're getting ready to have another sea change of that magnitude in terms of operating efficiencies and business. And I think that level of productivity is going to be very powerful. And for a company like ours with a lot of sort of fixed cost infrastructure. We're going to be able to do a lot more with every dollar.

So your digital business, as you guys alluded to, has been stronger in recent years, driven by several factors, including podcasting. Now that, that business is over $1 billion, you start facing the law of large numbers, now how do you think about a more normalized long-term growth rate for this part of the business?

Well, we -- look, we haven't given -- the only -- any guidance out, we still expect it to be a very strong growth rate just look at our -- the growth of our podcasting business, what we did last quarter, which I think we were like 12% or 13% overall for a quarter. So it still -- even with the lower log numbers, the growth is still extraordinary out there, and we expect to continue to have strong growth. And at the same time, we balanced it. We've said to people in terms of bringing that to the bottom line, which probably is the most important and FED generate the revenue growth is to model the business added about a 35% EBITDA margin, mid-30s EBITDA margin, and we feel very comfortable with that.

I also think when you look at digital is I think podcasting is probably the fastest-growing segment in digital today, fortunately, we have that. And I think we are looking at how are we going to do in digital, I think we're going to do sort of as well as the digital marketplace does. And I think podcasting is going to be leading that.

So would you say it's a sustainable double digit? I mean, it kind of feels like that, but...

I think it sort of depends on the macro end.

And do you think that the advertising dollars -- do you think of these advertising dollars is truly incremental? Or is it just a share shift away from traditional?

For us, this isn't a share shift because our broadcast radio is doing just fine. It's not -- our audience isn't shifting from broadcast radio to digital, we're adding new listening opportunities. And I'll give you a perfect example podcasting. In podcasting, 2/3 of the listening is done at home. In broadcast radio, 2/3 of listening is done out of home. I mean, those are businesses that neatly fit together. And so we're able to take advantage of that. I think we've got nothing like a change of devices. We're now able to find some new listing opportunities. In the past, you might see people in the parking lot in a car like this, they got the car, they won't get out because the person on the air is talking about something, and they want to wait until it finishes, and then they rush to the office. Today, that doesn't happen. When they get in the car, they put their headphones in, they click it on their -- on their phone, and they continue to listen. We just picked up new listening opportunity in that what was a dead zone. In the home, over the past 20 years, we've seen a degradation of the number of homes that have a clock radio. There was once upon in time that almost 100% of the homes had a clock radio. Today, I forgot what the number is, something like 1/3 of the homes have a clock radio. And we were fretting about that 10 years ago, what are we going to do to get more clock radios in the home. And then Alexa came along and Alexa is the new clock radio. And guess what, the number one use on Alexa is AM/FM radio. Number two is weather. So we again find some technological solutions that fill the hole, and there was nothing good about the pandemic, but we did get a benefit from it, which is that it caused consumers who stayed at home to find this and discover some new devices or smart TV, the Alexa, Roku, et cetera, and that it has long-lasting benefit.

Yes. Just one very quick thing. I don't -- we don't have it in front of me, but in our -- actually our investor deck that Bob and I talked to when we do our earnings release, there's actually a slide in there which shows where the listening come from and about 70% in terms of podcasting is actually coming from online video and social.

In terms of the usage. What did they give up to find time for podcast.

To your question, what are they giving up?

Yes. So if it's coming from these other areas, how do you think the dollars are that...

For podcasting?

Yes, it's coming from areas that are pretty big.

Yes, thank you.

But by the way, if you look -- there's two things I said about podcasting. Again, not our estimates, but you look at some estimates yourself come out from, I figured from like eMarketer, Deloitte, PwC, you got to 2025, '26, the numbers are $5 billion, $4 billion, $6 billion. But I mean, they're enormous.

And how much is just the market today, is it $2 billion yet or not?

It's hard to tell.

It's hard to get to the number, probably in that zone.

Yes, it's in that zone out there. But if you think about it for a second, people said, well, how could that -- just to be fair and give you some context. People said, oh my God, how can the numbers go from whatever we think they are today to those growth rates? But two things really kind of when you reflect and say, okay, that can make sense. One is from a medium standpoint, and just you know this as well as anybody, this is the most engaged medium, I would say, the 3 of us on stage, and we've all been involved in media companies for a long period of time, have ever seen. Right? 85% of people that start a podcast listen all the way through. And I'll just remind everybody that's here, you have all the capabilities you can fast forward, stop, rewind. Or somehow people think, well, the reason why that stat is so big is you don't have the capabilities you have like with a video that you do to online video you do today. Well, you do have that capabilities. And then the second piece is it's only the last couple of years that big advertisers have really come in to podcast. I think quite frankly, since we've made -- we've had such a big push in the podcasting. And that's important. The big advertisers out there, you talked about advertising dollars, they bring the big dollars to the medium. The big dollars weren't at the medium. So that's why it's -- that when you look at it, that's why it's plausible, no promises for that type of growth rate.

Well, I think it's also just the rule and the 3 of us have been around for a while and looking at media grow is advertising follows the consumer. If the consumer is there, the advertisers will be there.

So podcasting in the last couple of years, the past few years, you've seen some pretty visible, exclusive deals. You guys took a very different approach, and it looks like the market is stepping away from some of these deals. You see some big companies stepping away from exclusivity. Does this create an opportunity for you going forward?

Well, I think for us, we had a discipline that there is no such thing as a good deal where we don't make money. So I mean, not to say we won't make a mistake. But we're certainly not going to do a deal that doesn't model out to be a good financial deal for us. And I will tell you, when people are paying these ridiculous amounts of money to people, in our view, we say, I don't know how an earth that ever plays out for them. And we're looking at the same thing they're looking at and we got bigger audiences than they do, and we've got an ability to drive more audience than they do using our broadcast radio to get attention for it. And it turned out they couldn't get a return. And so I think as things return to earth, it makes our deals easier to do. But even in spite of those in that period of time, we still had the biggest players that wanted a big podcast, not necessarily a onetime pay day, but they wanted something that was sustainable, want to build something came with us, the NFL, the NBA in addition to the big talent. And I think at the end of the day, you can't buy -- you can't do crazy stupid deals to a degree that really affects the market that much in terms of taking things out of the marketplace. So I think it didn't hurt us in that regard, but I do think you're going to see value is getting much easier to do.

And by the way, if we all go back and look at just you talked about new categories, to me, this is just a natural evolution of what happens in a recent category, at a new category, particularly a very hot category. There's if you go back, always in businesses is like irrational bidders, people try and buy their way in and then you realize it's a business. You've got to make money, you've got to generate free cash flow and the marketplace becomes more rational moving forward. I think the great news for us on podcasting, the position we have in podcasting. I think last month, we just -- we had 420 million downloads according to Podtrac, which is effectively like Nielsen for podcasting. We, as a publisher, just to be clear, and that's where the money is in publishing. We're larger than the next 2 publishers combined, and we are more unique than anybody else combined. And I think the growth -- people on our growth, I think the month-over-month growth was like 11% or something in terms of our download. So I think all the vectors point towards growth. And I think could the lead we have not to take that for granted, but you don't often see someone with the position we have in a growth industry, just not continue ever really get unseated from that lead position. It just doesn't happen -- based on where we are on today.

So Bob, you mentioned the Triton acquisition and when you made that acquisition, you guys were very vocal about this being the final piece to putting your entire tech stack together. And you said it could take some time to see the benefits. So now we're 2 years later, can you talk about some of the incremental opportunities that the acquisition provided for you? And do you think the real benefit from this will be finally realized like when the advertising market fully recovers?

I think it's time. I mean anytime you have a new platform, it takes time. I can remember when we fought to get $1 billion of digital advertising in the Internet era. And it seems sort of quaint today anybody would worry whether you could get to $1 billion of digital advertising. I think that -- for Triton allowed us to really make our broadcast radio like digital. We're in the process of rolling that out. But I think if you look at the differential in performance in the last downturn of broadcast radio versus this downturn, it's night and day. I mean, one was down 50% and one is down single digits. And I think that -- you have to say a big part of that is also smart audio and the capabilities which Triton is providing. We have not yet seen the real impact of the programmatic. We've not seen the impact of real-time bidding programmatic, we are beginning to get some usage of the -- I can find an audience and now seamlessly serve it across all forms of audio broadcast streaming, and podcast. And by being able to do that for an advertiser, we can give them this credible scale and ways to reach that audience in many new ways. So those are still rolling out. And I think the big win for us, obviously, is getting into the integrated buying systems, which is I think where every advertising agency is eventually going. They're all working on it, they call it different things and they're working at different speeds. But to us, that's what Triton unlocks for us. And that's the big win for us.

Right. So is there like a time frame that you think you can get like maximum? Like is it another 1, 2 or 3 years before you really see the full benefit?

I think we're seeing it incrementally just continue to see the improvement. I don't think it's a cliff, I think it's a building process, and I think we're underway.

And then I want to go back to something, Rich, you mentioned political for next year, which obviously would be a big driver and hopefully, a recovery as well. But with the '24 presidential campaign, you're just starting to kick into gear, what are your expectations compared to 2020? And then we've just been talking about digital, how will you leverage your digital assets in the next campaign?

Well, if you look at -- from an expectation, I think I just touched upon earlier, we haven't given specific guidance, but everything we are seeing that we expect it to be a very strong political year. But by the way, not just -- I think it's the national campaign. I think it's the local races because -- just a reminder, our 850-plus radio stations in 150 markets out there. So our capabilities go up and down even to the local races and by the way, into the issues can pay just all we all need to do is pick up the papers and just you can kind of let your imagination go in terms of the issues out there. And from a digital standpoint, I think I would just refer to everything that Bob and I have been talking about for the last 30, 35 minutes or so. We are a different company. And the capabilities we have are just different. I think we point to the $1 billion plus of digital revenue we have as a manifestation. And as a data point, there's share with everybody that that's proof positive. We are a digital company. So Bob touched upon what happened we've had in the last recession in terms of the multi-platform group. And yes, we're down the multi-platform group now, but on a percentage basis, making sequential progress and down a lot less than we've done in the last recession. And part of that is because we just had different -- we have different capabilities that we had before. And on digital, we have different capabilities. So that's one of the reasons we have the optimism for next year being a very strong year.

By the way in the political, specifically, the political spend is even more interested in the data that we have and interested in being able to find that particular very narrow, in most cases, audience they're looking for, and we now have those capabilities. Now 10 years ago, we didn't have them, probably 5 or 6 years ago, we didn't have them. So -- and we're getting them better and better. So I think we're feeling good about this election with the political advertising, because not only can we reach this huge audience and reach them very efficiently, but we now can do the data mining that they're looking for and the targeting that they need as well as Rich mentioned here, monitoring and attribution as well.

So last topic, but a couple of questions, is capital allocation. You've maintained your target leverage of 4x for the foreseeable future. But it would seem you need a real reacceleration in the business to be able to get there anytime soon. So can you help us think through the time frame just to get there?

Sure. Look, I mean, we haven't changed our goal. And again, just about the reason we have a goal and the reason why we picked 4 to 1 is because that's what we heard from our equity holders from a risk profile is despite the fact of our significant generation of free cash flow and that hasn't changed. And I don't want to be a lot more specific than that, but we expect to -- as we get back to next year being as we articulated earlier, a significant growth year, coupled with our generation of free cash flow. And I think if you look at things we've done proactively on the free cash flow side, we continue to dramatically look at our capital expenditures. The guidance we gave this year was about $90 million. That was down significantly from about $120 million guidance we gave, and that was down significantly a year or so ago, we were up at $160 million, which we are very much that historical increase was done because of our real estate rationalization. And we reduced our square footprint in the U.S. from about 4 million square feet to 2 million square feet on real estate. We've had significant reductions on our employee count just as we become more efficient overall as a company. So I think all those things lead you to significant generations of free cash flow. So I think people should take some comfort that we expect to kind of reaccelerate getting back to that 4x because of the generation of free cash flow and what we said we expect next year to get back to a significant growth year.

And over the past several quarters, you've repurchased your public debt. Do you still think that's the most efficient way to delever the balance sheet?

Well, I think paying down debt is our most efficient way in terms of delevering the balance sheet. Herefore, and again, not predicting what we're going to do in the future, we've been in the market by the [ AD 3As ] That had about a $1.5 billion face and now we're down to about $1 billion face on that. And so we've bought -- that's the face value we bought over $400 million, obviously, the discount of those bonds. And it's had the benefit of saving cash interest expense to the tune of $40 million a year also. And so I think when you look at the discount and you look at the cash-on-cash yield on that, whether we could all do the math, whether it's 18%, 22%, depending on where the bonds trade, I think that's a pretty good return back to all of our stakeholders and particularly our equity stakeholders balance sheet. And just go back everything about saying today, you keep going back to it, we've got one job here, we're not confused, which is the equity creation value of this company. And everything else we're talking about quite frankly, whether it's the balance sheet management, whether it's the podcasting, whether it's the tech stack, all of that is the goal -- gets to the goal of creating equity value for our shareholders.

Right. So last question. I know we have like 2 minutes -- it's 1 minute. Can you just talk a little bit about the upcoming maturity schedule and what your plans are given the underlying challenges in the credit markets right now?

Yes. Look, I -- and what Jess is referring to is on maturities and I talked about the [ AD 3As ] which you do in 2027. We've got other maturities due in 2026. And from our standpoint, we've got to continue to have the business perform, which we've talked about that for a significant amount of time today. We feel great about that. We've got to continue to generate free cash flow, use that free cash flow to help manage down the debt structure, like I just articulated. And we've got -- I think we've got a period of time, and I think we've got the benefit of time out there, understand the credit markets. And just to put a very fine point on it, at least there's no question about the refinancing of whether it's whatever is left of the '27s and the '26s. The real question is what's the change in the composition of cash interest expense for the company. And quite frankly, under any scenario, we're very comfortable with that, what the cash interest expense is going to be. And what we just need to do is be opportunistic. And I think the benefit of Bob and I and the rest of the gang, and we've got a great Board of Directors on this too, is patience and just make sure patients then be opportunistic at the right time to maximize the value of the balance sheet and the refinancing.

Great. We're exactly out of time, but thank you guys so much for coming.

Thank you, Jess. Appreciate it.

Thank you.