iHeartMedia 2002 Annual Report Download - page 39

The non-cash impairments of our goodwill and FCC licenses were generally caused by unfavorable economic conditions, which persisted in
the industries we served throughout 2001. This weakness contributed to our customers reducing the number of advertising dollars spent on our
media inventory and live entertainment events. These conditions adversely impacted the cash flow projections used to determine the fair value
of our licenses and each reporting unit at January 1, 2002. These factors resulted in the non-cash impairment charge of a portion of our licenses
and goodwill.
Radio Broadcasting
(In thousands)
Reported basis revenue increased $261.7 million for the year ended December 31, 2002 as compared to 2001. Pro forma basis revenue
increased $219.9 million for the year ended December 31, 2002 as compared to 2001.
We experienced broad based revenue increases during 2002 on both a reported and pro forma basis. Growth occurred across our large and
small market clusters, in national and local sales, in our syndicated radio programs and across our advertising categories. Likewise, our ten
largest revenue markets contributed approximately 22% of the pro forma revenue growth while our markets ranked outside the top 100 in
revenue contributed approximately 24% of the pro forma revenue growth. Consistent with the widespread growth across our markets, our
national and local revenue increased 11% and 5%, respectively, on a reported basis for 2002 as compared to 2001. This growth was spurred by
growth in our auto, retail, telecom/utility, consumer products and entertainment advertising categories.
Audience reach is an important part of our ability to set rates because it is an indication of how many listeners will hear our customers’
advertisements. Reach is measured in individual markets by audience surveys. While ratings across all of our markets are the ultimate
determinate of the health of our radio business, we generate approximately half of our radio revenues from our top 20 markets. Therefore, we
took a snapshot of our ratings from these markets based on the percentage of people in the market over twelve years old who listened to our
stations in an average quarter hour for the six months ending in the fall of 2002. Based on this demographic, our ratings improved in twelve of
the twenty markets, were down in six of the twenty markets and were flat in the other markets as compared to the summer of 2001.
35
Years Ended December 31
,
%Chan
g
e
2002 2001 2002 v. 2001
A
sRe
p
orted Basis:
Revenue $3,717,243 $3,455,553 8%
Divisional Operating Expenses 2,126,139 2,104,719 1%
EBITDA as Adjusted * $1,591,104 $1,350,834 18%
* See page 30 for cautionary disclosure
Pro Forma Basis:
Revenue $3,717,243 $3,497,376 6%
Divisional Operating Expenses 2,126,139 2,139,239 (1%)
Reconciliation of Re
p
orted Basis to Pro Forma Basis
Reported Revenue $3,717,243 $3,455,553
Acquisitions —41,823
Divestitures
—
—
Pro Forma Revenue $3,717,243 $3,497,376
Reported Divisional Operating Expenses $2,126,139 $2,104,719
Acquisitions
—
34,520
Divestitures
—
—
Pro Forma Divisional Operating Expenses $2,126,139 $2,139,239