iHeartMedia 2004 Annual Report Download - page 40

RadioBroadcastingResultsofOperations
Our radio broadcasting operating results were as follows:
Our radio broadcasting revenues increased 2% during 2004 as compared to 2003, led by our small to mid-size markets (those outside the top
25), which outpaced our overall radio growth. These markets rely more heavily on local advertising, which was up for the year. Our national
syndication business also outpaced our overall radio growth through demand for advertising on existing programs and the addition of two new
shows, Delilah and Trumped. Growth in revenues from local and national advertisements broadcast during our traffic updates as well as non-
spot advertising revenues was positive for the year. Consistent with the radio industry, our national advertising revenues struggled throughout
the year and finished below amounts recognized in 2003. Some national advertising categories such as finance, professional services and
political increased spending during 2004, but declines in our three largest national advertising categories of retail, automotive and
telecom/utility weighed on the overall results. Although national advertising declined in 2004 as compared to 2003, we began to see growth in
national advertising during the fourth quarter of 2004, buoyed by political advertising, as well as strength in consumer products, professional
services and automotive advertisements.
Our divisional operating expenses grew $32.4 million during 2004 as compared to 2003, principally from programming expenses related to
higher on-air talent salaries and discretionary spending on marketing and promoting our radio stations.
Outdoor Advertising Results of Operations
Our outdoor advertising operating results were as follows:
Our outdoor advertising business had a strong year, with revenues up 13% over 2003. The increase includes $128.6 million in foreign
exchange fluctuations over 2003. Domestic revenue growth occurred across our inventory, with bulletins and posters leading the way.
Increased rates drove the growth in bulletin revenues, partially offset by a decrease in occupancy. We also grew rates on our poster inventory in
2004, with occupancy flat compared to 2003. Revenue growth occurred across the nation, fueled by growth in Los Angeles, New York, Miami,
San Antonio, Seattle and Cleveland. The domestic advertising categories leading revenue growth remained consistent throughout the year, the
largest being entertainment. Business and consumer services was also a strong category and was led by advertising spending from banking and
telecommunications customers. The automotive advertising category was up driven by national, regional and local auto dealer advertisements.
Street furniture sales in the United Kingdom, Belgium, Australia/New Zealand and Denmark were the leading contributors to our
international revenue growth. We saw strong demand for our street furniture inventory, enabling us to realize an increase in the average
revenue per display. Our international billboard revenues increased slightly as a result of an increase in average revenue per display. Also
contributing to the increase was $10.4 million related to the consolidation of our outdoor advertising joint venture in Australia during the
second quarter of 2003, which we had previously accounted for as an equity method investment. Tempering our 2004 results were a difficult
competitive environment for billboard sales in the United Kingdom and tough market conditions for all of our products in France.
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Years Ended December 31, % Change
(In thousands) 2004 2003 2004 v. 2003
Revenue $3,754,381 $3,695,020 2%
Divisional operating expenses 2,162,488 2,130,054 2%
Non-cash compensation 930 1,609 (42%)
Depreciation and amortization 159,082 154,121 3%
Operating income $1,431,881 $1,409,236 2%
Years Ended December 31, % Change
(In thousands) 2004 2003 2004 v. 2003
Revenue $2,447,040 $2,174,597 13%
Divisional operating expenses 1,757,024 1,593,736 10%
Depreciation and amortization 388,217 379,640 2%
Operating income $ 301,799 $ 201,221 50%