iHeartMedia 2010 Annual Report Download - page 33

Format of Presentation
Management’s discussion and analysis of our results of operations and financial condition should be read in conjunction with the
consolidated financial statements and related footnotes. Our discussion is presented on both a consolidated and segment basis. Our
reportable operating segments are radio broadcasting (“radio” or “radio broadcasting”), which includes our national syndication
business, Americas Outdoor Advertising (“Americas outdoor” or “Americas outdoor advertising”), and International Outdoor
Advertising (“International outdoor” or “International outdoor advertising”). Included in the “other” segment are our media
representation business, Katz Media, as well as other general support services and initiatives.
We manage our operating segments primarily focusing on their operating income, while Corporate expenses, Merger expenses,
Impairment charges, Other operating income (expense) - net, Interest expense, Gain (loss) on marketable securities, Equity in
earnings (loss) of nonconsolidated affiliates, Other income (expense) - net, Income tax benefit (expense) and Income (loss) from
discontinued operations, net are managed on a total company basis and are, therefore, included only in our discussion of consolidated
results.
Certain Credit Agreement EBITDA Adjustments
In the fourth quarter of 2008, CCMH initiated a restructuring program targeting a reduction in fixed costs through renegotiations
of lease agreements, workforce reductions, the elimination of overlapping functions and other cost savings initiatives (the
“restructuring program”). This restructuring program was substantially complete as of December 31, 2010.
Our senior secured credit facilities allow us to adjust the calculation of consolidated EBITDA (as calculated in accordance with
our senior secured credit facilities) for certain charges. These charges include restructuring costs of $47.3 million, $164.4 million and
$95.9 million for the years ended December 31, 2010, 2009 and 2008, respectively. In addition, certain other charges, including costs
related to the closure and/or consolidation of facilities, retention charges, systems establishment costs, costs related to refinancing and
acquisition and consulting fees incurred in connection with any of the foregoing, among other items, are also adjustments to the
calculation of consolidated EBITDA. For the year ended December 31, 2010, we adjusted our consolidated EBITDA calculation for
an additional $8.6 million. See “Sources of Capital” below for a description of the calculation of our consolidated EBITDA pursuant
to the senior secured credit facilities.
Radio Broadcasting
Our revenue is derived from selling advertising time, or spots, on our radio stations, with advertising contracts typically less than
one year in duration. The programming formats of our radio stations are designed to reach audiences with targeted demographic
characteristics that appeal to our advertisers. Management monitors average advertising rates, which are principally based on the
length of the spot and how many people in a targeted audience listen to our stations, as measured by an independent ratings service.
Also, our advertising rates are influenced by the time of day the advertisement airs, with morning and evening drive-time hours
typically highest priced. Management monitors yield per available minute in addition to average rates because yield allows
management to track revenue performance across our inventory. Yield is measured by management in a variety of ways, including
revenue earned divided by minutes of advertising sold.
Management monitors macro level indicators to assess our radio operations’ performance. Due to the geographic diversity and
autonomy of our markets, we have a multitude of market specific advertising rates and audience demographics. Therefore,
management reviews average unit rates across each of our stations.
Management looks at our radio operations’ overall revenue as well as the revenue from each type of advertising, including local
advertising, which is sold predominately in a station’s local market, and national advertising, which is sold across multiple markets.
Local advertising is sold by each radio station’s sales staff while national advertising is sold, for the most part, through our national
representation firm. Local advertising, which is our largest source of advertising revenue, and national advertising revenues are
tracked separately because these revenue streams have different sales forces and respond differently to changes in the economic
environment. We periodically review and refine our selling structures in all markets in an effort to maximize the value of our offering
to advertisers and, therefore, our revenue.
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