iHeartMedia 2012 Annual Report Download - page 6

Download and view the complete annual report

Please find page 6 of the 2012 iHeartMedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

3
channels, satellite radio, iHeartRadio.com and our stations’ websites, our iHeartRadio mobile application on smart phones and tablets
as well as in-vehicle entertainment and navigation systems. Some examples of our recent initiatives are as follows:
Streaming. We provide streaming content via the Internet, mobile and other digital platforms. We rank among the top
streaming networks in the U.S. with regards to Average Active Sessions (“AAS”), Session Starts (“SS”) and Average
Time Spent Listening (“ATSL”). AAS and SS measure the level of activity while ATSL measures the ability to keep the
audience engaged.
Websites and Mobile Applications. We have developed mobile and Internet applications such as the iHeartRadio smart
phone application and website. These mobile and Internet applications allow listeners to use their smart phones or other
digital devices to interact directly with stations, find titles/artists, request songs and create custom stations while
providing an additional method for advertisers to reach consumers. To date, our iHeartRadio mobile application has
been downloaded more than 143 million times. iHeartRadio provides a unique digital music experience by offering
access to more than 1,500 live broadcast and digital-only radio stations, plus user-created custom stations with broad
social media integration. Through our digital platforms, we estimate that we had more than 46 million unique digital
visitors for the month of December 2012. In addition, during 2012 iHeartRadio streamed, on average, 110 million total
listening hours monthly via our websites and mobile applications.
Sources of Revenue
Our CCME segment generated 49%, 48%, and 49% of our revenue for the years ended December 31, 2012, 2011 and 2010,
respectively. The primary source of revenue in our CCME segment is the sale of commercials on our radio stations for local and
national advertising. Our iHeartRadio mobile application and website, our station websites and Total Traffic Network also provide
additional means for our advertisers to reach consumers.
Our advertisers cover a wide range of categories, including consumer services, retailers, entertainment, health and beauty
products, telecommunications, automotive, media and political. Our contracts with our advertisers generally provide for a term that
extends for less than a one-year period. We also generate revenues from network compensation, our online services, our traffic
business, special events and other miscellaneous transactions. These other sources of revenue supplement our traditional advertising
revenue without increasing on-air-commercial time.
Each radio station’s local sales staff solicits advertising directly from local advertisers or indirectly through advertising
agencies. Our ability to produce commercials that respond to the specific needs of our advertisers helps to build local direct
advertising relationships. To generate national advertising sales, we leverage national sales teams and engage our Katz Media unit,
which specializes in soliciting radio advertising sales on a national level for us and other radio and television companies. National
sales representatives such as Katz Media obtain advertising principally from advertising agencies located outside the station’s market
and receive commissions based on advertising sold.
Advertising rates are principally based on the length of the spot and how many people in a targeted audience listen to our
stations, as measured by independent ratings services. A station’s format can be important in determining the size and characteristics
of its listening audience, and advertising rates are influenced by the station’s ability to attract and target audiences that advertisers aim
to reach. The size of the market influences rates as well, with larger markets typically receiving higher rates than smaller markets.
Rates are generally highest during morning and evening commuting periods.
Radio Stations
As of December 31, 2012, we owned 840 radio stations, including 240 AM and 600 FM domestic radio stations, of which
149 stations were in the top 25 markets. Therefore, no one property is material to our overall operations. We believe that our
properties are in good condition and suitable for our operations.
Radio broadcasting is subject to the jurisdiction of the Federal Communications Commission (“FCC”) under the
Communications Act of 1934, as amended (the “Communications Act”). As described in “Regulation of Our Media and
Entertainment Business” below, the FCC grants us licenses in order to operate our radio stations. The following table provides the
number of owned radio stations in the top 25 Arbitron-ranked markets within our CCME segment.