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CC Media Holdings, Inc. Reports Fourth Quarter and Full Year 2010 Results

Tuesday 08. February 2011 - 2010 Revenues Increase 6%; 2010 OIBDAN Increases 29%

CC Media Holdings, Inc. (OTCBB: CCMO) today reported results for the fourth quarter and year ended December 31, 2010.
“We executed our strategic plan and returned our operations to growth in 2010,” said Mark Mays, President and CEO of CC Media Holdings. “We drove considerable improvement in the operating fundamentals of both our radio and outdoor platforms as we benefitted from a recovering global economy, increasing revenues and improving margins. This all led to healthy growth in our cash flows for 2010.”
“Our global asset base remains well positioned to benefit from the ongoing advertising market recovery,” Mays continued. “In the year ahead, we remain focused on driving innovation across our operations, increasing market share and maintaining a disciplined approach to cost-management. Given the trends we are seeing across our business and the operating leverage in our model, we are optimistic that we can generate improved results in the year ahead.”
Full Year 2010 Results
For 2010, CC Media Holdings’ revenues grew 6% to $5.87 billion. The increase over the $5.55 billion reported for 2009 resulted from an improved advertising environment driven by the strengthening economy and occurred across the Company’s businesses.
Radio revenues increased $162 million, or 6%, from local and national revenues on improved rates
Americas Outdoor revenues increased $52 million, or 4%, across products, particularly digital, on improved rates and occupancy. Excluding the impact of the disposition of the Company’s Taxi Media business, and excluding the effects of foreign exchange1, revenues were up $82 million, or 7%
International Outdoor revenues increased $48 million, or 3%, from street furniture growth across various countries. Excluding the effects of foreign exchange1, revenues were up 4%
The Company substantially completed its restructuring program during 2010, benefitting from cost reductions and experiencing lower restructuring expenses compared to 2009. The growth in revenues, along with expanded margins, driven by cost reductions, resulted in OIBDAN1 growth of 29% over 2009.
OIBDAN1 was $1.66 billion for 2010 compared to $1.29 billion in 2009
Consolidated EBITDA, defined in the Liquidity and Financial Position section of this release, was approximately $1.8 billion for the period ending December 31, 2010, an increase of approximately 13%, compared to $1.6 billion for the period ending December 31, 2009
The Company’s leverage ratio, as defined under the Company’s credit agreements and described in the Liquidity and Financial Position section of this release, was 6.7:1 at December 31, 2010 compared to 7.4:1 at December 31, 2009
The Company’s loss before income taxes for the full year 2010 was $623 million compared to a loss before taxes of $4.54 billion for 2009. Included in the 2010 results were impairment charges of $15 million compared to impairment charges of $4.12 billion included in the 2009 results.
Fourth Quarter 2010 Results
CC Media Holdings’ revenues grew 8% to $1.63 billion in the fourth quarter of 2010 driven by growth across its businesses from an improved advertising environment. Revenues would have increased 9% excluding the effects of foreign exchange rates.1
Radio revenues increased $71 million, or 10%, from local and national revenues on improved rates
Americas Outdoor revenues increased $22 million, or 7%, across products on improved rates and occupancy. Excluding the impact of the disposition of the Company’s Taxi Media business in 2009, and the effects of foreign exchange1, revenues were up $30 million, or 9%
International Outdoor revenues increased $8 million, or 2%, from street furniture growth across various countries. Excluding the effects of foreign exchange1, revenues were up 5%
As a result of higher revenues and the impact of the cost savings generated by its restructuring program, the Company’s OIBDAN1 grew 40% over the fourth quarter of 2009. OIBDAN1 was $503 million for the fourth quarter of 2010 compared to $360 million for the fourth quarter of 2009.
The Company’s consolidated loss before income taxes in the fourth quarter of 2010 improved to $86 million compared to a loss before income taxes of $268 million for the same period in 2009. Included in the 2010 results were impairment charges of $15 million compared to impairment charges of $78 million included in the 2009 results.
1See reconciliations of revenue, direct operating and SG&A expenses and OIBDAN excluding the effects of foreign exchange, direct operating and SG&A expenses excluding non-cash compensation expense, revenue and direct operating and SG&A expense excluding Taxi Media, segment OIBDAN to consolidated operating income (loss) and the reconciliation of OIBDAN to net income (loss) at the end of this press release. See also the definition of OIBDAN under the Supplemental Disclosure section in this release.
2The Company’s operating expenses include direct operating expenses and SG&A expenses, but exclude non-cash compensation expenses associated with the Company’s stock option grants and restricted stock and restricted stock unit awards. Corporate expenses also exclude non-cash compensation expenses associated with the Company’s stock option grants and restricted stock and restricted stock unit awards.
Radio Broadcasting
Radio broadcasting revenue increased $162 million, or 6%, during 2010 compared to 2009, driven primarily by an $80 million increase in national advertising and a $51 million increase in local advertising. Average rates per minute increased during 2010 compared to the same period of 2009 as a result of improved economic conditions and a stronger advertising environment. Increases occurred across various advertising categories including automotive, food and beverage, healthcare and political.
Overall operating expenses2 decreased $33 million during 2010 compared to 2009, primarily from a $30 million decline in expenses incurred in connection with the Company’s restructuring program. The Company also benefited from cost savings that were the primary driver of declines of $27 million and $11 million in programming expenses and compensation expenses, respectively. Expenses declined a further $20 million from the non-renewals of unprofitable sports contracts. The decreases were partially offset by a $51 million increase in variable expenses associated with the increase in revenues and an $8 million impact associated with the finalization of purchase accounting during the first nine months of 2009.
Radio broadcasting OIBDAN1 for 2010 increased 21% to $1.10 billion from $909 million for 2009. The growth in revenues, along with the substantial completion of the restructuring program and the related costs savings derived from it, drove the OIBDAN growth.
Americas Outdoor Advertising
Americas’ outdoor revenue increased $52 million, or 4%, during 2010 compared to 2009 as a result of revenue growth across most of the Company’s advertising inventory, particularly digital. The increase was driven by increases in both occupancy and rate. Partially offsetting the revenue increase was the decrease in revenue related to the sale of the Company’s Taxi Media business during 2009.
Operating expenses2 decreased $4 million during 2010 compared to 2009. The decline in operating expenses was due to the disposition of Taxi Media, partially offset by a $26 million increase in variable expenses associated with the increase in revenue, a $6 million increase primarily related to the unfavorable impact of litigation and a $5 million increase in consulting costs.
Americas’ OIBDAN1 for 2010 was $492 million, an increase of 13% when compared with OIBDAN of $436 million for 2009. Excluding the effects of movements in foreign exchange rates1, the increase in OIBDAN would have been 12%. The growth in OIBDAN was driven by an overall improvement in business along with increased margins compared to 2009.
As of December 31, 2010, the Company had deployed 615 digital displays in 36 U.S. markets. This includes 59 digital displays that were rolled out during the fourth quarter of 2010 for a total of 158 digital displays that were deployed during 2010.
International Outdoor Advertising
International outdoor revenue increased $48 million, or 3%, during 2010 compared to 2009, primarily as a result of revenue growth from street furniture across most countries, partially offset by the exit from businesses in Greece and India. Foreign exchange movements1 negatively impacted 2010 revenue by $10 million, or approximately 1%.
Operating expenses2 decreased $52 million during 2010 compared to 2009, primarily as a result of a $20 million decrease in expenses incurred in connection with the Company’s restructuring program and a $16 million decline in site-lease expenses primarily from cost savings attributable to the restructuring program. Also contributing to the decline in expenses was the exit from businesses in Greece and India during 2010, an $11 million decrease from movements in foreign exchange, and a $5 million decrease in business tax related to a change in French tax law.
Led by the revenue growth from the Company’s street furniture business and improved margins across a number of countries, primarily as a result of the savings from the restructuring program, International OIBDAN1 for 2010 increased 62% to $263 million from $163 million for 2009.
Other and Corporate
For 2010, the Other segment, led by Katz Media, the Company’s national media representation firm, increased revenues $61 million, or 30%. The strong revenue growth at Katz Media was driven by national advertising, benefiting from the increase in political advertising during the year. There was also a substantial increase in OIBDAN1, growing to $74 million in 2010 from $12 million in 2009.
Corporate expenses increased $36 million during 2010 compared to 2009, primarily due to a $50 million increase in bonus expense from improved operating performance and a $54 million increase primarily related to headcount from centralization efforts and the expansion of corporate capabilities. Partially offsetting the 2010 increase was $24 million related to an unfavorable outcome of litigation recorded in 2009, a $23 million decrease in expenses during 2010 associated with the restructuring program and a $19 million decrease in 2010 related to various corporate accruals.
Other Events
In June 2010, Mark P. Mays announced his decision to retire as our President and Chief Executive Officer and asked the Company’s Board of Directors to initiate a search for his replacement. The Company has been actively searching for a replacement but, to date, has not identified his successor. Mr. Mays has informed the Company that he will step down as President and Chief Executive Officer on the earlier of the date that his successor joins the Company or March 31, 2011.