Ladies and gentlemen, thank you for standing by. Welcome to iHeartMedia, Inc.'s Third Quarter 2014 Earnings Conference Call. [Operator Instructions] And as a reminder, today's call is being recorded. I'll turn the conference over to your host, Effie Epstein, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining our 2014 Third Quarter Earnings Call. On the call today are Rich Bressler, President and Chief Financial Officer; and Brian Coleman, Senior Vice President and Treasurer. We'll provide an overview of the third quarter 2014 financial and operating performances of iHeartMedia, Inc., iHeartCommunications and Clear Channel Outdoor Holdings. For purposes of this call, when we describe the financial and operating performance of iHeartMedia, Inc., that also describes the performance of its subsidiary, iHeartCommunications. After an introduction and a review of the quarter, we'll open up the line for questions. Before we begin, I'd like to remind everyone that this conference call may include forward-looking statements that involve uncertainties and risks. There can be no assurance that management's expectations, beliefs or projections will be achieved or that actual results will not differ from expectations. Please see our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission for a discussion of important factors that could affect our actual result. Pacing data will also be mentioned during the call. For those of you not familiar with pacing data, it reflects revenues booked at a specific date versus the comparable date in the prior period and may or may not reflect the actual revenue growth rate at the end of the period. During today's call, we will provide certain performance measures that do not conform to generally accepted accounting principles. We provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases and a slide presentation, which can be found on the Investors section of our website, iheartmedia.com and clearchanneloutdoor.com. Please note that our 2 earnings releases and the slide presentation provide a detailed breakdown of foreign exchange and noncash compensation expense items, as well as segment revenues and OIBDAN. With that, I will now turn the call over to Rich Bressler.

Thanks, Effie, and good morning, everybody. Once again, as Effie mentioned, you can find our prepared slides on our website. This is our first earnings call as iHeartMedia, Inc., and I'm very excited about the opportunities this change gives us. Let me quickly remind you that EC Media Holdings is now iHeartMedia, Inc. Our former media and entertainment division is now iHeartMedia and there is no change in the name of our Outdoor business. Let me spend a couple of minutes sharing our thinking behind becoming iHeartMedia. This change let us capitalize on the powerful iHeartRadio brand that we've built in just 4 short years. A brand that already has achieved over 70% brand awareness. iHeartMedia could play a focus on our powerful local and national brands and industry-leading platforms, including broadcast radio, digital, events, outdoor, mobile and social. Our new name better reflects this scale, impact and reach, and looks to our future and not our past. It's now easier than ever for our advertisers and other partners to take full advantage of the range of content, audiences and experiences we deliver across multiple platforms in cars, on stages and everywhere consumers want to find information and be entertained. With advertisers, the name alone opens doors and doesn't peg us at any one platform, including broadcast or outdoor media. Ultimately, our whole company is focused on becoming the #1 multi-platform media company in revenue and earnings, in addition to already being #1 in reach in the United States. So this is an exciting opportunity to monetize our assets better and get our fair share of advertising spend. As you know, there was no name change for Outdoor. Clear Channel Outdoor is a strong and globally recognized customer-facing brand in all the countries in which it operates. And Clear Channel…

[Operator Instructions] First question comes from Jason Kim.

First on margins. Directionally speaking, how should investors think about your ability to hit margin expansion in 2015, that's with the media segments. I know it's not a political year next year and you continue to invest in the business to grow. But in terms of incremental spending levels, what's your comfort level and being able to the increase margins for the business in 2015?

This is Rich. Thanks for the question. Comfortable, in one word. We expect to see margin expansion in the fourth quarter this year. I expect to see margin expansion in 2015. I think when you go back to the first, second quarter this year, I talked about you starting to expenses level out, you saw that. In iHeartMedia in this quarter, actually when you factor out the onetime items -- just as a reminder of what I just said a few minutes ago. Expenses are actually slightly down. So you see margin expansion and really is just a way of life around here. It's just we're constantly -- we're going through our 2015 budget as we speak, and we're constantly looking at getting efficiencies at the organization, flattening the organization where it's appropriate. I think we've taken a lot of steps to do that. And we'll continue to challenge ourselves how to bring more money down to the bottom line.

Any update on the L.A. digital board situation that you could provide for us?

No, no real update. I mean, there's not much news on L.A. with respect to our 77 -- just to remind you, our 77 digital billboards. We're continuing to work vigorously, closely, productively with the city on a legislative solution that will allow us to turn back on as many build -- digital billboards as possible. As soon as possible. Believe me, nobody wants those boards on more than Bob, myself, William and the rest of the team. As I've said before, this process does take time and I never put a timeframe on it. Back when I first started having these calls I won't now. What we're trying to do in the interim is selectively seek permits to cover some of the Board's back to traditional vinyl, static signs. We converted 2 boards in the second quarter. Back to static signs, we converted 5 boards, I think, it was in the third quarter back to static signs. So again, this is just based on the numbers, it's not meaningful from a revenue perspective, but it's a good parallel step. We got to keep our feet moving, that we can take while we work through the legislative process.

Okay. And if I can ask one more on the balance sheet side of things. You guys have included in a lot of -- on the liability management side of things this year, but the nature of the market is always thinking about what's next for the company. So how do you feel about the liquidity of portfolio the company right now? And thoughts about the remaining 2016 maturity. And should we be thinking that your order of priority still remains 2016 maturity first. Or do you feel like the amount of that coming due in '16 is manageable enough for you to start considering buying back even some of the -- accommodate -- 2018 maturities in the open market that are trading piece-only below par?

Jason, let me just start that. I'm going to turn it over to Brian whose with me right here. Let me just highlight on -- there's obviously 2 sides on the balance sheet or a bunch of sides. But -- first, just on asset sales. We're obviously noncore asset sales. We're continuing to look at our business asset portfolios and optimize that. We indicated that the last couple of quarters, and now this quarter, what we talked about the sale of our buildings in San Antonio. We expressed the proceeds to be approximately $30 million and we'll lease those back. So again, similar to what I talked about earlier in the expense management, similar to capital expenditures, which we saw on a year-over-year basis, we were down in capital expenditures particularly at iHeartMedia -- I mean up slightly on the Outdoor business, which are revenue-producing assets. So again, that's really continues to be a way of life on the asset -- non-core asset side. I'll turn over to Brian for the balance sheet liability management.

Sure. We were out in the market and we repurchased $57.1 million of the 2016 note. I think that's a good indication of how the company uses its liquidity position. We feel pretty comfortable about where we are and the things that we can do. There was some market volatility, maybe even dislocation over the past couple weeks. We were optimistic, we bought back debt at a discount. I will point out that we repurchased 2016 indebtedness. We did not purchase any 2018 indebtedness. So when we think about focus, I think we'll continue to be opportunistic. Although the markets aren't today what they were the past couple of weeks. We'll focus on 2016, we will look to refinance the remaining term loans that are now below $1 billion. And we'll always look to be opportunistic. But again, I would kind of take a look at the actions we've taken and take that as an indication of our comfort level with respect to our liquidity position.

[Operator Instructions] And the next question comes from Lance Vitanza.

I wanted to start with the Omnicom partnership. Could you tell me, does this reflect the shift in strategy amongst advertisers? Or was this a more of a competitive victory? In others words, did you take business away from another radio company or is this money coming in from some other media?

So a couple of things. So look, we have a long-standing relationship with Omnicom. As quite frankly, we did with Horizon when we signed that deal early this year. The way to think about it, is that it underscores that the major agencies -- major advertising agencies are these 2 are first and clients continue to really appreciate our multi-platform assets. What we're doing, what we're delivering on, what we're achieving, the way we work major advertisers. And what this enables us to do is to build unique programs to address the advertiser's individual needs, the results we deliver and really gives them a unique partnership -- really gives them a unique partnership with us. From a financial perspective, neither the deals are all incremental. But we serve these agencies. As I said for a long period of time. What's important here is really the innovation for their clients, and again, an indicator of our ability to deliver dynamic marketing solutions. And as I mentioned also in my opening remarks, look, everything is going to move to ROI. That's what it's going to be about it. It's going about dollars that get put out the door by advertisers and companies, and then therefore, the return that we, as in the media, can all deliver back to them. We've talked about the results before that -- Nielsen came out with this study that on average. We are 6:1 dollars in versus dollars out. So we think we stand to benefit greatly as the world goes to ROI and we expect our Outdoor business to benefit greatly also.

Just one other question. About a week before -- on the iHeart segment side, about a week before the quarter ended when you were marketing your bond deal, you provided pacings that were plus-3, if I remember correctly, or close to plus-3. You came in at around plus-1. Can you explain the variance there for us?

Sure. Well, which I'll just have to say this, but you know, I say this every quarter. I hate giving out pacings and that's why I hate giving out pacings because it's just a reminder that pacings, at a period of time -- let me give you a couple of things though on that, having said that. First of all, the industry was overall weak in the third quarter. We significantly outperformed the market based on Miller Kaplan. And September was weaker than August. The political dollars came in a bit softer, quite frankly, than we expected, which I mentioned in my opening remarks. Plus we also had some timing issues with Jingle Ball and the festival. And now you see I reiterated that pacings, I think, as we're sitting here today, 1.3%, so we've improved since we closed out the quarter.

And our next question comes from the line of Avi Steiner.

I know you hate point in time, so I want to approach at least the comments around Q4 in the media and Entertainment segment by asking is there any tough comps we should be aware of or anything else, potentially weighing on the segment as we think about the fourth quarter this year?

No. There's nothing overall in particular that comes to mind. The one thing that I -- the only thing that general comment I would give you is picking up on the last question and the fact that we're up 1.3% today, and we continue to significantly outperform the sector. I think you're seeing real evidence, not just in the advertising agency deals that I mentioned earlier. But just on our revenue and their bottom line performance, I really start to really start to bring money to this sector. Bring money to the sector that has not come to the radio industry before. And again, based on all the data, based on the ROI data we have, based on the case studies we have with lots of big advertises, like Discovery Network, which advertised with us and we made Shark Week #1 across all the mediums in that week. It's things like that, as we build out the momentum I think you're going to see continued improvement. But nothing in particular on the comp basis.

Okay. And then second, turn to International Outdoor for a second. You've had some nice revenue growth, some new business wins you've highlighted. When do we see the bottom line flow through there? I know there's a timing issue, but if you can help us out there?

So we've had several -- maybe you and I have a little different definition of really good performance on the bottom line. I think we were up 14% this quarter on a reported basis. 15% on FX neutral basis overall in the quarter, so I think we're really starting to see the bottom line expansion we had. We've had margin expansion the last couple quarters. The increase that we've had, we've -- yes, I mentioned before we have had some increase in the expense cause of some airport contracts in Rome, some digital mall contracts in France. We've had some new contracts in Sweden. But if you look at the top line, as we talked about earlier in the year, these are countries and managements that have delivered every time we've allocated capital to them with margin expansion and with bottom line growth. And at least I for one would argue that 14% increase on a reported basis in International Outdoor, 15% on apples-to-apples basis with foreign currency. I think that's pretty good margin expansion. Obviously, we could always do better. But I give William and his team great kudos for the job they've done outside the United States. I put them up against any management team out there.

Fair enough, and sorry for that. Balance sheet, for a couple of questions and I'll turn it over. The $5.5 million that you bought back, not a huge amount but I'm curious why you decided to keep that outstanding relative to, I guess, prior senior note purchases where I believe you retired them. And then as a follow up to that one, if hypothetically you ended up buying significantly more, would the existing note condition be triggered if you held them and then retire those notes?

On the first one, I think our typical practice is when we repurchase debt out of the restricted side, we actually keep it outstanding. There has been a couple of cases several years ago where they -- the seller required us to retire them. But typically, we don't in the unrestructured subsidiary. And so we were just following standard practice here. The second question I want to think through a little bit, it's if we bought in these notes, can we accelerate the existing notes condition? Is that the question?

Yes, if you got below the $500 million threshold, but kept those outstanding.

You know, I don't think they're technically out. I think we repurchase them or we don't cancel them, they're not technically outstanding, so I do not believe that we would accelerate the existing note condition. I may want to check on that, but they're not technically outstanding. So I still think they count under the debt agreement. One thing I'd point out is we would need to retire nearly all of the 2016s and repurchase nearly all of the 2016s and retire them in order to do that.

Okay. Last question from me, can you remind us -- I guess based on last public disclosure and anything else you want to provide, what the sponsors own or control of your debt and while you've done a good job kind of selling assets and talked about couple other ones. I'm wondering if there's -- in your capital management side, the working capital has been great and progressing. I'm wondering if there's a more holistic solution to the cap structure here. And obviously, you may not want to share that with us, but I'm just wondering how you think about -- you've got a sort term stack, but longer term, how do you think about this balance sheet?

I think I'm going to take it in reverse order, Avi, you're right. To the extent there's a more holistic, strategic solution. I'm sure there's a lot of people thinking about it because that's not something we can really talk to on an earnings call. I would say that. Certainly the sponsors -- I'm thinking about all the things they can do, and I'm not privy to many of those conversations. But going into the first part of your question. Actually, would you repeat the first part of your question because I don't want to get it wrong.

I just want to -- I think in different proxy statements, you've disclosed what the sponsors, certain investors make hold of your debt, and I want you to get...

And I was going to respond that it's just in the proxy statement. I actually think we do update affiliate positions and some of our offering documents. So it's not something that we update on earnings calls or have special disclosure around. But certainly, we do update in our annual proxy that's available, and I do believe we make reference to affiliate positions in some of our offering documents when we issue debt so I'd refer you back to those public documents for a response there, and I apologize for having you repeat the question.

And we have a question from the line of Tracy Young.

Yes, my question relates to the Americas. In the release, you mentioned that higher digital revenues were offset by decreases from traditional product lines. I assume that is partially related to the Logan Airport contract. How are the static boards doing? And also, what should we assume for digital boards in terms of ramp-up for the year? Total boards.

Thanks. I mean, for contract. That's relatively small, to be honest, in the overall scheme of things. The traditional front, again, we talked about national every quarter, and that's really driven by national being down. As I said, we're starting to see some improvement. We obviously made changes in management, and I think right when we made those change, we started to see some improvement there and we talked a lot about that. Another reasons traditional is down is as you convert boards to digital, you lose inventory from those converter boards, and thereby, you're driving down the traditional revenue. Just [indiscernible]. Our digitalize is up because of the new boards we had in 2013. We've got full year revenue from those new boards. We continue to build out our digital presence this year. Just as a reminder, year-to-date, we've added 57 digital boards across our markets in the U.S. And as we, as I said up front, we're starting to talk and interact on the '15 budget, so we'll continue to look to add boards in '15 where it makes sense, where we can get the return on investment. That only when we can get the return on investment. And as a run, but typically, we tend to add more boards in the fourth quarter of a year than we do in the other quarters.

And our next question is from Marci Ryvicker.

When can you lapse the Logan contract? Is that the beginning of next year?

It came off of at the end of -- Marci it came off at the end of 2013, I believe. So yes, the beginning of next year.

Okay. And then you mentioned for Clear Channel Outdoor Americas that a big percentage of your contracts are on a long-term basis. Can you talk about the average length of your contracts today maybe versus historically ? I feel like the contracts have shortened in length, but I just want to make sure I understood what your comment meant.

I'm not going to -- I don't think this is going to surprise you. I'm not going to talk about the average length because it really does vary by product, excuse me, by advertiser, by product by category. I think the overall statement, which I've been talking about consistently the last 3 quarters is on average. Yes, things have shortened up in the timeframe. So that I'll reiterate and confirm. But other than that, I'm not going to go into any detail.

Okay. And then one last question. On the iHeart front, you talked about margin expansion in Q4 next year. Is that all in or is excluding the investment spend?

The -- it's going to be both. It's going to be -- I think if you include the investment spend year-over-year, you'll see margin expansion. But we really look -- but investment spend is going to be a little bit of a way of life here. And again, when we look at investments spend, just to be 100% clear, we never attach and I never attach any residual value to it. So every investment spend is got to stand on its own on return on investment basis cash-on-cash. So it really be both ways with and without.

And we have a question from David Miller.

On the third quarter domestic Outdoor result, which was quite good, it was obviously above the pacing number that you issued 90 days ago. How much of that was due to lapping the Los Angeles digital situation on a comparison basis? And how much of it was taking share perhaps from CBS Outdoor? Any commentary would be great. And then I have a follow-up.

Sure. Well, a couple of things. So L.A. came off -- just as a reminder, fully came off in the second quarter. I think this is the first time I've been in the job. I haven't been talking about. Look at L.A., or that it had lapsed full-time. And although L.A. isn't -- with not having L.A., the other thing to remember is on digital national footprint of portfolio also. So it part was L.A. but part of not having it is also does quite frankly affects part of our overall national business that it's there. And also, I'd say, we made a bunch of -- like I said, we've made a bunch of changes on Americas Outdoor within the top ranks of the organization. We're looking to hire a new CEO for America. But there's really not much else to comment on in terms of L.A. digital.

Okay. And then just to follow-on the Los Angeles digital situation, I mean, at one point -- obviously, you're defacing some of the boards and you're putting up sort of vinyl boards in the places of those particular boards. At what point do you sort of throw your hands up and just say, this isn't working, we're stuck in red tape and you just move to replace all the boards with vinyl? And then within that, we had heard some rumblings about some sort of court hearing that's going to take place in the situation in Q1? Could you confirm that?

So a couple of things. First of all, let me say unequivocally, we never throw up our hands. So that would be an oxymoron if you know anything about Bob and I and the rest of the team. So we're never going to throw up our hands. Look, we put up 5 boards this quarter. Again, I acknowledge that's not meaningful. But to the point about throwing up our hands, we're continuing to move the ball forward. I'm not going to comment on any specific court hearings or court dates because they get set up and I get frustrated as they get moved, they get delayed. I start like looking to our people, thinking, "Gee, why can't we to do something about it?" But productively, again, I said this earlier, we are working with the municipalities on a legislative solution with this city that will allow us to turn as many digital billboards as possible and as consistent with the past. I don't think I've ever given a date because to some extent, it's out of my -- not to some extent to a great extent, it's out of my control. This is a legislative process and I'm not going to give a date.

There are no further questions in the queue at this time. I'll turn it back over to you.

Thank you, everybody. Really appreciate spending the time and look forward to speaking to everybody in the future -- in the near future.

Ladies and gentlemen, that concludes our conference. We'd like to thank you for participating and for using AT&T teleconference. You may now disconnect.