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iHeartMedia, Inc. - Annual Report: 2020 (Form 10-K)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2020, or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to _________.
Commission File Number 001-38987
IHEARTMEDIA, INC.
(Exact name of registrant as specified in its charter)
Delaware26-0241222
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
20880 Stone Oak Parkway
San Antonio, Texas78258
(Address of principal executive offices)(Zip code)
(210) 822-2828
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001 per shareiHRTThe Nasdaq Stock Market LLC
Series A Preferred Stock Purchase RightsiHRTThe Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:  None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐  No  ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes ☐  No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.  Large accelerated filer ☐ Accelerated Filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).  Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
The aggregate market value of the Class A Common Stock held by non-affiliates of the registrant, based on the closing sales price of $8.35 on June 30, 2020, was approximately $506.1 million.
On February 22, 2021, there were 110,923,534 outstanding shares of Class A common stock, 29,088,181 outstanding shares of Class B common stock, and 6,201,453 outstanding Special Warrants.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Definitive Proxy Statement for the registrant’s 2021 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year ended December 31, 2020 are incorporated herein by reference in Part III of this Annual Report on Form 10-K.



IHEARTMEDIA, INC.
INDEX TO FORM 10-K
Page
Number
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.



Basis of Presentation

As used in this Annual Report on Form 10-K (this “Form 10-K”), unless the context otherwise requires, references to: “we,” “us,” “our,” the “Company,” “iHeartMedia” and similar references refer to iHeartMedia, Inc.
On March 14, 2018 (the “Petition Date”), the Company, iHeartCommunications, Inc. (“iHeartCommunications”) and certain of the Company’s direct and indirect domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code. On May 1, 2019 (the “Effective Date”), the Company emerged from Chapter 11 of the Bankruptcy Code through (a) a series of transactions (the “Separation”) through which our former subsidiary, Clear Channel Outdoor Holdings, Inc. (“CCOH”), its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, us and our subsidiaries (the “iHeart Group”), and (b) a series of transactions (the “Reorganization”) through which iHeartCommunications’ debt was reduced from approximately $16 billion to approximately $5.8 billion and a global compromise and settlement among holders of claims (“Claimholders”) in connection with the Chapter 11 Cases was effected (collectively, the “Plan of Reorganization”).
Upon the Company's emergence from the Chapter 11 Cases, the Company adopted fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after the Effective Date, are not comparable with the consolidated financial statements on or before that date. Refer to Note 3, Fresh Start Accounting, for additional information.
References to “Successor” or “Successor Company” relate to the financial position and results of operations of the Company after the Effective Date. References to "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of the Company on or before the Effective Date.




PART I
ITEM 1.  BUSINESS

iHeartMedia is the number one audio media company in the U.S. based on consumer reach.
Within the audio industry, companies operate in two primary sectors:

The ‘music collection’ sector, which essentially replaced downloads and CDs and
The ‘companionship’ sector, in which people regard their radio and podcasting personalities as trusted friends and companions on whom they rely to provide news on everything from entertainment and local content to points of view, storytelling, information about new music and artists, weather, traffic and more.
We operate in the second sector and have used our large scale and national reach in broadcast radio to build additional complementary platforms. We are now the only major multi-platform audio media company, with each platform building on and extending our companionship relationship with the consumer.
Our product strategy is ‘be where our listeners are with the products and services they expect from us’. We provide our consumers with the products and services they expect from us regardless of where they are and what platforms they're using. Our reach now extends across more than 250 platforms and over 2,000 different connected devices-and that reach continues to grow.
The platforms we lead in are:
Broadcast radio: We have a strong relationship with our consumers, and our broadcast radio audience has the largest reach of any audio company in the U.S. with an audience that is over twice as large as that of the next largest commercial broadcast radio company, as measured by Nielsen.
Digital: Our iHeartRadio digital platform is the number one streaming broadcast radio platform-with five times the digital listening hours of the next largest commercial broadcast radio company, as measured by Triton.
Podcasts: We are the number one podcast publisher-and we are more than three times the size of the next largest podcaster publisher as measured by audience, according to Podtrac. We are leading advancement of the podcast industry and have the largest growth across all podcast publishers in both global downloads and US audience, which increased 62% and 15%, respectively during 2020.
Social media: Our personalities, stations and brands have a social footprint that includes 228 million fans and followers as measured by Shareablee, which is nine times the size of the next largest commercial broadcast audio media company. This social footprint was at the heart of delivering 20 billion social media impressions for our iHeartRadio Living Room Concert for America and 19.4 billion social media impressions for the virtual 2020 iHeartRadio Music Festival.
Events: Historically, we had over 20,000 local live and virtual events per year and eight major nationally-recognized tentpole events. To respond to the realities of the COVID environment, we reimagined our overall approach to events and successfully built out many virtual events and produced 4 of our major tentpole events virtually. These live and virtual events provide significant opportunities for consumer promotion, advertising and social amplification.
We have been able to unify all of our local brands under a master brand "iHeartRadio". Using that umbrella has allowed us to build our other platforms as well as extend into third-party platforms like Snapchat, YouTube and cable and broadcast television.
Our business model has been to build strong consumer relationships at scale and monetize them by renting those relationships to unaffiliated third parties. We are transforming our sales process to be more competitive with the major digital players that have brought data, targeting and technology into the media buying process. Additionally, we have built out a strong marketing sales function to support the marketing needs of advertisers and agencies in addition to the more traditional media buying transactional relationships.
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Our History
iHeartMedia, Inc. was formed as a Delaware corporation in May 2007 for the purpose of acquiring the business of iHeartCommunications, Inc., a Texas corporation (“iHeartCommunications”), which occurred on July 30, 2008. Prior to the consummation of our acquisition of iHeartCommunications, iHeartMedia, Inc. had not conducted any activities, other than activities incident to its formation in connection with the acquisition, and did not have any assets or liabilities, other than those related to the acquisition.
On the Petition Date, we and certain of our subsidiaries filed the Chapter 11 Cases under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”). We emerged from Chapter 11 on the Effective Date. Our Class A common stock began trading on the Nasdaq Global Select Market on July 18, 2019.

Our Business Segments
As part of the Separation and Reorganization, we re-evaluated our segment reporting and have determined that our current business segments are:
Audio, which provides media and entertainment services via broadcast and digital delivery and also includes our events and national syndication businesses; and
Audio & Media Services, which provides other audio and media services, including our media representation business, Katz Media Group (“Katz Media”), and our provider of scheduling and broadcast software, RCS.
Audio Segment
Our Audio segment operations include broadcast radio, digital, mobile, podcasts, social, live and virtual events including mobile platforms and products, program syndication, traffic, weather, news and sports data distribution and on-demand entertainment. Our Audio segment revenue was $2,681.2 million in 2020, $3,454.5 million in 2019 and $3,353.8 million in 2018.
Our radio stations, podcasts and content can be heard on AM/FM stations, HD digital radio stations, satellite radio, on the Internet at iHeartRadio.com and our radio stations’ websites, and through our iHeartRadio mobile application in enhanced automotive dashes, on tablets, wearables and smartphones, on gaming consoles, via in-home entertainment (including smart televisions) and voice-controlled devices. As of December 31, 2020, we owned and operated 858 live broadcast radio stations and had a local sales force servicing approximately 160 U.S. markets, including 48 of the top 50 markets (with four markets embedded in larger markets), and 86 of the top 100 markets, (with six markets embedded in larger markets). We are also the beneficiary of Aloha Station Trust, LLC, which owns and operates 5 radios stations, and Sun and Snow Station Trust, LLC which owns and operates 1 radio station, all of which we were required to divest in order to comply with Federal Communication Commission (“FCC”) media ownership rules.
According to Nielsen's Fall 2020 book, we have the most number one ranked stations across the top 160 markets, and across the largest 50 markets, with 76 and 28 number one ranked stations in these markets, respectively. With our broadcast radio platform alone, we have over twice the broadcast radio audience of our next closest broadcast competitor. We also have five times the digital listening hours of our next closest commercial radio broadcast competitor.
We generate advertising revenue through three primary channels. The first is a transactional media relationship with national agencies where the Company is selling defined advertising units and impressions, primarily of inventory on our broadcast radio stations. The second is through a direct marketing relationship with both local and national clients and agencies where we use our diverse portfolio of assets to help develop a specific marketing solution tailored to the defined needs of the advertising partner. The third channel is the newest and smallest, but fastest growing, channel using data to develop specific targets and often executed over a technology platform. These three channels can all be used in varying degrees of efficiency over our multiple platforms including broadcast radio, digital streaming and display, podcasting, social amplification and events. Our national scale and structure allows us to offer these solutions at a national, regional or local level, or any combination thereof. 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 range from less than one-year to multi-year terms.
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Our Audio segment has the following businesses and revenue streams:
Broadcast Radio: Our primary source of revenue is derived from selling local and national advertising time on our domestic radio stations, generating local and national broadcast revenue of $1,604.9 million in 2020, $2,233.2 million in 2019 and $2,264.1 million in 2018. 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.
Increasingly, across both national and local markets, our advertisers are demanding data rich, analytics-driven advertising solutions. iHeartMedia offers a comprehensive suite of tech-enabled advertising solutions (that provide advanced attribution and analytics capability) through our SmartAudio platform, which includes:
Our digital-like ad-buying solution that allows clients to view the available broadcast inventory across various cohorts to address their specific needs; 
Our application of data science to aggregate business data from broadcasts and the user insights that come from listeners using our digital platform; and 
Our tools to present the effectiveness of clients' broadcast radio advertising campaigns by providing detailed digital dashboards on the results of the advertising spend
These programmatic, data and analytic and attribution solutions to account for an increasing proportion of ad buying and we expect that it will continue to expand in the future.
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Radio Stations
As of December 31, 2020, we owned and operated 858 radio stations, including 244 AM and 614 FM radio stations.  All of our radio stations are located in the United States. No one station 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 FCC under the Communications Act of 1934, as amended (the “Communications Act”).  As described in “Regulation of Our iHeartMedia Business” below, the FCC grants us licenses in order to operate our radio stations.  The following table provides the number of owned and operated radio stations in the top 25 Nielsen-ranked markets:
NielsenNumber
Marketof
Rank(1)
Market
Stations(2)
1New York, NY6
2Los Angeles, CA8
3Chicago, IL6
4San Francisco, CA6
5Dallas-Ft. Worth, TX6
6Houston-Galveston, TX6
7Atlanta, GA7
8Washington, DC6
9Philadelphia, PA6
10Boston, MA8
11Miami-Ft. Lauderdale-Hollywood, FL8
12Seattle-Tacoma, WA9
13Phoenix, AZ8
14Detroit, MI6
15Minneapolis-St. Paul, MN6
16San Diego, CA8
17Tampa-St. Petersburg-Clearwater, FL8
19Denver-Boulder, CO8
20Nassau-Suffolk, NY1
21Charlotte-Gastonia-Rock Hill, NC-SC4
22Portland, OR7
23Baltimore, MD4
24St. Louis, MO6
25San Antonio, TX7
Total Top 25 Markets
   154(3)
(1)Source: Fall 2020 NielsenAudio Radio Market Rankings.
(2)Excludes stations held in trust for sale.
(3)Our station in the Nassau-Suffolk, NY market is also represented in the New York, NY Nielsen market. Thus, the actual number of stations in the top 25 markets is 154.

Digital: Our Company’s reach now extends across more than 250 platforms, and 2,000 different connected devices. We generated digital revenue of $474.4 million in 2020, $376.2 million in 2019 and $284.6 million in 2018, comprised of streaming, subscription, display advertisements, podcasting and other content that is disseminated over digital platforms. Our leading streaming product, iHeartRadio, is a free downloadable mobile app and web‑based service that allows users to listen to their favorite radio stations, as well as digital‑only stations, custom artist stations, and podcasts. Monetization on the free streaming application occurs through national and local advertising. We also have two subscription-based offerings-iHeartRadio Plus and iHeartRadio All Access.
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Podcasting. Within our digital business, our multi-platform strategy has also enabled us to extend our leadership into the rapidly growing podcasting sector. Overall podcasting industry revenue is expected to exceed $1.0 billion by 2021, according to Magna Global, from an estimated $0.9 billion in 2020. Podcasts continue to expand the audio landscape, and the number of users has increased to 104 million in the U.S. in 2020, with 37% of the U.S. population aged 12 and above having listened to a podcast in the last month (compared to 9% in 2008), according to Edison in March 2020. iHeartMedia is the number one podcast publisher, as measured by Podtrac with 254 million global monthly downloads and streams and 29 million U.S. unique monthly users, in January 2021 and has the most shows featured in the Top 10 across all categories. We also have one of the first and only podcasts to pass 1 billion downloads with Stuff You Should Know, as measured by Podtrac. In the fourth quarter 2020, we acquired Voxnest, Inc., the leading consolidated marketplace for podcasts and the best-in-class provider of podcast analytics, enterprise publishing tools, programmatic integration and targeted ad serving. With this acquisition, we are able to provide podcast advertisers with additional targetable inventory at scale by allowing the effective and efficient monetization across an entire range of podcast inventory on this one-of-kind programmatic platform. We generated $101 million in podcasting revenue in 2020, an increase of 90.6% from the prior year.
Networks: We enable advertisers to engage with consumers through our Premiere Networks and Total Traffic & Weather services. We generate broadcast advertising revenue from selling local and national advertising on our programs featuring top personalities, and also generate revenue through the syndication of our programming to other media companies. Premiere Networks and Total Traffic & Weather generated revenue of $485.0 million in 2020, $614.7 million in 2019 and $582.3 million in 2018.
Premiere Networks is a national radio network that produces, distributes or represents 120 syndicated radio programs and services for more than 6,500 radio station affiliates. Our broad distribution capabilities enable us to attract and retain top programming talent. Some of our more popular syndicated programs featured top talent including Rush Limbaugh, Ryan Seacrest, Sean Hannity, Bobby Bones, Glenn Beck, Elvis Duran, Steve Harvey, the Breakfast Club, Colin Cowherd and Delilah. We believe recruiting and retaining top talent is an important component of the success of our radio networks.
Total Traffic & Weather Network delivers real-time local traffic flow and incident information along with weather updates, sports and news to more than 2,100 radio stations and approximately 170 television affiliates, as well as through Internet and mobile partnerships, reaching over 190 million consumers each month. Total Traffic & Weather Network services more than 230 markets in the U.S. and Canada. It operates the largest broadcast traffic navigation network in North America.
Sponsorship & Events: Prior to the outbreak of the COVID-19 pandemic, we held over 20,000 live, in-person local events annually and eight major nationally-recognized tent pole events. These events which, including endorsement and appearance fees generated by on-air talent, resulted in $209.5 million of revenue in 2019 and $200.6 million of revenue in 2018 from sponsorship, endorsement and other advertising revenue, as well as ticket sales and licensing. Our eight major tent pole events include: the iHeartRadio Music Festival, the iHeartRadio Music Awards, the iHeartRadio Wango Tango, the iHeartRadio Jingle Ball Tour, the iHeartCountry Festival, iHeartRadio ALTer Ego, the iHeartRadio Podcast Awards and the iHeartRadio Fiesta Latina. As a result of the COVID-19 pandemic, Wango Tango and the iHeartRadio Music Awards were not held in 2020 and the iHeartRadio Music Festival, the iHeartRadio Jingle Ball Tour, the iHeartCountry Festival and the iHeartRadio Fiesta Latina tent pole events were held virtually. With the outbreak of the COVID-19 pandemic, we identified opportunities to continue to engage with audiences through virtual events, including the iHeart Living Room Concert for America, First Responder Fridays, Wednesday Night Living Room Concerts, Commencement: Speeches For The Class of 2020 and the HBCU Homecoming Celebration and continuing with virtual offerings of four of our tent pole events, the iHeartRadio Music Festival, the iHeartRadio Jingle Ball Tour, the iHeartCountry Festival and the iHeartRadio Fiesta Latina, and over 1,000 local virtual events. In 2020, our live and then virtual local and tent pole events, including endorsement and appearance fees generated by on-air talent, resulted in $107.7 million of revenue from sponsorship, endorsement and other advertising revenue, as well as ticket sales and licensing. We expect to continue to look for opportunities to supplement our live local and tent pole events with virtual events on a go forward basis, which would provide additional opportunities to engage with consumers and advertisers.

Other: Other revenue streams connected to our core broadcast and digital radio operations include fees earned for miscellaneous services such as on-site promotions, activations, local marketing agreement (“LMA”) fees and tower rental provided to advertisers and other media companies. These services generated revenue of $9.4 million in 2020, $20.8 million in 2019 and $22.2 million in 2018.
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Audio & Media Services Segment:
We also provide services to broadcast industry participants through our Katz Media and RCS businesses, which accounted for $274.7 million of revenue in 2020, $236.7 million of revenue in 2019 and $264.1 million of revenue in 2018.
Katz Media Group is a leading media representation firm in the U.S. Katz Media represents more than 3,400 non-iHeartMedia radio stations and over 800 television stations and their respective digital platforms. Katz generates revenue via commissions on media sold.
RCS is a leading provider of broadcast and webcast software. Our software (radio station automation, music scheduling, HD2 solutions, newsroom software, audio logging and archiving, single station automation and contest tracking software) and technology (real-time audio recognition technology) is used by more than 9,000 radio stations, television music channels, cable companies, satellite music networks and Internet stations worldwide.
Ultimately, our superior local, national, and online sales force combined with our leading digital, events, content, and representation business position us to cover a wide range of advertiser categories, including consumer services, retailers, entertainment, health and beauty products, telecommunications, automotive, media and political. Our contracts with our advertisers range from less than one-year to multi-year terms.
Our Growth Strategy
Our strategy is centered on building strong consumer relationships with national reach. Providing this kind of at-scale companionship creates high-value advertising inventory for current audio advertisers as well as new advertisers and delivers superior returns to both. Moreover, we believe that we can leverage our investments in technology and data-informed decision making to capture increasing market share of the long tail of national and local revenue. The key elements of this growth strategy are:
Continued capture of advertising spend from all mediums
We intend to take advantage of our national scale, the brand power of "iHeartRadio," and product innovation to capture additional share of the overall radio advertising pool. We also believe our enhanced audience data and related analytics tools should drive capture of additional revenue from other advertising sectors, including digital and television, as advertisers are able to target audiences and measure the efficacy of their ad spend in a manner that mirrors the capabilities of these other mediums. We believe our advertising partners value the unique reach, engagement and return potential of audio, as well as iHeartMedia's differentiated platforms and marketing expertise, positioning the Company to capitalize on this trend.
We have made, and continue to make, significant investments so we can provide an ad-buying experience similar to that which was once only available from digital-only companies. Our SmartAudio programmatic solution provides improved planning and automated ad-buying by relying on sophisticated planning algorithms and a cloud-based network across all of iHeartMedia's broadcast radio inventory to deliver highly optimized plans to our advertising customers. With SmartAudio, advertisers can do impression-based audience planning and dynamic radio advertising that utilizes real-time triggers such as weather, pollen counts, sports scores, mortgage rates and more to deploy different campaign messages based on what is happening in a specific market at a specific moment. SmartAudio has allowed brands to use broadcast radio advertisements to dynamically serve the most relevant message in each market, at each moment, just as they do with digital campaigns, to ensure increased relevance and impact. Further SmartAudio is the first fully digital measurement and attribution service for broadcast radio that we believe can transform the way advertisers plan, buy and measure much of their audio campaigns to better optimize the extensive reach of radio. We continue to look for ways to further develop our advertising capabilities in order to expand our share of advertising partners' budgets.

Increasing share of national advertising market
Broadcast radio is the number one consumer reach medium, and advertisers have a renewed appreciation for its scale, diverse demographic access and impact. We intend to complement our current local advertising presence in approximately 160 U.S. markets by further growing our stake in national advertising campaigns through our multi-platform portfolio of audio assets, roster of on-air talent, and the amplifying effect of our listeners' social engagement. As a result of our ongoing technology investments, national advertisers can now look to our audio offerings with their extensive reach, efficient pricing and digital-like analytics as powerful alternatives to other national ad mediums.
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Broadening the scope of audio engagement
We continue to expand the spectrum of choices for our listeners-both in terms of compelling content and the array of ways in which it can be consumed. During 2020, we launched BIN: Black Information Network, the first and only 24/7 national and local all news audio service dedicated to providing an objective, accurate and trusted source of continual news coverage with a Black voice and perspective, and The Black Effect Podcast Network, a joint venture with Charlamagne Tha God developed to amplify Black voices, celebrate Black creators and invest in the Black community, with culturally relevant content across a variety of genres.

In addition, the proliferation of smart speakers, smart televisions and other connected devices greatly increases the range of options for accessing and interacting with our content, with significant increases to listenership across these devices in 2020. We are also very focused on rapidly growing content categories, such as our leadership position in podcasting. These initiatives not only improve the listener experience-they facilitate further engagement and heightened frequency of advertising impressions.

Notably, iHeartRadio, our all-in-one digital music, podcast and live streaming digital radio service, is available on an expansive range of platforms and devices including smart speakers, digital auto dashes, tablets, wearables, smartphones, virtual assistants, televisions and gaming consoles.

We have continued to extend our leadership position in podcasting, and we are now the largest podcast publisher. We believe that podcasting is to talk what streaming is to music and is the next strategic audio platform. Our podcasting platform allows us to capture incremental revenue as well as extend station brands, personalities and events onto a new platform-ultimately extending and deepening our consumer relationships and our opportunities for additional advertising revenue.

Employing technology to gain greater penetration of the full spectrum of advertising clients and segments
In addition to having sellers in approximately 160 local markets across the U.S., which few media companies can claim, we intend to extend our technology platform to address the clients that we do not currently reach through direct sales operations. As indication of the size of the potential opportunity, we currently have approximately 50,000 total clients compared to millions of clients for some of our largest social and search competitors which utilize technology solutions for advertisers of all sizes. In the third quarter 2020, we acquired Unified Enterprises Corp., which provides customers with a complete advertising solution across all forms of digital media, including the information and intelligence data that they need to make informed decisions about their advertising investments. Additionally, in the fourth quarter of 2020, we acquired Voxnest, Inc., a podcast programmatic technology solutions business that allows for the consolidation of the fragmented podcast marketplace and the best-in-class provider of podcast analytics, enterprise publishing tools, programmatic integration and targeted ad serving. With this acquisition, we are able to provide podcast advertisers with additional targetable inventory at scale by allowing the effective and efficient monetization across an entire range of podcast inventory on this one-of-kind programmatic platform. During the first quarter of 2021, we entered into a Share Purchase Agreement to acquire Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W. Scripps Company for $230 million in cash, subject to certain adjustments and conditions. These acquisitions, coupled with our leading broadcast footprint, will establish us as the only company able to provide a complete set of advertising technology and measurement solutions for all forms of audio: on-demand, broadcast radio, digital streaming radio, and podcasting..

Utilizing our unique bundle of advertising inventory to drive uplift
By adding other high cost per mille, the cost of every 1,000 advertisement impressions (“CPM”), platforms into our mix, as well as providing unique and differentiated solutions for advertisers, we believe that we have the potential to see a CPM uplift. Although our primary focus is revenue, we also aim to maximize the value of our inventory. Moreover, we are continuing to develop platforms (including podcasts) that independently garner superior CPMs.

Leveraging the iHeartRadio master brand to expand our high-profile events platform
Audio is a social experience and an important extension of the medium is events. For our listeners, events are an opportunity to interact with fellow fans and engage with their favorite artists. For our advertising partners, they are a chance to reach a captivated and highly targeted audience directly tied to our high reach and strong engagement broadcast radio platform. They also provide an opportunity to extend into platforms like cable and broadcast television, create ancillary licensing revenue streams and serve as an opportunity for ticket revenue. This is especially true with respect to our expansion into virtual events during 2020, which were live streamed over various networks and platforms. As with all of our platforms, the data collection
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from these sources is valuable to both our product creation process and our advertisers. Through our portfolio of major award shows, festivals and local live events and virtual events, we intend to continue to find innovative ways to integrate sponsorships and deliver unique advertising moments. In so doing, we will seek to create additional revenue opportunities through this platform.

Competition
We compete for share of our listeners’ time and engagement, a challenging task in today’s fragmented and multi-tasking world. We believe our national reach, the strength of our brand and assets, the quality of our programming and personalities, and the companionship nature of our medium allows us to compete effectively against both our legacy competition-cable and broadcast television, and other broadcast radio operators-as well the new, digital competition, including streaming music and video services, social media, and other digital companies.
Similarly, we compete for advertising and marketing dollars in the U.S. advertising market against an increasingly diverse set of competitors. Our legacy competition for the radio, podcast and digital advertising market includes legacy broadcast radio operators, as well as satellite radio companies, podcasters and streaming music companies with ad supported components of their business. We also compete in the larger U.S. advertising market-inclusive of the radio, podcast and digital opportunity-by developing and offering competitive advertising products intended to attract advertising and marketing dollars that might otherwise go to companies in the cable and broadcast television, digital, search, Internet, audio, print, newspaper, sponsorship and other advertising spaces.
Intellectual Property
Our success is dependent on our ability to obtain and maintain proprietary protection for our technology and the know‑how related to our business, defend and enforce our intellectual property rights and operate our business without infringing, misappropriating or otherwise violating valid and enforceable intellectual property rights of others. We seek to protect our investments made into the development of our technology by relying on a combination of patents, trademarks, copyrights, trade secrets, know‑how, confidentiality agreements and procedures, non‑disclosure agreements with third parties, employee disclosure and invention assignment agreements and other contractual rights.
As of December 31, 2020, we own approximately 200 issued U.S. patents, 140 pending U.S. patent applications, 10 issued foreign patents and 10 pending foreign patent applications, in addition to 662 U.S. trademarks registrations, 51 U.S. trademark applications, 784 state trademark registrations, 30 state trademark applications, 916 foreign registered trademarks and 108 foreign trademark applications. The duration of our intellectual property rights vary from country to country, but our U.S. patents expire 20 years from the patent filing date and we expect that our trademarks would expire between 2021 and 2034 assuming all required fees are paid.
We have filed and acquired dozens of issued patents and active patent applications in the U.S. and we continue to pursue additional patent protection where appropriate and cost effective. We intend to hold these patents as part of our strategy to protect and defend the Company’s technology, including to protect and defend the Company in patent‑related litigation. Our registered trademarks in the U.S. include our primary mark “iHeartRadio” and various versions of the iHeart word marks and logos. We have a portfolio of internet domain names, including our primary domains www.iheart.com and www.iheartmedia.com. We also have licenses with various rights holders to stream sound recordings and the musical compositions embodied therein, as further described under “-Regulation of our Business-Content, Licenses and Royalties” below.
We believe that our intellectual property has significant value and is important to our brand‑building efforts and the marketing of our products and services. We cannot predict, however, whether steps taken by us to protect our proprietary rights will be adequate to prevent misappropriation of these rights. In addition to the forms of intellectual property listed above, we own rights to proprietary processes and trade secrets, including those underlying the iHeartRadio digital platform. While we use contractual and technological means to control the use and distribution of our proprietary software, trade secrets, and other confidential information, both internally and externally, including by entering into confidentiality agreements with our employees, contractors, and partners and maintaining physical security of our premises and physical and electronic security of our information technology systems, such measures can be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors.
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Human Capital Management
Of the many strengths that iHeartMedia possesses, none is more valuable than our people. Our business relies on our ability to attract and retain talented employees. To attract and retain talent, we seek to provide a work environment that creates a diverse, inclusive and supportive workplace, with opportunities for our employees to grow and develop in their careers and provides meaningful work, supported by competitive compensation, benefits and health and wellness programs, and by programs that build connections between our employees and their communities.
Workforce Composition
As of February 22, 2021, we had approximately 10,200 employees. These employees represent the diverse and complex nature of iHeartMedia with skills in programming operations, sales, engineering, podcasting, digital and beyond, as well as corporate support, such as information technology, legal, human resources, communications and finance. Our workforce is comprised of approximately 88% full time and 12% part time employees. Approximately 6% of our employees are subject to collective bargaining agreements. We are a party to numerous collective bargaining agreements, none of which represent a significant number of employees. We believe that our relationship with our union and non-union employees is good.
Total Rewards
We operate in a highly-competitive environment and make significant investments in our people and provide competitive pay and comprehensive benefits including:

Employer sponsored health insurance;
Company provided life insurance;
Paid sick, holidays and vacation;
Spirit days so that our employees may volunteer in their community;
401(k) plan; and
An Employee Assistance Program, which is available to all full-time employees and their household members at no cost and provides services such as in person and telephonic counseling sessions, consultation on legal and financial matters and referrals for services such as child-care and relocation.

In response to COVID-19 we quickly took action enabling our employees, where possible, to work from home, voluntarily expanding our sick leave benefits to include additional time off for COVID-related illness, implementing flexible work policies, making resources available to parents who were homeschooling their children and offering a mid-year annual enrollment to give our employees the opportunity to elect additional coverage if they so desired.
Talent Development & Training
The Company is committed to supporting and developing its employees through global learning and development programs. We invest in a variety of employee training and compliance programs that give our employees the tools and information they need to make better decisions, become better leaders and managers, become better communicators and to work more collaboratively as a team. iHeartMedia employees engage in a variety of extensive training throughout the year and in 2020 our employees completed over 200,000 training courses which equated to over 100,000 hours of training.
Diversity
Diversity and inclusion are key to our success. As a company, we value diversity and respect all voices, from both inside and outside our Company. Since our Company reaches 90% of all Americans every month, listening to, understanding and integrating input from diverse voices and views are critical to our business success. One of our top priorities at iHeartMedia is to create an inclusive organizational culture to attract and develop a dynamic workforce that is as diverse as the audiences and communities we serve which includes and supports gender identity, race, sexual orientation, ethnicity, religion, socioeconomic background, age, disability, national origin and more. In addition, our Board is committed to seeking director candidates who can best contribute to the future success of the Company and represent stockholder interests through the exercise of sound judgment and leveraging of the group’s diversity of skills and experience, resulting in board members with diverse backgrounds, including, among other attributes, gender, ethnicity and professional experience.
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Our diversity and inclusion efforts are led by our Chief Diversity Officer, who reports directly to our Chief Executive Officer and our President. Current key initiatives center around accountability, education, mentorship and recruitment across all leadership and skill areas. We have instituted a Diversity, Equity and Inclusion Advisory Committee, which will bring important and timely issues around diversity and inclusion to senior management for consideration; serve as a sounding board as Company policies and decisions about diversity and inclusion are made; institute training and development programs on important diversity issues and help guide our efforts. Additionally, our Chief Executive Officer, President and other senior leaders have diversity and inclusion objectives embedded in their long-term performance goals.
Workplace Safety
Employee health and safety in the workplace is of utmost importance to our Company. We believe that all employees, regardless of our job role or title, have a shared responsibility in the promotion of health and safety in the workplace. We collectively are committed to providing and following all safety laws and rules, including internal policies and procedures. This means carrying out company activities in ways that preserve and promote a clean, safe and healthy environment.
The global effects associated with the COVID-19 pandemic have been unprecedented in their scope and depth. Our commitment and focus on workplace safety allowed navigation of the pandemic to preserve business continuity without sacrificing our commitment to the safety of our workplace. We have been and will continue to be following recommendations of the U.S. Center for Disease Control and other applicable agencies to maximize the safety and well-being of our employees. We have implemented comprehensive health and safety protocols to mitigate exposure risks. With respect to job roles that can be performed remotely, we quickly implemented a Work from Home policy that enabled our employees to continue working while also keeping themselves and their loved ones safe.
Seasonality
For information regarding the seasonality of our business, please refer to Item 7 of Part II of this Annual Report on Form 10-K.
Regulation of our Business
General
Radio broadcasting is subject to extensive regulation, including by the FCC under the Communications Act. The Communications Act permits the operation of a radio broadcast station only under a license issued by the FCC upon a finding that grant of the license would serve the public interest, convenience and necessity. Among other things, the Communications Act empowers the FCC to: issue, renew, revoke and modify broadcast licenses; assign frequency bands for broadcasting; determine stations’ technical parameters; impose penalties and sanctions for violation of its regulations, including monetary forfeitures and, in extreme cases, license revocation; impose annual regulatory and application processing fees; and adopt and implement regulations and policies affecting the ownership, program content, employment practices and many other aspects of broadcast station operations.
This following summary does not comprehensively cover all current and proposed statutes, regulations and policies affecting our business. Reference should be made to the Communications Act, FCC rules, public notices and rulings and other relevant statutes, regulations, policies and proceedings for further information concerning the nature and extent of regulation of our business.
Transfer or Assignment of Licenses
The Communications Act prohibits the assignment of a license or the transfer of control of an FCC licensee without prior FCC approval. In determining whether to grant such approval, the FCC considers a number of factors pertaining to the existing licensee and the proposed licensee, including compliance with FCC’ rules and the “character” of the proposed licensees. Applications for license assignments or transfers involving a substantial change in ownership are subject to a 30‑day period for public comment, during which parties may petition to such applications.
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License Renewal
The FCC grants broadcast licenses for a term of up to eight years. The FCC will renew a license for an additional eight‑year term if, after consideration of the renewal application and any objections thereto, it finds that the station has served the public interest, convenience and necessity and that, with respect to the station seeking renewal, there have been no serious violations of the Communications Act or the FCC’s rules and pattern of abuse of the Communications Act or FCC rules. The FCC may grant the license renewal application with or without conditions, including renewal for a term less than eight years, although renewal for less than the full eight‑year term is rare. While we cannot guarantee the unconditional grant of any future renewal application, our stations’ licenses historically have been renewed for the full eight‑year term.
Ownership Regulation
FCC rules and policies define the interests of individuals and entities, known as “attributable” interests, which implicate FCC rules governing ownership of broadcast stations. Under these rules, attributable interests generally include: (1) officers and directors of a licensee and of its direct and indirect parent(s); (2) general partners and limited liability company managers; (3) limited partners and limited liability company members, unless properly “insulated” from management activities; (4) a 5 percent or more direct or indirect voting stock interest in a corporate licensee or parent (except that, for a narrowly defined class of passive investors, a 20 percent voting threshold applies); and (5) combined equity and debt interests in excess of 33 percent of a licensee’s total asset value, if certain other conditions are met (the “EDP Rule”). An entity that owns one or more radio stations in a market and programs more than 15 percent of the broadcast time under a local marketing agreement (“LMA”), or sells more than 15 percent per week of the advertising time under a joint sales agreement (“JSA”), on a radio station in the same market is also generally deemed to have an attributable interest in that station.

Debt instruments, non‑voting corporate stock, minority voting stock interests in corporations having a single majority stockholder, and properly insulated limited partnership and limited liability company interests generally are not subject to attribution unless such interests implicate the EDP Rule. To the best of our knowledge at present, none of our officers, directors or 5 percent or greater stockholders holds an interest in another broadcast station that is inconsistent with the FCC’s ownership rules.
The current FCC ownership rules relevant to our business are summarized below.
Local Radio Ownership Rule. The maximum allowable number of radio stations that may be commonly owned in a market is based on the number of stations in the market. In markets with 45 or more stations, one entity may have an attributable interest in up to eight stations, of which no more than five are in the same radio service (AM or FM). In markets with 30-44 stations, one entity may have an attributable interest in up to seven stations, of which no more than four are in the same service. In markets with 15-29 stations, one entity may have an attributable interest in up to six stations, of which no more than four are in the same service. In markets with 14 or fewer stations, one entity may have an attributable interest in up to five stations, of which no more than three are in the same service, so long as the entity does not have an interest in more than 50 percent of all stations in the market. To apply these ownership tiers, the FCC relies on Nielsen Metro Survey Areas, where they exist, and a signal contour‑overlap methodology where they do not exist.
Cross-Ownership Rules. The newspaper/broadcast cross-ownership rule prohibits an individual or entity from having an attributable interest in either a radio or television station and a daily newspaper located in the same market, subject to certain exceptions and with waivers available in particular cases. The radio/television cross-ownership rule limits an individual or entity to having an attributable interest in only one or two television stations and varying number of radio stations within a single market.
The Communications Act requires the FCC to periodically review its media ownership rules, and those reviews have been and continue to be the subject of litigation and follow-on regulatory proceedings. In November 2019, the United States Court of Appeals for the Third Circuit issued a decision that resulted in reinstatement of the cross-ownership rules, which the FCC had previously eliminated. There may be future litigation regarding this decision. The Supreme Court of the United States granted petitions for certiorari seeking review of the Third Circuit decision and heard argument on January 19, 2021. The case remains pending.
In December 2018, the FCC commenced its 2018 quadrennial review of its media ownership regulations. Among other things, the FCC is seeking comment on all aspects of the local radio ownership rule including whether the current version of the rule remains necessary in the public interest. We cannot predict the outcome of the FCC’s media ownership proceedings or their effects on our business in the future.
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Irrespective of the FCC’s media ownership rules, the Antitrust Division of the U.S. Department of Justice (“DOJ”) and the U.S. Federal Trade Commission (“FTC”) have the authority to determine that a particular transaction presents antitrust concerns. See “Item 1. Business – Antitrust and Market Concentration Considerations.”
Alien Ownership Restrictions
The Communications Act and FCC regulations prohibit foreign entities or individuals from indirectly (i.e., through a parent company) owning or voting more than 25 percent of the equity in a corporation controlling the licensee of a radio broadcast station, unless the FCC determines that greater indirect foreign ownership is in the public interest. The FCC generally will not make such a determination absent favorable executive branch review.
To the extent that our aggregate foreign ownership or voting percentages exceeds 25 percent, any foreign holder or “group” of holders, defined pursuant to FCC regulations, of our common stock whose ownership or voting percentage would exceed 5 percent or 10 percent (with the applicable percentage determined pursuant to FCC rules) must also obtain the FCC’s “specific approval.”

On November 5, 2020, the FCC issued a declaratory ruling (“Declaratory Ruling”) authorizing us to have aggregate foreign ownership and voting percentages of up to 100 percent and specifically approving certain of our stockholders that are deemed to be foreign under FCC rules, subject to certain conditions. Among those conditions is a requirement that we comply with a Letter of Agreement (“LOA”) with the DOJ. The Declaratory Ruling also requires us to take our Special Warrants into account in determining our foreign ownership compliance. On February 5, 2021, Honeycomb Investments Limited, a company organized under the laws of the Bahamas, and certain related foreign persons (collectively “Honeycomb”) filed a Schedule 13D with the Securities and Exchange Commission (“SEC”) reporting ownership of more than 5% of our voting stock and equity. Honeycomb acquired its interest without our knowledge or control, and we are fulfilling our obligations under the Declaratory Ruling and the FCC rules with respect to Honeycomb’s interest. See “Item 3. Legal Proceedings- Alien Ownership Restrictions and FCC Declaratory Ruling.”

Programming and Content Regulation
The Communications Act requires broadcasters to serve the “public interest.” A licensee must present programming that responds to issues in the station’s community of license and maintain records demonstrating this responsiveness. Federal law also regulates the broadcast of obscene, indecent or profane material. The FCC has authority to impose fines exceeding $400,000 per utterance with a cap exceeding $3.75 million for a continuing violation. In June 2012, the U.S. Supreme Court ruled on appeals of several FCC indecency actions, but declined to rule on the constitutionality of the FCC’s indecency policies. The FCC has since solicited public comment on those policies in a proceeding which remains pending. In addition, the FCC regulates the conduct of on-air station contests, requiring in general that the material rules and terms of the contest be broadcast periodically or posted online and that the contest be conducted substantially as announced. The FCC also regulates, among other things, political advertising, sponsorship identification, and the advertisement of contests and lotteries.
Equal Employment Opportunity
The FCC’s rules require broadcasters to engage in broad equal employment opportunity recruitment efforts, retain data concerning such efforts and report much of this data to the FCC and to the public via periodic reports filed with the FCC or placed in stations’ public files and websites. Broadcasters could be sanctioned for noncompliance.
Technical Rules
Numerous FCC rules govern the technical operating parameters of radio stations, including permissible operating frequency, power and antenna height and interference protections between stations. Changes to these rules could negatively affect the operation of our stations.
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Content, Licenses and Royalties
We must pay royalties to copyright owners of musical compositions (typically, songwriters and publishers) whenever we broadcast or stream musical compositions. Copyright owners of musical compositions most often rely on intermediaries known as performing rights organizations (“PROs”) to negotiate licenses with copyright users for the public performance of their compositions, collect royalties under such licenses and distribute them to copyright owners. We have obtained public performance licenses from, and pay license fees to, the four major PROs in the U.S., which are the American Society of Composers, Authors and Publishers (“ASCAP”), Broadcast Music, Inc. (“BMI”), SESAC LLC ("SESAC") and Global Music Rights LLC (“GMR”). There is no guarantee that additional PROs will not emerge, which could impact, and in some circumstances increase, our royalty rates and negotiation costs.
To secure the rights to stream music content over the Internet, we also must obtain performance rights licenses and pay public performance royalties to copyright owners of sound recordings (typically, performing artists and record companies). Under Federal statutory licenses, we are permitted to stream any lawfully released sound recordings and to make ephemeral reproductions of these recordings on our computer servers without having to separately negotiate and obtain direct licenses with each individual copyright owner as long as we operate in compliance with the rules of those statutory licenses and pay the applicable royalty rates to SoundExchange, the organization designated by the Copyright Royalty Board (“CRB”) to collect and distribute royalties under these statutory licenses. From time to time, SoundExchange notifies us that certain calendar years are subject to routine audits of our royalty payments.  The results of such audits could result in higher royalty payments for the subject years. Sound recordings fixed on or after February 15, 1972 are protected by federal copyright law. Sound recording copyright owners have asserted that state law historically provided copyright protection for recordings fixed before that date (“pre-72 recordings”). Sound recording copyright owners have sued radio broadcasters and digital audio transmission services (including us) for unauthorized public performances and reproductions of pre-72 recordings under various state laws. In October 2018, federal legislation was signed into law that applies a statutory licensing regime to pre-72 recordings similar to that which governs post-72 recordings. Among other things, the new law extends remedies for copyright infringement to owners of pre-72 recordings when recordings are used without authorization. The new law creates a public performance right for pre-72 recordings streamed online that may increase our licensing costs. It also preempts state law infringement claims both prospectively and, in certain circumstances, retrospectively.
The rates at which we pay royalties to copyright owners are privately negotiated or set pursuant to a regulatory process. In addition, we have business arrangements directly with some copyright owners to receive deliveries of and, in some cases, to directly license their sound recordings for use in our Internet operations. There is no guarantee that the licenses and associated royalty rates that currently are available to us will be available to us in the future. In addition, congress may consider and adopt legislation that would require us to pay royalties to sound recording copyright owners for broadcasting those recordings on our terrestrial radio stations. The CRB has issued a final determination establishing copyright royalty rates for the public performance and ephemeral reproduction of sound recordings by various non‑interactive webcasters, including radio broadcasters that simulcast their terrestrial programming online, to apply to the period January 1, 2016‑December 31, 2020 under the so‑called webcasting statutory license. A proceeding to establish the rates for 2021‑2025 began in 2019, with a final, retroactively applicable determination expected on or before April 15, 2021. Increased royalty rates could significantly increase our expenses, which could adversely affect our business. Additionally, there are conditions applicable to the webcasting statutory license. Some, but not all, record companies have agreed to waive or provide limited relief from certain of these conditions under certain circumstances for set periods of time. Some of these conditions may be inconsistent with customary radio broadcasting practices.
Proposed Changes
Congress, the FCC and other government agencies and regulatory bodies may in the future adopt new laws, regulations and policies that could affect, directly or indirectly, the operation, profitability and ownership of our broadcast stations and Internet‑based audio music services. In addition to the regulations, proceedings and procedures noted above, such matters may include, for example: proposals to impose spectrum use or other fees on FCC licensees; changes to the political broadcasting rules, including the adoption of proposals to provide free air time to candidates; restrictions on the advertising of certain products, such as beer and wine; spectrum reallocations and changes in technical rules; and the adoption of significant new programming and operational requirements designed to increase local community‑responsive programming and enhance public interest reporting requirements.
Antitrust and Market Concentration Considerations
Beyond compliance with FCC rules governing media ownership, our acquisition of additional radio stations or other businesses could receive scrutiny or challenge under the federal antitrust laws. Transactions that meet specified size thresholds
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are subject to applicable waiting periods and possible review under the Hart‑Scott‑Rodino Act (the “HSR Act”) by the DOJ or the FTC Whether or not an acquisition is required to be reported under the HSR Act, the antitrust authorities may investigate the transaction and may take such action under the antitrust laws as they deem necessary, including seeking to enjoin the acquisition or requiring divestiture of the acquired assets or certain of our other assets. Any future iHeart acquisition could be the subject of review and/or remedial action by antitrust authorities, particularly if it involves businesses or markets in which we already hold a significant market share.
Privacy and Data Protection
Privacy and data protection legislation and regulation play a significant role in our business. We obtain information from users of our technology platforms, including, without limitation, our websites, web pages, interactive features, digital survey panels, applications, social media pages, and mobile application (“Platforms”), in accordance with the privacy policies and terms of use posted on the applicable Platform. We collect personally identifiable information directly from Platform users in several ways, including when a user uses or purchases our products or services, registers to use our services, fills out a listener profile, posts comments, uses our social networking features, participates in polls and contests and signs up to receive email newsletters. We also may obtain information about our listeners from other listeners and third parties. Outside our consumer-facing businesses, we collect personally identifiable information from our employees and our business partners. We use and share this information for a variety of business purposes including for analytics, attribution and to manage and execute digital advertising campaigns in a variety of ways, including delivering advertisements to Internet users based on their geographic locations, the type of device they are using, their interests as inferred from their web browsing or app usage activity. In addition, we obtain anonymous and aggregated audience behavior information from third‑party data providers who represent to us that they are compliant with applicable laws.
We are subject to a number of laws and regulations relating to consumer protection, information security, data protection and privacy. Many of these laws and regulations are still evolving and could be interpreted in ways that could harm our business or limit the services we are able to offer. In the area of information security and data protection, the laws in several states in the United States and most countries require companies to implement specific information security controls and legal protections to protect certain types of personally identifiable information. Likewise, most states in the United States and most countries have laws in place requiring companies to notify users if there is a security breach that compromises certain categories of their personally identifiable information. Any failure on our part to comply with these laws may subject us to significant liabilities. For example, the California Consumer Privacy Act (“CCPA”) establishes a new privacy framework that expands the definition of personal information, establishes new data privacy rights for consumers residing in the State of California, imposes special rules on the collection of consumer data from minors, creates new notice obligations and new limits on the sale of personal information, and creates a new and potentially severe statutory damages framework for (i) violations of the CCPA and (ii) businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
We regularly review and implement commercially reasonable organizational and technical physical and electronic security measures that are designed to protect against the loss, misuse, and alteration of our listeners’, employees’, clients’ and customers’ personally identifiable information and to protect our proprietary business information. Despite our best efforts, no security measures are perfect or impenetrable. Any failure or perceived failure by us to protect our information or information about our listeners, employees, clients and customers or to comply with our policies or applicable regulatory requirements could result in damage to our business and loss of confidence in us, damage to our brands, the loss of users of our services, including listeners, consumers, business partners and advertisers, as well as proceedings against us by governmental authorities or others, which could harm our business.
Available Information
You can find more information about us at our Internet website located at www.iheartmedia.com. Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports are available free of charge through our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (“SEC”). The contents of our websites are not deemed to be part of this Annual Report on Form 10-K or any of our other filings with the SEC.

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ITEM 1A.  RISK FACTORS

Risks Related to Our Business

The COVID-19 pandemic has adversely impacted, and is expected to continue to adversely impact, our business, results of operations and financial position.
In December 2019, a strain of novel coronavirus disease, COVID-19, was identified in Wuhan, China. This virus has been declared a pandemic and has spread around the world, including throughout the United States. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on our businesses and the economy generally, as supply chains have been disrupted; facilities and production have been suspended; and demand for many goods and services has fallen. In response to the spread of COVID-19, including shelter-in-place and stay-at-home orders, we implemented a work-from-home policy that remains in place for most of our employees and have restricted on-site activities.

As a result of the COVID-19 pandemic, we have experienced and may continue to experience disruptions that have adversely impacted our business, results of operations and financial position. The extent of future disruptions will depend on numerous evolving factors, which are highly uncertain, rapidly changing and cannot be predicted, and could result in significantly more severe impacts in the future, including:

reduced ad budgets and spend, order cancellations and increased competition for advertising revenue;
the effect of the outbreak on our customers and other business partners and vendors;
changes in how we conduct operations, including our events;
increased competition with alternative media platforms and technologies;
the inability of customers to pay amounts owed to the Company, or delays in collections of such amounts;
additional goodwill or other impairment charges;
limitations on our employee resources, including because of work-from-home, stay-at-home and shelter-in-place orders from federal or state governments, employee furloughs, or sickness of employees or their families;
diversion of management resources to focus on mitigating the impacts of the COVID-19 pandemic;
reduced capital expenditures; and
impacts from prolonged remote work arrangements, including increased cybersecurity risks.

These disruptions have negatively impacted our revenue, results of operations and financial position for the year ended December 31, 2020 and we expect these disruptions to continue to have a negative impact in 2021.
The COVID-19 pandemic continues to evolve. The extent to which the outbreak continues to impact our business, liquidity and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, stay-at-home and shelter-in-place orders, travel restrictions and social distancing throughout the United States, the duration and extent of business closures or business disruptions, the timing of a vaccine becoming widely available and the effectiveness of actions taken to contain and treat the disease. If we or our customers continue to experience prolonged shutdowns or other business disruptions beyond current expectations, our ability to conduct our business in the manner and within planned timelines could be materially and adversely impacted, and our business, liquidity and financial results will be adversely affected. Additionally, concerns over the economic impact of the COVID-19 pandemic caused extreme volatility in financial and other capital markets, which has adversely affected our stock price and credit rating and could impact our ability to access the capital markets in the future.
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Our results have been in the past, and could be in the future, adversely affected by economic uncertainty or deteriorations in economic conditions.
We derive revenues from the sale of advertising. Expenditures by advertisers tend to be cyclical, reflecting economic conditions and budgeting and buying patterns. Periods of a slowing economy or recession, or periods of economic uncertainty, may be accompanied by a decrease in advertising. Global economic activity has declined as a result of COVID-19, which has significantly reduced our advertising revenues. This reduction in advertising revenues had an adverse effect on our revenue, profit margins, cash flow and liquidity. If economic uncertainty continues or increases or economic conditions deteriorate, including due to the ongoing effect of the COVID-19 pandemic, global economic conditions may continue to adversely impact our revenue, profit margins, cash flow and liquidity. Furthermore, because a significant portion of our revenue is derived from local advertisers, our ability to generate revenues in specific markets is directly affected by local and regional conditions, and unfavorable regional economic conditions also may adversely impact our results. In addition, even in the absence of a downturn in general economic conditions, an individual business sector or market may experience a downturn, causing it to reduce its advertising expenditures, which also may adversely impact our results.
We face intense competition in our business.
We operate in a highly competitive industry, and we may not be able to maintain or increase our current audience ratings and advertising revenues. Our business competes for audiences and advertising revenues with other radio businesses, as well as with other media, such as streaming audio services, satellite radio, podcasts, other Internet-based streaming music services, television, live entertainment, newspapers, magazines and direct mail, within their respective markets. Audience ratings and market shares are subject to change for various reasons, including through consolidation of our competitors through processes such as mergers and acquisitions, which could have the effect of reducing our revenues in a specific market. Our competitors may develop technology, services or advertising media that are equal or superior to those we provide or that achieve greater market acceptance and brand recognition than we achieve. For example, our competitors may develop analytic products for programmatic advertising, and data and research tools that are superior to those that we provide or that achieve greater market acceptance. It also is possible that new competitors may emerge and rapidly acquire significant market share in our business or make it more difficult for us to increase our share of advertising partners’ budgets. The advertiser/agency ecosystem is diverse and dynamic, with advertiser/agency relationships subject to change. This could have an adverse effect on us if an advertiser client shifts its relationship to an agency with whom we do not have as good a relationship. An increased level of competition for advertising dollars may lead to lower advertising rates as we attempt to retain customers or may cause us to lose customers to our competitors who offer lower rates that we are unable or unwilling to match.
Our ability to compete effectively depends in part on our ability to achieve a competitive cost structure. If we cannot do so, then our business, financial condition and operating results would be adversely affected.
Alternative media platforms and technologies may continue to increase competition with our broadcasting operations.
Our terrestrial radio broadcasting operations face increasing competition from alternative media platforms and technologies, such as broadband wireless, satellite radio, audio broadcasting by cable television systems, other podcast streaming services, Internet-based streaming music services, as well as consumer products, such as portable digital audio players and other mobile devices, smart phones and tablets, gaming consoles, in-home entertainment and enhanced automotive platforms. These technologies and alternative media platforms, including those used by us, compete with our broadcast radio stations for audience share and advertising revenues. We are unable to predict the effect that such technologies and related services and products will have on our broadcasting and digital operations. The capital expenditures necessary to implement these or other technologies could be substantial and we cannot assure you that we will continue to have the resources to acquire new technologies or to introduce new services to compete with other new technologies or services, or that our investments in new technologies or services will provide the desired returns. Other companies employing new technologies or services could more successfully implement such new technologies or services or otherwise increase competition with our businesses.
Our business is dependent upon the performance of on-air talent and program hosts.
We employ or independently contract with many on-air personalities and hosts of syndicated radio programs, podcasts and other audio platforms, with significant loyal audiences in their respective markets. Although we have entered into long-term agreements with some of our key on-air talent and program hosts to protect our interests in those relationships, we can give no assurance that all or any of these persons will remain with us, will be able to continue to perform their duties, will retain their audiences or will continue to be profitable. Competition for these individuals is intense and many of these individuals are under no legal obligation to remain with us. Our competitors may choose to extend offers to any of these individuals on terms which we may be unwilling to meet. Furthermore, the popularity and audience loyalty of our key on-air talent and program hosts is
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highly sensitive to rapidly changing public tastes. A loss of such popularity or audience loyalty is beyond our control and could have a material adverse effect on our ability to attract local and/or national advertisers and on our revenue and/or ratings, and could result in increased expenses.
If events occur that damage our reputation and brand, our ability to grow our user base, advertiser relationships, and partnerships may be impaired and our business may be harmed.
We have developed a brand that we believe has contributed to our success. We also believe that maintaining and enhancing our brand is critical to growing our user base, advertiser relationships and partnerships. The iHeartRadio master brand ties together our radio stations, digital platforms, social, podcasts and events in a unified manner that reflects the quality and compelling nature of our listener experiences. Maintaining and enhancing our brand depends on many factors, including factors that are not entirely within our control. If we fail to successfully promote and maintain our brand or if we suffer damage to the public perception of our brand, our business may be harmed.
Our business is dependent on our management team and other key individuals.
Our business is dependent upon the performance of our management team and other key individuals. Although we have entered into agreements with members of our senior management team and certain other key individuals, we can give no assurance that any or all of them will remain with us, or that we will not continue to make changes to the composition of, and the roles and responsibilities of, our management team. Competition for these individuals is intense and many of our key employees are at-will employees who are under no obligation to remain with us, and may decide to leave for a variety of personal or other reasons beyond our control.  If members of our management or key individuals decide to leave us in the future, if we decide to make further changes to the composition of, or the roles and responsibilities of, these individuals, or if we are not successful in attracting, motivating and retaining other key employees, our business could be adversely affected.
Our financial performance may be adversely affected by many factors beyond our control.
Certain factors that could adversely affect our financial performance by, among other things, decreasing overall revenues, the numbers of advertising customers, advertising fees or profit margins include:
unfavorable fluctuations in operating costs, which we may be unwilling or unable to pass through to our customers;
our inability to successfully adopt or our being late in adopting technological changes and innovations that offer more attractive advertising or listening alternatives than what we offer, which could result in a loss of advertising customers or lower advertising rates, which could have a material adverse effect on our operating results and financial performance;
a loss of advertising customers or lower advertising rates, which could have a material adverse effect on our operating results and financial performance;
the impact of potential new or increased royalties or license fees charged for terrestrial radio broadcasting or the provision of our digital services, which could materially increase our expenses;
unfavorable shifts in population and other demographics, which may cause us to lose advertising customers as people migrate to markets where we have a smaller presence or which may cause advertisers to be willing to pay less in advertising fees if the general population shifts into a less desirable age or geographical demographic from an advertising perspective;
continued dislocation of advertising agency operations from new technologies and media buying trends;
adverse political effects and acts or threats of terrorism or military conflicts; and
unfavorable changes in labor conditions, which may impair our ability to operate or require us to spend more to retain and attract key employees.

Acquisitions, dispositions and other strategic transactions could pose risks.
We frequently evaluate strategic opportunities both within and outside our existing lines of business. We expect from time to time to pursue acquisitions of certain businesses as well as strategic dispositions. These acquisitions or dispositions could be material. Acquisitions or dispositions involve numerous risks, including:
our acquisitions may prove unprofitable and fail to generate anticipated cash flows:
to successfully manage our business, we may need to:
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recruit additional senior management as we cannot be assured that senior management of acquired businesses will continue to work for us and we cannot be certain that our recruiting efforts will succeed, and
expand corporate infrastructure to facilitate the integration of our operations with those of acquired businesses, because failure to do so may cause us to lose the benefits of any expansion that we decide to undertake by leading to disruptions in our ongoing businesses or by distracting our management;
we may enter into markets and geographic areas where we have limited or no experience;
we may encounter difficulties in the integration of new management teams, operations and systems;
our management’s attention may be diverted from other business concerns;
our dispositions may negatively impact revenues from our national, regional and other sales networks; and
our dispositions may make it difficult to generate cash flows from operations sufficient to meet our anticipated cash requirements, including debt service requirements.

Acquisitions and dispositions of media and entertainment businesses may require antitrust review by U.S. federal antitrust agencies and may require review by foreign antitrust agencies under the antitrust laws of foreign jurisdictions, including our proposed acquisition of Triton. We can give no assurances that the Department of Justice (“DOJ”), the U.S. Federal Trade Commission (“FTC”) or foreign antitrust agencies will not seek to bar us from acquiring or disposing of media and entertainment businesses or impose stringent undertakings on our business as a condition to the completion of an acquisition in any market where we already have a significant position.
Further, radio acquisitions are subject to FCC approval. Such transactions must comply with the Communications Act and FCC regulatory requirements and policies. The FCC’s media ownership rules remain subject to ongoing agency and court proceedings. Future changes could restrict our ability to dispose of or acquire new radio assets or businesses. See “Business-Regulation of our Business.”
If our security measures are breached, we could lose valuable information, suffer disruptions to our business, and incur expenses and liabilities including damages to our relationships with listeners, consumers, business partners, employees and advertisers.
We may be unable to anticipate or prevent unauthorized access. Our websites and digital platforms are vulnerable to software bugs, computer viruses, internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service, or other attacks and similar disruptions from unauthorized use of our and third-party computer systems, any of which could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access to personal data. A security breach could occur due to the actions of outside parties, employee error, malfeasance or a combination of these or other actions. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security, and availability of our services and technical infrastructure to the satisfaction of our listeners may harm our reputation and our ability to retain existing listeners and attract new listeners. We cannot assure you that the systems and processes that we have designed to protect our data and our listeners’ data, to prevent data loss and to prevent or detect security breaches will provide absolute security, and we may incur significant costs in protecting against or remediating cyber-attacks. If an actual or perceived breach of our security occurs, we may face regulatory or civil liability, lose competitively sensitive business information or suffer disruptions to our business operations, information processes and internal controls. In addition, the public perception of the effectiveness of our security measures or services could be harmed, we could lose listeners, consumers, business partners and advertisers. In the event of a security breach, we could suffer financial exposure in connection with penalties, remediation efforts, investigations and legal proceedings and changes in our security and system protection measures. In the event an E.U. regulator were to determine we had not adequately complied with E.U. General Data Protection Regulation (“GDPR”) standards, we may (i) incur regulatory financial penalties or (ii) be required to notify European Data Protection Authorities, within strict time periods, about any personal data breaches, unless the personal data breach is unlikely to result in a risk to the rights and freedoms of the affected individuals. We may also be required to notify the affected individuals of the personal data breach where there is a high risk to their rights and freedoms. If we suffer a personal data breach, we could be fined up to EUR 20 million or 4% of worldwide annual turnover of the preceding financial year, whichever is greater. Any data breach by service providers that are acting as data processors (i.e., processing personal data on our behalf) could also mean that we are subject to these fines and have to comply with the notification obligations set out above.
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We have engaged in restructuring activities in the past, and may need to implement further restructurings in the future and our restructuring efforts may not be successful or generate expected cost savings.
We actively seek to adapt our cost structure to the changing economics of the industry. For example, in the first quarter of 2020, we announced our modernization initiatives, which will take advantage of the significant investments we have made in new technologies to build an operating infrastructure that provides better quality and newer products and delivers new cost efficiencies. In addition, in response to the COVID-19 pandemic, we have taken steps to significantly reduce our capital and operating expenditures. There can be no assurance that we will be successful in upgrading our systems and processes effectively or on the timetable and at the costs contemplated, or that we will achieve the expected long-term cost savings.
We may be required to implement further restructuring activities, make additions or other changes to our management or workforce based on other cost reduction measures or changes in the markets and industry in which we compete. Restructuring activities can create unanticipated consequences and negative impacts on the business, and we cannot be sure that any ongoing or future restructuring efforts will be successful or generate expected cost savings.
Risks Related to our Indebtedness

Our substantial indebtedness may adversely affect our financial health and operating flexibility.
    We currently have a $450.0 million undrawn senior secured asset-based revolving credit facility, $4,600.8 million in principal amount of secured debt and $1,456.8 million in principal amount of unsecured debt. This substantial amount of indebtedness could have important consequences to us, including:
increase our vulnerability to adverse general economic, industry, or competitive developments;
require us to dedicate a more substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, investments, acquisitions, capital expenditures, and other general corporate purposes;
limit our ability to make required payments under our existing contractual commitments, including our existing long-term indebtedness;
require us to sell certain assets;
restrict us from making strategic investments, including acquisitions, or causing us to make non-strategic divestitures;
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
place us at a competitive disadvantage compared to our competitors that have less debt;
cause us to incur substantial fees from time to time in connection with debt amendments or refinancings;
increase our exposure to rising interest rates because a substantial portion of our borrowings is at variable interest rates; and
limit our ability to borrow additional funds or to borrow on terms that are satisfactory to us.

Our financing agreements also contain covenants that may restrict our or our subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, engage in mergers, consolidations, liquidations and dissolutions, sell assets, pay dividends and distributions, make investments, loans, or advances, prepay certain junior indebtedness, engage in certain transactions with affiliates, amend material agreements governing certain junior indebtedness, and change lines of business. Although the covenants in our financing agreements are subject to various exceptions, we cannot assure you that these covenants will not adversely affect our ability to finance future operations, capital needs, or to engage in other activities that may be in our best interest. In addition, in certain circumstances, our long-term debt may require us to maintain specified financial ratios, which may require that we take action to reduce our debt or to act in a manner contrary to our business objectives. A breach of any of these covenants could result in a default under our financing agreements.
In addition, we may be able to incur additional indebtedness in the future. To the extent we incur additional indebtedness, the risks associated with our leverage described above would increase.
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Uncertainty relating to the LIBOR calculation process and potential phasing out of LIBOR after 2021 may adversely affect the market value of our current or future debt obligations.
The London Inter-bank Offered Rate (“LIBOR”) and certain other interest “benchmarks” may be subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences. Regulators that oversee LIBOR have announced that they intend to stop encouraging or requiring banks to submit data used to compile certain LIBOR rates after 2021 and, in some cases, by mid-2023, and it is unclear if LIBOR will cease to exist or if new methods of calculating LIBOR will evolve. If LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, interest rates on our debt obligations may be adversely affected.

Regulatory, Legislative and Litigation Risks

Extensive current government regulation, and future regulation, may limit our radio broadcasting and other operations or adversely affect our business and financial results.
The domestic radio industry is heavily regulated by federal laws and regulations of several agencies, including the FCC. For example, the FCC could impact our profitability by imposing large fines on us if, in response to pending or future complaints, it finds that we violated FCC regulations. The FCC’s enforcement priorities are subject to change, and we cannot predict which areas of legal compliance the FCC will focus on in the future. We have received, and may receive in the future, letters of inquiry and other notifications from the FCC concerning compliance with the Communications Act and FCC rules, and we cannot predict the outcome of any outstanding or future letters of inquiry and notifications from the FCC or the nature or extent of future FCC enforcement actions.

Additionally, we cannot be sure that the FCC will approve renewal of the licenses we must have in order to operate our stations. Nor can we be assured that our licenses will be renewed without conditions and for a full term. Beginning in June 2019 and continuing through April 2022, we (along with all other FCC radio broadcast licensees) are submitting applications to renew the FCC licenses for each of our broadcast radio stations on an every two-month rolling schedule by state. The non-renewal, or conditioned renewal, of a substantial number of these FCC licenses could have a materially adverse impact on our operations. Furthermore, possible changes in interference protections, spectrum allocations and other technical rules may negatively affect the operation of our stations. In addition, Congress, the FCC and other regulatory agencies have considered, and may in the future consider and adopt, new laws, regulations and policies that could, directly or indirectly, have an adverse effect on our business operations and financial performance.
Legislation and certain ongoing litigation and royalty audits may require us to pay additional royalties, including to additional parties such as record labels or recording artists.
We currently pay royalties to composers and music publishers, including through BMI, ASCAP, SESAC and GMR. We also pay royalties to record companies and their representative, SoundExchange, for digital music transmissions. Currently, Congress does not require that broadcasters pay royalties associated with the public performance of sound recordings for over-the-air transmissions. From time to time, however, Congress considers legislation that could change this.
Moreover, it is possible that our license fees and negotiating costs associated with obtaining rights to use musical compositions and sound recordings in our programming could materially increase as a result of private negotiations, one or more regulatory rate-setting processes, or administrative and court decisions. For example, we are involved in pending litigation, royalty audits and/or negotiations with ASCAP and BMI related to royalty payments for the public performance of musical compositions, the outcome of which could cause us to owe increased royalty payments and adversely impact our business.
We are also involved in a proceeding before the CRB to determine statutory rates and terms for the public performance and ephemeral reproduction of sound recordings by various non-interactive webcasters, including iHeart, for the period from January 1, 2021 to December 31, 2025. The outcome of this proceeding may result in an increase to our licensing costs. Also, in October 2018, legislation was signed into law that creates a public performance right under federal law for pre-February 15, 1972 recordings streamed online. This law may increase our licensing costs.
Increased royalty rates could significantly increase our expenses, which could adversely affect our business and results of operations. Various other regulatory matters relating to our business are now, or may become, the subject of court litigation, and we cannot predict the outcome of any such litigation or its impact on our business.
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Regulations and consumer concerns regarding data privacy and data protection, or any failure to comply with these regulations, could hinder our operations.
We utilize personal, demographic and other information from and about our listeners, consumers, business partners and advertisers as they interact with us. For example: (1) our broadcast radio station websites and our iHeartRadio digital platform collect personal information as users use our services register for our services, fill out their listener profiles, post comments, use our social networking features, participate in polls and contests and sign-up to receive email newsletters; (2) we use tracking technologies, such as “cookies,” to manage and track our listeners’ interactions with us so that we can deliver relevant music content and advertising; (3) we accept credit cards as a method of payment from consumers, business partners and advertisers; however, the data collection related to processing such payments is handled by personal information compliant third-parties on our behalf; and (4) we collect precise location data about certain of our platform users for analytics, attribution and advertising purposes.
We are subject to numerous federal, state and foreign laws and regulations relating to consumer protection, information security, data protection and privacy, among other things. Many of these laws are still evolving, new laws may be enacted and any of these laws could be amended or interpreted by the courts or regulators in ways that could harm our business. For example, our ongoing efforts to comply with regulatory regimes such as the GDPR, effective as of May 2018, or the California Consumer Privacy Act (“CCPA”), effective as of January 2020, entails substantial expenses, diverts resources from other initiatives and projects, and could limit the services we are able to offer. The CCPA provides for a private right of action for unauthorized access, theft or disclosure of personal information in certain situations with possible damage awards of $100 to $750 per consumer per incident, or actual damages, whichever is greater, and also permits class action lawsuits. The California Attorney General may also impose penalties of up to $7,500 for each intentional violation of the CCPA. Additionally, a new California ballot initiative, the California Privacy Rights Act (the “CPRA”) passed in California in November 2020. The CPRA will impose additional data protection obligations on companies doing business in California, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.
In addition, changes in consumer rights, expectations and demands regarding privacy and data protection could restrict our ability to collect, use, disclose and derive economic value from demographic and other information related to our listeners, consumers, business partners and advertisers, or to transfer employee data within the corporate group. New consumer rights, including the right for consumers to prevent the sale of their data or have their data deleted could lead to a depletion of our consumer database. Such new consumer rights and restrictions on our use of consumer data could limit our ability to provide customized music content to our listeners, interact directly with our listeners and consumers and offer targeted advertising opportunities to our business partners and advertisers. Although we have implemented and are implementing policies and procedures designed to comply with these laws and regulations, any failure or perceived failure by us to comply with our policies or applicable regulatory requirements related to consumer protection, information security, data protection and privacy could result in a loss of confidence in us, damage to our brands, the loss of listeners, consumers, business partners and advertisers, as well as proceedings against us by governmental authorities or others, which could hinder our operations and adversely affect our business.
Environmental, health, safety and land use laws and regulations may limit or restrict some of our operations.
As the owner or operator of various real properties and facilities, we must comply with various foreign, federal, state and local environmental, health, safety and land use laws and regulations. We and our properties are subject to such laws and regulations relating to the use, storage, disposal, emission and release of hazardous and non-hazardous substances and employee health and safety as well as zoning restrictions. Historically, we have not incurred significant expenditures to comply with these laws. However, additional laws which may be passed in the future, or a finding of a violation of or liability under existing laws, could require us to make significant expenditures and otherwise limit or restrict some of our operations.
Risks Related to our Recent Emergence from the Chapter 11 Cases
Our actual financial results following our emergence from the Chapter 11 Cases are not comparable to our historical financial information.
Following the Separation and Reorganization, we began to operate under a new capital structure. As a result of the Separation and Reorganization, we no longer include CCOH in our consolidated financial statements following the Effective Date. In addition, we adopted fresh-start accounting and, as a result, at the Effective Date, our assets and liabilities were
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recorded at fair value, which resulted in values that are different than the values recorded in our historical financial statements. Accordingly, our financial condition and results of operations from and after the Effective Date are not comparable to the financial condition or results of operations reflected in our historical financial statements. As a result of all these factors, our historical financial information is not indicative of our future financial performance.
It is possible that the Chapter 11 Cases may give rise to unfavorable tax consequences for us.
The tax treatment of the transactions consummated in the Chapter 11 Cases, including the Separation and cancellation of existing indebtedness, is highly complex. The Separation resulted in the recognition of a loss for federal and most state income tax purposes and, therefore, such transactions did not result in material cash tax liability. However, the Internal Revenue Service or other taxing authorities could assert in connection with a subsequent audit that additional cash tax liabilities may have arisen in connection with such transactions. To the extent the transactions do give rise to any cash tax liability, CCOH, iHeartCommunications, the Company and various other entities would be jointly and severally liable under applicable law for any such amounts. The allocation of any such liabilities among the Company and its subsidiaries post-consummation of the Plan of Reorganization and CCOH are addressed by the new tax matters agreement that was entered into in connection with the Separation.

We have substantially reduced or eliminated certain of our tax attributes, including NOL carryforwards, as a result of any cancellation of indebtedness income realized in connection with the Chapter 11 Cases.
The consummation of the Chapter 11 Cases resulted in an “ownership change,” as defined in Section 382 of the U.S. Internal Revenue Code of 1986, as amended. As a result, even if any NOLs or other tax attributes are not eliminated by cancellation of indebtedness income arising as a result of the Chapter 11 Cases, our ability to utilize any such attributes may be limited in the future.
In connection with the Separation, the Outdoor Group agreed to indemnify us and we agreed to indemnify the Outdoor Group for certain liabilities. There can be no assurance that the indemnities from the Outdoor Group will be sufficient to insure us against the full amount of such liabilities.
Pursuant to agreements that we entered into with the Outdoor Group in connection with the Separation, the Outdoor Group agreed to indemnify us for certain liabilities, and we agreed to indemnify the Outdoor Group for certain liabilities. For example, we will indemnify the Outdoor Group for liabilities to the extent such liabilities related to the business, assets and liabilities of iHeartMedia as well as liabilities relating to a breach of the Separation Agreement. We will also indemnify the Outdoor Group for 50% of certain tax liabilities imposed on the Outdoor Group in connection with the Separation on or prior to the third anniversary of the Separation in excess of $5.0 million, with our aggregate liability limited to $15.0 million, and will reimburse the Outdoor Group for one-third of potential costs relating to certain agreements between the Outdoor Group and third parties in excess of $10.0 million up to the first $35.0 million of such costs such that we will not bear more than $8.33 million of such costs. However, third parties might seek to hold us responsible for liabilities that the Outdoor Group agreed to retain, and there can be no assurance that the Outdoor Group will be able to fully satisfy their respective indemnification obligations under these agreements. In addition, indemnities that we may be required to provide to the Outdoor Group could be significant and could adversely affect our business.
Risks Related to our Class A Common Stock
We do not intend to pay dividends on our Class A common stock for the foreseeable future.
We currently have no intention to pay dividends on our Class A common stock at any time in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our Board may deem relevant.
We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to meet our obligations.
We are a holding company that does not conduct any business operations of our own. As a holding company, our investments in our operating subsidiaries constitute all of our operating assets. Our subsidiaries conduct all of our consolidated operations and own substantially all of our consolidated assets. As a result, we must rely on dividends and other advances, distributions and transfers of funds from our subsidiaries to meet our obligations. The ability of our subsidiaries to pay dividends or make other advances, distributions and transfers of funds will depend on their respective results of operations and
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may be restricted by, among other things, applicable laws limiting the amount of funds available for payment of dividends and certain restrictive covenants contained in the agreements of those subsidiaries. The deterioration of income from, or other available assets of, our subsidiaries for any reason could limit or impair their ability to pay dividends or other distributions to us.
Conversion of shares of our Class B common stock and Special Warrants into our Class A common stock would cause significant dilution to our shareholders and may adversely impact the market price of our Class A common stock.
As of February 22, 2021, we had 110,923,534 shares of Class A common stock, 29,088,181 shares of Class B common stock and 6,201,453 Special Warrants outstanding. Each Special Warrant is currently exercisable for one share of Class A common stock or Class B common stock and each share of Class B common stock is currently convertible into one share of Class A common stock, in each case subject to the Ownership Restrictions described in Part I, Item 1, “Business” of this report. Upon the exercise of any Special Warrants or the conversion of any shares of Class B common stock, your voting rights as a holder of Class A common stock will be proportionately diluted. The issuance of additional shares of Class A common stock would increase the number of our publicly traded shares, which could depress the market price of our Class A common stock.
Delaware law and certain provisions in our certificate of incorporation may prevent efforts by our stockholders to change the direction or management of our company.
Our certificate of incorporation and our by-laws contain provisions that may make the acquisition of our company more difficult without the approval of our Board, including, but not limited to, the following:
for the first three years following the Effective Date, our board of directors will be divided into three equal classes, with members of each class elected in different years for different terms, making it impossible for stockholders to change the composition of our entire Board in any given year;
action by stockholders may only be taken at an annual or special meeting duly called by or at the direction of a majority of our Board;
advance notice for all stockholder proposals is required;
subject to the rights of holders of any outstanding shares of our preferred stock, for so long as our board remains classified our directors may only be removed for cause and upon the affirmative vote of holders of a majority of the voting power of the outstanding shares of our Class A common stock; and
for the first three years following the Effective Date, any amendment, alteration, rescission or repeal of the anti-takeover provisions of the charter, requires the affirmative vote of at least 66 2/3% in voting power of the outstanding shares of our stock entitled to vote generally in the election of directors.

    We are also subject to the anti-takeover provisions contained in Section 203 of the General Corporation Law of the State of Delaware. Under these provisions, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its voting stock unless the holder has held the stock for three years or, among other exceptions, the board of directors has approved the business combination or the transaction by which the person became an interested stockholder.

In addition, we have adopted a stockholder rights plan that could make it more difficult for a third-party to acquire our Class A common stock, Class B common stock or Special Warrants without the approval of our Board.

These and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more difficult for stockholders or potential acquirers to obtain control of our Board or initiate actions that are opposed by our Board, including actions to delay or impede a merger, tender offer or proxy contest involving our company. The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction.
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Our certificate of incorporation designates the Court of Chancery of the State of Delaware, subject to certain exceptions, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders and our bylaws designate the federal district courts of the United States as the exclusive forum for actions arising under the Securities Act of 1933, as amended, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our certificate of incorporation provides that the Court of Chancery of the State of Delaware, subject to certain exceptions, is the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against the company or any director or officer or employee of the company arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine. In addition, our bylaws provide that the federal district courts of the United States are the exclusive forum for any complaint raising a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our certificate of incorporation and bylaws described above. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employee, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our certificate of incorporation or bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Regulations imposed by the Communications Act and the FCC limit the amount of foreign individuals or entities that may invest in our capital stock without FCC approval.
The Communications Act and FCC regulations prohibit foreign entities or individuals from indirectly (i.e., through a parent company) owning or voting more than 25 percent of the equity in a corporation controlling the licensee of a radio broadcast station unless the FCC determines greater indirect foreign ownership is in the public. The FCC generally will not make such a determination absent favorable executive branch review.

The FCC calculates foreign voting rights separately from equity ownership, and both must be at or below the 25 percent threshold absent a foreign ownership declaratory ruling. To the extent that our aggregate foreign ownership or voting percentages exceeds 25 percent, any individual foreign holder of our common stock whose ownership or voting percentage would exceed 5 percent or 10 percent (with the applicable percentage determined pursuant to FCC rules) will additionally be required to obtain the FCC’s specific approval.

On November 5, 2020, the FCC issued the Declaratory Ruling which authorizes us to have aggregate foreign ownership and voting percentages of up to 100 percent and specifically approves certain of our stockholders that are deemed to be foreign under FCC rules, subject to certain conditions. Among those conditions is a requirement that we comply with the LOA that we entered into with the DOJ. The Declaratory Ruling also requires us to take our Special Warrants into account in determining our foreign ownership compliance. A direct or indirect owner of our securities that is deemed to be foreign under FCC rules could require us to take action under the Declaratory Ruling and the FCC’s foreign ownership rules if that owner acquires more than 5 percent, or more than 10 percent for certain “passive” investors, of our voting equity or total equity (including the Special Warrants on an as-exercised basis), without obtaining specific approval from the FCC through a new petition for declaratory ruling. On February 5, 2021, Honeycomb filed a Schedule 13D with the SEC reporting ownership of more than 5% of our voting stock and equity. Honeycomb acquired its interest without our knowledge or control, and we are fulfilling our obligations under the Declaratory Ruling and the FCC rules with respect to Honeycomb’s interest.

Direct or indirect ownership of our securities could result in the violation of the FCC’s media ownership rules by investors with “attributable interests” in other radio stations or in the same market as one or more of our broadcast stations.
Under the FCC’s media ownership rules, a direct or indirect owner of our securities could violate and/or cause us to violate the FCC’s structural media ownership limitations if that person owns or acquires an “attributable” interest in other radio stations in the same market as one or more of our radio stations. Under the FCC’s “attribution” policies the following relationships and interests generally are cognizable for purposes of the substantive media ownership restrictions: (1) ownership of 5 percent or more of a media company’s voting stock (except that, for a narrowly defined class of passive investors, the attribution threshold is 20 percent ); (2) officers and directors of a media company and its direct or indirect parent(s); (3) any general partnership or limited liability company manager interest; (4) any limited partnership interest or limited liability company member interest that is not “insulated,” pursuant to FCC-prescribed criteria, from material involvement in the
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management or operations of the media company; (5) certain same-market time brokerage agreements; (6) certain same-market joint sales agreements; and (7) under the FCC’s “equity/debt plus” standard, otherwise non-attributable equity or debt interests in a media company if the holder’s combined equity and debt interests amount to more than 33 percent of the “total asset value” of the media company and the holder has certain other interests in the media company or in another media property in the same market. Under the FCC’s rules, discrete ownership interests under common ownership, management, or control must be aggregated to determine whether or not an interest is “attributable.”
Our certificate of incorporation grants us broad authority to comply with FCC Regulations.
To the extent necessary to comply with the Communications Act, FCC rules and policies, and the Declaratory Ruling, and in accordance with our certificate of incorporation, we may request information from any stockholder or proposed stockholder to determine whether such stockholder’s ownership of shares of capital stock may result in a violation of the Communications Act, FCC rules and policies, or any FCC declaratory ruling. We may further take the following actions, among others, to help ensure compliance with and to remedy any actual or potential violation of the Communications Act, FCC rules and policies, or any FCC declaratory ruling, or to prevent the loss or impairment of any of our FCC licenses: (i) prohibit, suspend or rescind the ownership, voting or transfer of any portion of our outstanding capital stock; (ii) redeem capital stock; and (iii) exercise any and all appropriate remedies, at law or in equity, in any court of competent jurisdiction, against any stockholder, to cure any such actual or potential violation or impairment.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, our acquisition of Triton, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:
risks associated with weak or uncertain global economic conditions and their impact on the level of expenditures for advertising;
the impact of the COVID-19 pandemic on our business, financial position and results of operations;
intense competition including increased competition from alternative media platforms and technologies;
dependence upon the performance of on-air talent, program hosts and management as well as maintaining or enhancing our master brand;
fluctuations in operating costs;
technological changes and innovations;
shifts in population and other demographics;
the impact of our substantial indebtedness;
the impact of acquisitions, dispositions and other strategic transactions;
legislative or regulatory requirements;
the impact of legislation, ongoing litigation or royalty audits on music licensing and royalties;
regulations and consumer concerns regarding privacy and data protection, and breaches of information security measures;
risks associated with our recent emergence from the Chapter 11 Cases;
risks related to our Class A common stock;
regulations impacting our business and the ownership of our securities; and
other factors disclosed in the section entitled “Risk Factors” and elsewhere in this report.

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We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

ITEM 1B.  UNRESOLVED STAFF COMMENTS
None.

ITEM 2.  PROPERTIES
Corporate
Our corporate headquarters are located in San Antonio, Texas, where we lease space for executive offices and a data and administrative service center.  In addition, certain of our executive and other operations are located in New York, New York.
Audio
The types of properties required to support each of our radio stations include offices, studios, transmitter sites and antenna sites.  We either own or lease our transmitter and antenna sites.  A radio station’s studios are generally housed with its offices in downtown or business districts.  A radio station’s transmitter sites and antenna sites are generally positioned in a manner that provides maximum market coverage.
The studios and offices of our radio stations are located in leased or owned facilities.  These leases generally have expiration dates that range from one to 40 years.  We do not anticipate any difficulties in renewing those leases that expire within the next several years or in leasing other space, if required.  We lease substantially all of our towers and antennas and own substantially all of the other equipment used in our Audio business. For additional information regarding our Audio properties, see “Item 1. Business.”

ITEM 3.  LEGAL PROCEEDINGS
Although we are involved in a variety of legal proceedings in the ordinary course of business, a large portion of our litigation arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.
For additional information regarding legal proceedings, refer to Note 10, Commitments and Contingencies “-Chapter 11 Cases” and -Stockholder Litigation” to our Consolidated Financial Statements included in Item 8, Part II of this Annual Report on Form 10-K.
Alien Ownership Restrictions and FCC Petition for Declaratory Ruling
The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership to be in the public interest (the “Foreign Ownership Rule”). Under the Plan of
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Reorganization, the Company committed to file the PDR requesting the FCC to permit the Company to be up to 100% foreign-owned. 
On November 5, 2020, the FCC issued the Declaratory Ruling granting the relief requested by the PDR, subject to certain conditions.
On November 9, 2020, the Company notified the holders of Special Warrants of the commencement of an exchange process (the notification, the “Exchange Notice,” and the exchange, the “Exchange”). In the Exchange, which took place on January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules. Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock.

ITEM 4.  MINE SAFETY DISCLOSURES
Not Applicable.

INFORMATION ABOUT OUR DIRECTORS & EXECUTIVE OFFICERS
The following information with respect to our Board of Directors (the "Board") and executive officers is presented as of February 25, 2021:
NameAgePosition at iHeartMediaPrincipal Employment
Robert W. Pittman67Chairman and Chief Executive OfficerSame
Richard J. Bressler63President, Chief Operating Officer, Chief Financial Officer and DirectorSame
Gary Barber63Director
Chairman and Chief Executive Officer of Spyglass Media Group, LLC, a premium content company
Brad Gerstner49DirectorChief Executive Officer and Chief Investment Officer of Altimeter Capital Management, LP, an technology focused investment firm
Sean Mahoney58DirectorPrivate investor
Cheryl Mills56DirectorFounder and Chief Executive Officer of the BlackIvy Group LLC, a private holding company that grows and builds businesses in Sub-Saharan Africa
James A. Rasulo65DirectorFormer Chief Financial Officer and Senior Executive Vice President at Walt Disney Company, a global mass media and entertainment conglomerate
Kamakshi Sivaramakrishnan45DirectorLeading an integration and identity charter at LinkedIn, an employment technology services company
Michael B. McGuinness44Executive Vice President – Finance and Deputy Chief Financial OfficerSame
Scott D. Hamilton51Senior Vice President, Chief Accounting Officer and Assistant SecretarySame


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PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Shares of our Class A common stock are quoted for trading on the Nasdaq Global Select Market ("Nasdaq") under the symbol “IHRT.”  There were 604 stockholders of record of our Class A common stock as of February 22, 2021.  This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies. 
There is no established public trading market for our Class B common stock.  There were 29,088,181 shares of our Class B common stock outstanding on February 22, 2021.  Holders of shares of the Successor Company's Class B common stock are generally entitled to convert shares of Class B common stock into shares of Class A common stock on a one-for-one basis, subject to the Company’s ability to restrict conversion in order to comply with the Communications Act of 1934, as amended (the “Communications Act”) and Federal Communications Commission (“FCC”) regulations. There were 89 stockholders of record of our Class B common stock as of February 22, 2021.  This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.
On November 5, 2020, the FCC issued the Declaratory Ruling, which permits the Company to be up to 100% foreign-owned, subject to certain conditions. On January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules. Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock. Each Special Warrant issued under the special warrant agreement entered into in connection with the Reorganization may be exercised by its holder to purchase one share of the Company's Class A common stock or Class B common stock, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, (a) subject to certain exceptions, such exercising holder owning more than 4.99 percent of the Company's outstanding Class A common stock or total equity, or (b) the Company violating any provision of the Communications Act or restrictions on ownership or transfer imposed by the Company's certificate of incorporation or the decisions, rules and policies of the FCC. Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and certifications required under the special warrant agreement. There were 6,201,453 Special Warrants outstanding on February 22, 2021.
For more information regarding our Class A common Stock, Class B common stock and Special Warrants, refer to Note 12, Stockholders' Equity to our consolidated financial statements in Item 8 of Part II of this Annual Report on Form 10-K.
We currently have no intention to pay dividends on our Class A common stock at any time in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our Board may deem relevant.








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Stock Performance Graph
The following chart provides a comparison of the cumulative total returns, adjusted for any stock splits and dividends, for iHeartMedia, Inc., our Radio Index* and the Nasdaq Stock Market Index for the period from July 18, 2019, the day our Class A common stock was listed and began trading on the Nasdaq, through December 31, 2020.

Indexed Stock Price Close
(Price Adjusted for Stock Splits and Dividends)

cik0001400891-20201231_g1.jpg

Source: Yahoo Finance

*    We have constructed a peer group index comprised of other radio companies that includes Cumulus Media, Beasley Broadcast Group and Entercom Communications. Our peer group index previously included Emmis Communications, which delisted from Nasdaq in 2020 and we have replaced with Beasley Broadcast Group.

7/18/199/30/1912/31/193/31/206/30/209/30/2012/31/20
iHeartMedia, Inc. $1,000 $909 $1,024 $443 $506 $492 $787 
Radio Index*$1,000 $780 $860 $422 $439 $344 $489 
Nasdaq Stock Market Index$1,000 $975 $1,093 $938 $1,226 $1,361 $1,570 

Purchases of Equity Securities
The following table sets forth the purchases made during the quarter ended December 31, 2020 by or on behalf of us or an affiliated purchaser of shares of our Class A common stock registered pursuant to Section 12 of the Exchange Act:
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Period
Total Number of Shares Purchased(1)
Average Price Paid per Share(1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 through October 31759 $8.19 — $— 
November 1 through November 309,673 8.53 — — 
December 1 through December 316,923 8.35 — — 
Total17,355 $8.45 — — 
(1)The shares indicated consist of shares of our Class A common stock tendered by employees to us during the three months ended December 31, 2020 to satisfy the employees’ tax withholding obligation in connection with the vesting and release of restricted shares, which are repurchased by us based on their fair market value on the date the relevant transaction occurs.
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ITEM 6.  SELECTED FINANCIAL DATA
The following tables set forth our selected historical consolidated financial and other data as of the dates and for the periods indicated. The selected historical financial data are derived from our audited consolidated financial statements. Certain prior period amounts have been reclassified to conform to the 2020 presentation.  Historical results are not necessarily indicative of the results to be expected for future periods.  Acquisitions and dispositions impact the comparability of the historical consolidated financial data reflected in this schedule of Selected Financial Data.
The selected historical consolidated financial and other data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes thereto located within Item 8 of Part II of this Annual Report on Form 10-K.
(In thousands, except per share data)Successor CompanyPredecessor Company
For the Year Ended December 31, Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,For the Years Ended December 31,
202020192019201820172016
Results of Operations Data:
Revenue$2,948,218 $2,610,056 $1,073,471 $3,611,323 $3,586,647 $3,574,633 
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)
1,163,148 878,956 381,184 1,132,439 1,121,088 1,024,402 
Selling, general and administrative expenses (excludes depreciation and amortization)
1,225,097 897,670 427,230 1,350,157 1,318,346 1,202,841 
Corporate expenses (excludes depreciation and amortization)
144,572 136,171 53,647 184,216 174,400 187,263 
Depreciation and amortization402,929 249,623 52,834 211,951 275,304 291,103 
Impairment charges (1)
1,738,752 — 91,382 33,150 6,040 726 
Other operating (income) expense, net11,344 8,000 154 9,266 (9,313)1,132 
Operating income (loss)(1,737,624)439,636 67,040 690,144 700,782 867,166 
Interest expense (income), net343,745 266,773 (499)334,798 1,484,435 1,475,090 
Loss on investments(9,346)(20,928)(10,237)(472)(3,827)(13,438)
Equity in earnings (loss) of nonconsolidated affiliates(379)(279)(66)116 (1,865)(15,044)
Gain on extinguishment of debt— — — — 1,271 157,556 
Other income (expense), net(7,751)(18,266)23 (23,007)(45,122)(2,420)
Reorganization items, net— — 9,461,826 (356,119)— — 
Income (loss) from continuing operations before income taxes(2,098,845)133,390 9,519,085 (24,136)(833,196)(481,270)
Income tax benefit (expense)183,623 (20,091)(39,095)(13,836)177,188 127,130 
Income (loss) from continuing operations(1,915,222)113,299 9,479,990 (37,972)(656,008)(354,140)
Income (loss) from discontinued operations, net of tax— — 1,685,123 (164,667)197,297 107,568 
Net income (loss)(1,915,222)113,299 11,165,113 (202,639)(458,711)(246,572)
Less amount attributable to noncontrolling interest(523)751 (19,028)(729)(60,651)55,484 
Net income (loss) attributable to the Company$(1,914,699)$112,548 $11,184,141 $(201,910)$(398,060)$(302,056)
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(In thousands, except per share data)Successor CompanyPredecessor Company
For the Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,For the Years Ended December 31,
202020192019201820172016
Net income (loss) per common share:
Basic:
From continuing operations$(13.12)$0.77 $109.92 $(0.44)$(7.71)$(4.19)
From discontinued operations— — 19.76 (1.93)3.02 0.62 
Basic net income (loss) per share$(13.12)$0.77 $129.68 $(2.36)$(4.68)$(3.57)
Diluted:
From continuing operations$(13.12)$0.77 $109.92 $(0.44)$(7.71)$(4.19)
From discontinued operations— — 19.76 (1.93)3.02 0.62 
Diluted net income (loss) per share$(13.12)$0.77 $129.68 $(2.36)$(4.68)$(3.57)
(1)We recorded non-cash impairment charges of $1,738.8 million, $0.0 million, $91.4 million $33.2 million, $6.0 million and $0.7 million during 2020, the period from May 2, 2019 through December 31, 2019, the period from January 1, 2019 through May 1, 2019, 2018, 2017 and 2016, respectively.  Our impairment charges are discussed more fully in Item 8 of Part II of this Annual Report on Form 10-K.
(In thousands)Successor CompanyPredecessor Company
As of December 31,As of December 31,
20202019201820172016
Balance Sheet Data:
Current assets$1,618,976 $1,416,348 $2,235,017 $2,067,347 $2,494,229 
Property, plant and equipment, net811,702 846,876 502,202 489,685 535,329 
Total assets9,202,961 11,021,099 12,269,515 12,260,431 12,851,789 
Current liabilities717,804 667,398 1,247,649 16,354,597 1,674,574 
Long-term debt, net of current maturities5,982,155 5,756,504 — 410,661 14,912,060 
Liabilities subject to compromise— — 16,480,256 — — 
Stockholders' equity (deficit)1,050,817 2,945,441 (11,560,342)(11,344,344)(10,901,861)
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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Format of Presentation
Management’s discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related footnotes contained in Item 8 of this Annual Report on Form 10-Kof iHeartMedia, Inc. (the "Company," "iHeartMedia," "we," or "us"). 
Our primary business provides media and entertainment services via broadcast and digital delivery, including our networks businesses, through our Audio segment. We also operate businesses that provide audio and media services through our Audio and Media Services segment, including our full-service media representation business, Katz Media Group (“Katz Media”) and our provider of scheduling and broadcast software and services, RCS. Following the Separation, we ceased to operate our former outdoor business, which prior to the Separation was presented as our Americas outdoor segment and our International outdoor segment. The historical results of the outdoor business have been reclassified as results from discontinued operations.
Over the past ten years, we have transitioned our Audio business from a single platform radio broadcast operator to a company with multiple platforms including podcasting, networks and events. We have also invested in numerous technologies and businesses to increase the competitiveness of our inventory with our advertisers and our audience. We believe that our ability to generate cash flow from operations from our business initiatives and our current cash on hand will provide sufficient resources to fund and operate our businesses, fund capital expenditures and other obligations and make interest payments on our long-term debt for at least the next 12 months.
Certain prior period amounts have been reclassified to conform to the 2020 presentation.
Our Business
Our Audio strategy centers on delivering entertaining and informative content where our listeners want to find us across multiple platforms, including broadcast, digital and live mobile, as well as events. Our primary source of revenue is derived from selling local and national advertising time on our radio stations, with contracts typically less than one year in duration. The programming formats of our radio stations are designed to reach audiences with targeted demographic characteristics. We work closely with our advertising and marketing partners to develop tools and leverage data to enable advertisers to effectively reach their desired audiences. We continue to expand the choices for listeners and we deliver our radio, podcasting and other content and sell advertising across multiple distribution channels, including digitally via our iHeartRadio mobile application and other digital platforms which reach national, regional and local audiences. We also generate revenue from network syndication, our nationally recognized events, our station websites and other miscellaneous transactions.
Management monitors average advertising rates and cost per mille, the cost of every 1,000 advertisement impressions (“CPM”), 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.  In addition, our advertising rates are influenced by the time of day the advertisement airs, with morning and evening drive-time hours typically priced the highest.  Our price and yield information systems enable our station managers and sales teams to adjust commercial inventory and pricing based on local market demand, as well as to manage and monitor different commercial durations in order to provide more effective advertising for our customers at what we believe are optimal prices given market conditions. Yield is measured by management in a variety of ways, including revenue earned divided by minutes of advertising sold.
Management looks at our Audio 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 by our national sales team.  Local advertising, which is our largest source of advertising revenue, and national advertising revenues are tracked separately because these revenue streams have different sales teams and respond differently to changes in the economic environment.  We periodically review and refine our selling structures in all regions and markets in an effort to maximize the value of our offering to advertisers and, therefore, our revenue.
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Management also looks at Audio's revenue by region and market size.  Typically, larger markets can reach larger audiences with wider demographics than smaller markets.  Additionally, management reviews our share of Audio advertising revenues in markets where such information is available, as well as our share of target demographics listening in an average quarter hour.  This metric gauges how well our formats are attracting and retaining listeners.
Management also monitors revenue generated through our programmatic ad-buying platform, Soundpoint, and our data analytics advertising product, SmartAudio, to measure the success of our enhanced marketing optimization tools. We have made significant investments so we can provide the same ad-buying experience that once was only available from digital-only companies and enable our clients to better understand how our assets can successfully reach their target audiences.
A portion of our Audio segment’s expenses vary in connection with changes in revenue.  These variable expenses primarily relate to costs in our sales department, such as commissions, and bad debt.  Our content costs, including music royalty and license fees for music delivered via broadcast or digital streaming, vary with the volume and mix of songs played on our stations and the listening hours on our digital platforms. Our programming and general and administrative departments incur most of our fixed costs, such as utilities and office salaries.  We incur discretionary costs in our advertising, marketing and promotions, which we primarily use in an effort to maintain and/or increase our audience share. Lastly, we have incentive systems in each of our departments which provide for bonus payments based on specific performance metrics, including ratings, revenue and overall profitability.
Our advertising revenue is highly correlated to changes in gross domestic product (“GDP”) as advertising spending has historically trended in line with GDP.  A recession or downturn in the U.S. economy typically has a significant impact on the Company’s ability to generate revenue. In light of the novel coronavirus pandemic (“COVID-19”) and the resulting recession impacting the U.S. economy, our revenue for the year ended December 31, 2020 has declined significantly compared to 2019, largely as a result of a decline in consumer and business spending and the related impact to the demand for advertising and pricing pressure resulting from greater competition for available advertising dollars. In the third and fourth quarters of 2020, we experienced sequential increases in revenue compared to the second quarter of 2020, although we continued to see year-over-year declines in our Broadcast radio, Networks and Sponsorships revenue streams. Revenue from our Audio and Media Services increased, primarily as a result of higher political revenue, which resulted in an increase of $61.8 million in revenue in the year ended December 31, 2020 compared to 2019.
When the business environment recovers, we expect that the traditional use of radio will be a strong benefit to us. As businesses reopen both nationally and locally, we believe that we are advantaged by our unparalleled reach and the live and local trusted voices that advertisers need to get their messages out quickly.
In the first quarter of 2020, we announced our modernization initiatives, which take advantage of the significant investments we have made in new technologies to build an operating infrastructure that provides new, high quality products while also unlocking cost efficiencies. These initiatives delivered the expected 2020 in-year savings of approximately $50 million and remain on track to deliver annualized run-rate cost savings of approximately $100 million by mid-year 2021. In addition, and as previously discussed, in response to the COVID-19 pandemic, we took steps to significantly reduce our capital and operating expenditures in 2020. These initiatives generated approximately $200 million of operating cost savings in 2020 and we have identified, and executed on, plans to make substantially all of those savings permanent in 2021 and beyond. For more information, please see the Liquidity and Capital Resources - Anticipated Cash Requirements section below.
On March 26, 2020, we announced the withdrawal of our previously issued financial guidance for the fiscal year ending December 31, 2020 due to heightened uncertainty related to COVID-19. As a precautionary measure to preserve financial flexibility in light of this uncertainty, we borrowed $350.0 million principal amount under our senior secured asset-based revolving credit facility (the “ABL Facility”). During the second and third quarters of 2020, we repaid the amounts outstanding under our ABL Facility using cash on hand and the proceeds from the issuance of our Incremental Term Loan Facility (as defined below), resulting in no balance outstanding under the facility as of December 31, 2020 and borrowing capacity of $172 million, as a result of restrictions in iHeartMedia’s debt and preferred stock agreements.
In July 2020, iHeartCommunications issued $450.0 million of incremental term loans pursuant to an amendment (the “Incremental Term Loan Facility”) to the credit agreement (as amended, the “Credit Agreement”) with iHeartMedia Capital I, LLC ("Capital I"), as guarantor, certain subsidiaries of iHeartCommunications, Inc. ("iHeartCommunications"), as guarantors, and Bank of America, N.A., as administrative agent, governing the Company’s $2.5 billion aggregate principal amount of senior secured term loans (the “Term Loan Facility”), resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds was used to repay the balance outstanding on our ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. For more information please refer to the “Liquidity and Capital Resources section” in this MD&A.
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Impairment Charges
As a result of uncertainty related to COVID-19 and its negative impact on our business and the public trading values of our debt and equity, we were required to perform interim impairment tests on our long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020. The interim impairment tests resulted in a non-cash impairment of our Federal Communication Commission (“FCC”) licenses of $502.7 million and a non-cash impairment charge of $1.2 billion to reduce goodwill during the three months ended March 31, 2020.
The Company performs its annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. No impairment was required as part of the 2020 annual impairment testing. In addition, no further impairment was considered necessary in the fourth quarter of 2020. For more information, see Note 5, Property, Plant and Equipment, Intangible Assets and Goodwill to the consolidated financial statements located in Item 8 of this Annual Report on Form 10-K for a further description of the impairment charges and annual impairment tests.

While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our long-lived assets, indefinite-lived FCC licenses and reporting units, it is possible a material change could occur to the estimated fair value of these assets as a result of the uncertainty regarding the magnitude of the economic downturn caused by the COVID-19 pandemic, as well as the timing of any recovery. If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.

Combined Results
Our financial results for the periods from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 are referred to as those of the “Predecessor” period. Our financial results for the period from May 2, 2019 through December 31, 2019 and the year ended December 31, 2020 are referred to as those of the “Successor” period. Our results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with GAAP. Although GAAP requires that we report on our results for the period from January 1, 2019 through May 1, 2019 and the period from May 2, 2019 through December 31, 2019 separately, management views the Company’s operating results for the year ended December 31, 2019 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison to our results in the year ended December 31, 2020.
The Company cannot adequately benchmark the operating results of the period from May 2, 2019 through December 31, 2019 against any of the current or prior periods reported in its Consolidated Financial Statements without combining it with the period from January 1, 2019 through May 1, 2019 and does not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding the Company’s overall operating performance. Management believes that the key performance metrics such as revenue, operating income and Adjusted EBITDA for the Successor period in fiscal 2019 when combined with the Predecessor period in fiscal 2019 provides more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, in addition to presenting our results of operations as reported in our Consolidated Financial Statements in accordance with GAAP, the tables and discussion below also present the combined results for the year ended December 31, 2019.
The combined results for the year ended December 31, 2019, which we refer to herein as the results for the “year ended December 31, 2019” represent the sum of the reported amounts for the Predecessor period from January 1, 2019 through May 1, 2019 and the Successor period from May 2, 2019 through December 31, 2019. These combined results are not considered to be prepared in accordance with GAAP and have not been prepared as pro forma results per applicable regulations. The combined operating results do not reflect the actual results we would have achieved absent our emergence from bankruptcy and may not be indicative of future results. Accordingly, the results for the years ended December 31, 2020, 2019 and 2018 may not be comparable, particularly for statement of operations line items significantly impacted by the Reorganization and Separation transactions, the impact of fresh start accounting on depreciation and amortization and the impact of interest expense not being recognized while we were in Chapter 11 bankruptcy protection from the Petition Date of March 14, 2018 to May 1, 2019.
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Executive Summary
As 2020 began, we saw strong growth across our revenue streams in January and February, particularly from digital and from political advertising. However, while digital and political revenue continued to grow, the economic downturn as a result of the COVID-19 pandemic had a significant and negative impact on our other revenue streams beginning in March 2020 and continuing through the rest of 2020, including broadcast radio which is our largest revenue stream. Revenue from our Broadcast and Audio and Media Services revenue streams were positively impacted by political revenue as a result of 2020 being a presidential election year. Although revenue improved significantly from the low point through the remainder of 2020, we continued to experience a decline in advertising spend and the postponement or cancellation of certain tent-pole events drove an overall decrease in revenue for the year ended December 31, 2020 compared to the year ended December 31, 2019. The extent of the economic downturn and the timing of recovery, as well as the future impact on our operations, are subject to significant uncertainty. In an effort to further strengthen the Company's financial flexibility and efficiently manage through the COVID-19 pandemic, we implemented measures to cut costs and preserve cash. For additional information on these actions, see the Liquidity and Capital Resources - Anticipated Cash Requirements section below.
The key developments in our business for the year ended December 31, 2020 are summarized below:
Effects of the COVID-19 pandemic adversely impacted revenue for all revenue streams, with the exception of political revenue.
We achieved approximately $250 million of cost savings in 2020.
Revenue of $2,948.2 million decreased 20.0% during 2020 compared to 2019.
Revenue decreased 1.9%, 46.6%, 21.5% and 8.8% in the first, second, third and fourth quarters of 2020, respectively, compared to the respective quarters in 2019.
Operating loss of $1,737.6 million was down from Operating income of $506.7 million in 2019.
Net loss of $1.9 billion in 2020, driven primarily by an impairment of $1.7 billion in the first quarter of 2020, as compared to Net income of $11.3 billion in 2019.
Adjusted EBITDA(1) of $538.7 million, was down from Adjusted EBITDA(1) of $1,000.7 million in 2019.
Cash flows provided by operating activities from continuing operations of $215.9 million decreased $245.5 million or 53.2% compared to 2019.
Free cash flow(2) of $130.7 million decreased $218.5 million or 62.6% compared to 2019.

The table below presents a summary of our historical results of operations for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,%
2020201920192019Change
Revenue$2,948,218 $2,610,056 $1,073,471 $3,683,527 (20.0)%
Operating income (loss)$(1,737,624)$439,636 $67,040 $506,676 NM
Net income (loss)$(1,915,222)$113,299 $11,165,113 $11,278,412 NM
Cash provided by (used for) operating activities from continuing operations$215,945 $468,905 $(7,505)$461,400 (53.2)%
Adjusted EBITDA(1)
$538,673 $775,549 $225,149 $1,000,698 (46.2)%
Free cash flow from (used for) continuing operations(2)
$130,740 $392,912 $(43,702)$349,210 (62.6)%

(1) For a definition of Adjusted EBITDA, and a reconciliation to Operating income, the most closely comparable GAAP measure, and to Net Income (Loss), please see “Reconciliation of Operating Income to Adjusted EBITDA” and “Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA” in this MD&A.
(2) For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by (used for) operating activities from continuing operations to Free cash flow from (used for) continuing operations” in this MD&A.
36




Results of Operations
The table below presents the comparison of our historical results of operations for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192019
Revenue$2,948,218 $2,610,056 $1,073,471 $3,683,527 
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)
1,163,148 878,956 381,184 1,260,140 
Selling, general and administrative expenses (excludes depreciation and amortization)
1,225,097 897,670 427,230 1,324,900 
Corporate expenses (excludes depreciation and amortization)
144,572 136,171 53,647 189,818 
Depreciation and amortization402,929 249,623 52,834 302,457 
Impairment charges1,738,752 — 91,382 91,382 
Other operating expense, net11,344 8,000 154 8,154 
Operating income (loss)(1,737,624)439,636 67,040 506,676 
Interest expense (income), net343,745 266,773 (499)266,274 
Loss on investments, net(9,346)(20,928)(10,237)(31,165)
Equity in loss of nonconsolidated affiliates(379)(279)(66)(345)
Other income (expense), net(7,751)(18,266)23 (18,243)
Reorganization items, net— — 9,461,826 9,461,826 
Income (loss) from continuing operations before income taxes(2,098,845)133,390 9,519,085 9,652,475 
Income tax benefit (expense)183,623 (20,091)(39,095)(59,186)
Income (loss) from continuing operations(1,915,222)113,299 9,479,990 9,593,289 
Income from discontinued operations, net of tax— — 1,685,123 1,685,123 
Net income (loss)(1,915,222)113,299 11,165,113 11,278,412 
Less amount attributable to noncontrolling interest
(523)751 (19,028)(18,277)
Net income (loss) attributable to the Company
$(1,914,699)$112,548 $11,184,141 $11,296,689 

The table below presents the comparison of our revenue streams for the periods presented:
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(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,%
2020201920192019Change
Broadcast Radio$1,604,880 $1,575,382 $657,864 $2,233,246 (28.1)%
Digital474,371 273,389 102,789 376,178 26.1 %
Networks484,950 425,631 189,088 614,719 (21.1)%
Sponsorship and Events107,654 159,187 50,330 209,517 (48.6)%
Audio and Media Services274,749 167,292 69,362 236,654 16.1 %
Other9,370 14,211 6,606 20,817 (55.0)%
Eliminations(7,756)(5,036)(2,568)(7,604)
  Revenue, total
$2,948,218 $2,610,056 $1,073,471 $3,683,527 (20.0)%
    
Consolidated results for the year ended December 31, 2020 compared to the combined results for the year ended December 31, 2019 were as follows:
Revenue
Revenue decreased $735.3 million during the year ended December 31, 2020 compared to 2019. The decrease in Revenue is attributable to the macroeconomic effects of COVID-19, which began to unfold into a global pandemic in early March 2020, resulting in a significant economic downturn due to the shut-down of businesses and shelter-in-place orders. Strong revenue growth in January and February was followed by a sharp decline in revenue in March, which continued through the end of 2020, with the exception of October, which saw consolidated revenue growth as a result of strong political advertising spend, resulting in significant revenue declines impacting most of our revenue streams, primarily as a result of a decrease in broadcast radio advertising spend as a result of the COVID-19 pandemic. Broadcast revenue decreased $628.4 million, driven by a $432.7 million decrease in Local spot revenue and a $195.7 million decrease in National spot revenue. The decrease in Broadcast revenue was partially offset by a $70.5 million increase in political revenue as a result of 2020 being a presidential election year. Revenue from our Networks businesses, including both Premiere and Total Traffic & Weather, was also impacted by the downturn, resulting in a decrease of $129.8 million. Revenue from Sponsorship and Events decreased by $101.9 million, primarily as a result of the cancellations of events in response to the COVID-19 pandemic. Digital revenue increased $98.2 million, driven by continued growth in podcasting, including for both new and existing podcasts, which continued to experience increased advertiser demand. Audio and Media Services revenue increased $38.1 million primarily due to a $61.8 million increase in political revenue as a result of 2020 being a presidential election year, partially offset by the effects of COVID-19 on advertising spend.
Direct Operating Expenses
Direct operating expenses decreased $97.0 million during the year ended December 31, 2020 compared to 2019. The decrease in Direct operating expenses was driven primarily by lower employee compensation expenses resulting from our modernization initiatives and cost reduction initiatives taken in response to the COVID-19 pandemic. In addition, variable operating expenses, including music license and performance royalty fees, decreased in relation to lower revenue recognized during the year. Variable expenses related to events also decreased as a result of the postponement or cancellation of events in response to the COVID-19 pandemic. The decrease in Direct operating expenses was partially offset by severance payments and other costs specific to our modernization initiatives, as well as higher content costs from higher podcasting and digital subscription revenue.
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Selling, General and Administrative (“SG&A”) Expenses
SG&A expenses decreased $99.8 million during the year ended December 31, 2020 compared to 2019. The decrease in SG&A expenses was driven primarily by lower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic, along with lower sales commissions, which were impacted by the decrease in revenue. Travel and entertainment expenses also decreased primarily as a result of operating expense saving initiatives put into place in response to the COVID-19 pandemic, as well as trade and barter expenses primarily driven by lower Local trade expenses, which declined in line with lower trade revenue. The decrease in SG&A expenses was partially offset by costs incurred in relation to our modernization initiatives announced in the first quarter of 2020 and higher bad debt expense.
Corporate Expenses
Corporate expenses decreased $45.2 million during the year ended December 31, 2020 compared to 2019, as a result of lower employee compensation, including variable incentive expenses and employee benefits, resulting from cost reduction initiatives taken in response to the COVID-19 pandemic. The decrease in Corporate expenses was partially offset by costs incurred to support our modernization initiatives.
Depreciation and Amortization
Depreciation and amortization increased $100.5 million during 2020 compared to 2019, primarily as a result of the application of fresh start accounting, which resulted in significantly higher values of our tangible and intangible long-lived assets.
Impairment Charges
We perform our annual impairment test on our goodwill and FCC licenses as of July 1 of each year. In addition, we test for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired. As discussed above, as a result of the assumed potential adverse effects caused by the COVID-19 pandemic on estimated future cash flows, we performed an interim impairment test as of March 31, 2020 and we recognized non-cash impairment charges to our indefinite-lived intangible assets and goodwill of $1.7 billion in the first quarter of 2020. No impairment charges were recorded in the remainder of 2020 in connection with our annual impairment test which was performed in the third quarter of 2020.
We recognized non-cash impairment charges of $91.4 million in the first quarter of 2019 on our indefinite-lived FCC licenses as a result of an increase in our weighted average cost of capital. See Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill, to the consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K for a further description of the impairment charges.

Other Operating Expense, Net
Other operating expense, net of $11.3 million and $8.2 million in 2020 and 2019, respectively, primarily related to net losses recognized on the disposal of assets.
Interest Expense, Net
Interest expense, net increased $77.5 million during 2020 compared to 2019 as a result of the interest recognized on the new debt issued in connection with our emergence from the Chapter 11 Cases. During the period from March 14, 2018 to May 1, 2019, while the Company was a debtor-in-possession, no interest expense was recognized on pre-petition debt. The increase was offset by a decrease in interest expense driven by the impact of lower LIBOR rates, as well as the impact of the amendment to the Term Loan Facility in the first quarter of 2020, resulting in a 1.00% reduction in the Term Loan Facility interest rate.
In the Predecessor period, we ceased to accrue interest expense on long-term debt, which was reclassified as Liabilities subject to compromise as of the Petition Date, resulting in $533.4 million in contractual interest not being accrued on pre-petition indebtedness for the period from January 1, 2019 to May 1, 2019.
Loss on Investments, net
During the years ended December 31, 2020 and 2019, we recognized loss on investments, net of $9.3 million and $31.2 million, respectively, primarily in connection with other-than-temporary declines in the values of certain of our investments.
39


Other Expense, Net
Other expense, net was $7.8 million for the year ended December 31, 2020, which related primarily to costs incurred to amend our Term Loan Facility and professional fees incurred in connection with the Chapter 11 Cases in the Successor period.
Other expense, net was $18.2 million for the year ended December 31, 2019, which related primarily to professional fees incurred in connection with the Chapter 11 Cases in the Successor period. Such expenses were included within Reorganization items, net in the Predecessor period while the Company was a debtor-in-possession.
Reorganization Items, Net
During 2019, we recognized Reorganization items, net of $9,461.8 million related to our emergence from the Chapter 11 Cases, which consisted primarily of the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities. In addition, Reorganization items, net included professional fees recognized between the March 14, 2018 Petition Date and the May 1, 2019 Effective Date in connection with the Chapter 11 Cases. See Note 3, Fresh Start Accounting to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.
Income Tax Expense (Benefit)
The effective tax rate for the year ended December 31, 2020 was 8.7%. The effective tax rate for the year ended December 31, 2020 was primarily impacted by the impairment charges discussed above. In addition, the Successor Company recorded deferred tax adjustments to state net operating losses and federal and state disallowed interest carryforwards as a result of the filing of 2019 tax returns and certain legal entity restructuring completed during the period. These deferred tax adjustments were partially offset by valuation allowances adjustments recorded during the year against certain federal and state deferred tax assets such as net operating loss carryforwards and disallowed interest carryforwards due to the uncertainty of the ability to utilize those assets in future periods.
The Successor Company’s effective tax rate for the period from May 2, 2019 through December 31, 2019 was 15.1%. The effective tax rate for the Successor period was primarily impacted by deferred tax benefits recorded for changes in estimates related to the carryforward tax attributes that are expected to survive the emergence from bankruptcy and deferred tax adjustments associated with the filing of the Company’s 2018 tax returns during the fourth quarter of 2019. The primary change to the 2018 tax return filings, when compared to the provision estimates, was the Company's decision to elect out of the first-year bonus depreciation rules for the 2018 year for all qualified capital expenditures. This resulted in less tax depreciation deductions for tax purposes for the 2018 year and higher adjusted tax basis for our fixed assets as of the Effective Date.
The Predecessor Company’s effective tax rate for the period from January 1, 2019 through May 1, 2019 was 0.4%. The income tax expense for the period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consisted of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1) tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.
Net Income (Loss) Attributable to the Company
Net income (loss) attributable to the Company decreased $13.2 billion to a Net loss of $1.9 billion during the year ended December 31, 2020 compared to net income of $11.3 billion during the year ended December 31, 2019. The Net loss attributable to the Company for the year ended December 31, 2020 primarily related to the non-cash impairment charges to our indefinite-lived intangible assets and goodwill of $1.7 billion recognized in the first quarter of 2020. In 2019, the Net income attributable to the Company primarily related to the recognition of net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities.

40


The comparison of our combined results for the year ended December 31, 2019 to the consolidated results of year ended December 31, 2018 is as follows:

(In thousands)Successor CompanyPredecessor CompanyNon-GAAP CombinedPredecessor Company
Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,Year Ended December 31,
2019201920192018
Revenue$2,610,056 $1,073,471 $3,683,527 $3,611,323 
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)
878,956 381,184 1,260,140 1,132,439 
Selling, general and administrative expenses (excludes depreciation and amortization)
897,670 427,230 1,324,900 1,350,157 
Corporate expenses (excludes depreciation and amortization)
136,171 53,647 189,818 184,216 
Depreciation and amortization249,623 52,834 302,457 211,951 
Impairment charges— 91,382 91,382 33,150 
Other operating expense, net8,000 154 8,154 9,266 
Operating income439,636 67,040 506,676 690,144 
Interest expense (income), net266,773 (499)266,274 334,798 
Loss on investments, net(20,928)(10,237)(31,165)(472)
Equity in earnings (loss) of nonconsolidated affiliates
(279)(66)(345)116 
Other income (expense), net(18,266)23 (18,243)(23,007)
Reorganization items, net— 9,461,826 9,461,826 (356,119)
Income (loss) from continuing operations before income taxes133,390 9,519,085 9,652,475 (24,136)
Income tax expense(20,091)(39,095)(59,186)(13,836)
Income (loss) from continuing operations113,299 9,479,990 9,593,289 (37,972)
Income (loss) from discontinued operations, net of tax— 1,685,123 1,685,123 (164,667)
Net income (loss)113,299 11,165,113 11,278,412 (202,639)
Less amount attributable to noncontrolling interest
751 (19,028)(18,277)(729)
Net income (loss) attributable to the Company
$112,548 $11,184,141 $11,296,689 $(201,910)
41



The table below presents the comparison of our revenue streams for the periods presented:
(In thousands)Successor CompanyPredecessor CompanyNon-GAAP CombinedPredecessor Company
Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,Year Ended December 31,%
2019201920192018Change
Broadcast Radio$1,575,382 $657,864 $2,233,246 $2,264,058 (1.4)%
Digital273,389 102,789 376,178 284,565 32.2 %
Networks425,631 189,088 614,719 582,302 5.6 %
Sponsorship and Events159,187 50,330 209,517 200,605 4.4 %
Audio and Media Services167,292 69,362 236,654 264,061 (10.4)%
Other14,211 6,606 20,817 22,240 (6.4)%
Eliminations(5,036)(2,568)(7,604)(6,508)
  Revenue, total
$2,610,056 $1,073,471 $3,683,527 $3,611,323 2.0 %

Revenue
Revenue increased $72.2 million during the year ended December 31, 2019 compared to 2018. The increase in revenue is primarily due to higher digital revenue of $91.6 million driven by growth in podcasting, including the impact of our acquisition of Stuff Media in October 2018, as well as other digital revenue, including live radio and other on-demand services, and revenue from our Network businesses, which increased $32.4 million. Broadcast revenue decreased $30.8 million, due to a $38.2 million decrease in political revenue as a result of 2018 being a mid-term congressional election year, partially offset by growth generated by our programmatic offerings. Audio and Media Services revenue decreased $27.4 million due to a $34.5 million decrease in political revenue. Political revenue for the years ended December 31, 2019 and 2018 was $28.8 million and $103.0 million, respectively.
Direct Operating Expenses
Direct operating expenses increased $127.7 million during the year ended December 31, 2019 compared to 2018. Higher direct operating expenses were driven primarily by higher compensation-related expenses, including from the acquisitions of Stuff Media and Jelli in the fourth quarter of 2018, as well as higher music license fees, digital royalties and content costs from higher podcasting, subscription and other digital revenue. Included in this increase is the impact of updated estimates to music license fee expenses primarily related to prior years for which payments were made under interim agreements with performance rights organizations and that are subject to ongoing negotiations. The increase in direct operating expenses also includes a $6.3 million increase in lease expense due to the impact of the adoption of the new leasing standard in the first quarter of 2019 and the adoption of fresh start accounting.
SG&A Expenses
SG&A expenses decreased $25.3 million during the year ended December 31, 2019 compared to 2018. The decrease in our SG&A expenses was due primarily to lower commissions as a result of our revenue mix, lower bad debt expense, resulting from improved collections, and lower trade and barter expenses, primarily resulting from timing. The decrease in SG&A expenses was partially offset by higher third-party digital fees, driven by the increase in digital revenue, along with higher employee costs, primarily resulting from the acquisitions of Stuff Media and Jelli in the fourth quarter of 2018.
Corporate Expenses
Corporate expenses increased $5.6 million during the year ended December 31, 2019 compared to 2018 as a result of higher share-based compensation expense, which increased $24.8 million as a result of our equity compensation plan entered into in connection with our Plan of Reorganization. This increase was partially offset by lower employee benefit costs and lower amortization of retention bonuses related to the bankruptcy for which amortization ceased on the Effective Date.
42


Depreciation and Amortization
Depreciation and amortization increased $90.5 million during the year ended December 31, 2019 compared to 2018 primarily as a result of the application of fresh start accounting, which resulted in significantly higher values of our tangible and intangible long-lived assets.
Impairment Charges
We recognized non-cash impairment charges of $91.4 million in the first quarter of 2019 on our indefinite-lived FCC licenses as a result of an increase in the weighted average cost of capital. During 2018 we recorded impairment charges of $33.2 million related primarily to several of our Audio markets.
Other Operating Expense, Net
Other operating expense, net of $8.2 million and $9.3 million in 2019 and 2018, respectively, was primarily related to net losses recognized on the disposal of assets.

Interest Expense, Net
Interest expense, net decreased $68.5 million during 2019 compared to 2018 as a result of the interest recognized in the period from January 1, 2018 to the March 14, 2018 petition date on our pre-petition debt exceeding the interest recognized in the period from May 2, 2019 to December 31, 2019 on our new debt issued in connection with our emergence from the Chapter 11 Cases. During the period from March 14, 2018 to May 1, 2019, while the Company was a debtor-in-possession, no interest expense was recognized on pre-petition debt.

Loss on Investments, net

During the year ended December 31, 2019, we recognized a loss of $31.2 million, primarily in connection with other-than-temporary declines in the values of certain of our investments.
Equity in Loss of Nonconsolidated Affiliates

During the year ended December 31, 2019 we recognized a net loss of $0.3 million related to equity-method investments. During the year ended December 31, 2018, we recognized net earnings of $0.1 million related to equity-method investments.
Other Expense, Net
Other expense, net was $18.2 million for the year ended December 31, 2019, which related primarily to professional fees incurred in connection with the Chapter 11 Cases in the Successor period. Such expenses were included within Reorganization items, net in the Predecessor period while the Company was a debtor-in-possession.
Other expense, net was $23.0 million for the year ended December 31, 2018, which related primarily to professional fees incurred directly in connection with the Chapter 11 Cases before the March 14, 2018 Petition Date. Such expenses were included within Reorganization items, net in the post-petition period while the Company was a debtor-in-possession.
Reorganization Items, Net
During 2019, we recognized Reorganization items, net of $9,461.8 million related to our emergence from the Chapter 11 Cases, which consisted primarily of the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities. In addition, Reorganization items, net included professional fees recognized between the March 14, 2018 Petition Date and the May 1, 2019 Effective Date in connection with the Chapter 11 Cases. See Note 3 to our Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
43


Income Tax Benefit (Expense)
The Successor Company’s effective tax rate for the period from May 2, 2019 through December 31, 2019 was 15.1%. The effective tax rate for the Successor period was primarily impacted by deferred tax benefits recorded for changes in estimates related to the carryforward tax attributes that are expected to survive the emergence from bankruptcy and deferred tax adjustments associated with the filing of the Company’s 2018 tax returns during the fourth quarter of 2019. The primary change to the 2018 tax return filings, when compared to the provision estimates, was the Company's decision to elect out of the first-year bonus depreciation rules for the 2018 year for all qualified capital expenditures. This resulted in less tax depreciation deductions for tax purposes for the 2018 year and higher adjusted tax basis for our fixed assets as of the Effective Date.

The Predecessor Company’s effective tax rate for the period from January 1, 2019 through May 1, 2019 was 0.4%. The income tax expense for the period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consisted of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1) tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.
The effective tax rate for the year ended December 31, 2018 was (57.3)%.  The effective tax rate for 2018 was primarily impacted by $11.3 million of deferred tax expense attributed to the valuation allowance recorded against federal and state deferred tax assets generated in the period due to the uncertainty of the ability to realize those assets in future periods.
Net Income (Loss) Attributable to the Company
    Net income attributable to the Company increased $11.5 billion to $11.3 billion during the year ended December 31,
2019 compared to a net loss of $201.9 million during the year ended December 31, 2018, primarily due to the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities.
44




Non-GAAP Financial Measures

Reconciliations of Operating Income (Loss) to Adjusted EBITDA
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192019
Operating income (loss)$(1,737,624)$439,636 $67,040 $506,676 
Depreciation and amortization(1)
402,929 249,623 52,834 302,457 
Impairment charges1,738,752 — 91,382 91,382 
Other operating expense, net11,344 8,000 154 8,154 
Share-based compensation expense22,862 26,411 498 26,909 
Restructuring and reorganization expenses100,410 51,879 13,241 65,120 
Adjusted EBITDA(2)
$538,673 $775,549 $225,149 $1,000,698 

(In thousands)Successor CompanyPredecessor Company
Non-GAAP Combined2
Predecessor Company
Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,Year Ended December 31,
2019201920192018
Operating income$439,636 $67,040 $506,676 $690,144 
Depreciation and amortization(1)
249,623 52,834 302,457 211,951 
Impairment charges— 91,382 91,382 33,150 
Other operating expense, net8,000 154 8,154 9,266 
Share-based compensation expense(3)
26,411 498 26,909 2,066 
Restructuring and reorganization expenses51,879 13,241 65,120 30,078 
Adjusted EBITDA(2)
$775,549 $225,149 $1,000,698 $976,655 



45


Reconciliations of Net Income (Loss) to EBITDA and Adjusted EBITDA
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192019
Net income (loss)$(1,915,222)$113,299 $11,165,113 $11,278,412 
Income from discontinued operations, net of tax— — (1,685,123)(1,685,123)
Income tax (benefit) expense(183,623)20,091 39,095 59,186 
Interest expense (income), net343,745 266,773 (499)266,274 
Depreciation and amortization402,929 249,623 52,834 302,457 
EBITDA$(1,352,171)$649,786 $9,571,420 $10,221,206 
Reorganization items, net— — (9,461,826)(9,461,826)
Loss on investments, net9,346 20,928 10,237 31,165 
Other (income) expense, net7,751 18,266 (23)18,243 
Equity in loss of nonconsolidated affiliates379 279 66 345 
Impairment charges1,738,752 — 91,382 91,382 
Other operating expense, net11,344 8,000 154 8,154 
Share-based compensation expense22,862 26,411 498 26,909 
Restructuring and reorganization expenses100,410 51,879 13,241 65,120 
Adjusted EBITDA(2)
$538,673 $775,549 $225,149 $1,000,698 


(In thousands)Successor CompanyPredecessor CompanyNon-GAAP CombinedPredecessor Company
Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,Year Ended December 31,
2019201920192018
Net income (loss)$113,299 $11,165,113 $11,278,412 $(202,639)
(Income) loss from discontinued operations, net of tax— (1,685,123)(1,685,123)164,667 
Income tax expense20,091 39,095 59,186 13,836 
Interest expense (income), net266,773 (499)266,274 334,798 
Depreciation and amortization(1)
249,623 52,834 302,457 211,951 
EBITDA$649,786 $9,571,420 $10,221,206 $522,613 
Reorganization items, net— (9,461,826)(9,461,826)356,119 
Loss on investments, net20,928 10,237 31,165 472 
Other income (expense), net18,266 (23)18,243 23,007 
Equity in (earnings) loss of nonconsolidated affiliates279 66 345 (116)
Impairment charges— 91,382 91,382 33,150 
Other operating expense, net8,000 154 8,154 9,266 
Share-based compensation expense26,411 498 26,909 2,066 
Restructuring and reorganization expenses51,879 13,241 65,120 30,078 
Adjusted EBITDA(2)
$775,549 $225,149 $1,000,698 $976,655 
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(1)Increase in Depreciation and amortization is driven by the application of fresh start accounting, resulting in significantly higher values of our tangible and intangible assets.
(2)We define Adjusted EBITDA as consolidated Operating income (loss) adjusted to exclude restructuring and reorganization expenses included within Direct operating expenses, SG&A expenses and Corporate expenses, and share-based compensation expenses included within Corporate expenses, as well as the following line items presented in our Statements of Operations: Depreciation and amortization, Impairment charges and Other operating expense (income), net. Alternatively, Adjusted EBITDA is calculated as Net income (loss), adjusted to exclude (Income) loss from discontinued operations, net of tax, Income tax (benefit) expense, Interest expense (income), net, Depreciation and amortization, Reorganization items, net, (Gain) Loss on investments, net, Other (income) expense, net, Equity in loss of nonconsolidated affiliates, net, Impairment charges, Other operating expense (income), net, Share-based compensation expense, and restructuring and reorganization expenses. Restructuring expenses primarily include severance expenses incurred in connection with cost saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle. Reorganization expenses primarily include the amortization of retention bonus amounts paid or payable to certain members of management directly as a result of the Reorganization. We use Adjusted EBITDA, among other measures, to evaluate the Company’s operating performance. This measure is among the primary measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates. In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry. Since Adjusted EBITDA is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, operating income or net income (loss) as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies. Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs. Because it excludes certain financial information compared with operating income and compared with consolidated net income (loss), the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded.

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Reconciliations of Cash provided by (used for) operating activities from continuing operations to Free cash flow from (used for) continuing operations
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192019
Cash provided by (used for) operating activities from continuing operations$215,945 $468,905 $(7,505)$461,400 
Purchases of property, plant and equipment by continuing operations
(85,205)(75,993)(36,197)(112,190)
Free cash flow from (used for) continuing operations(2)
$130,740 $392,912 $(43,702)$349,210 

(In thousands)Successor CompanyPredecessor CompanyNon-GAAP CombinedPredecessor Company
Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,Year Ended December 31,
2019201920192018
Cash provided by (used for) operating activities from continuing operations(1)
$468,905 $(7,505)$461,400 $741,219 
Less: Purchases of property, plant and equipment by continuing operations
(75,993)(36,197)(112,190)(85,245)
Free cash flow from (used for) continuing operations(2)
$392,912 $(43,702)$349,210 $655,974 
(1)Cash provided by operating activities from continuing operations for the year ended December 31, 2019 was impacted primarily by an increase of $165.1 million in cash paid for interest. Our debt issued upon emergence was outstanding from the period of May 2, 2019 to December 31, 2019, resulting in cash interest payments of $183.8 million. In 2018, we made cash interest payments of $22.5 million on our pre-petition debt, which was outstanding for the period from January 1, 2018 to March 14, 2018. Cash provided by operating activities was also impacted by a $97.9 million increase in cash payments for Reorganization items, which consisted primarily of bankruptcy-related professional fees, as well as payments for settlement of pre-petition liabilities upon our emergence from bankruptcy.
(2)We define Free cash flow from (used for) continuing operations (Free Cash Flow) as Cash provided by (used for) operating activities from continuing operations less capital expenditures, which is disclosed as Purchases of property, plant and equipment by continuing operations in the Company's Consolidated Statements of Cash Flows. We use Free Cash Flow, among other measures, to evaluate the Company’s liquidity and its ability to generate cash flow. We believe that Free Cash Flow is meaningful to investors because we review cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations. In addition, we believe that Free Cash Flow helps improve investors' ability to compare our liquidity with other companies. Since Free Cash Flow is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, Cash provided by operating activities and may not be comparable to similarly titled measures employed by other companies. Free Cash Flow is not necessarily a measure of our ability to fund our cash needs.
Share-Based Compensation Expense
Historically, we had granted restricted shares of the Company's Class A common stock to certain key individuals. In connection with the effectiveness of our Plan of Reorganization, all unvested restricted shares were canceled.
Pursuant to the new equity incentive plan (the “Post-Emergence Equity Plan”) we adopted in connection with the effectiveness of our Plan of Reorganization, we have granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.
Share-based compensation expenses are recorded in corporate expenses and were $22.9 million, $26.4 million and $2.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.
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In August 2020, we issued performance-based restricted stock units (“Performance RSUs”) to certain key employees. Such Performance RSUs vest upon the achievement of critical operational (cost savings) improvements and specific environmental, social and governance initiatives, which are being measured over an approximately 18-month period from the date of issuance. In the year ended December 31, 2020, we recognized $3.4 million in relation to these performance-based RSUs.
As of December 31, 2020, there was $54.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions. This cost is expected to be recognized over a weighted average period of approximately 2.8 years. In addition, as of December 31, 2020, there was $1.6 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on performance conditions. 


LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following discussion highlights cash flow activities during the periods presented:

(In thousands) Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP CombinedPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,Year Ended December 31,
20202019201920192018
Cash provided by (used for):
Operating activities$215,945 $468,905 $(40,186)$428,719 $966,672 
Investing activities$(147,813)$(73,278)$(261,144)$(334,422)$(345,478)
Financing activities$241,180 $(58,033)$(55,557)$(113,590)$(491,799)
Free Cash Flow(1)
$130,740 $392,912 $(43,702)$349,210 $655,974 

(1) For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by (used for) operating activities from continuing operations to Free cash flow from (used for) continuing operations” in this MD&A.
Operating Activities
2020
Cash provided by operating activities was $215.9 million in 2020 compared to $428.7 million of cash provided by operating activities in 2019. 
Cash provided by operating activities from continuing operations decreased from $461.4 million in 2019 to $215.9 million in 2020 primarily as a result of a decrease in Revenue driven by the decline in advertising spend resulting from the economic slow-down caused by the COVID-19 pandemic. In addition, cash interest payments made by continuing operations increased $169.6 million in 2020 compared to 2019 as a result of interest payments on our debt issued upon our emergence. The Company ceased paying interest on long-term debt after the March 14, 2018 petition date until the Company emerged from bankruptcy on May 1, 2019. The decrease was partially offset by changes in working capital balances, particularly accounts receivable, which was impacted by improved collections, and accrued expenses, which was impacted by the timing of payments. In addition, payments made in relation to Reorganization items, net were $201.2 million lower in the year ended December 31, 2020 compared to the year ended December 31, 2019. 
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2019
Cash provided by operating activities was $428.7 million in 2019 compared to $966.7 million of cash provided by operating activities in 2018. The primary driver for the change in cash provided by operating activities was a $258.1 million decrease in operating cash flows provided by discontinued operations, which decreased from a cash inflow of $225.5 million in the year ended December 31, 2018 to a cash outflow of $32.7 million in the year ended December 31, 2019.
Cash provided by operating activities from continuing operations decreased from $741.2 million in 2018 to $461.4 million in 2019 primarily as a result of cash interest payments made by continuing operations, which increased $165.1 million as a result of interest payments on our debt issued upon our emergence compared to pre-petition interest payments made in the prior year. The Company ceased paying interest on long-term debt classified as Liabilities subject to compromise after the March 14, 2018 petition date. In addition, cash decreased as a result of cash payments for Reorganization items, including payments for prepetition liabilities and for bankruptcy-related professional fees, upon our emergence from bankruptcy on May 1, 2019. Such payments for Reorganization items were $97.9 million higher in the year ended December 31, 2019 compared to the year ended December 31, 2018.
2018
Cash provided by operating activities from continuing operations was $741.2 million in 2018 compared to $619.2 million of cash used for operating activities from continuing operations in 2017. The increase in cash provided by operating activities is primarily attributed to the $1,374.4 million decrease in cash paid for interest. Cash paid for interest was $398.0 million during 2018 compared to $1,772.4 million during 2017. In addition, cash provided by operating activities increased as a result of changes in working capital balances, particularly accounts receivable, which were affected by improved collections as well as accounts payable and accrued expenses which were impacted by the timing of payments. Cash paid for Reorganization items, net was $103.7 million during 2018. As part of our liquidity measures taken in anticipation of our March 14, 2018 bankruptcy filing, we did not make scheduled interest payments on our long-term debt and we extended certain accounts payable to conserve cash. Subsequent to the bankruptcy filing, interest payments on our debt classified as "Liabilities subject to compromise" were stayed and only limited pre-petition payments on accounts payable were made.
Investing Activities
2020
Cash used for investing activities of $147.8 million in 2020 was driven primarily by capital expenditures of $85.2 million primarily related to IT software and infrastructure, reflecting a $27.0 million decrease in capital expenditures compared to the prior year as a result of actions taken in response to the COVID-19 pandemic. In addition, we used $62.1 million of cash to acquire certain strategic businesses including Voxnest which was acquired in the fourth quarter of 2020.
2019
Cash used for investing activities of $334.4 million in 2019 primarily reflects $222.4 million in cash used for investing activities from discontinued operations. In addition, we used $112.2 million for capital expenditures, primarily related to IT software and infrastructure.
2018
Cash used for investing activities of $345.5 million in 2018 primarily reflects $203.6 million in cash used for investing activities from discontinued operations. In addition, we used $85.2 million for capital expenditures, primarily related to IT software and infrastructure.
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Financing Activities
2020
Cash provided by financing activities of $241.2 million in 2020 primarily resulted from the net proceeds of $425.8 million from the issuance of incremental term loan commitments, offset by the $150.0 million prepayment on our Term Loan Facility in the first quarter 2020, along with required quarterly principal payments made on our term loan credit facilities.
2019
Cash used for financing activities of $113.6 million in 2019 primarily resulted from the net payment by iHeartCommunications to CCOH as CCOH’s recovery of its claims under the Due from iHeartCommunications Note and settlement of the post-petition intercompany note balance, partially offset by $60.0 million in proceeds received from the issuance of the iHeart Operations Preferred Stock.
2018
Cash used for financing activities of $491.8 million in 2018 primarily resulted from payments on long-term debt and on our receivables based credit facility. In connection with the replacement of the iHeartCommunications' receivables based credit facility with a new Debtor-in-Possession Facility (“DIP Facility”) on June 14, 2018, we repaid the outstanding $306.4 million and $74.3 million balances of the receivables based credit facility's term loan and revolving credit commitments, respectively. An additional $125.0 million principal amount was repaid under the DIP Facility during the third quarter of 2018.
Anticipated Cash Requirements
Our primary sources of liquidity are cash on hand, which consisted of $720.7 million as of December 31, 2020, cash flow from operations and borrowing capacity under our $450.0 million ABL Facility. As of December 31, 2020, iHeartCommunications had no principal amounts outstanding under the ABL Facility, a facility size of $450.0 million and $32.9 million in outstanding letters of credit, resulting in $417.1 million of excess availability. As a result of certain restrictions in the Company's debt and preferred stock agreements, as of December 31, 2020, approximately $172 million was available to be drawn upon under the ABL Facility.
In July 2020, the Company issued $450.0 million of incremental term loans, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay all outstanding balances under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. Our cash balance was $720.7 million as of December 31, 2020. Together with our borrowing capacity under the ABL Facility, our total available liquidity1 was approximately $893 million.
We continue to evaluate the full extent of COVID-19’s impact on our business. While the challenges that COVID-19 has created for advertisers and consumers had a significant impact on our revenue for the year ended December 31, 2020 and has created a business outlook that is less clear in the near term, we believe that we have sufficient liquidity to continue to fund our operations for at least the next twelve months.
We expect that our primary anticipated uses of liquidity will be to fund our working capital, make interest payments, fund capital expenditures, pursue certain strategic opportunities and maintain operations in light of the COVID-19 pandemic and other obligations. We expect to have approximately $335 million of cash interest payments in 2021.
As a result of certain favorable tax provisions in the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, our 2020 taxes were significantly reduced compared to what they would have been absent these provisions. Our cash income tax payments were $5.8 million primarily as a result of the provisions allowing for increased interest deductions, which resulted in additional tax deductible interest expense of $179.4 million during the year. In addition, the Company was able to defer the payment of $29.3 million in certain employment taxes during 2020, of which half will be due on December 31, 2021 and the other half will be due on December 31, 2022.
1 Total available liquidity defined as cash and cash equivalents plus available borrowings under the ABL Facility. We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.
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Over the past ten years, we have transitioned our Audio business from a single platform radio broadcast operator to a company with multiple platforms, including digital, podcasting, networks and events. Early in the first quarter of 2020, we implemented our modernization initiatives to take advantage of the significant investments we have made in new technologies to build an operating infrastructure that provides better quality and newer products and delivers new cost efficiencies. Our investments in modernization delivered approximately $50 million of savings in 2020 and are expected to deliver annualized run-rate cost savings of approximately $100 million by mid-year 2021. We have also invested in numerous technologies and businesses to increase the competitiveness of our inventory with our advertisers and our audience.
In response to the COVID-19 pandemic, in an effort to further strengthen the Company's financial flexibility and efficiently manage through the period of economic slowdown and uncertainty, the Company took the following measures, which generated approximately $200 million in operating cost savings in 2020:
Substantial reduction in certain operating expenses, such as new employee hiring, travel and entertainment expenses, 401(k) matching expenses, consulting fees and other discretionary expenses.
Reduction in planned capital expenditures to a level that we believe will still enable the Company to make key investments to continue our strategic initiatives related to Smart Audio and Digital, including podcasting.
Reduction in compensation for senior management and other employees of the Company, including a 100% reduction of the Company's Chief Executive Officer's annual base salary and bonus.
In addition, as a result of the decrease in revenue as a result of the COVID-19 pandemic, certain variable expenses including event production costs and sales commissions, as well as other variable compensation, showed a corresponding decrease.
The Company has identified, and executed on, strategic initiatives to ensure that the majority of all of the $200 million in COVID-19 savings persist in 2021.
We believe that our cash balance, our cash flow from operations and availability under our ABL Facility provide us with sufficient liquidity to fund our core operations, maintain key personnel and meet our other material obligations. In addition, none of our long-term debt includes maintenance covenants that could trigger early repayment. We fully appreciate the unprecedented challenges posed by the COVID-19 pandemic, however, we remain confident in our business, our employees and our strategy. We believe that our ability to generate cash flow from operations from our business initiatives, our current cash on hand and availability under the ABL Facility will provide sufficient resources to continue to fund and operate our business, fund capital expenditures and other obligations and make interest payments on our long-term debt. If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms or at all in the future.
We frequently evaluate strategic opportunities, and we expect from time to time to pursue acquisitions or dispose of certain businesses, which may or may not be material. For example, on October 22, 2020, we used a portion of our cash on hand to complete the strategic acquisition of Voxnest, Inc., a provider of podcast analytics and programmatic ad serving tools, which we believe will be a transaction accretive to shareholder value. Specifically, as we continue to focus on operational efficiencies that drive greater margin and cash flow, we will continue to review and consider opportunities to unlock shareholder value and increase free cash flow.
On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.
As a precautionary measure to preserve financial flexibility in light of the uncertainty surrounding the COVID-19 pandemic, we borrowed $350.0 million principal amount under our ABL Facility. On July 16, 2020, iHeartCommunications entered into an additional amendment to the Credit Facility (“Amendment No. 2”) to provide for $450.0 million, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the then-remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. The incremental term loans issued pursuant to Amendment No. 2 have an interest rate of 4.00% for Eurocurrency Rate Loans and 3.00% for Base Rate Loans (subject to a LIBOR floor of 0.75% and Base Rate floor of 1.75%). Amendment No. 2 also modifies certain other provisions of the Credit Agreement.
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In connection with the Separation and Reorganization, we entered into the following transactions which may require ongoing capital commitments:
Transition Services Agreement
Pursuant to the Transition Services Agreement between us, iHeartMedia Management Services, Inc. (“iHM Management Services”), iHeartCommunications and CCOH, for one year from the Effective Date, we agreed to provide CCOH with certain administrative and support services and other assistance which CCOH utilized in the conduct of its business as such business was conducted prior to the Separation.
The Transition Services Agreement was terminated on August 31, 2020. For additional information, see Note 4, Discontinued Operations to the consolidated financial statements located in Item 8 of this Annual Report on Form 10-K for a further description.
New Tax Matters Agreement
In connection with the Separation, we entered into the New Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and CCOH and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.
The New Tax Matters Agreement requires that iHeartMedia and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against certain tax claims related to the Separation. In addition, the New Tax Matters Agreement requires that CCOH indemnify iHeartMedia for certain income taxes paid by iHeartMedia on behalf of CCOH and its subsidiaries. For additional information, see Note 4, Discontinued Operations to the consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K for a further description.
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Sources of Capital
As of December 31, 2020 and December 31, 2019, we had the following debt outstanding, net of cash and cash equivalents:
(In millions)Successor Company
December 31, 2020December 31, 2019
Term Loan Facility due 2026(1)
$2,080.3 $2,251.3 
Incremental Term Loan Facility due 2026(2)
447.8 — 
Asset-based Revolving Credit Facility due 2023(2)(3)
— — 
6.375% Senior Secured Notes due 2026800.0 800.0 
5.25% Senior Secured Notes due 2027750.0 750.0 
4.75% Senior Secured Notes due 2028500.0 500.0 
Other Secured Subsidiary Debt22.7 21.0 
Total Secured Debt4,600.8 4,322.3 
8.375% Senior Unsecured Notes due 20271,450.0 1,450.0 
Other Subsidiary Debt6.7 12.5 
Original issue discount(18.8)— 
Long-term debt fees(21.8)(19.4)
Total Debt6,016.9 5,765.4 
Less: Cash and cash equivalents720.7 400.3 
Net Debt$5,296.2 $5,365.1 
(1)On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.
(2)On July 16, 2020, iHeartCommunications issued $450.0 million of incremental term loans under the Amendment No. 2, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding on the Company's ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.
(3)On March 13, 2020, iHeartCommunications borrowed $350.0 million under the ABL Facility, the proceeds of which were invested as cash on the Balance Sheet. During the three months ended June 30, 2020 and the three months ended September 30, 2020, iHeartCommunications voluntarily repaid the principal amount drawn under the ABL Facility. As of December 31, 2020, the ABL Facility had a facility size of $450.0 million, no principal amounts outstanding and $32.9 million of outstanding letters of credit, resulting in $417.1 million of excess availability. As a result of certain restrictions in the Company's debt and preferred stock agreements, as of December 31, 2020, approximately $172.0 million was available to be drawn upon under the ABL Facility.

For additional information regarding our debt, including the terms of the governing documents, refer to Note 9, Long-Term Debt to our consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K.
Exchange of Special Warrants
On July 25, 2019, the Company filed a PDR with the FCC to permit up to 100% of the Company’s voting stock to be owned by non-U.S. individuals and entities. On November 5, 2020, the FCC issued the Declaratory Ruling granting the relief requested by the PDR, subject to certain conditions set forth in the Declaratory Ruling.
On January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into 45,133,811 shares of iHeartMedia Class A common stock, the Company’s publicly traded equity, and 22,337,312 Class B common stock in compliance with the Declaratory Ruling, the Communications Act and FCC rules. Following the Exchange, the Company's remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock. There
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were 110,923,534 shares of Class A common stock, 29,088,181 shares of Class B common stock and 6,201,453 Special Warrants outstanding on February 22, 2021.
Supplemental Financial Information under Debt Agreements and Certificate of Designation Governing the iHeart Operations Preferred Stock
Pursuant to iHeartCommunications' material debt agreements, Capital I, the parent guarantor and a subsidiary of iHeartMedia, is permitted to satisfy its reporting obligations under such agreements by furnishing iHeartMedia’s consolidated financial information and an explanation of the material differences between iHeartMedia’s consolidated financial information, on the one hand, and the financial information of Capital I and its consolidated restricted subsidiaries, on the other hand. Because neither iHeartMedia nor iHeartMedia Capital II, LLC, a wholly-owned direct subsidiary of iHeartMedia and the parent of Capital I, have any operations or material assets or liabilities, there are no material differences between iHeartMedia’s consolidated financial information for the year ended December 31, 2020, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same period.
According to the certificate of designation governing the iHeart Operations Preferred Stock, iHeart Operations is required to provide certain supplemental financial information of iHeart Operations in comparison to the Company and its consolidated subsidiaries.  iHeart Operations and its subsidiaries comprised 84.8% of the Company's consolidated assets as of December 31, 2020. For the year ended December 31, 2020, iHeart Operations and its subsidiaries comprised 85.3% of the Company's consolidated revenues.

Uses of Capital
Capital Expenditures
Capital expenditures for the years ended December 31, 2020, 2019 and 2018 were as follows:
(In millions)Successor CompanyPredecessor CompanyNon-GAAP CombinedPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,Year Ended December 31,
20202019201920192018
Audio$73.9 $62.0 $31.2 $93.2 $72.4 
Audio and Media Services5.1 4.0 1.3 5.3 5.9 
Corporate6.2 10.0 3.7 13.7 6.9 
Total capital expenditures$85.2 $76.0 $36.2 $112.2 $85.2 

See the Contractual Obligations table under “Commitments, Contingencies and Guarantees” and Note 10 to our consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K for the Company's future capital expenditure commitments.
Our capital expenditures are not of significant size individually and primarily relate to studio and broadcast equipment and software.
Dividends
Holders of shares of our Class A common stock are entitled to receive dividends, on a per share basis, when and if declared by our Board out of funds legally available therefor and whenever any dividend is made on the shares of our Class B common stock subject to certain exceptions set forth in our certificate. See Note 12 to our consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K.
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Acquisitions
During the first quarter of 2021, we entered into a Share Purchase Agreement to acquire Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W. Scripps Company for $230 million in cash, subject to certain adjustments. The consummation of the proposed acquisition is subject to the satisfaction or waiver of customary closing conditions, including regulatory approval.
During the fourth quarter of 2020, we acquired Voxnest, Inc. for aggregate consideration of $50 million. The assets acquired primarily consisted of intangible assets valued at $53.2 million, including $36.6 million in goodwill.
During the fourth quarter of 2018, we acquired Stuff Media LLC and Jelli, Inc. for aggregate consideration of $120.3 million, of which $74.3 million was paid in cash in the fourth quarter of 2018 and $46.0 million, plus imputed interest, was paid in cash in the fourth quarter of 2019. The assets acquired as part of these transactions consisted of $27.0 million in fixed assets and $35.2 million in intangible assets, primarily consisting of technology and content, along with $77.3 million in goodwill.
Commitments, Contingencies and Guarantees
We are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued our estimate of the probable costs for resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.  Please refer to Item 3. “Legal Proceedings” within Part I of this Annual Report on Form 10-K.
Certain agreements relating to acquisitions provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies generally over a one to five-year period.  The aggregate of these contingent payments, if performance targets are met, would not significantly impact our financial position or results of operations.
We have future cash obligations under various types of contracts.  We lease office space, certain broadcast facilities and equipment.  Some of our lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for our payment of utilities and maintenance.
We have non-cancellable contracts in our radio broadcasting operations related to program rights and music license fees.
In the normal course of business, our broadcasting operations have minimum future payments associated with employee and talent contracts.  These contracts typically contain cancellation provisions that allow us to cancel the contract with good cause.
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The scheduled maturities of iHeartCommunications' secured debt, unsecured debt, mandatorily redeemable preferred stock, and our future minimum rental commitments under non-cancelable lease agreements, minimum payments under other non-cancelable contracts, payments under employment/talent contracts and other long-term obligations as of December 31, 2020 were as set forth in the table below.
(In thousands)Payments due by Period
Contractual ObligationsTotal20212022-20232024-2025Thereafter
Long-term debt:
Secured debt$4,600,762 $28,268 $56,372 $55,469 $4,460,653 
Unsecured debt1,456,782 6,507 275 — 1,450,000 
Mandatorily Redeemable Preferred Stock60,000 — — — 60,000 
Interest payments on long-term debt and preferred stock(1)
2,054,956 335,267 665,929 657,395 396,365 
Non-cancelable operating leases 1,293,645 126,732 253,211 207,230 706,472 
Non-cancelable contracts198,147 125,853 67,434 3,143 1,717 
Employment/talent contracts262,307 102,263 117,679 42,365 — 
Unrecognized tax benefits (2)
18,183 — — — 18,183 
Other long-term obligations53,034 — 24,401 5,267 23,366 
Total$9,997,816 $724,890 $1,185,301 $970,869 $7,116,756 
(1)Interest payments on long-term debt and preferred stock reflect the Company's obligations as of December 31, 2020. Interest payments calculated based on floating rates assume rates are held constant over the remaining term.
(2)The non-current portion of the unrecognized tax benefits is included in the “Thereafter” column as we cannot reasonably estimate the timing or amounts of additional cash payments, if any, at this time.  For additional information, see Note 11 included in Item 8 of Part II of this Annual Report on Form 10-K.

OFF-BALANCE SHEET ARRANGEMENTS
As of December 31, 2020, we did not have any off-balance sheet arrangements.


SEASONALITY
Typically, the Audio segment experiences its lowest financial performance in the first quarter of the calendar year. We expect this trend to continue in the future. Due to this seasonality and certain other factors, the results for the interim periods may not be indicative of results for the full year.  In addition, our Audio segment and our Audio and Media Services segment are impacted by political cycles and generally experience higher revenues in congressional election years, and particularly in presidential election years. This cyclicality may affect comparability of results between years.

MARKET RISK
We are exposed to market risks arising from changes in market rates and prices, including movements in interest rates, foreign currency exchange rates and inflation.
57


Interest Rate Risk
A significant amount of our long-term debt bears interest at variable rates. Accordingly, our earnings will be affected by changes in interest rates. As of December 31, 2020, approximately 43% of our aggregate principal amount of long-term debt bore interest at floating rates. Assuming the current level of borrowings and assuming a 50% change in LIBOR, it is estimated that our interest expense for the year ended December 31, 2020 would have changed by $8.2 million.
In the event of an adverse change in interest rates, management may take actions to mitigate our exposure.  However, due to the uncertainty of the actions that would be taken and their possible effects, the preceding interest rate sensitivity analysis assumes no such actions.  Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.
Inflation
Inflation is a factor in our business and we continue to seek ways to mitigate its effect.  Inflation has affected our performance in terms of higher costs for wages, salaries and equipment.  We believe the effects of inflation, if any, on our historical results of operations and financial condition have been immaterial. Although the exact impact of inflation is indeterminable, we believe we have offset these higher costs by increasing the effective advertising rates of most of our broadcasting stations in our Audio operations.
NEW ACCOUNTING PRONOUNCEMENTS
For information regarding new accounting pronouncements, refer to Note 1, Summary of Significant Accounting Policies.

CRITICAL ACCOUNTING ESTIMATES
The preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material.  Our significant accounting policies are discussed in the notes to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.  Management believes that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.  The following narrative describes these critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions.
Allowance for Doubtful Accounts
We evaluate the collectability of our accounts receivable based on a combination of factors.  In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be collected.  For all other customers, we recognize reserves for bad debt based on historical experience for each business unit, adjusted for relative improvements or deteriorations in the agings and changes in current economic conditions.
If our agings were to improve or deteriorate resulting in a 10% change in our allowance, we estimated that our bad debt expense for the year ended December 31, 2020 would have changed by approximately $3.9 million.
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Leases
The most significant estimates used by management in accounting for leases and the impact of these estimates are as follows:
Expected lease term Our expected lease term includes both contractual lease periods and cancellable option periods where failure to exercise such options would result in an economic penalty. The expected lease term is used in determining whether the lease is accounted for as an operating lease or a finance lease. A lease is considered a finance lease if the lease term exceeds 75% of the leased asset's useful life. The expected lease term is also used in determining the depreciable life of the asset. An increase in the expected lease term will increase the probability that a lease may be considered a finance lease and will generally result in higher interest and depreciation expense for a leased property recorded on our balance sheet.
Incremental borrowing rate The incremental borrowing rate is primarily used in determining whether the lease is accounted for as an operating lease or a finance lease. A lease is considered a finance lease if the net present value of the minimum lease payments is greater than 90% of the fair market value of the property. An increase in the incremental borrowing rate decreases the net present value of the minimum lease payments and reduces the probability that a lease will be considered a finance lease.
Fair market value of leased asset The fair market value of leased property is generally estimated based on comparable market data as provided by third-party sources. Fair market value is used in determining whether the lease is accounted for as an operating lease or a finance lease. A lease is considered a finance lease if the net present value of the minimum lease payments equals or exceeds 90% of the fair market value of the leased property. A higher fair market value reduces the likelihood that a lease will be considered a finance lease.
Long-lived Assets
Long-lived assets, including plant and equipment and definite-lived intangibles, are reported at historical cost less accumulated depreciation and amortization. We estimate the useful lives for various types of advertising structures and other long-lived assets based on our historical experience and our plans regarding how we intend to use those assets. Our experience indicates that the estimated useful lives applied to our portfolio of assets have been reasonable, and we do not expect significant changes to the estimated useful lives of our long-lived assets in the future. When we determine that structures or other long-lived assets will be disposed of prior to the end of their useful lives, we estimate the revised useful lives and depreciate the assets over the revised period. We also review long-lived assets for impairment when events and circumstances indicate that depreciable and amortizable long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.
We use various assumptions in determining the remaining useful lives of assets to be disposed of prior to the end of their useful lives and in determining the current fair market value of long-lived assets that are determined to be unrecoverable. Estimated useful lives and fair values are sensitive to factors including contractual commitments, regulatory requirements, future expected cash flows, industry growth rates and discount rates, as well as future salvage values. Our impairment loss calculations require management to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.
If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results of operations.
Indefinite-lived Intangible Assets
In connection with our Plan of Reorganization, we applied fresh start accounting as required by ASC 852 and recorded all of our assets and liabilities at estimated fair values, including our FCC licenses, which are included within our Audio reporting unit. Indefinite-lived intangible assets, such as our FCC licenses, are reviewed annually for possible impairment using the direct valuation method as prescribed in ASC 805-20-S99. Under the direct valuation method, the estimated fair value of the indefinite-lived intangible assets was calculated at the market level as prescribed by ASC 350-30-35. Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flows model, which results in value that is directly attributable to the indefinite-lived intangible assets.

59


Our key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average asset within a market.

On July 1, 2020, we performed our annual impairment test in accordance with ASC 350-30-35 and we concluded no impairment of the indefinite-lived intangible assets was required. In determining the fair value of our FCC licenses, the following key assumptions were used:

Revenue forecasts published by BIA Financial Network, Inc. (“BIA”), varying by market, were used for the initial four-year period;
2.0% revenue growth was assumed beyond the initial four-year period;
Revenue was grown proportionally over a build-up period, reaching market revenue forecast by year 3;
Operating margins of 8.0% in the first year gradually climb to the industry average margin in year 3 of up to 21.0%, depending on market size; and
Assumed discount rates of 8.5% for the 15 largest markets and 9.0% for all other markets.

While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate the fair value of our indefinite-lived intangible assets, it is possible a material change could occur. If future results are not consistent with our assumptions and estimates, we may be exposed to impairment charges in the future. The following table shows the change in the fair value of our indefinite-lived intangible assets that would result from a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption:

(In thousands)
DescriptionRevenue
Growth Rate
Profit
Margin
Discount
Rate
FCC license$343,517 $184,986 $542,741 

The estimated fair value of our FCC licenses at July 1, 2020 was $2.0 billion, while the carrying value was $1.8 billion.

Goodwill
Upon application of fresh start accounting in accordance with ASC 852 in connection with our emergence from bankruptcy, we recorded goodwill of $3.3 billion, which represented the excess of estimated enterprise fair value over the estimated fair value of our assets and liabilities. Goodwill was further allocated to our reporting units based on the relative fair values of our reporting units as of May 1, 2019.

We test goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. The fair value of our reporting units is used to apply value to the net assets of each reporting unit. To the extent that the carrying amount of net assets would exceed the fair value, an impairment charge may be required to be recorded.

The discounted cash flow approach we use for valuing goodwill involves estimating future cash flows expected to be generated from the related assets, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value.

On July 1, 2020, we performed our annual impairment test in accordance with ASC 350-30-35, resulting in no impairment of goodwill. In determining the fair value of our reporting units, we used the following assumptions:

Expected cash flows underlying our business plans for the periods 2020 through 2024. Our cash flow assumptions are based on detailed, multi-year forecasts performed by each of our operating reporting units, and reflect the current advertising outlook across our businesses.
Cash flows beyond 2024 are projected to grow at a perpetual growth rate, which we estimated at 2.0% for our Audio and digital reporting units and 2.0% for our Katz Media reporting unit (beyond 2028).
In order to risk adjust the cash flow projections in determining fair value, we utilized a discount rate of approximately 14.0% for each of our reporting units.

60


Based on our annual assessment using the assumptions described above, the excess of fair value of the Audio and RCS reporting units compared to its carrying value is approximately 10% or less; however, a hypothetical 5% reduction in the estimated fair value in each of our reporting units would not result in a material impairment condition.

While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate the estimated fair value of our reporting units, it is possible a material change could occur. If future results are not consistent with our assumptions and estimates, we may be exposed to impairment charges in the future. The following table shows the decline in the fair value of each of our reporting units that would result from a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption:

(In thousands)
DescriptionRevenue
Growth Rate
Profit
Margin
Discount
Rate
Audio$590,000 $233,000 $671,000 
Katz Media$28,000 $13,000 $31,000 
Other$16,000 $6,000 $16,000 

Tax Provisions
Our estimates of income taxes and the significant items giving rise to the deferred tax assets and liabilities are shown in the notes to our consolidated financial statements and reflect our assessment of actual future taxes to be paid on items reflected in the financial statements, giving consideration to both timing and probability of these estimates. Actual income taxes could vary from these estimates due to future changes in income tax law or results from the final review of our tax returns by federal, state or foreign tax authorities.
We use our judgment to determine whether it is more likely than not that our deferred tax assets will be realized.  Deferred tax assets are reduced by valuation allowances if the Company believes it is more than likely than not that some portion or the entire asset will not be realized.
We use our judgment to determine whether it is more likely than not that we will sustain positions that we have taken on tax returns and, if so, the amount of benefit to initially recognize within our financial statements.  We regularly review our uncertain tax positions and adjust our unrecognized tax benefits (UTBs) in light of changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law.  These adjustments to our UTBs may affect our income tax expense.  Settlement of uncertain tax positions may require use of our cash.
Litigation Accruals
We are currently involved in certain legal proceedings.  Based on current assumptions, we have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.  Future results of operations could be materially affected by changes in these assumptions or the effectiveness of our strategies related to these proceedings.
Management’s estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.
Insurance Accruals
We are currently self-insured beyond certain retention amounts for various insurance coverages, including general liability and property and casualty.  Accruals are recorded based on estimates of actual claims filed, historical payouts, existing insurance coverage and projected future development of costs related to existing claims. Our self-insured liabilities contain uncertainties because management must make assumptions and apply judgment to estimate the ultimate cost to settle reported claims and claims incurred but not reported as of December 31, 2020.
If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material.  A 10% change in our self-insurance liabilities at December 31, 2020 would have affected our net loss by approximately $2.0 million for the year ended December 31, 2020.
61


Share-Based Compensation
Under the fair value recognition provisions of ASC 718-10, share-based compensation cost is measured at the grant date based on the fair value of the award.  Determining the fair value of share-based awards at the grant date requires assumptions and judgments, such as expected volatility, among other factors. If actual results differ significantly from these estimates, our results of operations could be materially impacted.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Required information is located within Item 7 of Part II of this Annual Report on Form 10-K, under the heading “Market Risk”.
62


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm 

To the Stockholders and the Board of Directors of iHeartMedia, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of iHeartMedia, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019 (Successor), the related consolidated statements of comprehensive income (loss), changes in stockholders' equity (deficit) and cash flows for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), and the year ended December 31, 2018 (Predecessor), and the related notes and the financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019 (Successor), and the results of its operations and its cash flows for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), and the year ended December 31, 2018 (Predecessor) in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 25, 2021 expressed an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
63


Valuation of Goodwill and Indefinite-Lived Intangibles
Description of the Matter
As described in Note 7 to the consolidated financial statements, at December 31, 2020 the Company’s goodwill was $2.1 billion and FCC licenses with indefinite lives were $1.8 billion. Management conducts impairment tests for goodwill and indefinite-lived intangibles annually during the third quarter, or more frequently, if events or circumstances indicate the carrying value of goodwill or indefinite-lived intangibles may be impaired. In the first quarter, the Company performed an interim impairment test which resulted in a goodwill impairment charge of $1.2 billion related to the Audio reporting unit within the Audio segment, and FCC license impairment charges of $502.7 million.

Auditing management’s impairment tests for goodwill and intangible assets with indefinite lives was complex and highly judgmental and required the involvement of a valuation specialist due to the significant estimation required to determine the fair value of the reporting units and FCC licenses. In particular for goodwill, the fair value estimates in the discounted cash flow models of reporting units are sensitive to assumptions such as changes in projected cash flows, including due to the impacts of COVID-19, and discount rate. For FCC Licenses, the fair value estimates in the discounted cash flow models are sensitive to changes to the discount rate assumption. All of these assumptions are sensitive to and affected by expected future market or economic conditions, and industry factors.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and FCC licenses impairment review process, including controls over management’s review of the significant assumptions described above. This included evaluating controls over the Company’s forecasting process used to develop the estimated future cash flows. We also tested controls over management’s review of the data used in their valuation models and review of the significant assumptions such as estimation of discount rates.

To test the estimated fair values of the Company’s reporting units and FCC licenses, our audit procedures included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by management, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We compared the projected cash flows to the Company’s historical cash flows and other available industry and market forecast information, including third-party industry projections for the advertising industry. We involved our valuation specialists to assist in reviewing the valuation methodology and testing the terminal growth rates and discount rates. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units and FCC licenses that would result from changes in the assumptions. In addition, for goodwill we also tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company. For FCC licenses, we also assessed whether the assumptions used were consistent with those used in the goodwill impairment review process.

/s/ Ernst & Young LLP

We have served as the Company's auditor since at least 1986, but we are unable to determine the specific year.
San Antonio, Texas
February 25, 2021
64


CONSOLIDATED BALANCE SHEETS OF
IHEARTMEDIA, INC. AND SUBSIDIARIES
(In thousands, except share and per share data)Successor Company
December 31,
2020
December 31,
2019
Cash and cash equivalents$720,662 $400,300 
Accounts receivable, net of allowance of $38,777 in 2020 and $12,629 in 2019
801,380 902,908 
Prepaid expenses79,508 71,764 
Other current assets17,426 41,376 
Total Current Assets1,618,976 1,416,348 
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net811,702 846,876 
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses1,770,345 2,277,735 
Other intangibles, net1,924,492 2,176,540 
Goodwill2,145,935 3,325,622 
OTHER ASSETS
Operating lease right-of-use assets825,887 881,762 
Other assets105,624 96,216 
Total Assets$9,202,961 $11,021,099 
CURRENT LIABILITIES  
Accounts payable$149,333 $117,282 
Current operating lease liabilities76,503 77,756 
Accrued expenses265,651 240,151 
Accrued interest68,054 83,768 
Deferred revenue123,488 139,529 
Current portion of long-term debt34,775 8,912 
Total Current Liabilities717,804 667,398 
Long-term debt5,982,155 5,756,504 
Series A Mandatorily Redeemable Preferred Stock, par value $0.001, authorized 60,000 shares, 60,000 shares issued in 2020 and 2019, respectively
60,000 60,000 
Noncurrent operating lease liabilities764,491 796,203 
Deferred income taxes556,477 737,443 
Other long-term liabilities71,217 58,110 
Commitments and contingent liabilities (Note 10)
STOCKHOLDERS’ EQUITY
Noncontrolling interest8,350 9,123 
Preferred stock, par value $.001 per share, 100,000,000 shares authorized, no shares issued and outstanding
— — 
Class A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued and outstanding 64,726,864 and 57,776,204 shares in 2020 and 2019, respectively
65 58 
Class B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued and outstanding 6,886,925 and 6,904,910 shares in 2020 and 2019, respectively
Special Warrants, 74,835,899 and 81,046,593 issued and outstanding in 2020 and 2019, respectively
— — 
Additional paid-in capital2,849,020 2,826,533 
Retained earnings (Accumulated deficit)(1,803,620)112,548 
Accumulated other comprehensive income (loss)194 (750)
Cost of shares (254,066 in 2020 and 128,074 in 2019) held in treasury
(3,199)(2,078)
Total Stockholders' Equity1,050,817 2,945,441 
Total Liabilities and Stockholders' Equity$9,202,961 $11,021,099 

See Notes to Consolidated Financial Statements
65


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) OF
IHEARTMEDIA, INC. AND SUBSIDIARIES
Successor CompanyPredecessor Company
(In thousands, except per share data)Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192018
Revenue$2,948,218 $2,610,056 $1,073,471 $3,611,323 
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)
1,163,148 878,956 381,184 1,132,439 
Selling, general and administrative expenses (excludes depreciation and amortization)
1,225,097 897,670 427,230 1,350,157 
Corporate expenses (excludes depreciation and amortization)144,572 136,171 53,647 184,216 
Depreciation and amortization402,929 249,623 52,834 211,951 
Impairment charges1,738,752 — 91,382 33,150 
Other operating expense, net11,344 8,000 154 9,266 
Operating income (loss)(1,737,624)439,636 67,040 690,144 
Interest expense (income), net343,745 266,773 (499)334,798 
Loss on investments, net(9,346)(20,928)(10,237)(472)
Equity in earnings (loss) of nonconsolidated affiliates(379)(279)(66)116 
Other income (expense), net(7,751)(18,266)23 (23,007)
Reorganization items, net— — 9,461,826 (356,119)
Income (loss) from continuing operations before income taxes(2,098,845)133,390 9,519,085 (24,136)
Income tax benefit (expense)183,623 (20,091)(39,095)(13,836)
Income (loss) from continuing operations(1,915,222)113,299 9,479,990 (37,972)
Income (loss) from discontinued operations, net of tax— — 1,685,123 (164,667)
Net income (loss)(1,915,222)113,299 11,165,113 (202,639)
Less amount attributable to noncontrolling interest(523)751 (19,028)(729)
Net income (loss) attributable to the Company$(1,914,699)$112,548 $11,184,141 $(201,910)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments945 (750)(1,175)(15,924)
Other adjustments to comprehensive income (loss)— — — (1,498)
Reclassification adjustments— — — 2,962 
Other comprehensive income (loss)945 (750)(1,175)(14,460)
Comprehensive income (loss)(1,913,754)111,798 11,182,966 (216,370)
Less amount attributable to noncontrolling interest— — 2,784 (8,713)
Comprehensive income (loss) attributable to the Company$(1,913,754)$111,798 $11,180,182 $(207,657)
Basic net income (loss) per share
From continuing operations$(13.12)$0.77 $109.92 $(0.44)
From discontinued operations— — 19.76 (1.93)
Basic net income (loss) per share$(13.12)$0.77 $129.68 $(2.36)
Weighted average common shares outstanding - Basic145,979 145,608 86,241 85,412 
Diluted net income (loss) per share
From continuing operations$(13.12)$0.77 $109.92 $(0.44)
From discontinued operations— — 19.76 (1.93)
Diluted net income (loss) per share$(13.12)$0.77 $129.68 $(2.36)
Weighted average common shares outstanding - Diluted145,979 145,795 86,241 85,412 
See Notes to Consolidated Financial Statements
66


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) OF
IHEARTMEDIA, INC. AND SUBSIDIARIES

(In thousands, except share data)Controlling Interest
Common Shares(1)
Non-
controlling
Interest
Common
Stock
Additional
Paid-in
Capital
Retained Earnings (Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Class A
Shares
Class B
Shares
Special WarrantsTotal
Balances at
December 31, 2019 (Successor)
57,776,204 6,904,910 81,046,593 $9,123 $65 $2,826,533 $112,548 $(750)$(2,078)$2,945,441 
Net loss
(523) — (1,914,699)— — (1,915,222)
Vesting of restricted stock and other
724,963  (29)— — (1,121)(1,143)
Share-based compensation  22,516 — — — 22,516 
Conversion of Special Warrants to Class A and Class B Shares6,205,617 2,095 (6,207,712)—  — — — — — 
Conversion of Class B Shares to Class A Shares
20,080 (20,080)—  — — — — — 
Cancellation of Special Warrants(2,982)—  — — — — — 
Other
(250) — (1,469)(1)— (1,720)
Other comprehensive income
  — — 945 — 945 
Balances at
December 31, 2020 (Successor)
64,726,864 6,886,925 74,835,899 $8,350 $72 $2,849,020 $(1,803,620)$194 $(3,199)$1,050,817 

(1) The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2020 or 2019.

See Notes to Consolidated Financial Statements
















67


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) OF
IHEARTMEDIA, INC. AND SUBSIDIARIES

(In thousands, except share data)Controlling Interest
Common Shares(1)
Non-
controlling
Interest
Common
Stock
Additional
Paid-in
Capital
Retained Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Class A
Shares
Class B
Shares
Class C
Shares
Special WarrantsTotal
Balances at
December 31, 2018 (Predecessor)
32,292,944 555,556 58,967,502  $30,868 $92 $2,074,632 $(13,345,346)$(318,030)$(2,558)$(11,560,342)
Net income (loss)(19,028)— — 11,184,141 — — 11,165,113 
Non-controlling interest - Separation
(13,199)— — — — — (13,199)
Accumulated other comprehensive loss - Separation
— — — — 307,813 — 307,813 
Adoption of ASC 842, Leases
— — — 128,908 — — 128,908 
Issuance of restricted stock
196 — — — — (4)192 
Forfeitures of restricted stock
(110,333)— — — — — — — 
Share-based compensation— — 2,028 — — — 2,028 
Share-based compensation - discontinued operations
2,449 — — — — — 2,449 
Payments to non-controlling interests(3,684)— — — — — (3,684)
Other
— — — — — 
Other comprehensive income (loss)
2,784 — — — (3,959)— (1,175)
Cancellation of Predecessor equity
(32,182,611)(555,556)(58,967,502)(386)(92)(2,076,660)2,059,998 14,175 2,562 (403)
Issuance of Successor common stock and warrants
56,861,941 6,947,567 — 81,453,648 8,943 64 2,770,108 (27,701)— — 2,751,414 
Balances at
May 1, 2019 (Predecessor)
56,861,941 6,947,567  81,453,648 $8,943 $64 $2,770,108 $ $ $ $2,779,115 
Balances at
May 2, 2019 (Successor)
56,861,941 6,947,567  81,453,648 $8,943 $64 $2,770,108 $ $ $ $2,779,115 
Net income
751  — 112,548 — — 113,299 
Vesting of restricted stock
644,025  (1)— — (2,078)(2,078)
Share-based compensation  26,377 — — — 26,377 
Conversion of Special Warrants to Class A and Class B Shares216,921 10,660 (227,581)—  — — — — — 
Conversion of Class B Shares to Class A Shares53,317 (53,317)—  — — — — — 
Cancellation of Special Warrants and other
(179,474)(571) 30,049 — — — 29,478 
Other comprehensive loss
  — — (750)— (750)
Balances at
December 31, 2019 (Successor)
57,776,204 6,904,910  81,046,593 $9,123 $65 $2,826,533 $112,548 $(750)$(2,078)$2,945,441 

(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019 or 2018..
See Notes to Consolidated Financial Statements
68



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) OF
IHEARTMEDIA, INC. AND SUBSIDIARIES

(In thousands, except per share data)Controlling Interest
Common Shares(1)
Non-
controlling
Interest
Common
Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Class A
Shares
Class B
Shares
Class C
Shares
Total
Balances at
December 31, 2017 (Predecessor)
32,626,168 555,556 58,967,502 $41,191 $92 $2,072,566 $(13,142,001)$(313,718)$(2,474)$(11,344,344)
Net loss(729)— — (201,910)— — (202,639)
Issuance of restricted stock and other
(333,224)(713)— — — — (84)(797)
Share-based compensation
— — 2,066 — — — 2,066 
Share-based compensation - discontinued operations
8,517 — — — — — 8,517 
Payments to non-controlling interests
(8,742)— — — — — (8,742)
Other57 — — (1,435)1,435 — 57 
Other comprehensive loss
(8,713)— — — (5,747)— (14,460)
Balances at
December 31, 2018 (Predecessor)
32,292,944 555,556 58,967,502 $30,868 $92 $2,074,632 $(13,345,346)$(318,030)$(2,558)$(11,560,342)

(1) The Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2018 and 2017, respectively.
See Notes to Consolidated Financial Statements
69


CONSOLIDATED STATEMENTS OF CASH FLOWS OF
IHEARTMEDIA, INC. AND SUBSIDIARIES
Successor CompanyPredecessor Company
(In thousands)Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192018
Cash flows from operating activities:
Net income (loss)$(1,915,222)$113,299 $11,165,113 $(202,639)
(Income) loss from discontinued operations— — (1,685,123)164,667 
Reconciling items:
Impairment charges1,738,752 — 91,382 33,150 
Depreciation and amortization402,929 249,623 52,834 211,951 
Deferred taxes(184,269)9,120 115,839 3,643 
Provision for doubtful accounts38,273 14,088 3,268 21,042 
Amortization of deferred financing charges and note discounts, net4,758 1,295 512 11,871 
Non-cash Reorganization items, net— — (9,619,236)252,392 
Share-based compensation22,516 26,377 498 2,066 
(Gain) loss on disposal of operating and other assets6,986 4,539 (143)3,233 
Loss on investments9,346 20,928 10,237 472 
Equity in (earnings) loss of nonconsolidated affiliates379 279 66 (116)
Barter and trade income(10,502)(12,961)(5,947)(10,873)
Other reconciling items, net656 (9,154)(65)(596)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease in accounts receivable77,335 (179,479)117,263 (35,464)
(Increase) decrease in prepaid expenses and other current assets2,447 15,288 (24,044)(2,055)
(Increase) decrease in other long-term assets(1,119)7,924 (7,098)(13,755)
Increase (decrease) in accounts payable and accrued expenses52,354 127,150 (156,885)23,699 
Increase (decrease) in accrued interest(15,714)84,523 256 303,344 
Increase (decrease) in deferred income(21,859)(8,441)13,377 (21,455)
Increase (decrease) in other long-term liabilities7,899 4,507 (79,609)(3,358)
Cash provided by (used for) operating activities from continuing operations215,945 468,905 (7,505)741,219 
Cash provided by (used for) operating activities from discontinued operations— — (32,681)225,453 
Net cash provided by (used for) operating activities215,945 468,905 (40,186)966,672 
Cash flows from investing activities:
Proceeds from disposal of assets3,041 8,046 99 19,152 
Purchases of businesses(62,050)— (1,998)(74,272)
Purchases of property, plant and equipment(85,205)(75,993)(36,197)(85,245)
Change in other, net(3,599)(5,331)(682)(1,521)
Cash used for investing activities from continuing operations(147,813)(73,278)(38,778)(141,886)
Cash used for investing activities from discontinued operations— — (222,366)(203,592)
Net cash used for investing activities(147,813)(73,278)(261,144)(345,478)
Cash flows from financing activities:
Proceeds from long-term debt and credit facilities779,750 1,250,007 269 143,332 
Payments on long-term debt and credit facilities(532,392)(1,285,408)(8,294)(622,677)
Proceeds from Mandatorily Redeemable Preferred Stock— — 60,000 — 
Settlement of intercompany related to discontinued operations— — (159,196)— 
Debt issuance costs(4,786)(19,983)— — 
Change in other, net(1,392)(2,649)(5)(1,157)
Cash provided by (used for) financing activities from continuing operations241,180 (58,033)(107,226)(480,502)
Cash provided by (used for) financing activities from discontinued operations— — 51,669 (11,297)
Net cash provided by (used for) financing activities241,180 (58,033)(55,557)(491,799)
Effect of exchange rate changes on cash257 15 562 (10,361)
Net increase (decrease) in cash, cash equivalents and restricted cash309,569 337,609 (356,325)119,034 
Cash, cash equivalents and restricted cash at beginning of period411,618 74,009 430,334 311,300 
Cash, cash equivalents and restricted cash at end of period721,187 411,618 74,009 430,334 
Less cash, cash equivalents and restricted cash of discontinued operations at end of period— — — 202,869 
Cash, cash equivalents and restricted cash of continuing operations at end of period$721,187 $411,618 $74,009 $227,465 
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for interest$357,168 $183,806 $137,042 $397,984 
Cash paid during the year for taxes5,844 5,759 22,092 34,203 
Cash paid for Reorganization items, net443 18,360 183,291 103,727 
See Notes to Consolidated Financial Statements
70



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
iHeartMedia, Inc. (the “Company,” "iHeartMedia," "we" or "us") was formed in May 2007 for the purpose of acquiring the business of iHeartCommunications, Inc., a Texas company (“iHeartCommunications”), which occurred on July 30, 2008. Prior to the consummation of the acquisition of iHeartCommunications, iHeartMedia had not conducted any activities, other than activities incident to its formation in connection with the acquisition, and did not have any assets or liabilities, other than those related to the acquisition.
On March 14, 2018 (the “Petition Date”), the Company, iHeartCommunications and certain of the Company’s direct and indirect domestic subsidiaries (collectively, the “Debtors”)) filed voluntary petitions for relief (the "Chapter 11 Cases") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court"). On May 1, 2019 (the “Effective Date”), the conditions to the effectiveness of the Debtors plan of reorganization, as amended, were satisfied and the Company emerged from Chapter 11 through (a) a series of transactions (the “Separation”) through which Clear Channel Outdoor Holdings, Inc. (“CCOH”), its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “iHeart Group”), and (b) a series of transactions (the “Reorganization”) through which iHeartCommunications’ debt was reduced from approximately $16 billion to approximately $5.8 billion and a global compromise and settlement among holders of claims (“Claimholders”) in connection with the Chapter 11 Cases was effected (collectively, the “Plan of Reorganization”).
Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations. The operations of the Outdoor Group have been presented as discontinued. The Company presents businesses that represent components as discontinued operations when the components meet the criteria for held for sale, are sold, or spun-off and their disposal represents a strategic shift that has, or will have, a major effect on its operations and financial results. See Note 4, Discontinued Operations.
As part of the Separation and Reorganization (as defined below), the Company reevaluated its segment reporting, resulting in the presentation of two reportable segments:
Audio, which provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses and  
Audio and Media Services, which provides other audio and media services, including the Company’s media representation business, Katz Media Group (“Katz Media”) and the Company's provider of scheduling and broadcast software, RCS.
COVID-19
Our business has been adversely impacted by the novel coronavirus pandemic (“COVID-19”), its impact on the operating and economic environment and related, near-term advertiser spending decisions. iHeartCommunications borrowed $350.0 million principal amount under its $450.0 million senior secured asset-based revolving credit facility (the “ABL Facility”) as a precautionary measure to preserve iHeartCommunications’ financial flexibility in light of this uncertainty. The Company repaid the amounts borrowed under the ABL Facility during the second and third quarters of 2020 using cash on hand and the proceeds from the issuance of the incremental term loan (as discussed below). As of December 31, 2020, the ABL Facility had a facility size of $450.0 million, no principal amounts outstanding and $32.9 million of outstanding letters of credit, resulting in $417.1 million of excess availability. As a result of certain restrictions in the Company's debt and preferred stock agreements, as of December 31, 2020, approximately $172 million was available to be drawn upon under the ABL Facility.
In July 2020, iHeartCommunications issued $450.0 million of incremental term loans pursuant to an amendment (the “Amendment No. 2”) to the credit agreement (as amended, the “Credit Agreement”) with iHeartMedia Capital I, LLC as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Bank of America, N.A., as administrative agent, governing the Company’s $2.5 billion aggregate principal amount of senior secured term loans (the “Term Loan Facility”) and used a portion of the proceeds to repay the $235.0 million outstanding balance under the ABL Facility.
71



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company's revenue in the latter half of the month ended March 31, 2020 and in the remainder of 2020 was significantly and negatively impacted as a result of a decline in advertising spend driven by COVID-19, and the Company's management took proactive actions during the year to expand the Company’s financial flexibility by reducing expenses and preserving cash as a result of such impact.
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.  The Company continues to examine the impacts the CARES Act may have on its business. For more information on the expected benefits of the CARES Act on the Company's income tax liabilities, see Note 11, Income Taxes.
As of December 31, 2020, the Company had approximately $720.7 million in cash and cash equivalents.  While the Company expects COVID-19 to continue to negatively impact the results of operations, cash flows and financial position of the Company for some time into the future, the related financial impact cannot be reasonably estimated at this time. Based on current available liquidity, the Company expects to be able to meet its obligations as they become due over the coming year.

As a result of uncertainty related to COVID-19 and its negative impact on the Company's business and the public trading values of its debt and equity, the Company was required to perform interim impairment tests on its long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020. The interim impairment tests resulted in a non-cash impairment of the Company's Federal Communication Commission (“FCC”) licenses of $502.7 million and a non-cash impairment charge of $1.2 billion to reduce goodwill.
The Company performed its annual impairment testing of goodwill and indefinite-lived intangible assets as of July 1, 2020. No additional impairment charges were recorded as a result of this assessment. For more information, see Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill.
Voluntary Filing under Chapter 11
On the Petition Date, the Debtors filed the Chapter 11 Cases. Clear Channel Outdoor Holdings, Inc. (“CCOH”) and its direct and indirect subsidiaries did not file voluntary petitions for reorganization under the Bankruptcy Code and were not Debtors in the Chapter 11 Cases.
On the Effective Date, the conditions to the effectiveness of the Plan of Reorganization were satisfied and the Company emerged from Chapter 11 through (a) a series of transactions (through which the Outdoor Group was were separated from, and ceased to be controlled by, the iHeart Group, and (b) the Reorganization of transactions through which iHeartCommunications’ debt was reduced from approximately $16 billion to approximately $5.8 billion and a global compromise and settlement among Claimholders in connection with the Chapter 11 Cases was effected. The compromise and settlement involved, among others, (i) the restructuring of iHeartCommunications’ indebtedness by (A) replacing its “debtor-in-possession” credit facility with a $450 million ABL Facility and (B) issuing to certain Claimholders, on account of their claims, approximately $3.5 billion aggregate principal amount of new senior secured term loans (the “Term Loan Facility”), approximately $1.45 billion aggregate principal amount of new 8.375% Senior Notes due 2027 (the “Senior Unsecured Notes”) and approximately $800 million aggregate principal amount of new 6.375% Senior Secured Notes due 2026 (the “6.375% Senior Secured Notes”), (ii) the Company’s issuance of new Class A common stock, new Class B common stock and special warrants to purchase shares of new Class A common stock and Class B common stock (“Special Warrants”) to Claimholders, subject to ownership restrictions imposed by the Federal Communications Commission (“FCC”), (iii) the settlement of certain intercompany transactions, and (iv) the sale of the preferred stock (the “iHeart Operations Preferred Stock”) of the Company’s wholly-owned subsidiary iHeart Operations, Inc. (“iHeart Operations”) in connection with the Separation.
All of the Company's equity existing as of the Effective Date was canceled on such date pursuant to the Plan of Reorganization.
Upon the Company's emergence from the Chapter 11 Cases, the Company adopted fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after the Effective Date, are not comparable with the consolidated financial statements on or before that date. Refer to Note 3, Fresh Start Accounting, for additional information.
72



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
References to “Successor” or “Successor Company” relate to the financial position and results of operations of the Company after the Effective Date. References to "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of the Company on or before the Effective Date.
During the Predecessor period, the Company applied Accounting Standards Codification (“ASC”) 852 - Reorganizations (“ASC 852”) in preparing the consolidated financial statements. ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during 2018 and 2019 related to the Chapter 11 Cases, including the write-off of unamortized long-term debt fees and discounts associated with debt classified as liabilities subject to compromise, and professional fees incurred directly as a result of the Chapter 11 Cases are recorded as Reorganization items, net in the Predecessor period.
ASC 852 requires certain additional reporting for financial statements prepared between the bankruptcy filing date and the date of emergence from bankruptcy, including:
Reclassification of Debtor pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured, to a separate line item in the Consolidated Balance Sheet called, "Liabilities subject to compromise" and
Segregation of Reorganization items, net as a separate line in the Consolidated Statement of Comprehensive Loss, included within income from continuing operations.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes including, but not limited to, legal, tax and insurance accruals.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.  Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries.  Also included in the consolidated financial statements are entities for which the Company has a controlling financial interest or is the primary beneficiary.  Investments in companies in which the Company owns 20% to 50% of the voting common stock or otherwise exercises significant influence over operating and financial policies of the Company are accounted for using the equity method of accounting. All significant intercompany accounts have been eliminated in consolidation.
Certain prior period amounts have been reclassified to conform to the 2020 presentation.
The Company is the beneficiary of two trusts created to comply with Federal Communications Commission (“FCC”) ownership rules.  The radio stations owned by the trusts are managed by independent trustees.  The trustees are marketing these stations for sale, and the stations will have to be sold unless any stations may be owned by the Company under then-current FCC rules, in which case the trusts will be terminated with respect to such stations.  The trust agreements stipulate that the Company must fund any operating shortfalls of the trust activities, and any excess cash flow generated by the trusts is distributed to the Company.  The Company is also the beneficiary of proceeds from the sale of stations held in the trusts.  The Company consolidates the trusts in accordance with ASC 810-10, which requires an enterprise involved with variable interest entities to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in the variable interest entity, as the trusts were determined to be a variable interest entity and the Company is the primary beneficiary under the trusts.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.
73



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accounts Receivable
Accounts receivable are recorded when the Company has an unconditional right to payment, either because it has satisfied a performance obligation prior to receiving payment from the customer or has a non-cancelable contract that has been billed in advance in accordance with the Company’s normal billing terms.
Accounts receivable are recorded at the invoiced amount, net of reserves for sales allowances and allowances for doubtful accounts. The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, it records a specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it recognizes reserves for bad debt based on historical experience of bad debts as a percent of accounts receivable for each business unit, adjusted for relative improvements or deteriorations in the agings and changes in current economic conditions. The Company believes its concentration of credit risk is limited due to the large number of its customers.
Business Combinations
The Company accounts for its business combinations under the acquisition method of accounting. The total cost of an acquisition is allocated to the underlying identifiable net assets, based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.  Determining the fair value of assets acquired and liabilities assumed requires management's judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items.  Various acquisition agreements may include contingent purchase consideration based on performance requirements of the investee.  The Company accounts for these payments in conformity with the provisions of ASC 805-20-30, which establish the requirements related to recognition of certain assets and liabilities arising from contingencies.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method at rates that, in the opinion of management, are adequate to allocate the cost of such assets over their estimated useful lives, which are as follows:
Buildings and improvements – 10 to 39 years
Towers, transmitters and studio equipment – 5 to 40 years
Furniture and other equipment – 3 to 7 years
Leasehold improvements – shorter of economic life or lease term assuming renewal periods, if appropriate
For assets associated with a lease or contract, the assets are depreciated at the shorter of the economic life or the lease or contract term, assuming renewal periods, if appropriate.  Expenditures for maintenance and repairs are charged to operations as incurred, whereas expenditures for renewal and betterments are capitalized.
The Company tests for possible impairment of property, plant, and equipment whenever events and circumstances indicate that depreciable assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.  When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value. 
Assets and businesses are classified as held for sale if their carrying amount will be recovered or settled principally through a sale transaction rather than through continuing use. The asset or business must be available for immediate sale and the sale must be highly probable within one year.
74



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Leases
The Company enters into operating lease contracts for land, buildings, structures and other equipment. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases primarily include land and building lease contracts and leases of radio towers. Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers. Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use ("ROU') assets and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively.
The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt or within Liabilities subject to compromise (see Note 3, Fresh Start Accounting).
ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.
Certain of the Company's operating lease agreements include rental payments that are adjusted periodically for inflationary changes. Payments due to changes in inflationary adjustments are included within variable rent expense, which is accounted for separately from periodic straight-line lease expense. Amounts related to insurance and property taxes in lease arrangements when billed on a pass-through basis are allocated to the lease and non-lease components of the lease based on their relative standalone selling prices.
Certain of the Company's leases provide options to extend the terms of the agreements. Generally, renewal periods are excluded from minimum lease payments when calculating the lease liabilities as, for most leases, the Company does not consider exercise of such options to be reasonably certain. As a result, unless a renewal option is considered reasonably assured, the optional terms and related payments are not included within the lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment." In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted the IBR used to value the Company's ROU assets and operating lease liabilities at the Effective Date (see Note 3, Fresh Start Accounting). Upon adoption of ASC 852 in the first quarter of 2019, the Company did not elect the practical expedient to combine non-lease components with the associated lease components. Upon application of fresh start accounting on the Effective Date, the Company elected to use the practical expedient to not separate non-lease components from the associated lease component for all classes of the Company's assets.
Intangible Assets
The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Audio segment.  The Company’s indefinite-lived intangible assets are not subject to amortization, but are tested for impairment at least annually. The Company tests for possible impairment of indefinite-lived intangible assets whenever events or changes in circumstances, such as a significant reduction in operating cash flow or a dramatic change in the manner for which the asset is intended to be used indicate that the carrying amount of the asset may not be recoverable. In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted its FCC licenses to their respective estimated fair values as of the Effective Date of $2,281.7 million (see Note 3, Fresh Start Accounting).
The Company normally performs its annual impairment test for its FCC licenses using a direct valuation technique as prescribed in ASC 805-20-S99.  The Company engages a third-party valuation firm to assist the Company in the development of these assumptions and the Company’s determination of the fair value of its FCC licenses. As discussed above, as a result of uncertainty related to COVID-19 and its negative impact on the Company's business and the public trading values of its debt and equity, the Company performed interim impairment tests on its indefinite-lived intangible assets as of March 31, 2020. The
75



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
interim impairment tests resulted in a non-cash impairment of the Company's FCC licenses of $502.7 million. The Company performed its annual impairment testing of indefinite-lived intangible assets as of July 1, 2020 and no additional impairment charges were recorded. See Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill.
Other intangible assets include definite-lived intangible assets.  The Company’s definite-lived intangible assets primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows.  The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets.  These assets are recorded at amortized cost. In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted Other intangible assets to their respective fair values at the Effective Date (see Note 3, Fresh Start Accounting).
The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.  When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.
Goodwill
At least annually, the Company performs its impairment test for each reporting unit’s goodwill.  The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.
The Company identified its reporting units in accordance with ASC 350-20-55. Generally, the Company's annual impairment test includes a full quantitative assessment, which involves the preparation of a fair value estimate for each reporting unit based on the most recent projected financial results, market and industry factors, including comparison to peer companies and the application of the Company's current estimated WACC. However, in connection with emergence from bankruptcy, the Company qualified for and adopted fresh start accounting on the Effective Date. As of May 1, 2019, the Company allocated its estimated enterprise fair value to its individual assets and liabilities based on their estimated fair values in conformity with ASC 805, "Business Combinations."

Upon application of fresh start accounting in accordance with ASC 852 in connection with the emergence from bankruptcy, the Company recorded goodwill of $3.3 billion, which represented the excess of Reorganization Value over the estimated fair value of the Company's assets and liabilities. Goodwill was further allocated to reporting units based on the relative fair values of the Company's reporting units as of May 1, 2019.

As discussed above, as a result of uncertainty related to COVID-19 and its negative impact on the Company's business and the public trading values of its debt and equity, the Company performed interim impairment tests on its long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020. The interim impairment tests resulted in a non-cash impairment of the Company's goodwill of $1.2 billion. The Company performed its annual impairment testing of goodwill and indefinite-lived intangible assets as of July 1, 2020 and no additional impairment charges were recorded. In addition, no further impairment was considered necessary in the fourth quarter of 2020. For more information, see Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill.

Nonconsolidated Affiliates
In general, investments in which the Company owns 20% to 50% of the common stock or otherwise exercises significant influence over the investee are accounted for under the equity method.  The Company does not recognize gains or losses upon the issuance of securities by any of its equity method investees.  The Company reviews the value of equity method investments and records impairment charges in the statement of operations as a component of “Equity in earnings (loss) of nonconsolidated affiliates” for any decline in value that is determined to be other-than-temporary.
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Other Investments
We apply Accounting Standards Update ("ASU") 2016-01 Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"), which requires us to measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in earnings. For equity securities without readily determinable fair values, we have elected the measurement alternative under which we measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Prior to the adoption of ASU 2016-01, marketable equity securities not accounted for under the equity method were classified as available-for-sale. For equity securities classified as available-for-sale, realized gains and losses were included in net income. Unrealized gains and losses on equity securities classified as available-for-sale were recognized in accumulated other comprehensive income (loss) ("AOCI"), net of tax. Equity securities without readily determinable fair values were recorded at cost.
The Company recorded noncash impairment charges of $0.9 million, $21.0 million, $8.3 million and $14.2 million during the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended 2018 (Predecessor), respectively. Such charge is recorded on the Statement of Comprehensive Income (Loss) in “Loss on investments, net”.
Financial Instruments
Due to their short maturity, the carrying amounts of accounts and notes receivable, accounts payable, accrued liabilities, and short-term borrowings approximated their fair values at December 31, 2020 and 2019.
Income Taxes
The Company accounts for income taxes using the liability method.  Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled.  Deferred tax assets are reduced by valuation allowances if the Company believes it is more likely than not that some portion or the entire asset will not be realized.  The Company has not provided U.S. federal income taxes for temporary differences with respect to investments in foreign subsidiaries.  It is not apparent that these temporary differences will reverse in the foreseeable future.  If any excess cash held by our foreign subsidiaries were needed to fund operations in the U.S., the Company could presently repatriate available funds without a requirement to accrue or pay U.S. taxes. The Company regularly reviews its tax liabilities on amounts that may be distributed in future periods and provides for foreign withholding and other current and deferred taxes on any such amounts, where applicable.
Revenue Recognition
The Company recognizes revenue when or as it satisfies a performance obligation by transferring a promised good or service to a customer. Where third-parties are involved in the provision of goods and services to a customer, revenue is recognized at the gross amount of consideration the Company expects to receive if the Company controls the promised good or service before it is transferred to the customer; otherwise, revenue is recognized at the net amount the Company retains. The Company receives payments from customers based on billing schedules that are established in its contracts, and deferred revenue is recorded when payment is received from a customer before the Company has satisfied the performance obligation or a non-cancelable contract has been billed in advance in accordance with the Company’s normal billing terms.
The primary source of revenue in the Audio segment is the sale of advertising on the Company’s broadcast radio stations, its iHeartRadio mobile application and website, station websites, and national and local live and virtual events. Revenues for advertising spots are recognized at the point in time when the advertisement is broadcast or streamed, while revenues for online display advertisements are recognized over time based on impressions delivered or time elapsed, depending upon the terms of the contract. Revenues for event sponsorships are recognized over the period of the event. Audio also generates revenues from programming talent, network syndication, traffic and weather data, and other miscellaneous transactions, which are recognized when the services are transferred to the customer. Audio's contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations.
The Company also generates revenue through contractual commissions realized from the sale of national spot and online advertising on behalf of clients of its full-service media representation business, Katz Media, which is part of the Audio and
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Media Services business. Revenues from these contracts are recognized at the point in time when the advertisements are broadcast. Because the Company is a representative of its media clients and does not control the advertising inventory before it is transferred to the advertiser, the Company recognizes revenue at the net amount of contractual commissions retained for its representation services. The Company’s media representation contracts typically have terms up to ten years in duration and are generally billed monthly upon satisfaction of the performance obligations.
The Company recognizes revenue in amounts that reflect the consideration it expects to receive in exchange for transferring goods or services to customers, excluding sales taxes and other similar taxes collected on behalf of governmental authorities (the "transaction price”). When this consideration includes a variable amount, the Company estimates the amount of consideration it expects to receive and only recognizes revenue to the extent that it is probable it will not be reversed in a future reporting period. Because the transfer of promised goods and services to the customer is generally within a year of scheduled payment from the customer, the Company is not typically required to consider the effects of the time value of money when determining the transaction price. Advertising revenue is reported net of agency commissions.
In order to appropriately identify the unit of accounting for revenue recognition, the Company determines which promised goods and services in a contract with a customer are distinct and are therefore separate performance obligations. If a promised good or service does not meet the criteria to be considered distinct, it is combined with other promised goods or services until a distinct bundle of goods or services exists. Certain of the Company’s contracts with customers include options for the customer to acquire additional goods or services for free or at a discount, and management judgment is required to determine whether these options are material rights that are separate performance obligations.
For revenue arrangements that contain multiple distinct goods or services, the Company allocates the transaction price to these performance obligations in proportion to their relative standalone selling prices or the best estimate of their fair values. The Company has concluded that the contractual prices for the promised goods and services in its standard contracts generally approximate management’s best estimate of standalone selling price as the rates reflect various factors such as the size and characteristics of the target audience, market location and size, and recent market selling prices. However, where the Company provides customers with free or discounted services as part of contract negotiations, management uses judgment to determine how much of the transaction price to allocate to these performance obligations.
Contract Costs
Incremental costs of obtaining a contract primarily relate to sales commissions, which are included in selling, general and administrative expenses and are generally commensurate with sales. These costs are generally expensed when incurred because the period of benefit is one year or less.
Advertising Expense
The Company records advertising expense as it is incurred.  Advertising expenses were $167.2 million, $126.0 million, $59.6 million and $201.2 million for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 (Predecessor), respectively, which include $133.0 million, $105.0 million, $46.0 million and $155.2 million in barter advertising, respectively.
Share-Based Compensation
Under the fair value recognition provisions of ASC 718-10, share-based compensation cost is measured at the grant date based on the fair value of the award.  For awards that vest based on service conditions, this cost is recognized as expense on a straight-line basis over the vesting period. For awards that will vest based on market or performance conditions, this cost is recognized when it becomes probable that the performance conditions will be satisfied.  Determining the fair value of share-based awards at the grant date requires assumptions and judgments, such as expected volatility, among other factors.
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Foreign Currency
Results of operations for foreign subsidiaries and foreign equity investees are translated into U.S. dollars using average exchange rates during the year.  The assets and liabilities of those subsidiaries and investees are translated into U.S. dollars using the exchange rates at the balance sheet date.  The related translation adjustments are recorded in a separate component of stockholders' equity, “Accumulated other comprehensive income (loss)”.  Foreign currency transaction gains and losses are included in Other income (expense), net in the Statement of Comprehensive Income (Loss).
Reclassifications
Certain prior period amounts have been reclassified to conform to the 2020 presentation. In the first quarter of 2020, in connection with a reorganization of the Company’s management structure after the Separation and emergence from the Chapter 11 cases, the Company reevaluated the classification of certain expenses to determine whether such expenses should be included within Direct operating expenses, Selling, general & administrative (“SG&A”) expenses or Corporate expenses. As a result, certain expenses were reclassified from Corporate expenses to Direct operating or SG&A expenses. In addition, certain expenses were reclassified from SG&A expenses to Direct operating expenses. The reclassifications had no impact on the Company's Operating Income (Loss) or Net Income (Loss). Accordingly, the Company recast the corresponding amounts in the prior period to conform to the current expense classifications. The corresponding current and prior period segment disclosures were recast to reflect the current expense classifications. See Note 15, Segment Data.
New Accounting Pronouncements Recently Adopted
During the second quarter of 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and finalized amendments to FASB ASC Subtopic 825-15, Financial Instruments-Credit Losses ("ASC 326").  The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.  The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses.  ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate.  Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a write-down.  The Company adopted the updated guidance in the first quarter of 2020 utilizing the modified retrospective approach, which resulted in the recognition of estimated credit loss reserves against certain available-for-sale debt securities from third-parties held by the Company.
Upon adoption, the Company recognized a $1.5 million cumulative-effect adjustment to opening retained earnings to reflect expected credit losses in relation to notes receivable held by the Company. In addition, the Company evaluated the potential impact of the COVID-19 pandemic on the collectability of its notes receivable from third-parties. To develop an estimate of the present value of expected cash flows of notes receivable, the Company used a probability-weighted discounted cash flow model. As a result of this analysis, the Company recognized an additional credit loss reserve against available-for-sale debt securities of $5.6 million, which was recognized within Loss on investments, net in the Company's Statement of Comprehensive Loss for the year ended December 31, 2020. The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses.

The FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences.  It also clarifies and simplifies other aspects of the accounting for income taxes.  For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.  Early adoption is permitted in interim or annual periods with any adjustments reflected as of the beginning of the annual period that includes that interim period.  Additionally, entities that elect early adoption must adopt all the amendments in the same period.  Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings.  The Company early adopted this standard, which did not have significant impact on our financial position, results of operations or cash flows.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides temporary optional expedients and exceptions to accounting guidance on contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied through December 31, 2022. The adoption of this standard did not have a significant impact on our financial position, results of operations or cash flows.

Restricted Cash 
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts reported in the Consolidated Statements of Cash Flows:
(In thousands)Successor Company
December 31,
2020
December 31,
2019
Cash and cash equivalents$720,662 $400,300 
Restricted cash included in:
  Other current assets(1)
— 11,318 
  Other assets525 — 
Total cash, cash equivalents and restricted cash in the Statement of Cash Flows$721,187 $411,618 
(1) During the quarter ended December 31, 2020, the Successor Company settled the remaining claims outstanding and provided a final distribution to all General Unsecured Claimholders. As a result the remaining balance held in the Guarantor General Unsecured Recovery Cash Pool pursuant to the terms of the Plan of Reorganization of $9.9M was released and was reclassified as cash and cash equivalents available for general use.

NOTE 2 - EMERGENCE FROM VOLUNTARY REORGANIZATION UNDER CHAPTER 11 PROCEEDINGS
Plan of Reorganization
As described in Note 1, on May 1, 2019, the Company and the other Debtors emerged from bankruptcy pursuant to the Plan of Reorganization. Capitalized terms not defined in this note are defined in the Plan of Reorganization.

On or following the Effective Date and pursuant to the Plan of Reorganization, the following occurred:
CCOH was separated from and ceased to be controlled by iHeartCommunications and its subsidiaries.
The existing indebtedness of iHeartCommunications of approximately $16 billion was discharged, the Company entered into the Term Loan Facility ($3,500 million) and issued the 6.375% Senior Secured Notes ($800 million) and the Senior Unsecured Notes ($1,450 million), collectively the “Successor Emergence Debt.”
The Company adopted an amended and restated certificate of incorporation and bylaws.
Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were canceled, and on the Effective Date, reorganized iHeartMedia issued an aggregate of 56,861,941 shares of iHeartMedia Class A common stock, 6,947,567 shares of Class B common stock and special warrants to purchase 81,453,648 shares of Class A common stock or Class B common stock to holders of claims pursuant to the Plan of Reorganization.
The following classes of claims received the Successor Emergence Debt and 99.1% of the new equity, as defined in the Plan of Reorganization:
Secured Term Loan / 2019 PGN Claims (Class 4)
Secured Non-9.0% PGN Due 2019 Claims Other Than Exchange 11.25% PGN Claims (Class 5A)
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Secured Exchange 11.25% PGN Claims (Class 5B)
iHC 2021 / Legacy Notes Claims (Class 6)
Guarantor Funded Debt against other Guarantor Debtors Other than CCH and TTWN (Class 7)
The holders of the Guarantor Funded Debt Unsecured Claims Against CCH (Class 7F) received their Pro Rata share of 100 percent of the CCOH Interests held by the Debtors and CC Finco, LLC and Broader Media, LLC. Refer to the discussion below regarding the Separation Transaction.
Settled the following classes of claims in cash:
General Unsecured Claims Against Non-Obligor Debtors (Class 7A); paid in full
General Unsecured Claims Against TTWN Debtors (Class 7B); paid in full
iHC Unsecured Claims (Class 7D); paid 14.44% of allowed claim
Guarantor General Unsecured Claims (Class 7G); paid minimum of 45% and maximum of 55% of allowed claim
The CCOH Due From Claims (Class 8) represent the negotiated claim between iHeartMedia and CCOH, which was settled in cash on the date of emergence at 14.44%.
The Predecessor Company’s common stockholders (Class 9) received their pro rata share of 1% of the new common stock; provided that 0.1% of the new common stock that otherwise would have been distributed to the Company's former sponsors was instead distributed to holders of Legacy Notes Claims.
The Company entered into a new $450.0 million ABL Facility, which was undrawn at emergence.
The Company funded the Guarantor General Unsecured Recovery Cash Pool for $17.5 million in order to settle the Class 7G General Unsecured Claims.
The Company funded the Professional Fee Escrow Account.
On the Effective Date, the iHeartMedia, Inc. 2019 Equity Incentive Plan (the “Post-Emergence Equity Plan”) became effective. The Post-Emergence Equity Plan allows the Company to grant stock options and restricted stock units representing up to 12,770,387 shares of Class A common stock for key members of management and service providers and up to 1,596,298 for non-employee members of the board of directors. The amounts of Class A common stock reserved under the Post-Emergence Equity Plan were equal to 8% and 1%, respectively, of the Company’s fully-diluted and distributed shares of Class A common stock as of the Effective Date.
In addition, as part of the Separation, iHeartCommunications and CCOH consummated the following transactions:

the cash sweep agreement under the then-existing corporate services agreement and any agreements or licenses requiring royalty payments to iHeartMedia by CCOH for trademarks or other intellectual property (“Trademark License Fees”) were terminated;

iHeartCommunications, iHeartMedia, iHeartMedia Management Services, Inc. (“iHM Management Services”) and CCOH entered into a transition services agreement (the “Transition Services Agreement”) pursuant to which, the Company or its subsidiaries will provide administrative services historically provided to CCOH by iHeartCommunications for a period of one year after the Effective Date, which was terminated on August 31, 2020;

the Trademark License Fees charged to CCOH during the post-petition period were waived by iHeartMedia;

iHeartMedia contributed the rights, title and interest in and to all tradenames, trademarks, service marks, common law marks and other rights related to the Clear Channel tradename (the “CC Intellectual Property”) to CCOH;

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iHeartMedia paid $115.8 million to CCOH, which consisted of the $149.0 million payment by iHeartCommunications to CCOH as CCOH’s recovery of its claims under the Due from iHeartCommunications Note, partially offset by the $33.2 million net amount payable to iHeartCommunications under the post-petition intercompany balance between iHeartCommunications and CCOH after adjusting for the post-petition Trademark License Fees which were waived as part of the settlement agreement;

iHeartCommunications entered into a revolving loan agreement with Clear Channel Outdoor, LLC (“CCOL”) and Clear Channel International, Ltd., wholly-owned subsidiaries of CCOH, to provide a line of credit in an aggregate amount not to exceed $200 million at the prime rate of interest, which was terminated by the borrowers on July 30, 2019 in connection with the closing of an underwritten public offering of common stock by CCOH; and

iHeart Operations, Inc. issued $60.0 million in preferred stock to a third party for cash (see Note 9, Long-Term Debt).



NOTE 3 - FRESH START ACCOUNTING
Fresh Start
In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and adopted fresh start accounting on the Effective Date. The Company was required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (ii) the reorganization value of the Company's assets immediately prior to confirmation of the Plan of Reorganization was less than the post-petition liabilities and allowed claims.
In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair values in conformity with ASC 805, "Business Combinations." The reorganization value represents the fair value of the Successor Company's assets before considering liabilities. The excess reorganization value over the fair value of identified tangible and intangible assets is reported as goodwill. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after May 1, 2019 are not comparable with the consolidated financial statements as of or prior to that date.
Reorganization Value

As set forth in the Plan of Reorganization and the Disclosure Statement, the enterprise value of the Successor Company was estimated to be between $8.0 billion and $9.5 billion. Based on the estimates and assumptions discussed below, the Company estimated the enterprise value to be $8.75 billion, which was the mid-point of the range of enterprise value as of the Effective Date.
Management and its valuation advisors estimated the enterprise value of the Successor Company, which was approved by the Bankruptcy Court. The selected publicly traded companies analysis approach, the discounted cash flow analysis approach and the selected transactions analysis approach were all utilized in estimating the enterprise value. The use of each approach provides corroboration for the other approaches. To estimate enterprise value utilizing the selected publicly traded companies analysis method, valuation multiples derived from the operating data of publicly-traded benchmark companies to the same operating data of the Company were applied. The selected publicly traded companies analysis identified a group of comparable companies giving consideration to lines of business and markets served, size and geography. The valuation multiples were derived based on historical and projected financial measures of revenue and earnings before interest, taxes, depreciation and amortization and applied to projected operating data of the Company.
To estimate enterprise value utilizing the discounted cash flow method, an estimate of future cash flows for the period 2019 to 2022 with a terminal value was determined and discounted the estimated future cash flows to present value. The expected cash flows for the period 2019 to 2022 with a terminal value were based upon certain financial projections and assumptions provided to the Bankruptcy Court. The expected cash flows for the period 2019 to 2022 were derived from earnings forecasts and assumptions regarding growth and margin projections, as applicable. A terminal value was included, calculated using the terminal multiple method, which estimates a range of values at which the Successor Company will be valued at the end of the Projection Period based on applying a terminal multiple to final year Adjusted EBITDA (referred to as "OIBDAN" in the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
documents filed with the Bankruptcy Court), which is defined as consolidated operating income adjusted to exclude non-cash compensation expenses included within corporate expenses, as well as Depreciation and amortization, Impairment charges and Other operating income (expense), net.
To estimate enterprise value utilizing the selected transactions analysis, valuation multiples were derived from an analysis of consideration paid and net debt assumed from publicly disclosed merger or acquisition transactions, and such multiples were applied to the broadcast cash flows of the Successor Company. The selected transactions analysis identified companies and assets involved in publicly disclosed merger and acquisition transactions for which the targets had operating and financial characteristics comparable in certain respects to the Successor Company.
The following table reconciles the enterprise value per the Plan of Reorganization to the implied value (for fresh start accounting purposes) of the Successor Company's common stock as of the Effective Date:
(In thousands, except per share data)
Enterprise Value $8,750,000 
Plus:
  Cash and cash equivalents 63,142 
Less:
  Debt issued upon emergence (5,748,178)
  Finance leases and short-term notes (61,939)
  Mandatorily Redeemable Preferred Stock(60,000)
  Changes in deferred tax liabilities(1)
(163,910)
  Noncontrolling interest (8,943)
  Implied value of Successor Company common stock $2,770,172 
Shares issued upon emergence (2)
145,263 
Per share value $19.07 

(1) Difference in the assumed effect of deferred taxes in the calculation of enterprise value versus the actual effect of deferred taxes as of May 1.
(2) Includes the Class A Common Stock, Class B Common Stock and Special Warrants issued at emergence.

The reconciliation of the Company’s enterprise value to reorganization value as of the Effective Date is as follows:
(In thousands)
Enterprise Value $8,750,000 
Plus:
  Cash and cash equivalents 63,142 
  Current liabilities (excluding Current portion of long-term debt)426,944 
  Deferred tax liability596,850 
  Other long-term liabilities 54,393 
 Noncurrent operating lease obligations 818,879 
Reorganization value $10,710,208 
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Consolidated Balance Sheet

The adjustments set forth in the following consolidated balance sheet as of May 1, 2019 reflect the effect of the Separation (reflected in the column "Separation of CCOH Adjustments"), the consummation of the transactions contemplated by the Plan of Reorganization that are incremental to the Separation (reflected in the column "Reorganization Adjustments") and the fair value adjustments as a result of applying fresh start accounting (reflected in the column "Fresh Start Adjustments"). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities, as well as significant assumptions or inputs.
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(In thousands)Separation of CCOH AdjustmentsReorganization AdjustmentsFresh Start Adjustments
Predecessor(A)(B)(C)Successor
CURRENT ASSETS
Cash and cash equivalents$175,811 $— $(112,669)(1)$— $63,142 
Accounts receivable, net748,326 — — (10,810)(1)737,516 
Prepaid expenses127,098 — — (24,642)(2)102,456 
Other current assets22,708 — 8,125 (2)(1,668)(3)29,165 
Current assets of discontinued operations1,000,753 (1,000,753)(1)— — — 
Total Current Assets2,074,696 (1,000,753)(104,544)(37,120)932,279 
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net499,001 — — 333,991 (4)832,992 
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses2,326,626 — — (44,906)(5)2,281,720 
Other intangibles, net104,516 — — 2,240,890 (5)2,345,406 
Goodwill3,415,492 — — (92,127)(5)3,323,365 
OTHER ASSETS
Operating lease right-of-use assets355,826 — — 554,278 (6)910,104 
Other assets139,409 — (384)(3)(54,683)(2)84,342 
Long-term assets of discontinued operations5,351,513 (5,351,513)(1)— — — 
Total Assets$14,267,079 $(6,352,266)$(104,928)$2,900,323 $10,710,208 
CURRENT LIABILITIES  
Accounts payable$41,847 $— $3,061 (4)$— $44,908 
Current operating lease liabilities470 — 31,845 (7)39,092 (6)71,407 
Accrued expenses208,885 — (32,250)(5)2,328 (9)178,963 
Accrued interest462 — (462)(6)— — 
Deferred revenue128,452 — — 3,214 (7)131,666 
Current portion of long-term debt46,618 — 6,529 (7)40 (6)53,187 
Current liabilities of discontinued operations999,778 (999,778)(1)— — — 
Total Current Liabilities1,426,512 (999,778)8,723 44,674 480,131 
Long-term debt— — 5,758,516 (8)(1,586)(8)5,756,930 
Series A Mandatorily Redeemable Preferred Stock— — 60,000 (9)— 60,000 
Noncurrent operating lease liabilities828 — 398,154 (7)419,897 (6)818,879 
Deferred income taxes— — 575,341 (10)185,419 (10)760,760 
Other long-term liabilities121,081 — (64,524)(11)(2,164)(7)54,393 
Liabilities subject to compromise16,770,266 — (16,770,266)(7)— — 
Long-term liabilities of discontinued operations7,472,633 (7,472,633)(1)— — — 
Commitments and contingent liabilities (Note 10)
STOCKHOLDERS’ EQUITY (DEFICIT)
Noncontrolling interest13,584 (13,199)(1)— 8,558 (11)8,943 
Predecessor common stock92 — (92)(12)— — 
Successor Class A Common Stock— — 57 (13)— 57 
Successor Class B Common Stock— — (13)— 
Predecessor additional paid-in capital2,075,130 — (2,075,130)(12)— — 
Successor additional paid-in capital— 2,770,108 (13)— 2,770,108 
Accumulated deficit(13,288,497)1,825,531 (1)9,231,616 (14)2,231,350 (12)— 
Accumulated other comprehensive loss(321,988)307,813 (1)— 14,175 (12)— 
Cost of share held in treasury(2,562)— 2,562 (12)— — 
Total Stockholders' Equity (Deficit)(11,524,241)2,120,145 9,929,128 2,254,083 2,779,115 
Total Liabilities and Stockholders' Equity (Deficit)$14,267,079 $(6,352,266)$(104,928)$2,900,323 $10,710,208 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Separation of CCOH Adjustments
(1) On May 1, 2019, as part of the Separation, the outstanding shares of both classes of CCOH common stock were consolidated such that CCH held all of the outstanding CCOH Class A common stock that was held by subsidiaries of iHeartCommunications, through a series of share distributions by other subsidiaries that held CCOH common stock and a conversion of CCOH Class B common stock that CCH held to CCOH Class A common stock. Prior to the Separation, iHeartCommunications owned approximately 89.1% of the economic rights and approximately 99% of the voting rights of CCOH. To complete the Separation, CCOH merged with and into CCH, with CCH surviving the merger and changing its name to Clear Channel Outdoor Holdings, Inc. (“New CCOH”), and pre-merger shares of CCOH Class A common stock (other than shares of CCOH Class A common stock held by CCH or any direct or indirect wholly-owned subsidiary of CCH) were converted into an equal number of shares of post-merger common stock of New CCOH. iHeartCommunications transferred the post-merger common stock of New CCOH it held to Claimholders pursuant to the Plan of Reorganization but retained 31,269,762 shares. Such retained shares were distributed to two affiliated Claimholders on July 18, 2019. Upon completion of the merger and Separation, New CCOH became an independent public company. Upon distribution of the shares held by iHeartCommunications, the Company does not hold any ownership interest in CCOH.

    The assets and liabilities of CCOH have been classified as discontinued operations. The discontinued operations reflect the assets and liabilities of CCOH, which are presented as discontinued operations as of the Effective Date. CCOH’s assets and liabilities are adjusted to: (1) eliminate the balance on the Due from iHeartCommunications Note and the balance on the intercompany payable due to iHeartCommunications from CCOH’s consolidated balance sheet, which are intercompany amounts that were eliminated in consolidation; (2) eliminate CCOH’s Noncontrolling interest and treasury shares; and (3) eliminate other intercompany balances.

B. Reorganization Adjustments
In accordance with the Plan of Reorganization, the following adjustments were made:
(1)     The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan:
(In thousands)
Cash at May 1, 2019 (excluding discontinued operations)$175,811 
Sources:
  Proceeds from issuance of Mandatorily Redeemable Preferred Stock$60,000 
  Release of restricted cash from other assets into cash 3,428 
Total sources of cash$63,428 
Uses:
  Payment of Mandatorily Redeemable Preferred Stock issuance costs$(1,513)
  Payment of New Term Loan Facility to settle certain creditor claims (1,822)
  Payments for Emergence debt issuance costs (7,213)
  Funding of the Guarantor General Unsecured Recovery Cash Pool (17,500)
  Payments for fully secured claims and general unsecured claims (1,990)
  Payment of contract cure amounts (15,763)
  Payment of consenting stakeholder fees (4,000)
  Payment of professional fees (85,091)(a)
  Funding of Professional Fees Escrow Account (41,205)(a)
Total uses of cash$(176,097)
Net uses of cash$(112,669)
Cash upon emergence$63,142 
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(a) Approximately $30.5 million of professional fees paid at emergence were accrued as of May 1, 2019. These payments also reflect both the payment of success fees for $86.1 million and other professionals paid directly at emergence.

(2)     Pursuant to the terms of the Plan of Reorganization, on the Effective Date, the Company funded the Guarantor General Unsecured Recovery Cash Pool account in the amount of $17.5 million, which was reclassified as restricted cash within Other current assets. The Company made payments of $6.0 million through the Cash Pool at the time of emergence. Additionally, $3.4 million of restricted cash previously held to pay critical utility vendors was reclassified to cash.

(3)     Reflects the write-off of prepaid expenses related to the $2.3 million of prepaid premium for Predecessor Company's director and officer insurance policy, offset by the accrual of future reimbursements of $1.9 million for negotiated discounts related to the professional fee escrow account.

(4) Reflects the reinstatement of $3.1 million of accounts payable included within Liabilities subject to compromise to be satisfied in the ordinary course of business.

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(5)    Reflects the reduction of accrued expenses related to the $21.2 million of professional fees paid directly, $9.3 million of professional fees paid through the Professional Fee Escrow Account and other accrued expense items. Additionally, the Company reinstated accrued expenses included within Liabilities subject to compromise to be satisfied in the ordinary course of business.
(In thousands)
Reinstatement of accrued expenses$551 
Payment of professional fees(21,177)
Payment of professional fees through the escrow account(9,260)
Impact on other accrued expenses(2,364)
  Net impact on Accrued expenses$(32,250)
(6)    Reflects the write-off of the DIP facility accrued interest associated with the DIP facility fees paid at emergence.
    
(7)    As part of the Plan of Reorganization, the Bankruptcy Court approved the settlement of claims reported within Liabilities subject to compromise in the Company's Consolidated balance sheet at their respective allowed claim amounts.

The table below indicates the disposition of Liabilities subject to compromise:
(In thousands)
Liabilities subject to compromise pre-emergence$16,770,266 
To be reinstated on the Effective Date:
  Deferred taxes$(596,850)
  Accrued expenses(551)
  Accounts payable(3,061)
  Finance leases and other debt(16,867)(a)
  Current operating lease liabilities(31,845)
  Noncurrent operating lease liabilities(398,154)
  Other long-term liabilities(14,518)(b)
Total liabilities reinstated$(1,061,846)
Less amounts settled per the Plan of Reorganization
  Issuance of new debt $(5,750,000)
  Payments to cure contracts(15,763)
  Payments for settlement of general unsecured claims from escrow account(5,822)
  Payments for fully secured and other claim classes at emergence(1,990)
Equity issued at emergence to creditors in settlement of Liabilities subject to Compromise(2,742,471)
Total amounts settled(8,516,046)
Gain on settlement of Liabilities Subject to Compromise$7,192,374 
(a) Includes finance lease liabilities and other debt of $6.6 million and $10.3 million classified as current and long-term debt, respectively.

(b) Reinstatement of Other long-term liabilities were as follows:
    
(In thousands)
Reinstatement of long-term asset retirement obligations$3,527 
Reinstatement of non-qualified deferred compensation plan10,991 
  Total reinstated Other long-term liabilities$14,518 
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(8)     The exit financing consists of the Term Loan Facility of approximately $3.5 billion and 6.375% Senior Secured Notes totaling $800 million, both maturing seven years from the date of issuance, the Senior Unsecured Notes totaling $1.45 billion, maturing eight years from the date of issuance, and a $450 million ABL Facility with no amount drawn at emergence, which matures on June 14, 2023.

    Upon emergence, the Company paid cash of $1.8 million to settle certain creditor claims for which claims were designated to receive term loans pursuant to the Plan of Reorganization.

The remaining $10.3 million is related to the reinstatement of the Long-term portion of finance leases and other debt as described above.
(In thousands)TermInterest RateAmount
Term Loan Facility7 years
Libor + 4.00%
$3,500,000 
6.375% Senior Secured Notes
7 years6.375%800,000 
Senior Unsecured Notes8 years8.375%1,450,000 
Asset-based Revolving Credit Facility4 years
Varies(a)
— 
  Total Long-Term Debt - Exit Financing$5,750,000 
Less:
Payment of Term Loan Facility to settle certain creditor claims(1,822)
Net proceeds from exit financing at emergence$5,748,178 
Long-term portion of finance leases and other debt reinstated10,338 
  Net impact on Long-term debt$5,758,516 
(a)     Borrowings under the ABL Facility bear interest at a rate per annum equal to the applicable rate plus, at iHeartCommunications’ option, either (x) a eurocurrency rate or (y) a base rate. The applicable margin for borrowings under the ABL Facility range from 1.25% to 1.75% for eurocurrency borrowings and from 0.25% to 0.75% for base-rate borrowings, in each case, depending on average excess availability under the ABL Facility based on the most recently ended fiscal quarter.

(9)     Reflects the issuance by iHeart Operations of $60.0 million in aggregate liquidation preference of its Series A Perpetual Preferred Stock, par value $0.001 per share. On May 1, 2029, the shares of the Preferred Stock will be subject to mandatory redemption for $60.0 million in cash, plus any accrued and unpaid dividends, unless waived by the holders of the Preferred Stock.

(10) Reflects the reinstatement of deferred tax liabilities included within Liabilities subject to compromise of $596.9 million, offset by an adjustment to net deferred tax liabilities of $21.5 million. Upon emergence from the Chapter 11 Cases, iHeartMedia’s federal and state net operating loss carryforwards were reduced in accordance with Section 108 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), due to cancellation of debt income, which is excluded from U.S. federal taxable income. The estimated remaining deferred tax assets attributed to federal and state net operating loss carryforwards upon emergence totaled $114.9 million. The adjustments reflect a reduction in deferred tax assets for federal and state net operating loss carryforwards as described above, a reduction in deferred tax liabilities attributed to long-term debt as a result of the restructuring of our indebtedness upon emergence and a reduction in valuation allowance.

(11) Reflects the reinstatement of Other long-term liabilities from Liabilities subject to compromise, offset by the reduction of liabilities for unrecognized tax benefits classified as Other long-term liabilities that were discharged and effectively settled upon emergence.
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(In thousands)
Reinstatement of long-term asset retirement obligations$3,527 
Reinstatement of non-qualified pension plan10,991 
Reduction of liabilities for unrecognized tax benefits(79,042)
  Net impact to Other long-term liabilities$(64,524)
(12) Pursuant to the terms of the Plan of Reorganization, as of the Effective Date, all Predecessor common stock and stock-based compensation awards were canceled without any distribution. As a result of the cancellation, the Company recognized $1.5 million in compensation expense related to the unrecognized portion of share-based compensation as of the Effective Date.

(13) Reflects the issuance of Successor Company equity, including the issuance of 56,861,941 shares of iHeartMedia Class A common stock, 6,947,567 shares of Class B common stock and special warrants to purchase 81,453,648 shares of Class A common stock or Class B common stock in exchange for claims against or interests in iHeartMedia pursuant to the Plan of Reorganization.
(In thousands)
Equity issued to Class 9 Claimholders (prior equity holders)$27,701 
Equity issued to creditors in settlement of Liabilities subject to compromise 2,742,471 
  Total equity issued at emergence $2,770,172 
(14) The table reflects the cumulative impact of the reorganization adjustments discussed above:
(In thousands)
Gain on settlement of Liabilities subject to compromise $7,192,374 
Payment of professional fees upon emergence(11,509)
Payment of success fees upon emergence (86,065)
Cancellation of unvested stock-based compensation awards(1,530)
Cancellation of Predecessor prepaid director and officer insurance policy(2,331)
Write-off of debt issuance and Mandatorily Redeemable Preferred Stock costs incurred at emergence(8,726)
  Total Reorganization items, net $7,082,213 
Income tax benefit $102,914 
Cancellation of Predecessor Equity 2,074,190 (a)
Issuance of Successor Equity to prior equity holders (27,701)
Net Impact on Accumulated deficit$9,231,616 
(a) This value is reflective of Predecessor common stock, Additional paid in capital and the recognition of $1.5 million in compensation expense related to the unrecognized portion of share-based compensation, less Treasury stock.

C. Fresh Start Adjustments
We have applied fresh start accounting in accordance with ASC 852. Fresh start accounting requires the revaluation of our assets and liabilities to fair value, including both existing and new intangible assets, such as FCC licenses, developed technology, customer relationships and tradenames. Fresh start accounting also requires the elimination of all predecessor earnings or deficits in Accumulated deficit and Accumulated other comprehensive loss. These adjustments reflect the actual amounts recorded as of the Effective Date.

(1)     Reflects the fair value adjustment as of May 1, 2019 made to accounts receivable to reflect management's best estimate of the expected collectability of accounts receivable balances.

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(2)     Reflects the fair value adjustment as of May 1, 2019 to eliminate certain prepaid expenses related to software implementation costs and other upfront payments. The Company historically incurred third-party implementation fees in connection with installing various cloud-based software products, and these amounts were recorded as prepaid expenses and recognized as a component of selling, general and administrative expense over the term of the various contracts. The Company determined that the remaining unamortized costs related to such implementation fees do not provide any rights that result in future economic benefits. In addition, the Company pays signing bonuses to certain of its on-air personalities, and these amounts were recorded as prepaid expenses and recognized as a component of Direct operating expenses over the terms of the various contracts. To the extent these contracts do not contain substantive claw-back provisions, these prepaid amounts do not provide any enforceable rights that result in future economic benefits. Accordingly, the balances related to these contracts as of May 1, 2019 were adjusted to zero.

(3) Reflects the fair value adjustment to eliminate receivables related to tenant allowances per certain lease agreements. These receivables were incorporated into the recalculated lease obligations per ASC 842.

(4)     Reflects the fair value adjustment to recognize the Company’s property, plant and equipment as of May 1, 2019 based on the fair values of such property, plant and equipment. Property was valued using a market approach comparing similar properties to recent market transactions. Equipment and towers were valued primarily using a replacement cost approach. Internally-developed and owned software technology assets were valued primarily using the Royalty Savings Method, similar to the approach used in valuing the Company’s tradenames and trademarks. Estimated royalty rates were determined for each of the software technology assets considering the relative contribution to the Company’s overall profitability as well as available public market information regarding market royalty rates for similar assets. The selected royalty rates were applied to the revenue generated by the software technology assets. The forecasted cash flows expected to be generated as a result of the royalty savings were discounted to present value utilizing a discount rate considering overall business risks and risks associated with the asset being valued. For certain of the software technology assets, the Company used the cost approach which utilized historical financial data regarding development costs and expected future profit associated with the assets. The adjustment to the Company’s property, plant and equipment consists of a $182.9 million increase in tangible property and equipment and a $151.0 million increase in software technology assets
    
(5) Historical goodwill and other intangible assets have been eliminated and the Company has recognized certain intangible assets at estimated current fair values as part of the application of fresh start accounting, with the most material intangible assets being the FCC licenses related to the Company’s 854 radio stations. The Company has also recorded customer-related and marketing-related intangible assets, including the iHeart tradename.

The following table sets forth estimated fair values of the components of these intangible assets and their estimated useful lives:
(In thousands)Estimated Fair ValueEstimated Useful Life
     FCC licenses$2,281,720 (a)Indefinite
     Customer / advertiser relationships1,643,670 (b)
5 - 15 years
     Talent contracts373,000 (b)
2 - 10 years
     Trademarks and tradenames321,928 (b)
7 - 15 years
     Other6,808 (c)
Total intangible assets upon emergence$4,627,126 
Elimination of historical acquired intangible assets(2,431,142)
Fresh start adjustment to acquired intangible assets$2,195,984 
(a) FCC licenses. The fair value of the indefinite-lived FCC licenses was determined primarily using the direct valuation method of the Income Approach and, for smaller markets a combination of the Income approach and the Market Approach. The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its FCC licenses.

    Under the direct valuation method, the fair value of the FCC licenses was calculated at the market level as prescribed by ASC 350. The application of the direct valuation method attempts to isolate the income that is
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properly attributable to the FCC licenses alone (that is, apart from tangible and identified intangible assets and goodwill). It is based upon modeling a hypothetical “greenfield” build-up to a “normalized” enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been paid for (or added) as part of the build-up process. Under the direct valuation method, it is assumed that rather than acquiring FCC licenses as part of a going concern business, the buyer hypothetically obtains FCC licenses and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flow model which results in value that is directly attributable to the FCC licenses. In applying the direct valuation method to the Company’s FCC licenses, the licenses are grouped by type (e.g. FM licenses vs. AM licenses) and market size in order to ensure appropriate assumptions are used in valuing the various FCC licenses based on population and demographics that influence the level of revenues generated by each FCC license, using industry projections. The key assumptions used in applying the direct valuation method include market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate (“WACC”) and terminal values. The WACC was calculated by weighting the required returns on interest-bearing debt and common equity capital in proportion to their estimated percentages based on a market participant capital structure.

    For licenses valued using the Market Transaction Method, the Company used publicly available data, which included sales of comparable radio stations and FCC auction data involving radio broadcast licenses to estimate the fair value of FCC licenses. Similar to the application of the Income approach for the FCC licenses, the Company grouped licenses by type and market size for comparison to historical market transactions.

    The historical book value of the FCC licenses as of May 1, 2019 was subtracted from the fair value of the FCC licenses to determine the adjustment to decrease the value of Indefinite-lived intangible assets-licenses by $44.9 million.

(b) Other intangible assets. Definite-lived intangible assets include customer/advertiser relationships, talent contracts for on-air personalities, trademarks and tradenames and other intangible assets. The Company engaged a third-party valuation firm to assist in developing the assumptions and determining the fair values of each of these assets.

For purposes of estimating the fair values of customer/advertiser relationships and talent contracts, the Company primarily utilized the Income Approach (specifically, the multi-period excess earnings method, or MPEEM) to estimate fair value based on the present value of the incremental after-tax cash flows attributable only to the subject intangible assets after deducting contributory asset charges. The cash flows attributable to each grouping of customer/advertiser relationships were adjusted for the appropriate contributory asset charges (e.g., FCC licenses, working capital, tradenames, technology, workforce, etc.). The discount rate utilized to present-value the after-tax cash flows was selected based on consideration of the overall business risks and the risks associated with the specific assets being valued. Additionally, for certain advertiser relationships the Company used the Cost Approach using historical financial data regarding the sales, administrative and overhead expenses related to the Company’s selling efforts associated with revenue for both existing and new advertisers. The ratio of expenses for selling efforts to revenue was applied to total revenue from new customers to determine an estimated cost per revenue dollar of revenue generated by new customers. This ratio was applied to total revenue from existing customers to estimate the replacement cost of existing customer/advertiser relationships. The historical book value of customer/advertiser relationships as of May 1, 2019 was subtracted from the fair value of the customer/advertiser relationships determined as described above to determine the adjustment to increase the value of the customer/advertiser relationship intangible assets by $1,604.1 million.

For purposes of estimating the fair value of trademarks and tradenames, the Company primarily used the Royalty Savings Method, a variation of the Income approach. Estimated royalty rates were determined for each of the trademarks and tradenames considering the relative contribution to the Company’s overall profitability as well as available public information regarding market royalty rates for similar assets. The selected royalty rates were applied to the revenue generated by the trademarks and tradenames to determine the amount of royalty payments saved as a result of owning these assets. The forecasted cash flows expected to be generated as a result of the royalty savings were discounted to present value utilizing a discount rate considering overall business risks and risks associated with the asset being valued. The historical book values of talent contracts, trademarks and
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tradenames and other intangible assets as of May 1, 2019 were subtracted from the fair values determined as described above to determine the adjustments as follows:
(In millions)
Customer/advertiser relationships$1,604.1 increase in value
Talent contracts361.6 increase in value
Trademarks and tradenames274.4 increase in value
Other0.8 increase in value
Total fair value adjustment$2,240.9 increase in value
(c) Included within other intangible assets are permanent easements, which have an indefinite useful life. All other intangible assets are amortized over the respective lives of the agreements, or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows.

    The following table sets forth the adjustments to goodwill:
(In thousands)
Reorganization value $10,710,208 
Less: Fair value of assets (excluding goodwill) (7,386,843)
Total goodwill upon emergence 3,323,365 
Elimination of historical goodwill (3,415,492)
Fresh start adjustment to goodwill $(92,127)


(6)     The operating lease obligation as of May 1, 2019 had been calculated using an incremental borrowing rate applicable to the Company while it was a debtor-in-possession before its emergence from bankruptcy. Upon application of fresh start accounting, the lease obligation was recalculated using the incremental borrowing rate applicable to the Company after emergence from bankruptcy and commensurate to its new capital structure. The incremental borrowing rate used decreased from 12.44% as of March 31, 2019 to 6.54% as of May 1, 2019. As a result of this decrease, the Company's Operating lease liabilities and corresponding Operating lease right-of-use assets increased by $541.2 million to reflect the higher balances resulting from the application of a lower incremental borrowing rate. The Operating lease right-of-use-assets were further adjusted to reflect the resetting of the Company's straight-line lease calculation. In addition, the Company increased the Operating lease right-of-use assets to recognize $13.1 million related to the favorable lease contracts.

(7)     Reflects the fair value adjustment to adjust deferred revenue and other liabilities as of May 1, 2019 to its estimated fair value. The fair value of the deferred revenue was determined using the market approach and the cost approach. The market approach values deferred revenue based on the amount an acquirer would be required to pay a third party to assume the remaining performance obligations. The cost approach values deferred revenue utilizing estimated costs that will be incurred to fulfill the obligation plus a normal profit margin for the level of effort or assumption of risk by the acquirer. Additionally, a deferred gain was recorded at the time of the certain historical sale-leaseback transaction. During the implementation of ASC 842, the operating portion was written off as of January 1, 2019. The financing lease deferred gain remained. As part of fresh start accounting, this balance of $0.9 million was written off.

(8) Reflects the fair value adjustment to adjust Long-term debt as of May 1, 2019. This adjustment is to state the Company's finance leases and other pre-petition debt at estimated fair values.

(9) Reflects the fair value adjustment to adjust Accrued expenses as of May 1, 2019. This adjustment primarily relates to adjusting vacation accruals to estimated fair values.

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(10) Reflects a net increase to deferred tax liabilities for fresh start adjustments attributed primarily to property, plant and equipment and intangible assets, the effects of which are partially offset by a decrease in the valuation allowance. The Company believes it is more likely than not that its deferred tax assets remaining after the Reorganization and emergence will be realized based on taxable income from reversing deferred tax liabilities primarily attributable to property, plant and equipment and intangible assets.

(11) Reflects the adjustment as of May 1, 2019 to state the noncontrolling interest balance at estimated fair value.
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(12) The table below reflects the cumulative impact of the fresh start adjustments as discussed above:
(In thousands)
Fresh start adjustment to Accounts receivable, net$(10,810)
Fresh start adjustment to Other current assets (1,668)
Fresh start adjustment to Prepaid expenses (24,642)
Fresh start adjustment to Property, plant and equipment, net 333,991 
Fresh start adjustment to Intangible assets 2,195,984 
Fresh start adjustment to Goodwill (92,127)
Fresh start adjustment to Operating lease right-of-use assets554,278 
Fresh start adjustment to Other assets (54,683)
Fresh start adjustment to Accrued expenses (2,328)
Fresh start adjustment to Deferred revenue (3,214)
Fresh start adjustment to Debt 1,546 
Fresh start adjustment to Operating lease obligations(458,989)
Fresh start adjustment to Other long-term liabilities 2,164 
Fresh start adjustment to Noncontrolling interest(8,558)
  Total Fresh Start Adjustments impacting Reorganization items, net$2,430,944 
Reset of Accumulated other comprehensive income(14,175)
Income tax expense (185,419)
  Net impact to Accumulated deficit$2,231,350 

Reorganization Items, Net

The tables below present the Reorganization items incurred and cash paid for Reorganization items as a result of the Chapter 11 Cases during the periods presented:
(In thousands)Successor CompanyPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192018
Write-off of deferred loans costs $— $— $— $(67,079)
Write-off of original issue discount — — — (131,100)
Debtor-in-possession refinancing costs — — — (10,546)
Professional fees and other bankruptcy related costs— — (157,487)(147,119)
Net gain on settlement of Liabilities subject to compromise — — 7,192,374 (275)
Impact of fresh start adjustments— — 2,430,944 — 
Other items, net — — (4,005)— 
Reorganization items, net$— $— $9,461,826 $(356,119)
Cash payments for Reorganization items, net$443 $18,360 $183,291 $103,727 

The Company incurred additional professional fees related to the bankruptcy, post-emergence, of $6.3 million and $26.5 million for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively,
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which are included within Other income (expense), net in the Company's Consolidated Statements of Comprehensive Income (Loss).

NOTE 4 - DISCONTINUED OPERATIONS
Discontinued operations relate to our domestic and international outdoor advertising businesses and were previously reported as the Americas outdoor and International outdoor segments prior to the Separation. Revenue, expenses and cash flows for these businesses are separately reported as revenue, expenses and cash flows from discontinued operations in the Company's financial statements for all periods presented.

Financial Information for Discontinued Operations

Income Statement Information

The following shows the revenue, income (loss) from discontinued operations and gain on disposal of the Predecessor Company's discontinued operations for the periods presented:

(In thousands)Predecessor Company
Period from January 1, 2019 through May 1,Year Ended December 31,
20192018
Revenue$804,566 $2,721,705 
Loss from discontinued operations before income taxes$(133,475)$(132,152)
  Income tax expense(6,933)(32,515)
Loss from discontinued operations, net of taxes$(140,408)$(164,667)
Gain on disposals before income taxes$1,825,531 $— 
  Income tax expense— — 
Gain on disposals, net of taxes$1,825,531 $— 
Income from discontinued operations, net of taxes$1,685,123 $(164,667)


In connection with the Separation, the Company and its subsidiaries entered into the agreements described below.

Transition Services Agreement
On the Effective Date, the Company, iHM Management Services, iHeartCommunications and CCOH entered into a transition services agreement (the “Transition Services Agreement”), pursuant to which iHM Management Services agreed to provide, or cause the Company and its subsidiaries to provide, CCOH with certain administrative and support services and other assistance which CCOH utilized in the conduct of its business as such business was conducted prior to the Separation, for one year from the Effective Date (subject to certain rights of CCOH to extend up to one additional year).
The allocation of cost was based on various measures depending on the service provided, which measures include relative revenue, employee headcount, number of users of a service or other factors.
CCOH terminated the Transition Services Agreement on August 31, 2020.
New Tax Matters Agreement
On the Effective Date, the Company entered into a new tax matters agreement (the “New Tax Matters Agreement”) by and among the Company, iHeartCommunications, iHeart Operations, CCH, CCOH and CCOL, to allocate the responsibility of the
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Company and its subsidiaries, on the one hand, and the Outdoor Group, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.
The New Tax Matters Agreement requires that the Company and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against (i) any taxes other than transfer taxes or indirect gains taxes imposed on the Company or any of its subsidiaries (other than CCOH and its subsidiaries) in connection with the Separation, (ii) any transfer taxes and indirect gains taxes arising in connection with the Separation, and (iii) fifty percent of the amount by which the amount of taxes (other than transfer taxes or indirect gains taxes) imposed on CCOH or any of its subsidiaries in connection with the Separation that are paid to the applicable taxing authority on or before the third anniversary of the separation of CCOH exceeds $5 million, provided that, the obligations of the Company and iHeartCommunications to indemnify CCOH and its subsidiaries with respect taxes (other than transfer taxes or indirect gains taxes) imposed on CCOH or any of its subsidiaries in connection with the Separation will not exceed $15 million. In addition, if the Company or its subsidiaries use certain tax attributes of CCOH and its subsidiaries (including net operating losses, foreign tax credits and other credits) and such use results in a decrease in the tax liability of the Company or its subsidiaries, then the Company is required to reimburse CCOH for the use of such attributes based on the amount of tax benefit realized. The New Tax Matters Agreement provides that any reduction of the tax attributes of CCOH and its subsidiaries as a result of cancellation of indebtedness income realized in connection with the Chapter 11 Cases is not treated as a use of such attributes (and therefore does not require the Company or iHeartCommunications to reimburse CCOH for such reduction).
The New Tax Matters Agreement also requires that (i) CCOH indemnify the Company for any income taxes paid by the Company on behalf of CCOH and its subsidiaries or, with respect to any income tax return for which CCOH or any of its subsidiaries joins with the Company or any of subsidiaries in filing a consolidated, combined or unitary return, the amount of taxes that would have been incurred by CCOH and its subsidiaries if they had filed a separate return, and (ii) except as described in the preceding paragraph, CCOH indemnify the Company and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against any taxes other than transfer taxes or indirect gains taxes imposed on CCOH or any of its subsidiaries in connection with the Separation.
Any tax liability of CCH attributable to any taxable period ending on or before the date of the completion of the Separation, other than any such tax liability resulting from CCH’s being a successor of CCOH in connection with the merger of CCOH with and into CCOH or arising from the operation of the business of CCOH and its subsidiaries after the merger of CCOH with and into CCH, will not be treated as a liability of CCOH and its subsidiaries for purposes of the New Tax Matters Agreement.

NOTE 5 – REVENUE
The Company generates revenue from several sources:
The primary source of revenue in the Audio segment is the sale of advertising on the Company’s radio stations, its iHeartRadio mobile application and website, station websites, and live and virtual events. This segment also generates revenues from programming talent, network syndication, traffic and weather data, and other miscellaneous transactions.
The Company also generates revenue through contractual commissions realized from the sale of national spot and online advertising on behalf of clients of its full-service media representation business, Katz Media, which is reported in the Company’s Audio and Media Services segment.
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Disaggregation of Revenue
The following table shows revenue streams for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019:
Successor Company
(In thousands)AudioAudio and Media ServicesEliminationsConsolidated
Year Ended December 31, 2020
Revenue from contracts with customers:
  Broadcast Radio(1)
$1,604,880 $— $— $1,604,880 
  Digital(2)
474,371 — — 474,371 
  Networks(3)
484,950 — — 484,950 
 Sponsorship and Events(4)
107,654 — — 107,654 
  Audio and Media Services(5)
— 274,749 (7,086)267,663 
  Other(6)
7,276 — (670)6,606 
     Total2,679,131 274,749 (7,756)2,946,124 
Revenue from leases(7)
2,094 — — $2,094 
Revenue, total$2,681,225 $274,749 $(7,756)$2,948,218 
Period from May 2, 2019 through December 31, 2019
Revenue from contracts with customers:
  Broadcast Radio(1)
$1,575,382 $— $— $1,575,382 
  Digital(2)
273,389 — — 273,389 
  Networks(3)
425,631 — — 425,631 
 Sponsorship and Events(4)
159,187 — — 159,187 
  Audio and Media Services(5)
— 167,292 (4,589)162,703 
  Other(6)
13,017 — (447)12,570 
     Total2,446,606 167,292 (5,036)2,608,862 
Revenue from leases(7)
1,194 — — 1,194 
Revenue, total$2,447,800 $167,292 $(5,036)$2,610,056 

(1)Broadcast Radio revenue is generated through the sale of advertising time on the Company’s domestic radio stations.
(2)Digital revenue is generated through the sale of streaming and display advertisements on digital platforms, subscriptions to iHeartRadio streaming services, podcasting and the dissemination of other digital content.
(3)Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies.
(4)Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent.
(5)Audio and media services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast and webcast software and technology and services to radio stations, television music channels, cable companies, satellite music networks and Internet stations worldwide.
(6)Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements.
(7)Revenue from leases is primarily generated by the lease of towers to other media companies, which are all categorized as operating leases.
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The following table shows revenue streams from continuing operations for the Predecessor Company. The presentation of amounts in the Predecessor periods has been revised to conform to the Successor period presentation.
Predecessor Company
(In thousands)AudioAudio and Media ServicesEliminationsConsolidated
Period from January 1, 2019 through May 1, 2019
Revenue from contracts with customers:
  Broadcast Radio$657,864 $— $— $657,864 
  Digital102,789 — — 102,789 
  Networks189,088 — — 189,088 
 Sponsorship and Events50,330 — — 50,330 
  Audio and Media Services— 69,362 (2,325)67,037 
  Other5,910 — (243)5,667 
     Total1,005,981 69,362 (2,568)1,072,775 
Revenue from leases696 — — 696 
Revenue, total$1,006,677 $69,362 $(2,568)$1,073,471 
Year Ended December 31, 2018
Revenue from contracts with customers:
  Broadcast Radio$2,264,058 $— $— $2,264,058 
  Digital284,565 — — 284,565 
  Networks582,302 — — 582,302 
 Sponsorship and Events200,605 — — 200,605 
  Audio and Media Services— 264,061 (6,508)257,553 
  Other19,446 — — 19,446 
     Total3,350,976 264,061 (6,508)3,608,529 
Revenue from leases2,794 — — 2,794 
Revenue, total$3,353,770 $264,061 $(6,508)$3,611,323 

Trade and Barter
Trade and barter transactions represent the exchange of advertising spots for merchandise, services, other advertising or other assets in the ordinary course of business. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised to the customer. Trade and barter revenues and expenses from continuing operations, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows:
Successor CompanyPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
(In thousands)2020201920192018
Consolidated:
  Trade and barter revenues$158,383 $151,497 $65,934 $202,674 
  Trade and barter expenses154,715 134,865 58,330 199,982 
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The Successor Company recognized barter revenue of $10.5 million and $13.0 million for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively, in connection with investments made in companies in exchange for advertising services. The Predecessor Company recognized barter revenue of $5.9 million and $10.9 million in the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 in connection with investments made in companies in exchange for advertising services.

Deferred Revenue
The following tables show the Company’s deferred revenue balance from contracts with customers, excluding discontinued operations:
Successor CompanyPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
(In thousands)2020201920192018
Deferred revenue from contracts with customers:
  Beginning balance(1)
$162,068 $151,475 $148,720 $155,228 
    Impact of fresh start accounting — 298 — — 
    Revenue recognized, included in beginning balance(95,531)(102,237)(76,473)(115,930)
    Additions, net of revenue recognized during period, and other78,956 112,532 79,228 109,422 
  Ending balance$145,493 $162,068 $151,475 $148,720 
(1)Deferred revenue from contracts with customers, which excludes other sources of deferred revenue that are not related to contracts with customers, is included within deferred revenue and other long-term liabilities on the Consolidated Balance Sheets, depending upon when revenue is expected to be recognized. As described in Note 3, as part of the fresh start accounting adjustments on May 1, 2019, deferred revenue from contracts with customers was adjusted to its estimated fair value.
The Company’s contracts with customers generally have a term of one year or less; however, as of December 31, 2020, the Company expects to recognize $270.9 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration of greater than one year, with substantially all of this amount to be recognized over the next five years. Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales.
Revenue from Leases
As of December 31, 2020, the future lease payments to be received by the Successor Company are as follows:
(In thousands)
2021$1,841 
20221,128 
20231,082 
2024946 
2025764 
Thereafter11,169 
  Total minimum future rentals$16,930 

NOTE 6 – LEASES
The following tables provide the components of lease expense included within the Consolidated Statement of Comprehensive Income (Loss) for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor):
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Successor CompanyPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,
(In thousands)202020192019
Operating lease expense$151,448 $100,835 $44,667 
Variable lease expense$31,451 $15,940 $476 

The following table provides the weighted average remaining lease term and the weighted average discount rate for the Company's leases as of December 31, 2020 (Successor):
December 31,
2020
Operating lease weighted average remaining lease term (in years)13.3
Operating lease weighted average discount rate6.6 %

As of December 31, 2020 (Successor), the Company’s future maturities of operating lease liabilities were as follows:
(In thousands)
2021$126,732 
2022133,086 
2023120,125 
2024109,958 
202597,272 
Thereafter706,472 
  Total lease payments$1,293,645 
Less: Effect of discounting452,651 
  Total operating lease liability$840,994 

The following table provides supplemental cash flow information related to leases for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor):
Successor CompanyPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,
(In thousands)202020192019
Cash paid for amounts included in measurement of operating lease liabilities$139,507 $89,567 $44,888 
Lease liabilities arising from obtaining right-of-use assets(1)
$56,243 $29,498 $913,598 
(1) Lease liabilities from obtaining right-of-use assets include transition liabilities upon adoption of ASC 842, as well as new leases entered into during the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31,
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2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor). Upon adoption of fresh start accounting upon emergence from the Chapter 11 Cases, the Company increased its operating lease obligation by $459.0 million to reflect its operating lease obligation as estimated fair value (see Note 3, Fresh Start Accounting).
The Company reflects changes in the lease liability and changes in the ROU asset on a net basis in the Statements of Cash Flows. The non-cash operating lease expense was $103.4 million, $61.6 million and $14.3 million for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor), respectively.

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL
Property, Plant and Equipment
Acquisitions
On October 22, 2020, the Company acquired Voxnest, Inc. ("Voxnest") for approximately $50 million. Voxnest is the leading consolidated marketplace for podcasts and podcast analytics, enterprise publishing tools, programmatic integration and targeted ad serving and will be included within the Company's Audio segment.
During the first quarter of 2021, we entered into a Share Purchase Agreement to acquire Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W. Scripps Company for $230 million in cash, subject to certain adjustments. The consummation of the proposed acquisition is subject to the satisfaction or waiver of customary closing conditions, including regulatory approval.
Property, Plant and Equipment
The Company’s property, plant and equipment consisted of the following classes of assets as of December 31, 2020 (Successor) and 2019 (Successor), respectively:
(In thousands)Successor Company
December 31,
2020
December 31,
2019
Land, buildings and improvements$386,980 $385,017 
Towers, transmitters and studio equipment169,788 156,739 
Computer equipment and software398,084 321,936 
Furniture and other equipment45,711 39,591 
Construction in progress25,073 21,287 
1,025,636 924,570 
Less: accumulated depreciation213,934 77,694 
Property, plant and equipment, net$811,702 $846,876 

Indefinite-lived Intangible Assets
The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Audio segment.  FCC broadcast licenses are granted to radio stations for up to eight years under the Telecommunications Act of 1996 (the “Act”).  The Act requires the FCC to renew a broadcast license if the FCC finds that the station has served the public interest, convenience and necessity, there have been no serious violations of either the Communications Act of 1934 or the FCC’s rules and regulations by the licensee, and there have been no other serious violations which taken together constitute a pattern of abuse.  The licenses may be renewed indefinitely at little or no cost.  The Company does not believe that the technology of wireless broadcasting will be replaced in the foreseeable future. In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted its FCC licenses to their respective estimated fair values as of the Effective Date of $2,281.7 million (see Note 3, Fresh Start Accounting).
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Annual Impairment Test on Indefinite-lived Intangible Assets
The Company performs its annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. In addition, the Company tests for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired.
The Company applied fresh start accounting as of May 1, 2019 in connection with its emergence from Chapter 11 bankruptcy, which required stating the Company’s intangible assets at estimated fair value. Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence. The economic downturn starting in March 2020 and the COVID-19 pandemic had an adverse impact on the trading values of the Company’s publicly-traded debt and equity and on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic had a negative impact on the Company's forecasted future cash flows. As a result, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses.
For purposes of initial recording in fresh start accounting and for annual impairment testing purposes, our FCC licenses are valued using the direct valuation approach, with the key assumptions being forecasted market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average asset within a market.
In estimating the fair value of its FCC licenses, the Company obtained the most recent broadcast radio industry revenue projections which considered the impact of COVID-19 on future broadcast radio advertising revenue. Such projections reflected a significant and negative impact from COVID-19. In addition to using these broadcast radio industry revenue projections at the time, the Company used various sources to analyze media and broadcast industry market forecasts and other data in developing the assumptions used for purposes of performing impairment testing on our FCC licenses as of March 31, 2020. As a result of COVID-19, the United States economy was undergoing a period of economic disruption and uncertainty, which had caused, among other things, lower consumer and business spending. The uncertainty surrounding the projected demand for advertising negatively impacted the key assumptions used in the discounted cash flow models used to value the Company's FCC licenses. Considerations in developing these assumptions included the extent of the economic downturn, ranges of expected timing of recovery, discount rates and other factors. As a result of the Company’s assessment, the estimated fair value of FCC licenses was determined to be below their carrying values as of March 31, 2020. As a result, during the three months ended March 31, 2020, the Successor Company recognized a non-cash impairment charge of $502.7 million on its FCC licenses.
The impairment tests for indefinite-lived intangible assets consist of a comparison between the fair value of the indefinite-lived intangible asset at the market level with its carrying amount. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of the indefinite-lived asset is its new accounting basis. The fair value of the indefinite-lived asset is determined using the direct valuation method as prescribed in ASC 805-20-S99. Under the direct valuation method, the fair value of the indefinite-lived assets is calculated at the market level as prescribed by ASC 350-30-35. The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its indefinite-lived intangible assets.
The application of the direct valuation method attempts to isolate the income that is attributable to the indefinite-lived intangible asset alone (that is, apart from tangible and identified intangible assets and goodwill). It is based upon modeling a hypothetical “greenfield” build-up to a “normalized” enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been paid for (or added) as part of the build-up process. The Company forecasts revenue, expenses, and cash flows over a ten-year period for each of its markets in its application of the direct valuation method. The Company also calculates a “normalized” residual year which represents the perpetual cash flows of each market. The residual year cash flow was capitalized to arrive at the terminal value of the licenses in each market.
Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as part of a going concern business, the buyer hypothetically develops indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flow model which results in value that is directly attributable to the indefinite-lived intangible assets.
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The key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average FCC license or billboard permit within a market.
No further impairment was recognized as a result of the Company's annual impairment test on indefinite-lived intangible assets.
During the period from January 1, 2019 through May 1, 2019, the Predecessor Company recognized non-cash impairment charges of $91.4 million in relation to indefinite-lived FCC licenses as a result of an increase in the WACC used in performing the annual impairment test. As a result of the fair value exercise applied in connection with fresh start accounting, the Successor Company opted to use a qualitative assessment as permitted by ASC 350, "Intangibles - Goodwill and Other" as of July 1, 2019 and no additional impairment charges were recorded. The Predecessor Company recognized impairment charges related to its indefinite-lived intangible assets within several iHM radio markets of $33.2 million during the year ended December 31, 2018.

Other Intangible Assets
Other intangible assets consists of definite-lived intangible assets, which primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows.  The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets.  These assets are recorded at amortized cost.
The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.  When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.
The Company applied fresh start accounting as of May 1, 2019 in connection with its emergence from Chapter 11 bankruptcy which required stating the Company’s intangible assets at estimated fair value. Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence. The economic downturn in March 2020 and the COVID-19 pandemic had an adverse impact on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic has had a negative impact on the Company's forecasted future cash flows. As a result, the Company performed interim impairment tests as of March 31, 2020 on its other intangible assets. Based on the Company’s test of recoverability using estimated undiscounted future cash flows, the carrying values of the Company’s definite-lived intangible assets were determined to be recoverable, and no impairment was recognized.
The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of December 31, 2020 (Successor) and December 31, 2019 (Successor), respectively:
(In thousands)Successor Company
December 31, 2020December 31, 2019
Gross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Customer / advertiser relationships$1,620,509 $(286,066)$1,629,236 $(114,280)
Talent and other contracts375,900 (84,065)375,399 (33,739)
Trademarks and tradenames326,061 (54,358)321,977 (21,661)
Other31,351 (4,840)21,394 (1,786)
Total$2,353,821 $(429,329)$2,348,006 $(171,466)
Total amortization expense related to definite-lived intangible assets for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019 was $258.9 million and $171.5 million, respectively. Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the period
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from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 was $12.7 million and $110.9 million, respectively.
As acquisitions and dispositions occur in the future, amortization expense may vary.  The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:
(In thousands)
2021$260,976 
2022259,364 
2023250,153 
2024249,116 
2025211,262 

Goodwill
The following table presents the changes in the carrying amount of goodwill:
(In thousands)AudioAudio & Media ServicesConsolidated
Balance as of December 31, 2018 (Predecessor)$3,330,922 $81,831 $3,412,753 
Acquisitions— 2,767 2,767 
Foreign currency— (28)(28)
Balance as of May 1, 2019 (Predecessor)$3,330,922 $84,570 $3,415,492 
Impact of fresh start accounting(111,712)19,585 (92,127)
Balance as of May 2, 2019 (Successor)$3,219,210 $104,155 $3,323,365 
     Acquisitions4,637 — 4,637 
     Dispositions(9,466)— (9,466)
     Foreign currency— (1)(1)
     Other7,087 — 7,087 
Balance as of December 31, 2019 (Successor)$3,221,468 $104,154 $3,325,622 
Impairment(1,224,374)— (1,224,374)
Acquisitions44,606 — 44,606 
Dispositions(164)— (164)
Foreign currency— 245 245 
Balance as of December 31, 2020 (Successor)$2,041,536 $104,399 $2,145,935 

The balance at December 31, 2018 (Predecessor) is net of cumulative impairments of $3.5 billion and $212.0 million in the Company’s Audio and Audio and Media Services segments, respectively.
Goodwill Impairment
The Company performs its annual impairment test on goodwill as of July 1 of each year. The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.
As described in Note 1, the economic disruption as a result of COVID-19 had a significant impact to the trading values of the Company’s publicly-traded debt and equity and on the Company's results in the latter half of the month ended March 31, 2020. In addition, the Company expected that the pandemic would continue to impact the operating and economic environment of our
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customers and would impact the near-term spending decisions of advertisers. As a result, the Company performed an interim impairment test on its indefinite-lived intangible assets as of March 31, 2020.
The goodwill impairment test requires measurement of the fair value of the Company's reporting units, which is compared to the carrying value of the reporting units, including goodwill. Each reporting unit is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value. Assessing the recoverability of goodwill requires estimates and assumptions about sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. As with the impairment testing performed on the Company’s FCC licenses described above, the significant deterioration in market conditions and uncertainty in the markets impacted the assumptions used to estimate the discounted future cash flows of the Company’s reporting units for purposes of performing the interim goodwill impairment test. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.
As discussed above, the carrying values of the Company’s reporting units were based on estimated fair values determined upon our emergence from bankruptcy on May 1, 2019, and the rapid deterioration in economic conditions resulting from the COVID-19 pandemic resulted in lower estimated fair values determined in connection with our interim goodwill impairment testing as of March 31, 2020. The estimated fair value of one of the Company's reporting units was below its carrying value, including goodwill. The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model. As a result, the Company recognized a non-cash impairment charge of $1.2 billion in the first quarter of 2020 to reduce goodwill.
The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its reporting units as of July 1, 2020 as part of the annual impairment test. No further impairment was recognized as a result of the Company's annual impairment test on goodwill.
While management believes the estimates and assumptions utilized to calculate the fair value of the Company's tangible and intangible long-lived assets, indefinite-lived FCC licenses and reporting units are reasonable, it is possible a material change could occur to the estimated fair value of these assets. Uncertainty regarding the full extent of the economic downturn as a result of COVID-19, as well as the timing of any recovery, may result in the Company's actual results not being consistent with its estimates, and the Company could be exposed to future impairment losses that could be material to its results of operations.
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NOTE 8 – INVESTMENTS

The following table summarizes the Company's investments in nonconsolidated affiliates and other securities:
(In thousands)Available-for-Sale Debt SecuritiesEquity Method InvestmentsOther InvestmentsMarketable Equity SecuritiesTotal Investments
Balance at December 31, 2018 (Predecessor)$25,823 $24,104 $38,813 $— $88,740 
Purchases of investments— 591 103 — 694 
Equity in loss— (66)— — (66)
Loss on investments(1,895)— (8,342)— (10,237)
Other(3)— — — (3)
Balance at May 1, 2019 (Predecessor)$23,925 $24,629 $30,574 $— $79,128 
Impact of fresh start accounting(8,842)(14,986)(1,062)— (24,890)
Balance at May 2, 2019 (Successor)$15,083 $9,643 $29,512 $— $54,238 
Purchases of investments24,103 1,588 2,425 3,440 31,556 
Equity in loss— (279)— — (279)
Loss on investments— — (21,003)(740)(21,743)
Other(6,058)— 6,055 — (3)
Balance at December 31, 2019 (Successor)$33,128 $10,952 $16,989 $2,700 $63,769 
Purchases of investments9,595 1,523 7,629 — 18,747 
Equity in loss— (379)— — (379)
Disposals(194)(1,000)— — (1,194)
Distributions received— (31)— — (31)
Loss on investments, net(7,116)— (959)(1,271)(9,346)
Other(3,957)— 2,965 — (992)
Balance at December 31, 2020 (Successor)$31,456 $11,065 $26,624 $1,429 $70,574 
Equity method investments in the table above are not consolidated, but are accounted for under the equity method of accounting. The Company records its investments in these entities on the balance sheet within “Other assets.” The Company's interests in the operations of equity method investments are recorded in the statement of comprehensive income (loss) as “Equity in earnings (loss) of nonconsolidated affiliates.” Other investments includes various investments in companies for which there is no readily determinable market value.
During 2020, the Successor Company recorded $15.0 million in its Audio segment for investments made in seven companies in exchange for advertising services. One of these investments is being accounted for under the equity method of accounting, two of these investments are being accounted for at amortized cost and four of these investments are notes receivable that are convertible into cash or equity. During the period from May 2, 2019 through December 31, 2019, the Successor Company recorded $30.0 million in its Audio segment for investments made in ten companies in exchange for advertising services and cash. Two of these investments are being accounted for under the equity method of accounting, one of these investments is being accounted for at amortized cost, one of these investments is being accounted for as an available-for-sale security and six of these investments are notes receivable that are convertible into cash or equity.
The Successor Company recognized barter revenue of $10.5 million and $13.0 million in the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively. The Predecessor Company recognized barter revenue of $6.0 million in the period from January 1, 2019 through May 1, 2019 in connection with these investments as services were provided.  The Successor Company recognized non-cash investment impairments totaling $5.7 million and $21.0
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million on our investments for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively, which were recorded in “Loss on investments, net.”  The Predecessor Company recognized non-cash investment impairments totaling $10.2 million on our investments for the period from January 1, 2019 through May 1, 2019, which were recorded in “Loss on investments, net.”
NOTE 9 – LONG-TERM DEBT
Long-term debt outstanding as of December 31, 2020 (Successor) and December 31, 2019 (Successor) consisted of the following:
(In thousands)Successor Company
December 31,
2020
December 31,
2019
Term Loan Facility due 2026(1)
$2,080,259 $2,251,271 
Incremental Term Loan Facility due 2026(2)
447,750 — 
Asset-based Revolving Credit Facility due 2023(2)(3)
— — 
6.375% Senior Secured Notes due 2026
800,000 800,000 
5.25% Senior Secured Notes due 2027
750,000 750,000 
4.75% Senior Secured Notes due 2028
500,000 500,000 
Other secured subsidiary debt(2)
22,753 20,992 
Total consolidated secured debt4,600,762 4,322,263 
8.375% Senior Unsecured Notes due 2027
1,450,000 1,450,000 
Other unsecured subsidiary debt6,782 12,581 
Original issue discount(18,817)— 
Long-term debt fees(21,797)(19,428)
Total debt6,016,930 5,765,416 
Less: Current portion34,775 8,912 
Total long-term debt$5,982,155 $5,756,504 
(1)On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.
(2)On July 16, 2020, iHeartCommunications issued $450.0 million of incremental term loans under the Amendment No. 2, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding on the Company's ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.
(3)On March 13, 2020, iHeartCommunications borrowed $350.0 million under the ABL Facility, the proceeds of which were invested as cash on the Balance Sheet. During the second and third quarters of 2020, iHeartCommunications voluntarily repaid principal amounts outstanding under the ABL Facility. As of December 31, 2020, the ABL Facility had a facility size of $450.0 million, no principal amounts outstanding and $32.9 million of outstanding letters of credit, resulting in $417.1 million of excess availability. As a result of certain restrictions in the Company's debt and preferred stock agreements, as of December 31, 2020, approximately $172 million was available to be drawn upon under the ABL Facility.
(4)Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2021 through 2045.

The Successor Company’s weighted average interest rate was 5.5% and 6.4% as of December 31, 2020 and December 31, 2019, respectively.  The aggregate market value of the Successor Company’s debt based on market prices for which quotes were available was approximately $6.2 billion and $6.1 billion as of December 31, 2020 and December 31, 2019, respectively. Under the fair value hierarchy established by ASC 820-10-35, the fair market value of the Successor Company’s debt is classified as either Level 1 or Level 2.
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Asset-based Revolving Credit Facility due 2023

On the Effective Date, iHeartCommunications, as borrower, entered into a Credit Agreement (the “ABL Credit Agreement”) with iHeartMedia Capital I, LLC, the direct parent of iHeartCommunications (“Capital I”), as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, Citibank, N.A., as administrative and collateral agent, and the lenders party thereto from time to time, governing the ABL Facility. The ABL Facility includes a letter of credit sub-facility and a swingline loan sub-facility.
Size and Availability

The ABL Facility provides for a senior secured asset-based revolving credit facility in the aggregate principal amount of up to $450.0 million, with amounts available from time to time (including in respect of letters of credit) equal to the lesser of (A) the borrowing base, which equals the sum of (i) 90.0% of the eligible accounts receivable of iHeartCommunications and the subsidiary guarantors and (ii) 100% of qualified cash, each subject to customary reserves and eligibility criteria, and (B) the aggregate revolving credit commitments. Subject to certain conditions, iHeartCommunications may at any time request one or more increases in the amount of revolving credit commitments, in an amount up to the sum of (x) $150.0 million and (y) the amount by which the borrowing base exceeds the aggregate revolving credit commitments. As of December 31, 2020, iHeartCommunications had no principal amounts outstanding under the ABL Facility, a facility size of $450.0 million and $32.9 million in outstanding letters of credit, resulting in $417.1 million of excess availability. As a result of certain restrictions in the Company's debt and preferred stock agreements, as of December 31, 2020, approximately $172.0 million was available to be drawn upon under the ABL Facility.
Interest Rate and Fees

Borrowings under the ABL Facility bear interest at a rate per annum equal to the applicable margin plus, at iHeartCommunications’ option, either (1) a eurocurrency rate or (2) a base rate. The applicable margin for borrowings under the ABL Facility range from 1.25% to 1.75% for eurocurrency borrowings and from 0.25% to 0.75% for base-rate borrowings, in each case, depending on average excess availability under the ABL Facility based on the most recently ended fiscal quarter.

In addition to paying interest on outstanding principal under the ABL Facility, iHeartCommunications is required to pay a commitment fee to the lenders under the ABL Facility in respect of the unutilized commitments thereunder. The commitment fee rate ranges from 0.25% to 0.375% per annum dependent upon average unused commitments during the prior quarter. iHeartCommunications may also pay customary letter of credit fees.

Maturity

Borrowings under the ABL Facility will mature, and lending commitments thereunder will terminate on June 14, 2023.

Prepayments

If at any time, the sum of the outstanding amounts under the ABL Facility exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitments under the facility (such lesser amount, the “line cap”), iHeartCommunications is required to repay outstanding loans and cash collateralize letters of credit in an aggregate amount equal to such excess. iHeartCommunications may voluntarily repay outstanding loans under the ABL Facility at any time without premium or penalty, other than customary “breakage” costs with respect to eurocurrency rate loans. Any voluntary prepayments made by iHeartCommunications will not reduce iHeartCommunications’ commitments under the ABL Facility.

Guarantees and Security

The ABL Facility is guaranteed by, subject to certain exceptions, the guarantors of iHeartCommunications’ Term Loan Facility. All obligations under the ABL Facility, and the guarantees of those obligations, are secured by a perfected security interest in the accounts receivable and related assets of iHeartCommunications’ and the guarantors’ accounts receivable, qualified cash and related assets and proceeds thereof that is senior to the security interest of iHeartCommunications’ Term Loan Facility in such accounts receivable, qualified cash and related assets and proceeds thereof, subject to permitted liens and certain exceptions.

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Certain Covenants and Events of Default

If borrowing availability is less than the greater of (a) $40.0 million and (b) 10% of the aggregate commitments under the ABL Facility, in each case, for two consecutive business days (a “Trigger Event”), iHeartCommunications will be required to comply with a minimum fixed charge coverage ratio of at least 1.00 to 1.00, and must continue to comply with this minimum fixed charge coverage ratio for fiscal quarters ending after the occurrence of the Trigger Event until borrowing availability exceeds the greater of (x) $40.0 million and (y) 10% of the aggregate commitments under the ABL Facility, in each case, for 20 consecutive calendar days, at which time the Trigger Event shall no longer be deemed to be occurring.

Term Loan Facility due 2026

On the Effective Date, iHeartCommunications, as borrower, entered into a Credit Agreement (the “Term Loan Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Citibank N.A., as administrative and collateral agent, governing the Term Loan Facility. On the Effective Date, iHeartCommunications issued an aggregate of approximately $3.5 billion principal amount of senior secured term loans under the Term Loan Facility to certain Claimholders pursuant to the Plan of Reorganization. As described below, on August 7, 2019, the proceeds from the issuance of $750.0 million in aggregate principal amount of 5.25% Senior Secured Notes due 2027 were used, together with cash on hand, to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility due 2026. On November 22, 2019, the proceeds from the issuance of $500.0 million in aggregate principal amount of 4.75% Senior Secured Notes due 2028 were used, together with cash on hand, to prepay at par $500.0 million of borrowings outstanding under the Term Loan Facility due 2026. The Term Loan Facility matures on May 1, 2026.
On February 3, 2020, iHeartCommunications entered into an amendment to the Credit Agreement governing its Term Loan Facility due 2026. The amendment reduces the interest rate to LIBOR plus a margin of 3.00% (from LIBOR plus a margin of 4.00%), or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% (from Base Rate plus a margin of 3.00%) and modifies certain covenants contained in the Credit Agreement. In connection with the Term Loan Facility amendment in February 2020, iHeartCommunications also prepaid at par $150.0 million of borrowings outstanding under the Term Loan Facility with cash on hand.
On July 16, 2020, iHeartCommunications entered into Amendment No. 2 to issue $450.0 million of incremental term loan commitments, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance were used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.
Under the terms of the Term Loan Facility Credit Agreement, iHeartCommunications made quarterly principal payments totaling $23.3 million during the year ended December 31, 2020.

Interest Rate and Fees

Following the amendment made on February 3, 2020, the Term loans under the Term Loan Facility bear interest at a rate per annum equal to LIBOR plus a margin of 3.00%, or the Base Rate plus a margin of 2.00%. The incremental term loans issued pursuant to Amendment No. 2 have an interest rate of 4.00% for Eurocurrency Rate Loans and 3.00% for Base Rate Loans (subject to a LIBOR floor of 0.75% and Base Rate floor of 1.75%). Amendment No. 2 also modifies certain other provisions of the Credit Agreement.

Collateral and Guarantees

The Term Loan Facility is guaranteed by Capital I and each of iHeartCommunications’ existing and future material wholly-owned restricted subsidiaries, subject to certain exceptions. All obligations under the Term Loan Facility, and the guarantees of those obligations, are secured, subject to permitted liens and other exceptions, by a first priority lien in substantially all of the assets of iHeartCommunications and all of the guarantors’ assets, including a lien on the capital stock of iHeartCommunications and certain of its subsidiaries owned by a guarantor, other than the accounts receivable and related assets of iHeartCommunications and all of the subsidiary guarantors, and by a second priority lien on accounts receivable and related assets securing iHeartCommunications’ ABL Facility.

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Prepayments

iHeartCommunications is required to prepay outstanding term loans under the Term Loan Facility, subject to certain exceptions, with:

50% (which percentage may be reduced to 25% and to 0% based upon iHeartCommunications’ first lien leverage ratio) of iHeartCommunications’ annual excess cash flow, subject to customary credits, reductions and exclusions;

100% (which percentage may be reduced to 50% and 0% based upon iHeartCommunications’ first lien leverage ratio) of the net cash proceeds of sales or other dispositions of the assets of iHeartCommunications or its wholly owned restricted subsidiaries, subject to reinvestment rights and certain other exceptions; and

100% of the net cash proceeds of any incurrence of debt, other than debt permitted under the Term Loan Facility.

iHeartCommunications may voluntarily repay outstanding loans under the Term Loan Facility at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to eurocurrency loans.

Certain Covenants and Events of Default

The Term Loan Facility does not include any financial covenants. However, the Term Loan Facility includes negative covenants that, subject to significant exceptions, limit Capital I’s ability and the ability of its restricted subsidiaries (including iHeartCommunications) to, among other things:

• incur additional indebtedness;
• create liens on assets;
• engage in mergers, consolidations, liquidations and dissolutions;
• sell assets;
• pay dividends and distributions or repurchase Capital I’s capital stock;
• make investments, loans, or advances;
• prepay certain junior indebtedness;
• engage in certain transactions with affiliates;
• amend material agreements governing certain junior indebtedness; and
• change lines of business.

The Term Loan Facility includes certain customary representations and warranties, affirmative covenants and events of default, including but not limited to, payment defaults, breach of representations and warranties, covenant defaults, cross defaults to certain indebtedness, certain bankruptcy-related events, certain events under ERISA, material judgments and a change of control. If an event of default occurs, the lenders under the Term Loan Facility are entitled to take various actions, including the acceleration of all amounts due under the Term Loan Facility and all actions permitted to be taken under the loan documents relating thereto or applicable law.

6.375% Senior Secured Notes due 2026
On the Effective Date, iHeartCommunications entered into an indenture (the “Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $800.0 million aggregate principal amount of 6.375% Senior Secured Notes due 2026 that were issued to certain Claimholders pursuant to the Plan of Reorganization. The 6.375% Senior Secured Notes mature on May 1, 2026 and bear interest at a rate of 6.375% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2020.

The 6.375% Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility or other credit facilities or capital markets debt securities. The 6.375% Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’
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and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 6.375% Senior Secured Notes (including the Term Loan Facility, the 5.25% Senior Secured Notes, the 4.75% Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 6.375% Senior Secured Notes, effectively subordinated in right of payment to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 6.375% Senior Secured Notes, to the extent of the value of such assets, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 6.375% Senior Secured Notes.

The 6.375% Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.

iHeartCommunications may redeem the 6.375% Senior Secured Notes at its option, in whole or in part, at any time prior to May 1, 2022, at a price equal to 100% of the principal amount of the 6.375% Senior Secured Notes being redeemed, plus an applicable premium and plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the 6.375% Senior Secured Notes at its option, in whole or in part, on or after May 1, 2022, at the redemption prices set forth in the 6.375% Senior Secured Notes Indenture plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2022, iHeartCommunications may redeem at its option, up to 40% of the aggregate principal amount of the 6.375% Senior Secured Notes at a redemption price equal to 106.375% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the proceeds of one or more equity offerings.

The 6.375% Senior Secured Notes Indenture contains covenants that limit the ability of Capital I and its restricted subsidiaries, including iHeartCommunications, to, among other things:

incur or guarantee additional debt or issue certain preferred stock;
create liens on certain assets;
redeem, purchase or retire subordinated debt;
make certain investments;
create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries;
enter into certain transactions with affiliates;
merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets;
sell certain assets, including capital stock of iHeartCommunications’ subsidiaries;
designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and
pay dividends, redeem or repurchase capital stock or make other restricted payments.

5.25% Senior Secured Notes due 2027

On August 7, 2019, iHeartCommunications entered into an indenture (the “5.25% Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $750.0 million aggregate principal amount of 5.25% Senior Secured Notes due 2027 that were issued in a private placement to qualified institutional buyers under Rule 144A under the Securities Act, and to persons outside the United States pursuant to Regulation S under the Securities Act. The 5.25% Senior Secured Notes mature on August 15, 2027 and bear interest at a rate of 5.25% per annum. Interest is payable semi-annually on February 15 and August 15 of each year, beginning on February 15, 2020.

The 5.25% Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility. The 5.25% Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 5.25% Senior Secured Notes (including the Term Loan Facility, the 6.375% Senior Secured Notes, the 4.75% Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 5.25% Senior
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Secured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 5.25% Senior Secured Notes, to the extent of the value of such collateral, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 5.25% Senior Secured Notes.

The 5.25% Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.    

iHeartCommunications may redeem the 5.25% Senior Secured Notes at its option, in whole or part, at any time prior to August 15, 2022, at a price equal to 100% of the principal amount of the 5.25% Senior Secured Notes redeemed, plus a make-whole premium, plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the 5.25% Senior Secured Notes, in whole or in part, on or after August 15, 2022, at the redemption prices set forth in the 5.25% Senior Secured Notes Indenture plus accrued and unpaid interest to the redemption date. At any time on or before August 15, 2022, iHeartCommunications may elect to redeem up to 40% of the aggregate principal amount of the 5.25% Senior Secured Notes at a redemption price equal to 105.25% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

The 5.25% Senior Secured Notes Indenture contains covenants that limit the ability of iHeartCommunications and its restricted subsidiaries, to, among other things:

incur or guarantee additional debt or issue certain preferred stock;
create liens on certain assets;
redeem, purchase or retire subordinated debt;
make certain investments;
create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries;
enter into certain transactions with affiliates;
merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets;
sell certain assets, including capital stock of iHeartCommunications’ subsidiaries;
designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and
pay dividends, redeem or repurchase capital stock or make other restricted payments.

4.75% Senior Secured Notes due 2028

On November 22, 2019, iHeartCommunications entered into an indenture (the “4.75% Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $500.0 million aggregate principal amount of 4.75% Senior Secured Notes due 2028 that were issued in a private placement to qualified institutional buyers under Rule 144A under the Securities Act, and to persons outside the United States pursuant to Regulation S under the Securities Act. The 4.75% Senior Secured Notes mature on January 15, 2028 and bear interest at a rate of 4.75% per annum. Interest is payable semi-annually on January 15 and July 15 of each year, beginning on July 15, 2020.

The 4.75% Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility. The 4.75% Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 4.75% Senior Secured Notes (including the Term Loan Facility, the 6.375% Senior Secured Notes, the 5.25% Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 4.75% Senior Secured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 4.75% Senior Secured Notes, to the extent of the value of such collateral, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 4.75% Senior Secured Notes.
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The 4.75% Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.    

iHeartCommunications may redeem the 4.75% Senior Secured Notes at its option, in whole or part, at any time prior to January 15, 2023, at a price equal to 100% of the principal amount of the 4.75% Senior Secured Notes redeemed, plus a make-whole premium, plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the 4.75% Senior Secured Notes, in whole or in part, on or after January 15, 2023, at the redemption prices set forth in the 4.75% Senior Secured Notes Indenture plus accrued and unpaid interest to the redemption date. At any time on or before November 15, 2022, iHeartCommunications may elect to redeem up to 40% of the aggregate principal amount of the 4.75% Senior Secured Notes at a redemption price equal to 104.75% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

The 4.75% Senior Secured Notes Indenture contains covenants that limit the ability of iHeartCommunications and its restricted subsidiaries, to, among other things:

incur or guarantee additional debt or issue certain preferred stock;
create liens on certain assets;
redeem, purchase or retire subordinated debt;
make certain investments;
create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries;
enter into certain transactions with affiliates;
merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets;
sell certain assets, including capital stock of iHeartCommunications’ subsidiaries;
designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and
pay dividends, redeem or repurchase capital stock or make other restricted payments.

8.375% Senior Unsecured Notes due 2027

On the Effective Date, iHeartCommunications entered into an indenture (the “Senior Unsecured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee, governing the $1,450.0 million aggregate principal amount of 8.375% Senior Notes due 2027 that were issued to certain Claimholders pursuant to the Plan of Reorganization. The Senior Unsecured Notes mature on May 1, 2027 and bear interest at a rate of 8.375% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2019.

The Senior Unsecured Notes are guaranteed on a senior unsecured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility or other credit facilities or capital markets debt securities. The Senior Unsecured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the Senior Unsecured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured (including the 6.375% Senior Secured Notes, the 5.25% Senior Secured Notes, the 4.75% Senior Secured Notes and borrowings under the ABL Facility and the Term Loan Facility), to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the Senior Unsecured Notes.

iHeartCommunications may redeem the Senior Unsecured Notes at its option, in whole or in part, at any time prior to May 1, 2022, at a price equal to 100% of the principal amount of the Senior Unsecured Notes being redeemed, plus an applicable premium and plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the Senior Unsecured Notes at its option, in whole or in part, on or after May 1, 2022, at the redemption prices set forth in the Senior Unsecured Notes Indenture plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2022, iHeartCommunications redeem at its option, up to 40% of the aggregate principal amount of the Senior Unsecured Notes at a
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redemption price equal to 108.375% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the proceeds of one or more equity offerings.

The Senior Unsecured Notes Indenture contains covenants that limit the ability of Capital I and its restricted subsidiaries, including iHeartCommunications, to, among other things:

incur or guarantee additional debt or issue certain preferred stock;
create liens on certain assets;
redeem, purchase or retire subordinated debt;
make certain investments;
create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries;
enter into certain transactions with affiliates;
merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets;
sell certain assets, including capital stock of iHeartCommunications’ subsidiaries;
designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and
pay dividends, redeem or repurchase capital stock or make other restricted payments.

Mandatorily Redeemable Preferred Stock
On the Effective Date, in accordance with the Plan of Reorganization, iHeart Operations issued 60,000 shares of its Series A Perpetual Preferred Stock, par value $0.001 per share (the "iHeart Operations Preferred Stock"), having an aggregate initial liquidation preference of $60.0 million for a cash purchase price of $60.0 million. The iHeart Operations Preferred Stock was purchased by a third party investor. As of December 31, 2020, the liquidation preference of the iHeart Operations Preferred Stock was $60.0 million. As further described below, the iHeart Operations Preferred Stock is mandatorily redeemable for cash at a date certain and therefore is classified as a liability in the Company's balance sheet.
There are no sinking fund provisions applicable to the iHeart Operations Preferred Stock. Shares of the iHeart Operations Preferred Stock, upon issuance, were fully paid and non-assessable. The shares of the iHeart Operations Preferred Stock are not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of iHeart Operations. The holders of shares of the iHeart Operations Preferred Stock have no pre-emptive rights with respect to any shares of our capital stock or any of iHeart Operations’ other securities convertible into or carrying rights or options to purchase any such capital stock.
Holders of the iHeart Operations Preferred Stock are entitled to receive, as declared by the board of directors of iHeart Operations, in respect of each share, cumulative dividends accruing daily and payable quarterly at a per annum rate equal to the sum of (1) the greater of (a) LIBOR and (b) two percent, plus (2) the applicable margin, which is calculated as a function of iHeartMedia’s consolidated total leverage ratio. Dividends are payable on the liquidation preference. Unless all accrued and unpaid dividends on the iHeart Operations Preferred Stock are paid in full, no dividends or distributions may be paid on any equity interests of iHeartMedia or its subsidiaries other than iHeart Operations, and no such equity interests may be repurchased or redeemed (subject to certain exceptions that are specified in the certificate of designation for the iHeart Operations Preferred Stock). Dividends, if declared, will be payable on March 31, June 30, September 30 and December 31 of each year (or on the next business day if such date is not a business day). During the year ended December 31, 2020 and the period from May 1, 2019 through December 31, 2019, the Successor Company recognized $9.3 million and $5.5 million, respectively, of interest expense related to dividends on mandatorily redeemable preferred stock.
Other than as set forth below, iHeart Operations may not redeem the iHeart Operations Preferred Stock at its option prior to the third anniversary of the issue date of the iHeart Operations Preferred Stock. Upon consummation of certain equity offerings, iHeart Operations may, at its option, redeem all or a part of the iHeart Operations Preferred Stock for the liquidation preference plus a make-whole premium. At any time on or after the third anniversary of the issue date, the iHeart Operations Preferred Stock may be redeemed at the option of iHeart Operations, in whole or in part, for cash at a redemption price equal to the liquidation preference per share.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Upon (i) a liquidation, dissolution or winding up of iHeart Operations, iHeartMedia or iHeartCommunications, together with the subsidiaries of such entity, taken as a whole, (ii) a bankruptcy event, (iii) a change of control, (iv) a sale or transfer of all or substantially all of iHeart Operations’, iHeartMedia’s or iHeartCommunications’ assets and the assets of such entity’s subsidiaries, taken as a whole in a single transaction (other than to iHeartMedia or any of its subsidiaries), or a series of transactions, (v) an acceleration or payment default of indebtedness of iHeart Operations, iHeartMedia or any of its subsidiaries of $100 million or more or (vi) consummation of certain equity offerings of iHeartMedia, iHeart Operations or iHeartCommunications or certain significant subsidiaries, then any holder of shares of iHeart Operations Preferred Stock may require iHeartMedia to purchase such holder’s shares of iHeart Operations Preferred Stock at a purchase price equal to (a) the liquidation preference plus a make-whole premium, if such purchase is consummated prior to the third anniversary of the issue date or (b) the liquidation preference, if the purchase is consummated on or after the third anniversary of the issue date.
The shares of iHeart Operations Preferred Stock include repurchase rights, pursuant to which the holders may require iHeartMedia or iHeartCommunications to purchase the iHeart Operations Preferred Stock after the fifth anniversary of the issue date.
On the tenth anniversary of the issue date, the shares of iHeart Operations Preferred Stock will be subject to mandatory redemption for an amount equal to the liquidation preference.
If a default occurs or dividends payable on the shares of iHeart Operations Preferred Stock have not been paid in cash for twelve consecutive quarters, the holders of the iHeart Operations Preferred Stock will have the right, voting as a class, to elect one director to iHeartMedia’s Board of Directors. Upon any termination of the rights of the holders of shares of the iHeart Operations Preferred Stock as a class to vote for a director as described above, the director so elected to iHeartMedia’s Board of Directors will cease to be qualified as a director and the term of such director’s office shall terminate immediately.
Future Maturities of Long-term Debt
Future maturities of long-term debt at December 31, 2020 are as follows:
(in thousands)
2021$34,775 
202228,514 
202328,133 
202428,051 
202527,418 
Thereafter5,910,653 
Total (1)(2)
$6,057,544 
(1)Excludes purchase accounting adjustments and original issue discount of $18.8 million and long-term debt fees of $21.8 million, which are amortized through interest expense over the life of the underlying debt obligations.
(2)Under the terms of the Term Loan Facility and Incremental Term Loan Facility, the Company is required to make quarterly prepayments of $6.4 million. Such prepayments are reflected in the table above.
Surety Bonds and Letters of Credit
As of December 31, 2020, iHeartCommunications had outstanding surety bonds and commercial standby letters of credit of $9.1 million and $33.3 million, respectively. These surety bonds and letters of credit relate to various operational matters including insurance, lease and performance bonds as well as other items.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Commitments and Contingencies
The Company accounts for its rentals that include renewal options, annual rent escalation clauses, minimum franchise payments and maintenance related to displays under the guidance in ASC 842.
The Company accounts for annual rent escalation clauses included in the lease term on a straight-line basis under the guidance in ASC 840-20-25.  The Company considers renewal periods in determining its lease terms if at inception of the lease there is reasonable assurance the lease will be renewed.  Expenditures for maintenance are charged to operations as incurred, whereas expenditures for renewal and betterments are capitalized. Non-cancelable contracts that provide the lessor with a right to fulfill the arrangement with property, plant and equipment not specified within the contract are not a lease and have been included within non-cancelable contracts within the table below.
The Company leases office space, certain broadcasting facilities and equipment under long-term operating leases.  The Company accounts for these leases in accordance with the policies described above.
As of December 31, 2020, the Company's future minimum rental commitments under non-cancelable operating lease agreements with terms in excess of one year, minimum payments under non-cancelable contracts in excess of one year, capital expenditure commitments and employment/talent contracts consist of the following:
(In thousands)
Non-CancelableNon-CancelableEmployment/Talent
Operating LeasesContractsContracts
2021$126,732 $125,853 $102,263 
2022133,086 50,736 75,944 
2023120,125 16,698 41,735 
2024109,958 2,424 41,336 
202597,272 719 1,029 
Thereafter706,472 1,717 — 
Total$1,293,645 $198,147 $262,307 
Rent expense charged to operations for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 (Predecessor) was $198.2 million, $128.3 million, $59.2 million and $169.9 million, respectively.
The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.  These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.  It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings.  Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations.
Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of its litigation arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.
Alien Ownership Restrictions and FCC Petition for Declaratory Ruling
The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership to be in the public interest (the “Foreign Ownership Rule”). Under the Plan of Reorganization, the Company committed to file the PDR requesting the FCC to permit the Company to be up to 100% foreign-owned.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On November 5, 2020, the FCC issued the Declaratory Ruling, which granted the relief requested by the PDR, subject to certain conditions.
On November 9, 2020, the Company notified the holders of Special Warrants of the commencement of an exchange process (the notification, the “Exchange Notice,” and the exchange, the “Exchange”). In the Exchange, which took place on January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules. Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock. See “Item 1. Business – Regulation of Our Business, Alien Ownership Restrictions” and “Item 1A. Risk Factors - Regulatory, Legislative and Litigation Risks, Regulations imposed by the Communications Act and the FCC limit the amount of foreign individuals or entities that may invest in our capital stock without FCC approval.”

NOTE 11 – INCOME TAXES
On March 27, 2020 the CARES Act, which included numerous tax provisions, was signed into law. The CARES Act included certain temporary relief provisions with respect to the application of the Section 163(j) interest deduction limitation including the ability to elect to use the Company’s 2019 Adjusted Taxable Income (as defined under Section 163(j)) for purposes of calculating the 2020 interest deduction limitation. This provision of the CARES Act resulted in an increase to allowable interest deductions of $179.4 million during 2020. The other federal income tax provisions within the CARES Act did not materially impact the Company’s financial statements.

On December 27, 2020, the Consolidated Appropriations Act was signed into law in order to provide further stimulus and support to those affected by the COVID-19 pandemic. The tax provisions included within the Consolidated Appropriations Act did not materially impact the Company’s financial statements in the current year.

As a result of steps in the Plan of Reorganization described in Note 2 and the fresh start accounting adjustments described in Note 3, there were significant tax adjustments recorded in the period from January 1, 2019 through May 1, 2019. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period ended May 1, 2019, primarily consisting of: (1) $483.0 million in tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) $275.2 million in tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) $62.3 million in tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) $263.8 million in tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period ended May 1, 2019, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Significant components of the provision for income tax benefit (expense) from continuing operations are as follows:
(In thousands)Successor CompanyPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192018
Current - Federal$(652)$(172)$2,264 $
Current - foreign(1,674)(754)(282)(969)
Current - state1,680 (10,045)74,762 (9,225)
Total current benefit (expense)(646)(10,971)76,744 (10,193)
Deferred - Federal172,302 (14,470)(109,511)1,276 
Deferred - foreign28 23 (8)(1)
Deferred - state11,939 5,327 (6,320)(4,918)
Total deferred benefit (expense)184,269 (9,120)(115,839)(3,643)
Income tax benefit (expense)$183,623 $(20,091)$(39,095)$(13,836)

The current tax expense recorded in the Successor period ended December 31, 2020 was primarily related to local country foreign tax expense in certain jurisdictions partially offset by adjustments to the Company’s reserves for unrecognized tax benefits in certain state jurisdictions.
The current tax expense of $11.0 million recorded in the Successor period from May 2, 2019 through December 31, 2019 was primarily related to state income taxes on operating profits generated in certain state jurisdictions during the period. The federal current tax expense for the Successor period was not significant due to the net operating loss carryforwards that were available to offset taxable income.
The current tax benefit of $76.7 million recorded for the Predecessor period from January 1, 2019 through May 1, 2019 relates primarily to the effective settlement of liabilities for unrecognized tax benefits that were discharged upon the Company's emergence from bankruptcy for certain state jurisdictions.
Current tax expense for the Predecessor period ended December 31, 2018 was $10.2 million.  The current tax expense recorded in 2018 was primarily related to state income tax expense incurred during the period and reserves recorded for unrecognized state tax benefits.

The deferred tax benefit of $184.3 million recorded in the Successor period ended December 31, 2020 related primarily to the current period net operating losses and a reduction in deferred tax liabilities recorded in connection with the impairment of our FCC licenses discussed in Note 7.
The deferred tax expense of $9.1 million recorded in the Successor period from May 2, 2019 through December 31, 2019 related primarily to the utilization of federal and state net operating loss carryforwards which offset taxable income during the period.
The deferred tax expense of $115.8 million recorded in the Predecessor period from January 1, 2019 through May 1, 2019 related primarily to the impact of reorganization and fresh start adjustments described above.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Significant components of the Successor Company's deferred tax liabilities and assets as of December 31, 2020 and 2019 are as follows:
Successor Company
(In thousands)20202019
Deferred tax liabilities:
Intangibles and fixed assets$1,005,116 $1,163,310 
Operating lease right-of-use assets204,953 130,123 
Total deferred tax liabilities1,210,069 1,293,433 
Deferred tax assets:
Accrued expenses23,052 24,525 
Net operating loss carryforwards218,290 167,008 
Interest expense carryforwards315,304 324,481 
Operating lease liabilities209,010 109,503 
Capital loss carryforwards1,662,174 601,309 
Investments15,378 26,071 
Bad debt reserves15,247 9,916 
Other13,228 13,799 
Total gross deferred tax assets2,471,683 1,276,612 
Less: Valuation allowance1,818,091 720,622 
Total deferred tax assets653,592 555,990 
Net deferred tax liabilities$556,477 $737,443 

The deferred tax liability related to intangibles and fixed assets primarily relates to the difference in book and tax basis of FCC licenses and other intangible assets that were adjusted for book purposes to estimated fair values as part of the application of fresh start accounting, and were further adjusted in the first quarter of 2020 upon recognition of an impairment as discussed in Note 7.  In accordance with ASC 350-10, Intangibles—Goodwill and Other, the Company does not amortize FCC licenses.  As a result, this deferred tax liability will not reverse over time unless the Company recognizes future impairment charges or sells its FCC licenses.  As the Company continues to amortize its tax basis in its FCC licenses, the deferred tax liability will increase over time. The Company’s net foreign deferred tax liabilities for the periods ending December 31, 2020 and December 31, 2019 were $0.3 million.
At December 31, 2020, the Successor Company had recorded net operating loss and tax credit carryforwards (tax effected) for federal and state income tax purposes of approximately $218.3 million, expiring in various amounts through 2040 or in some cases with no expiration date. In connection with the tax reform legislation passed in December of 2017, Section 163(j) of the Internal Revenue Code was amended, thereby establishing new rules governing a U.S. taxpayer’s ability to deduct interest expense beginning in 2018. Section 163(j), as amended, generally limits the deduction for business interest expense to thirty percent of adjusted taxable income (notwithstanding the temporary provisions described above from the enactment of the CARES Act), and provides that any disallowed interest expense may be carried forward indefinitely. The Successor Company recorded deferred tax assets for federal and state interest limitation carryforwards of $315.3 million as of December 31, 2020. In connection with the taxable separation of the Outdoor division as part of the bankruptcy restructuring, the Successor Company realized a $7.2 billion capital loss (gross after attribute reduction calculations). For federal tax purposes the capital loss can be carried forward 5 years and only be used to offset capital gains. For state tax purposes, the capital loss has various carryforward periods. The Successor Company has recorded a full valuation allowance against the deferred tax asset associated with the federal and state capital loss carryforward as it is not expected to be realized. The Successor Company expects to realize the benefits of a portion of its remaining deferred tax assets based upon expected future taxable income from deferred tax liabilities that reverse in the relevant federal and state jurisdictions and carryforward periods. As of December 31, 2020, the Successor Company had recorded a valuation allowance of $1.8 billion against a portion of these U.S. federal and state deferred tax assets which it does not expect to realize, relating primarily to capital loss carryforwards and certain state net operating loss
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
carryforwards. The Successor Company's U.S. federal and state deferred tax valuation allowance increased by $1.1 billion during the Successor period ending December 31, 2020 primarily due to an increase in the capital loss carryforward as determined on the Company's 2019 income tax filings.  Any deferred tax liabilities associated with acquired FCC licenses and tax-deductible goodwill intangible assets are now relied upon as sources of future taxable income for purposes of realizing deferred tax assets attributed to carryforwards that have an indefinite life such as the Section 163(j) interest carryforward.
At December 31, 2020, net deferred tax liabilities include a deferred tax asset of $3.5 million relating to stock-based compensation expense under ASC 718-10, Compensation—Stock Compensation.  Full realization of this deferred tax asset requires stock options to be exercised at a price equal to or exceeding the sum of the grant price plus the fair value of the option at the grant date and restricted stock to vest at a price equaling or exceeding the fair market value at the grant date.  Accordingly, there can be no assurance that the stock price of the Successor Company’s common stock will rise to levels sufficient to realize the entire deferred tax benefit currently reflected in its balance sheet.
The reconciliations of income tax on income (loss) from continuing operations computed at the U.S. federal statutory tax rates to the recorded income tax benefit (expense) for the Successor Company and Predecessor Company are:
Successor Company
Year Ended December 31,Period from May 2, 2019 through December 31,
(In thousands)20202019
AmountPercentAmountPercent
Income tax benefit (expense) at statutory rates$440,758 21.0 %$(28,012)21.0 %
State income taxes, net of federal tax effect
13,619 0.7 %(4,718)3.5 %
Foreign income taxes(1,187)(0.1)%(1,593)1.2 %
Nondeductible items(8,928)(0.4)%(7,345)5.5 %
Changes in valuation allowance and other estimates
(30,531)(1.5)%24,439 (18.2)%
Impairment charges(257,119)(12.3)%— — %
Other, net27,011 1.3 %(2,862)2.1 %
Income tax benefit (expense)$183,623 8.7 %$(20,091)15.1 %
Predecessor Company
Period from January 1, 2019 through May 1,Year Ended December 31,
(In thousands)20192018
AmountPercentAmountPercent
Income tax benefit (expense) at statutory rates$(1,999,008)21.0 %$5,069 21.0 %
State income taxes, net of federal tax effect
68,442 (0.7)%(14,958)(62.0)%
Foreign income taxes(270)— %(3,076)(12.7)%
Nondeductible items(1,793)— %(4,834)(20.0)%
Changes in valuation allowance and other estimates
648,384 (6.8)%10,958 45.4 %
Tax impact of outdoor charges eliminated in discontinued operations— — %(8,017)(33.2)%
Reorganization and fresh start adjustments1,245,282 (13.1)%— — %
Other, net(132)— %1,022 4.2 %
Income tax expense$(39,095)0.4 %$(13,836)(57.3)%

The Successor Company’s effective tax rate for the year ended December 31, 2020 is 8.7%.  The effective tax rate for this period was primarily impacted by the impairment charges to non-deductible goodwill discussed in Note 7. In addition, the Company recorded deferred tax adjustments to state net operating losses and federal and state disallowed interest carryforwards
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
as a result of the filing of 2019 tax returns and certain legal entity restructuring completed during the period. These adjustments were partially offset by valuation allowance adjustments recorded during the year against certain federal and state deferred tax assets such as net operating loss carryforwards and disallowed interest carryforwards due to the uncertainty of the ability to realize those assets in future periods.
The Successor Company’s effective tax rate for the period from May 2, 2019 through December 31, 2019 was 15.1%. The effective rate for the Successor period was primarily impacted by deferred tax benefits recorded for changes in estimates related to the carryforward tax attributes that survived the emergence from bankruptcy and deferred tax adjustments associated with the filing of the Company’s 2018 tax returns during the fourth quarter of 2019. The primary change to the 2018 tax return filings, when compared to the provision estimates, was the Company's decision to elect out of the first-year bonus depreciation rules for the 2018 year for all qualified capital expenditures. This resulted in less tax depreciation deductions for tax purposes for the 2018 year and higher adjusted tax basis for our fixed assets as of the Effective Date.
The Predecessor Company’s effective tax rate for the period from January 1, 2019 through May 1, 2019 was 0.4%.  The income tax expense for the period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consists of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1) tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets. In addition to the above mentioned adjustments, the Reorganization and fresh start adjustments line above includes the reversal of the $2.0 billion in tax benefits that are presented in the reconciliation table in the Income tax benefit at statutory rates line.
The Predecessor Company’s effective tax rate for the year ended December 31, 2018 was (57.3)%.  The effective tax rate for 2018 was primarily impacted by $11.3 million of deferred tax expense attributed to the valuation allowance recorded against federal and state deferred tax assets generated in the period due to the uncertainty of the ability to realize those assets in future periods. In addition, the Company did not record a tax effect for charges between the iHeartMedia group and the Outdoor Group that were eliminated in the presentation of discontinued operations as these charges are respected for income tax purposes under the Tax Matters Agreement.
The Successor Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense.  The total amount of interest accrued at December 31, 2020 and 2019 was $5.3 million and $6.9 million, respectively.  The total amount of unrecognized tax benefits including accrued interest and penalties at December 31, 2020 and 2019 was $20.0 million and $20.5 million, respectively, of which $18.2 million and $20.3 million is included in “Other long-term liabilities”.  In addition, $1.8 million and $0.2 million of unrecognized tax benefits are recorded net with the Company’s deferred tax assets for its net operating losses as opposed to being recorded in “Other long-term liabilities” at December 31, 2020 and 2019, respectively.  The total amount of unrecognized tax benefits at December 31, 2020 and 2019 that, if recognized, would impact the effective income tax rate is $13.8 million and $15.5 million, respectively.
(In thousands)Successor Company
Years Ended December 31,
Unrecognized Tax Benefits20202019
Balance at beginning of period$13,664 $53,156 
Increases for tax position taken in the current year2,325 4,070 
Increases for tax positions taken in previous years453 2,534 
Decreases for tax position taken in previous years(1,566)(2,948)
Decreases due to settlements with tax authorities— (1,183)
Decreases due to lapse of statute of limitations(195)(41,965)
Balance at end of period$14,681 $13,664 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions.  During 2019 the Company settled several state and local tax and foreign tax examinations resulting is a reduction of unrecognized tax benefits of $1.2 million, excluding interest. In addition, during 2019 the statute of limitations for certain tax years expired upon our emergence from bankruptcy resulting in the reduction to unrecognized tax benefits of $42.0 million, excluding interest. All federal income tax matters through 2016 are closed.  The majority of all material state, local, and foreign income tax matters have been concluded for years through 2017 with the exception of a current examination in Texas that covers the 2007-2016 tax years.

NOTE 12 – STOCKHOLDERS’ EQUITY
As described in Note 2 - Emergence from Voluntary Reorganization under Chapter 11 Proceedings and Note 3 - Fresh Start Accounting, the Company emerged from bankruptcy upon the effectiveness of the Plan of Reorganization on May 1, 2019, at which time all shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were canceled, and reorganized iHeartMedia issued an aggregate of 56,861,941 shares of iHeartMedia Class A common stock, 6,947,567 shares of Class B common stock and special warrants to purchase 81,453,648 shares of Class A common stock or Class B common stock to holders of claims pursuant to the Plan of Reorganization.  The value of these shares and warrants issued to claimholders in settlement of Liabilities subject to compromise was based on the difference between the Enterprise Value of the Company and the and new debt and mandatorily redeemable preferred stock issued upon emergence, adjusted as necessary for cash and cash equivalents, noncontrolling interest and changes in deferred taxes.  The impact of finalization of deferred tax amounts related to the Reorganization is reflected within the Consolidated Statement of Changes in Stockholders’ Equity (Deficit).
Historically, the Company granted restricted shares of the Company's Class A common stock to certain key individuals. In connection with the effectiveness of the Plan of Reorganization, all unvested restricted shares were canceled.
Pursuant to the Post-Emergence Equity Plan the Company adopted in connection with the effectiveness of our Plan of Reorganization, the Company has granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.
This Post-Emergence Equity Plan is designed to provide an incentive to certain key members of management and service providers of the Company or any of its subsidiaries and non-employee members of the Board of Directors and to offer an additional inducement in obtaining the services of such individuals. The Post-Emergence Equity Plan provides for the grant of (a) options and (b) restricted stock units, which, in each case, may be subject to contingencies or restrictions as set forth under the plan and applicable award agreement.
The aggregate number of shares of Class A common stock that may be issued or used for reference purposes with respect to which awards may be granted under the plan shall be equal to the sum of (a) 12,770,387 shares of Class A common stock for awards to key members of management and service providers plus (b) 1,596,298 shares of Class A common stock for awards to non-employee members of the Board. Such shares of common stock may, in the discretion of the Board of Directors, consist either in whole or in part of authorized but unissued shares of common stock or shares of common stock held in the treasury of the Company. The Company shall at all times during the term of the plan reserve and keep available such number of shares of common stock as will be sufficient to satisfy the requirements of the plan.
The Company granted 5,542,668 stock options and 3,205,360 restricted stock units on May 30, 2019 in connection with the Company's emergence from bankruptcy (the "Emergence Awards").
Share-Based Compensation
Successor
Stock Options
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The term of each option granted pursuant to the plan may not exceed (a) six (6) years from the date of grant thereof in the case of the awards granted upon emergence and (b) ten (10) years from the date of grant thereof in the case of all other options; subject, however, in either case, to earlier termination as hereinafter provided.
Options granted under the plan are exercisable at such time or times and subject to such terms and conditions as shall be determined by the Compensation Committee of the Board (the "Committee") at the time of grant.
The options granted as Emergence Awards vest (or vested, as applicable), subject to a participant’s continued full-time employment or service with the Company through each applicable vesting date, (a) 20% on July 22, 2019, and (b) an additional 20% vesting on each of the next four anniversaries of the grant date.
No options granted under the plan will provide for any dividends or dividend equivalents thereon.
The Company accounts for its share-based payments using the fair value recognition provisions of ASC 718-10.  The fair value of options that vest based on continued service is estimated on the grant date using a Black-Scholes option-pricing model.  Expected volatilities were based on historical volatility of peer companies’ stock, including the Company, over the expected life of the options.  The expected life of the options granted represents the period of time that the options granted are expected to be outstanding.   The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods equal to the expected life of the option. The Company does not estimate forfeitures at grant date, but rather has elected to account for forfeitures when they occur.
The following assumptions were used to calculate the fair value of the Successor Company's options on the date of grant:
Year Ended December 31,Period from May 2, 2019 through December 31,
20202019
Expected volatility
44% – 57%
44% – 45%
Expected life in years
6.0 – 6.3
4.0 – 4.1
Risk-free interest rate
0.35% – 1.41%
1.40% – 2.02%
Dividend yield—%—%

The following table presents a summary of the Successor Company's stock options outstanding at and stock option activity during the year ended December 31, 2020 ("Price" reflects the weighted average exercise price per share):
(In thousands, except per share data)OptionsPriceWeighted
Average
Remaining
Contractual Term
Outstanding, January 1, 20205,645 $18.93 5.4 years
Granted2,292 9.05 
Forfeited(161)16.42 
Expired(81)19.00 
Outstanding, December, 31, 20207,695 16.01 5.9 years
Exercisable2,204 18.87 4.3 years
Expected to Vest5,491 14.87 6.5 years
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A summary of the Successor Company's unvested options and changes during the year ended December 31, 2020 is presented below:
(In thousands, except per share data)OptionsWeighted Average Grant Date Fair Value
Unvested, January 1, 20204,517 $5.28 
Granted2,292 4.76 
Vested (1)
(1,157)5.29 
Forfeited(161)5.20 
Unvested, December 31, 20205,491 5.06 
(1)The total fair value of the options vested during the year ended December 31, 2020 (Successor) was $6.1 million.
Restricted Stock Units (RSUs)
RSUs may be issued either alone or in addition to other awards granted under the plan.
The RSUs granted in respect of the Emergence Awards vest or vested (as applicable), subject to a participant’s continued full-time employment or service with the Company through each applicable vesting date, (a) 20% on July 22, 2019, and (b) an additional 20% vesting on each of the next four anniversaries of the grant date.
Each RSU (representing one share of common stock) awarded to a participant will be credited with dividends paid in respect of one share of common stock (“Dividend Equivalents”). Dividend Equivalents will be withheld by the Company for the participant’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a participant’s account and attributable to any particular RSU (and earnings thereon, if applicable) shall be distributed to the participant upon settlement of such RSU and, if such RSU is forfeited, the participant shall have no right to such Dividend Equivalents.
The following table presents a summary of the Successor Company's restricted stock outstanding and restricted stock activity as of and during the year ended December 31, 2020 (“Price” reflects the weighted average share price at the date of grant):
(In thousands, except per share data)AwardsPrice
Outstanding, January 1, 20202,648 $16.47 
Granted752 9.31 
Vested (restriction lapsed)(725)16.32 
Forfeited(97)16.50 
Outstanding, December 31, 20202,578 14.42 

Performance-based Restricted Stock Units (“Performance RSUs”)

In August 2020, the Company issued Performance RSUs to certain key employees. Such Performance RSUs vest upon the achievement of critical operational (cost savings) improvements and specific environmental, social and governance initiatives, which are being measured over an approximately 18-month period from the date of issuance. In the year ended December 31, 2020, the Company recognized $3.4 million in relation to these Performance RSUs.

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The following table presents a summary of the Successor Company's Performance RSUs outstanding and activity as of and during the year ended December 31, 2020 (“Price” reflects the weighted average share price at the date of grant):
(In thousands, except per share data)AwardsPrice
Outstanding, January 1, 2020— $— 
Granted556 8.98 
Vested (restriction lapsed)— — 
Forfeited— — 
Outstanding, December 31, 2020556 $8.98 

Predecessor
Prior to the Emergence Date, the Predecessor Company had granted share-based awards that were canceled upon emergence from bankruptcy. In conjunction with the cancellation, the Predecessor Company accelerated the unrecognized share-based compensation expense and recorded $1.5 million of compensation expense in the period from January 1, 2019 through May 1, 2019 (Predecessor), principally reflected in Reorganization costs, net.
Stock Options
The Predecessor Company granted options to purchase its shares of Class A common stock to certain key executives under its equity incentive plan at no less than the fair value of the underlying stock on the date of grant.  These options were granted for a term not to exceed ten years and were forfeited, except in certain circumstances, in the event the executive terminated his or her employment or relationship with the Predecessor Company or one of its affiliates.  Approximately three-fourths of the options outstanding at December 31, 2017 vested based solely on continued service over a period of up to five years with the remainder becoming eligible to vest over a period of up to five years if certain predetermined performance targets are met.  The equity incentive plan contains antidilutive provisions that permitted an adjustment for any change in capitalization.
As of December 31, 2018, the Predecessor Company had 690,994 options outstanding with a weighted average exercise price of $33.70. During the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 there were no options vested, granted or exercised and the 690,994 options outstanding were canceled upon the Company’s emergence from bankruptcy.
Restricted Stock Awards (RSAs)
The Predecessor Company granted restricted stock awards to certain of its employees and affiliates under its equity incentive plan.  The restricted stock awards were restricted in transferability for a term of up to five years. Restricted stock awards were forfeited, except in certain circumstances, in the event the employee terminates his or her employment or relationship with the Company prior to the lapse of the restriction.
As of December 31, 2018, the Predecessor Company had 5,258,526 RSAs outstanding with a weighted average share price at the date of the grant of $3.74. During the period from January 1, 2019 through May 1, 2019 (Predecessor), there were 18,600 RSA's vested at a weighted average share price at the date of the grant of $1.42 and 110,333 RSA's forfeited at a weighted average share price at the date of the grant of $3.16. Outstanding RSA's of 5,129,593 were canceled upon the Company’s emergence from bankruptcy.
Successor Common Stock and Special Warrants
The following table presents the Successor Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of December 31, 2020:
(In thousands, except share and per share data)December 31,
2020
Successor Class A Common Stock, par value $.001 per share, 1,000,000,000 shares authorized
64,726,864 
Successor Class B Common Stock, par value $.001 per share, 1,000,000,000 shares authorized
6,886,925 
Successor Special Warrants74,835,899 
  Total Successor Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding146,449,688 
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Class A Common Stock
Holders of shares of the Successor Company's Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the Successor Company's Class A common stock will have the exclusive right to vote for the election of directors. There will be no cumulative voting rights in the election of directors.
Holders of shares of the Successor Company's Class A common stock are entitled to receive dividends, on a per share basis, when and if declared by the Company's Board out of funds legally available therefor and whenever any dividend is made on the shares of the Successor Company's Class B common stock subject to certain exceptions set forth in our certificate.
The Successor Company may not subdivide or combine (by stock split, reverse stock split, recapitalization, merger, consolidation or any other transaction) its shares of Class A common stock or Class B common stock without subdividing or combining its shares of Class B common stock or Class A common stock, respectively, in a similar manner.
Upon our dissolution or liquidation or the sale of all or substantially all of the Successor Company's assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Successor Company's Class A common stock will be entitled to receive pro rata together with holders of the Successor Company's Class B common stock our remaining assets available for distribution.
New Class A common stock certificates issued upon transfer or new issuance of Class A common stock shares will contain a legend stating that such shares of Class A common stock are subject to the provisions of our amended and restated certificate of incorporation, including but not limited to provisions governing compliance with requirements of the Communications Act and regulations thereunder, including, without limitation, those concerning foreign ownership and media ownership.
On July 18, 2019, the Company’s Class A common stock was listed and began trading on the Nasdaq Global Select Market ("Nasdaq") under the ticker symbol “IHRT”.
Class B Common Stock
Holders of shares of the Successor Company's Class B common stock are not entitled to vote for the election of directors or, in general, on any other matter submitted to a vote of the Company’s stockholders, but are entitled to one vote per share on the following matters: (a) any amendment or modification of any specific rights or obligations of the holders of Class B common stock that does not similarly affect the rights or obligations of the holders of Class A common stock, in which case the holders of Class B Common Stock will be entitled to a separate class vote, with each share of Class B common stock having one vote; and (b) to the extent submitted to a vote of our stockholders, (i) the retention or dismissal of outside auditors by the Company, (ii) any dividends or distributions to our stockholders, (ii) any material sale of assets, recapitalization, merger, business combination, consolidation, exchange of stock or other similar reorganization of the Company or any of its subsidiaries, (iv) the adoption of any amendment to our certificate of incorporation, (v) other than in connection with any management equity or similar plan adopted by the Company's Board, any authorization or issuance of equity interests, or any security or instrument convertible into or exchangeable for equity interests, in the Company or any of its subsidiaries, and (vi) the liquidation of the Company, in which case in respect to any such vote concerning the matters described in clause (b), the holders of Class B common stock are entitled to vote with the holders of the Class A common stock, with each share of common stock having one vote and voting together as a single class.
Holders of shares of the Successor Company's Class B common stock are generally entitled to convert shares of Class B common stock into shares of Class A common stock on a one-for-one basis, subject to the Company’s ability to restrict conversion in order to comply with the Communications Act and FCC regulations.
Holders of shares of the Successor Company's Class B common stock are entitled to receive dividends when and if declared by the Company's Board out of funds legally available therefor and whenever any dividend is made on the shares of the Successor Company's Class A common stock subject to certain exceptions set forth in our certificate of incorporation. Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Successor Company's Class B common stock will be entitled to receive pro rata with holders of the Successor Company's Class A common stock our remaining assets available for distribution.
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During the year ended December 31, 2020, 20,080 shares of the Class B common stock were converted into Class A common stock. During the period from May 2, 2019 to December 31, 2019, 53,317 shares of the Class B common stock were converted into Class A common stock.

Special Warrants
Each Special Warrant issued under the special warrant agreement entered into in connection with the Reorganization may be exercised by its holder to purchase one share of Successor Class A common stock or Successor Class B common stock at an exercise price of $0.001 per share, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, subject to certain exceptions, (a) such exercising holder owning more than 4.99 percent of the Successor Company's outstanding Class A common stock, (b) more than 22.5 percent of the Successor Company's capital stock or voting interests being owned directly or indirectly by foreign individuals or entities, (c) the Company exceeding any foreign ownership threshold set by the FCC pursuant to a declaratory ruling or specific approval requirement or (d) the Company violating any provision of the Communications Act or restrictions on ownership or transfer imposed by the Company's certificate of incorporation or the decisions, rules and policies of the FCC. Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and certifications required under the special warrant agreement.
To the extent there are any dividends declared or distributions made with respect to the Successor Class A common stock or Successor Class B common stock, those dividends or distributions will also be made to holders of Special Warrants concurrently and on a pro rata basis based on their ownership of common stock underlying their Special Warrants on an as-exercised basis; provided, that no such distribution will be made to holders of Special Warrants if (x) the Communications Act or an FCC rule prohibits such distribution to holders of Special Warrants or (y) our FCC counsel opines that such distribution is reasonably likely to cause (i) the Company to violate the Communications Act or any applicable FCC rule or (ii) any such holder not to be deemed to hold a noncognizable (under FCC rules governing foreign ownership) future equity interest in the Company; provided further, that, if any distribution of common stock or any other securities to a holder of Special Warrants is not permitted pursuant to clauses (x) or (y), the Company will cause economically equivalent warrants to be distributed to such holder in lieu thereof, to the extent that such distribution of warrants would not violate the Communications Act or any applicable FCC rules.
The Special Warrants will expire on the earlier of the twentieth anniversary of the issuance date and the occurrence of a change in control of the Company.
During the year ended December 31, 2020, stockholders exercised 6,205,617 and 2,095 Special Warrants for an equivalent number of shares of Class A common stock and Class B common stock, respectively. During the period from May 2, 2019 through ended December 31, 2019, stockholders exercised 216,921 and 10,660 Special Warrants for an equivalent number of Class A common stock and Class B common stock, respectively.
January 2021 Exchange Substantially Expanding Class A and Class B Shares Outstanding
On January 8, 2021, the Company completed an exchange of 67,471,123 Special Warrants into 45,133,811 shares of Class A common stock, the Company’s publicly traded equity, and 22,337,312 shares of Class B common stock. The exchange was authorized by a previously issued Declaratory Ruling from the Federal Communications Commission approving an increase in iHeartMedia’s authorized aggregate foreign ownership from 25% to 100%, subject to certain conditions set forth in the Declaratory Ruling. Certain shares of Class B common stock and Special Warrants were not converted into Class A Common Stock due to current regulatory restrictions applicable to certain shareholders. There were 6,201,453 Special Warrants outstanding on February 22, 2021.
Share-Based Compensation Cost

The share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. Share-based compensation payments are recorded in corporate expenses and were $22.9 million and $26.4 million for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively. Share-based compensation expenses for the Predecessor Company were $0.5 million and $2.1 million during the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018, respectively.
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The tax benefit related to the share-based compensation expense for the Successor Company for the year ended December 31, 2020 and the period from May 1, 2019 through December 31, 2019 was $5.7 million and $4.1 million, respectively. The tax benefit related to the share-based compensation expense for the Predecessor Company for the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 was $0.1 million and $0.5 million, respectively.
As of December 31, 2020, there was $54.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on service conditions.  This cost is expected to be recognized over a weighted average period of approximately 2.8 years. In addition, as of December 31, 2020, there was $1.6 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on certain performance conditions.

Income (Loss) per Share
(In thousands, except per share data)Successor CompanyPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
 2020201920192018
NUMERATOR: 
Net income (loss) attributable to the Company – common shares$(1,914,699)$112,548 $11,184,141 $(201,910)
Exclude:
  Income (loss) from discontinued operations, net of tax$— $— $1,685,123 $(164,667)
  Noncontrolling interest from discontinued operations, net of tax - common shares
— — 19,028 124 
Total income (loss) from discontinued operations, net of tax - common shares
$— $— $1,704,151 $(164,543)
Total income (loss) from continuing operations$(1,914,699)$112,548 $9,479,990 $(37,367)
  Noncontrolling interest from continuing operations, net of tax - common shares
523 (751)— 605 
Income (loss) from continuing operations$(1,915,222)$113,299 $9,479,990 $(37,972)
DENOMINATOR(1):
 
Weighted average common shares outstanding - basic145,979 145,608 86,241 85,412 
  Stock options and restricted stock(2):
— 187 — — 
Weighted average common shares outstanding - diluted145,979 145,795 86,241 85,412 
Net income (loss) attributable to the Company per common share: 
From continuing operations - Basic$(13.12)$0.77 $109.92 $(0.44)
From discontinued operations - Basic$— $— $19.76 $(1.93)
From continuing operations - Diluted$(13.12)$0.77 $109.92 $(0.44)
From discontinued operations - Diluted$— $— $19.76 $(1.93)
(1)All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019.
(2)Outstanding equity awards representing 9.1 million and 5.9 million shares of Class A common stock of the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive. Outstanding equity awards representing 5.9 million and 7.2 million shares of Class A common stock of the Predecessor Company for the period for the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.
Stockholder Rights Plan

On May 5, 2020, the Board approved the adoption of a short-term stockholder rights plan (the “Stockholder Rights Plan”).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the stockholder rights plan, the Board declared a dividend distribution of one right on each outstanding share of Class A common stock, share of Class B common stock and special warrant issued in connection with the Plan of Reorganization. The record date for such dividend distribution was May 18, 2020.

Under the Stockholder Rights Plan, subject to certain exceptions, the rights will generally be exercisable only if, in a transaction not approved by the Board, a person or group acquires beneficial ownership of 10% or more of the Company’s Class A common stock (or 20% in the case of certain passive investors), including through such person’s ownership of the convertible Class B common stock and/or special warrants, as further detailed in the Stockholder Rights Plan. In that situation, each holder of a right (other than the acquiring person or group) will have the right to purchase, upon payment of the exercise price, a number of shares of the Company’s Class A common stock, Class B common stock or special warrants, as applicable, having a market value of twice such price. In addition, the Stockholder Rights Plan contains a similar provision if the Company is acquired in a merger or other business combination after an acquiring person acquires beneficial ownership of 10% or more of the Company’s Class A common stock (or 20% in the case of certain passive investors).

The Stockholder Rights Plan has a duration of less than one year, expiring on May 5, 2021. The Stockholder Rights Plan may also be terminated, or the rights may be redeemed, by action of the Company prior to the scheduled expiration date under certain circumstances, including if the Board determines that market and other conditions warrant, which the Board intends to monitor. The adoption of the Stockholder Rights Plan is not a taxable event and does not have any impact on the Company’s financial reporting.

NOTE 13 – EMPLOYEE STOCK AND SAVINGS PLANS
iHeartCommunications has various 401(k) savings and other plans for the purpose of providing retirement benefits for substantially all employees.  Under these plans, an employee can make pre-tax contributions and iHeartCommunications will match a portion of such an employee’s contribution.  Employees vest in these iHeartCommunications matching contributions based upon their years of service to iHeartCommunications. In April 2020, the Company announced incremental operating-expense-saving initiatives in response to the economic environment resulting from the COVID-19 pandemic, which included a temporary suspension of the Company's 401(k) matching program. Contributions of $4.5 million, $8.6 million, $6.1 million and $13.5 million were made to these plans for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 (Predecessor), respectively, were expensed.

iHeartCommunications offers a non-qualified deferred compensation plan for a select group of management or highly compensated employees, under which such employees were able to make an annual election to defer up to 50% of their annual salary and up to 80% of their bonus before taxes.  iHeartCommunications suspended all salary and bonus deferrals and company matching contributions to the deferred compensation plan on January 1, 2010. iHeartCommunications accounts for the plan in accordance with the provisions of ASC 710-10.  Matching credits on amounts deferred may be made in iHeartCommunications' sole discretion and iHeartCommunications retains ownership of all assets until distributed.  Participants in the plan have the opportunity to allocate their deferrals and any iHeartCommunications matching credits among different investment options, the performance of which is used to determine the amounts to be paid to participants under the plan.  In accordance with the provisions of ASC 710-10, the assets and liabilities of the non-qualified deferred compensation plan are presented in “Other assets” and “Other long-term liabilities” in the accompanying consolidated balance sheets, respectively.  The asset and liability under the deferred compensation plan at December 31, 2020 (Successor) was approximately $12.3 million recorded in “Other assets” and $12.3 million recorded in “Other long-term liabilities”, respectively.  The asset and liability under the deferred compensation plan at December 31, 2019 (Successor) was approximately $11.3 million recorded in “Other assets” and $11.3 million recorded in “Other long-term liabilities”, respectively.
NOTE 14 — OTHER INFORMATION
OTHER INCOME (EXPENSE), NET
The following table discloses the components of "Other income (expense), net" for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 (Predecessor), respectively:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)Successor CompanyPredecessor Company
Year Ended December 31,Period from May 2, 2019 through December 31,Period from January 1, 2019 through May 1,Year Ended December 31,
2020201920192018
Professional fees $(6,278)$(26,487)$(156)$(23,100)
Other(1,473)8,221 179 93 
Total other income (expense), net$(7,751)$(18,266)$23 $(23,007)
Other income (expense), net for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) and the year ended December 31, 2018 (Predecessor) included $6.3 million, $26.5 million and $23.1 million, respectively, in expenses incurred in connection with our bankruptcy and negotiations with lenders and other activities related to our capital structure.

OTHER CURRENT ASSETS
The following table discloses the components of “Other current assets” as of December 31, 2020 and 2019, respectively:
(In thousands)Successor Company
As of December 31,
20202019
Inventory$1,153 $507 
Deposits2,680 2,944 
Restricted cash— 11,318 
Due from related parties549 1,480 
Other receivables11,905 24,326 
Other1,139 801 
Total other current assets$17,426 $41,376 

OTHER ASSETS
The following table discloses the components of “Other assets” as of December 31, 2020 and 2019, respectively:
Successor Company
(In thousands)As of December 31,
20202019
Investments in, and advances to, nonconsolidated affiliates$11,065 $10,952 
Other investments28,053 19,689 
Available-for-sale debt securities, net of reserve of $4,167 in 2020 and $0 in 2019
31,456 33,128 
Deposits4,553 4,481 
Prepaid rent8,882 6,284 
Non-qualified plan assets12,265 11,343 
Other9,350 10,339 
Total other assets$105,624 $96,216 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OTHER LONG-TERM LIABILITIES
The following table discloses the components of “Other long-term liabilities” as of December 31, 2020 and 2019, respectively:
(In thousands)Successor Company
As of December 31,
20202019
Unrecognized tax benefits$18,183 $20,334 
Asset retirement obligation3,951 3,722 
Non-qualified plan liabilities12,265 11,343 
Deferred income22,018 22,588 
Other14,800 123 
Total other long-term liabilities$71,217 $58,110 

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table discloses the components of “Accumulated other comprehensive income (loss),” net of tax, as of December 31, 2020 and 2019, respectively:
(In thousands)Successor Company
As of December 31,
20202019
Cumulative currency translation adjustment$194 $(750)
Cumulative other adjustments— — 
Total accumulated other comprehensive income (loss)$194 $(750)

NOTE 15 – SEGMENT DATA
The Company’s primary business is included in its Audio segment. Revenue and expenses earned and charged between Audio, Corporate and the Company's Audio & Media Services businesses are eliminated in consolidation.  The Audio segment provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses.  The Audio & Media Services business provides other audio and media services, including the Company’s media representation business (Katz Media) and its provider of scheduling and broadcast software (RCS).  Corporate includes infrastructure and support, including executive, information technology, human resources, legal, finance and administrative functions for the Company’s businesses. Share-based compensation is recorded within Corporate expenses.
Beginning with the first quarter of 2021, the Company is changing its presentation of segment information to reflect changes in the way the business is managed and resources are allocated by the Company's Chief Operating Decision Maker ("CODM") as a result of a reorganization of the Company's management structure. Effective January 1, 2021, the Company will have three reportable segments - iHeartMedia Multiplatform Group, which includes our Broadcast radio, Networks and Sponsorships and Events businesses, iHeartMedia Digital Audio Group, which includes all of our Digital assets, including Podcasting, and our Audio and Media Services Group. These reportable segments reflect how senior management views the Company, align with certain leadership and organizational changes implemented in the first quarter of 2021.
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Additionally, beginning on January 1, 2021, Segment Adjusted EBITDA will be the segment profitability metric reported to the Company's CODM for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. Segment Adjusted EBITDA is calculated as Revenue less Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses. Restructuring expenses consist primarily of severance expenses incurred in connection with cost saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle.
The following table presents the Company's segment results for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019:
Successor Company
(In thousands)AudioAudio and Media ServicesCorporate and other reconciling itemsEliminationsConsolidated
Year Ended December 31, 2020
Revenue$2,681,225 $274,749 $— $(7,756)$2,948,218 
Direct operating expenses1,136,279 32,387 — (5,518)1,163,148 
Selling, general and administrative expenses
1,076,063 151,220 — (2,186)1,225,097 
Corporate expenses— — 144,624 (52)144,572 
Depreciation and amortization
369,310 23,502 10,117 — 402,929 
Impairment charges— — 1,738,752 — 1,738,752 
Other operating expense, net
— — 11,344 — 11,344 
Operating income (loss)$99,573 $67,640 $(1,904,837)$— $(1,737,624)
Segment assets$7,936,468 $473,628 $796,450 $(3,585)$9,202,961 
Intersegment revenues $670 $7,086 $— $— $7,756 
Capital expenditures$73,859 $5,105 $6,241 $— $85,205 
Share-based compensation expense
$— $— $22,862 $— $22,862 
Period from May 2, 2019 through December 31, 2019
Revenue$2,447,800 $167,292 $— $(5,036)$2,610,056 
Direct operating expenses858,597 21,106 — (747)878,956 
Selling, general and administrative expenses
800,796 101,131 — (4,257)897,670 
Corporate expenses— — 136,203 (32)136,171 
Depreciation and amortization
229,869 14,776 4,978 — 249,623 
Impairment charges— — — — — 
Other operating expense, net
— — 8,000 — 8,000 
Operating income (loss)
$558,538 $30,279 $(149,181)$— $439,636 
Segment assets(1)
$10,040,750 $486,551 $497,576 $(3,778)$11,021,099 
Intersegment revenues$447 $4,589 $— $— $5,036 
Capital expenditures$62,016 $3,980 $9,997 $— $75,993 
Share-based compensation expense
$— $— $26,411 $— $26,411 
The following table presents the Company's segment results for the Predecessor Company for the periods indicated.
133



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Predecessor Company
(In thousands)AudioAudio and Media ServicesCorporate and other reconciling itemsEliminationsConsolidated
Period from January 1, 2019 through May 1, 2019
Revenue$1,006,677 $69,362 $— $(2,568)$1,073,471 
Direct operating expenses371,989 9,559 — (364)381,184 
Selling, general and administrative expenses
383,342 46,072 — (2,184)427,230 
Corporate expenses53,667 (20)53,647 
Depreciation and amortization
41,233 5,266 6,335 — 52,834 
Impairment charges— — 91,382 — 91,382 
Other operating expense, net
— — 154 — 154 
Operating income (loss)
$210,113 $8,465 $(151,538)$— $67,040 
Intersegment revenues$243 $2,325 $— $— $2,568 
Capital expenditures$31,177 $1,263 $3,757 $— $36,197 
Share-based compensation expense
$— $— $498 $— $498 
Year Ended December 31, 2018
Revenue$3,353,770 $264,061 $— $(6,508)$3,611,323 
Direct operating expenses1,104,290 28,360 — (211)1,132,439 
Selling, general and administrative expenses
1,208,882 147,505 — (6,230)1,350,157 
Corporate expenses— — 184,283 (67)184,216 
Depreciation and amortization
173,657 18,286 20,008 — 211,951 
Impairment charges— — 33,150 — 33,150 
Other operating expense, net— — 9,266 — 9,266 
Operating income (loss)
$866,941 $69,910 $(246,707)$— $690,144 
Segment assets(1)
$7,084,222 $448,072 $370,157 $(206)$7,902,245 
Intersegment revenues$— $6,508 $— $— $6,508 
Capital expenditures$72,392 $5,965 $6,888 $— $85,245 
Share-based compensation expense
$— $— $2,066 $— $2,066 
(1) The Predecessor Company's Segment assets exclude $4,367.3 million of assets related to discontinued operations as of December 31, 2018.



134



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 — QUARTERLY RESULTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)Successor Company
Three Months Ended
March 31,
Three Months Ended June 30,Three Months Ended
September 30,
Three Months Ended
December 31,
2020202020202020
Revenue$780,634 $487,648 $744,406 $935,530 
Operating expenses:
Direct operating expenses
301,632 249,866 276,719 334,931 
Selling, general and administrative expenses
344,141 261,219 292,581 327,156 
Corporate expenses
39,949 26,419 34,657 43,547 
Depreciation and amortization
96,768 103,347 99,379 103,435 
Impairment charges
1,727,857 5,378 — 5,517 
 Other operating expense, net1,066 506 1,675 8,097 
Operating income (loss)(1,730,779)(159,087)39,395 112,847 
Interest expense, net90,089 81,963 85,562 86,131 
Gain (loss) on investments, net
(9,955)1,280 62 (733)
Equity in income (loss) of nonconsolidated affiliates(564)(31)(58)274 
Other income (expense), net
(7,860)(1,258)(1,177)2,544 
Income (loss) before income taxes(1,839,247)(241,059)(47,340)28,801 
Income tax benefit (expense)150,511 43,742 15,228 (25,858)
Net income (loss)
(1,688,736)(197,317)(32,112)2,943 
Less amount attributable to noncontrolling interest
— — — (523)
Net income (loss) attributable to the Company
$(1,688,736)$(197,317)$(32,112)$3,466 
Net income (loss) attributable to the Company per common share:
Basic$(11.60)$(1.35)$(0.22)$0.02 
Diluted$(11.60)$(1.35)$(0.22)$0.02 
The Successor Company's Class A common shares are quoted for trading on the Nasdaq Global Select Market under the symbol IHRT.
135



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)Predecessor CompanySuccessor Company
Three Months Ended
March 31,
Period from April 1, 2019 through May 1,Period from May 2, 2019 through June 30,Three Months Ended
September 30,
Three Months Ended
December 31,
20192019201920192019
Revenue$795,797 $277,674 $635,646 $948,338 $1,026,072 
Operating expenses:
Direct operating expenses282,874 98,310 198,772 316,740 363,444 
Selling, general and administrative expenses324,934 102,296 220,231 327,115 350,324 
Corporate expenses39,141 14,506 26,818 58,513 50,840 
Depreciation and amortization38,290 14,544 59,383 95,268 94,972 
Impairment charges91,382 — — — — 
Other operating (income) expense, net27 127 (3,246)9,880 1,366 
Operating income19,149 47,891 133,688 140,822 165,126 
Interest expense (income), net(99)(400)69,711 100,967 96,095 
Gain (loss) on investments, net(10,237)— — 1,735 (22,663)
Equity in loss of nonconsolidated affiliates(7)(59)(24)(1)(254)
Other income (expense), net(127)150 (9,157)(12,457)3,348 
Reorganization items, net(36,118)9,497,944 — — — 
Income (loss) from continuing operations before income taxes(27,241)9,546,326 54,796 29,132 49,462 
Income tax benefit (expense)61,194 (100,289)(16,003)(16,758)12,670 
Income from continuing operations33,953 9,446,037 38,793 12,374 62,132 
Income (loss) from discontinued operations(169,554)1,854,677 — — — 
Net income (loss)(135,601)11,300,714 38,793 12,374 62,132 
Less amount attributable to noncontrolling interest(21,218)2,190 — — 751 
Net income (loss) attributable to the Company$(114,383)$11,298,524 $38,793 $12,374 $61,381 
Net income (loss) to the Company per common share:
From continuing operations - Basic$0.40 $110.28 $0.27 $0.08 $0.42 
From discontinued operations - Basic$(1.73)$21.63 $— $— $— 
From continuing operations - Diluted$0.40 $110.28 $0.27 $0.08 $0.42 
From discontinued operations - Diluted$(1.73)$21.63 $— $— $— 
The Predecessor Company's Class A common shares were quoted for trading on the OTC / Pink Sheets Bulletin Board under the symbol IHRT. The Successor Company's Class A common shares are quoted for trading on the Nasdaq Global Select Market under the symbol IHRT.
NOTE 17 – CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Transition Services Agreement

On the Effective Date, the Company, iHM Management Services, iHeartCommunications and CCOH entered into the Transition Services Agreement. CCOH terminated the Transition Services Agreement on August 31, 2020. For information regarding the Transition Services Agreement, refer to Note 4, Discontinued Operations.
136



IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
New Tax Matters Agreement

On the Effective Date, the Company entered into the New Tax Matters Agreement by and among the Company, iHeartCommunications, iHeart Operations, CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of the Company and its subsidiaries, on the one hand, and the Outdoor Group, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation. For information regarding the New Tax Matters Agreement, refer to Note 4, Discontinued Operations.
137


ITEM 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable
ITEM 9A.  Controls and Procedures
Disclosure Controls and Procedures
Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2020.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended.
There are inherent limitations to the effectiveness of any control system, however well designed, including the possibility of human error and the possible circumvention or overriding of controls. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The design of a control system also is based in part upon assumptions and judgments made by management about the likelihood of future events, and there can be no assurance that a control will be effective under all potential future conditions. As a result, even an effective system of internal control over financial reporting can provide no more than reasonable assurance with respect to the fair presentation of financial statements and the processes under which they were prepared.
As of December 31, 2020, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).  Based on the assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2020, based on those criteria.
Ernst & Young LLP, our independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting, which appears in this Item under the heading “Report of Independent Registered Public Accounting Firm.”
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

138


Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of iHeartMedia, Inc.
Opinion on Internal Control over Financial Reporting
We have audited iHeartMedia, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2020 consolidated financial statements of the Company and our report dated February 25, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Antonio, Texas
February 25, 2021

139


ITEM 9B.  Other Information
On February 23, 2021, our Board of Directors amended and restated the Company’s second amended and restated bylaws (as amended and restated, the “Amended and Restated Bylaws”) to insert a new “Section 9.15. Forum Selection”. Section 9.15 of the Amended and Restated Bylaws provides that (i) unless the Company consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, and (ii) any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to the provisions of Section 9.15 of the Amended and Restated Bylaws.

In addition to the exclusive forum clause described above, the Amended and Restated Bylaws contain the following changes, including:

Permitting the Company to provide notice to stockholders via a form of electronic transmission (as defined in the Amended and Restated Bylaws) in compliance with applicable law.
Adding the Chief Executive Officer as one of the individuals permitted to call a special meeting of the Board, in addition to the Chairman of the Board, President or Secretary, who may already call a special meeting of the Board.
Revising the provisions governing amendments to the bylaws by the Board and the Company’s stockholders to be consistent with the Company’s amended and restated certificate of incorporation, which is controlling.
Non-substantive clean-up changes to provisions relating to the treatment of a proposed nomination of a director if the election of such proposed nominee would result in a FCC Regulatory Limitation (as defined in the Company’s amended and restated certificate of incorporation).

The Amended and Restated Bylaws, along with a copy marked to show the changes from the second amended and restated bylaws, are filed herewith as Exhibits 3.2 and 3.3, respectively. The above description of the changes contained in the Amended and Restated Bylaws is qualified by reference to the full text of the Amended and Restated Bylaws, which are incorporated herein by reference.
140


PART III
ITEM 10.  Directors, Executive Officers and Corporate Governance
The information required by this item with respect to our executive officers is set forth at the end of Part I of this Annual Report on Form 10-K.
Our Code of Business Conduct and Ethics (the “Code of Conduct”) applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer and principal accounting officer.  The Code of Conduct is publicly available on our Internet website at www.iheartmedia.com.  We intend to satisfy the disclosure required by law or Nasdaq Stock Market listing standards regarding any amendment to, or waiver from, a provision of the Code of Conduct by posting such information on our website at www.iheartmedia.com.
All other information required by this item is incorporated by reference to the sections captioned “Election of Directors” and “Corporate Governance” set forth in our Definitive Proxy Statement for our 2021 Annual Meeting of Stockholders (the “Definitive Proxy Statement”), which we expect to file with the SEC within 120 days after our fiscal year end.

ITEM 11.  Executive Compensation
The information required by this item is incorporated by reference to the sections captioned “Executive Compensation,” “Director Compensation” and “Corporate Governance” set forth in our Definitive Proxy Statement, which we expect to file with the SEC within 120 days after our fiscal year end.

ITEM 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Plan CategoryNumber of Securities to be issued upon exercise of outstanding options, warrants and rights (Column A)
Weighted-Average exercise price of outstanding options, warrants and rights (1)
Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in Column A)
Equity Compensation Plans approved by security holders(2)
— $— — 
Equity Compensation Plans not approved by security holders
10,829,057(3)
$16.02 2,413,013 
Total10,829,057 $16.02 2,413,013 
(1)The weighted-average exercise price is calculated based solely on the exercise prices of the outstanding options and does not reflect the shares that will be issued upon the vesting of outstanding awards of restricted stock, which have no exercise price.
(2)Represents the Equity Plan.
(3)This number includes shares subject to outstanding awards granted, of which 7,695,010 shares are subject to outstanding options and 3,134,047 shares are subject to outstanding RSUs.
All other information required by this item is incorporated by reference to the section captioned “Security Ownership of Certain Beneficial Owners and Management” in our Definitive Proxy Statement, which we expect to file with the SEC within 120 days after our fiscal year end.

ITEM 13.  Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to the sections captioned “Corporate Governance” and “Certain Relationships and Related Person Transactions” in our Definitive Proxy Statement, which we expect to file with the SEC within 120 days after our fiscal year end.
141


ITEM 14.  Principal Accountant Fees and Services
The information required by this item is incorporated by reference to the section captioned “Principal Accountant Fees and Services” and “Pre-Approval Policies and Procedures” in our Definitive Proxy Statement, which we expect to file with the SEC within 120 days after our fiscal year end.

142


PART IV
ITEM 15.  Exhibits and Financial Statement Schedules
(a)1.  Financial Statements.
The following consolidated financial statements are included in Item 8:
Consolidated Balance Sheets.
Consolidated Statements of Comprehensive Income (Loss).
Consolidated Statements of Changes in Stockholders’ Equity (Deficit).
Consolidated Statements of Cash Flows.
Notes to Consolidated Financial Statements
2. Financial Statement Schedule.
The following financial statement schedule and related report of independent auditors is filed as part of this report and should be read in conjunction with the consolidated financial statements.
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.


143



SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts
(In thousands)
DescriptionBalance at Beginning of PeriodCharges to Costs, Expenses and OtherWrite-off of Accounts ReceivableImpact of Fresh Start Accounting
Other (1)
Balance at End of Period
Year ended December 31, 2018 (Predecessor)$25,963 $21,042 $20,409 $— $(12)$26,584 
Period from January 1, 2019 through May 1, 2019 (Predecessor)$26,584 $4,728 $8,622 $(22,689)$(1)$— 
Period from May 2, 2019 through December 31, 2019 (Successor)$— $12,628 $— $— $$12,629 
Year ended December 31, 2020 (Successor)$12,629 $38,273 $12,738 $— $613 $38,777 
(1)Primarily foreign currency adjustments and acquisition and/or divestiture activity.

Deferred Tax Asset Valuation Allowance
(In thousands)
DescriptionBalance at Beginning of Period
Charges to Costs, Expenses and Other (1)
Reversal (2)
Impact of Fresh Start Accounting
Adjustments(3)
Balance at End of Period
Year ended December 31, 2018 (Predecessor)$678,118 $11,277 $— — $4,146 $693,541 
Period from January 1, 2019 through May 1, 2019 (Predecessor)$693,541 $714,520 $(316,374)(343,662)$(28,539)$719,486 
Period from May 2, 2019 through December 31, 2019 (Successor)$719,486 $1,870 $(734)$— $— $720,622 
Year ended December 31, 2020 (Successor)$720,622 $3,047 $(444)$— $1,094,866 $1,818,091 
(1)During 2020, the period from May 2 through December 31, 2019, and 2018 the Company recorded a valuation allowance of $3.0 million, $1.9 million and $11.3 million, respectively, on a portion of its deferred tax assets attributable to federal and state net operating loss carryforwards and Sec. 163(j) disallowed interest carryforwards due to the uncertainty of the ability to utilize those assets in future periods. During the period from January 1 through May 1, 2019, the Predecessor Company recorded a valuation allowance of $714.5 million on the federal and state capital losses and separate state net operating losses generated in connection with the restructuring transactions.
(2)During the period from January 1 through May 1, 2019, the Predecessor Company reversed certain valuation allowances as a result of the restructuring transaction which resulted in reduction of federal and state net operating losses due to the cancellation of debt income realized.
(3)During 2020, the Successor Company adjusted the carrying amount of its federal and state capital loss carryfowards due to the filing of its 2019 income tax returns during the quarter ending December 31, 2020. As a result of the increase in the capital loss carryforwards shown on the final tax filings, the Company increased the valuation allowances by $1.1 billion to fully offset those assets as they are not expected to be utilized in future periods. During
144


the period from January 1 through May 1, 2019, the Predecessor Company adopted the new lease standard which resulted in a reduction in deferred tax assets and the release of $28.5 million in valuation allowance.
145


3. Exhibits.
Exhibit
Number
Description
2.1

3.1
3.2*

3.3*

3.4

3.5

3.6

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

146


4.10

4.11*

4.12

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

147


10.11

10.12§

10.13§

10.14§

10.15§

10.16§

10.17§

10.18§

10.19§

10.20§

10.21§

10.22§

10.23§

10.24§

10.25§

10.26§


148


10.27§

10.28§

10.29§

10.30§*
10.31§

10.32§

10.33
 
10.34

10.35

21*

23*
31.1*

31.2*

32.1**
 
32.2**

101.INS*Inline XBRL Instance Document. - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema Document.
 
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.
 
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document.
 
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document.
 
149


101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document.
 
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_________________
*              Filed herewith.
**           This exhibit is furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
§              A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 601 of Regulation S-K.

ITEM 16.  Form 10-K Summary
None.
150


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
IHEARTMEDIA, INC.
By:/s/ Robert W. Pittman
Name:Robert W. Pittman
Title:Chairman and Chief Executive Officer
Date:February 25, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
NameTitleDate
 
/s/ Robert W. Pittman
Robert W. Pittman
Chairman and Chief Executive Officer (Principal Executive Officer) and DirectorFebruary 25, 2021
 
/s/ Richard J. Bressler
Richard J. Bressler
President, Chief Operating Officer, Chief Financial Officer (Principal Financial Officer) and DirectorFebruary 25, 2021
 
/s/ Scott D. Hamilton
Scott D. Hamilton
Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) and Assistant SecretaryFebruary 25, 2021
 
/s/ James A. Rasulo
James A. Rasulo
DirectorFebruary 25, 2021

/s/ Gary Barber
Gary Barber
DirectorFebruary 25, 2021

/s/ Brad Gerstner
Brad Gerstner
DirectorFebruary 25, 2021
 
/s/ Sean Mahoney
Sean Mahoney
DirectorFebruary 25, 2021
 
/s/ Cheryl Mills
Cheryl Mills
DirectorFebruary 25, 2021
 
/s/ Kamakshi Sivaramakrishnan
Kamakshi Sivaramakrishnan
DirectorFebruary 25, 2021
151