ITEM 1A. RISK FACTORS
Risks Related to Our Business
Our results have been in the past, and could be in the future, adversely affected by economic or political uncertainty or deterioration in economic conditions and corresponding reduced spending by advertisers.
We derive revenues from the sale of advertising. As is common in the audio entertainment industry, advertisers do not have long-term advertising commitments with us and can terminate their contracts at any time. Expenditures by advertisers tend to be cyclical, reflecting economic and political 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. Macroeconomic uncertainty continued to impact our advertising revenues during the year ended December 31, 2025. This impact in advertising revenues has had an adverse effect on our profit margins, cash flow and liquidity. If macroeconomic uncertainty continues or increases, or if economic conditions deteriorate, we may continue to experience an adverse impact on our revenue, profit margins, cash flow and liquidity as a result. In addition, inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers. Similarly, political conditions, including new and changing laws or tariffs, regulations, executive orders and enforcement priorities, may impact customer budgets and create uncertainty about how such laws and regulations will be interpreted and applied, which may impact advertising customer demand and adversely impact our business. 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 are required to evaluate our goodwill, indefinite-lived and definite-lived intangible assets for impairment. 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. While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate the estimated fair value of our reporting units and FCC licenses, it is possible a material change could occur. We have taken material impairment charges in recent periods and if future results are not consistent with our assumptions and estimates, including as a result of increased economic uncertainty or deterioration in economic conditions, we may be exposed to impairment charges in the future.
The success of our business is dependent upon advertising revenues, which are seasonal, cyclical, and may fluctuate as a result of a number of factors, some of which are beyond our control.
Our main source of revenue is the sale of advertising. Our ability to sell advertising depends on, among other things:
• economic conditions;
• national and local demand for radio and digital advertising;
• the popularity of our programming;
• local and national advertising price fluctuations, which can be affected by the availability of programming and the relative supply of and demand for commercial advertising;
• the capability and effectiveness of our sales organization;
• our competitors' activities, including increased competition from other advertising-based mediums;
• decisions by advertisers to withdraw or delay planned advertising expenditures for any reason;
• keeping pace with changes in technology and our competitors;
• maintaining and growing our relationships with marketers, agencies, and other demand sources who purchase advertising inventory from us;
• continuing to develop and diversify our advertising platform and offerings; and
• other factors beyond our control.
In addition, disruptions to our operations and our customers’ operations from pandemics or public health crises may reduce demand for advertising, reduce our advertising revenue and adversely impact our business, results of operations and financial position.
Our operations and revenues also tend to be seasonal in nature, with generally lower revenue generated in the first quarter of the year and generally higher revenue generated in the fourth quarter of the year. This seasonality causes and will likely continue to cause a variation in our quarterly operating results. Such variations could have a material effect on the timing of our cash flows. In addition, our revenues tend to fluctuate between years, consistent with, among other things, increased advertising expenditures in even-numbered years by political candidates, political parties and special interest groups.
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, listener engagement and advertising revenues. Our business competes for audiences and advertising revenues with other radio businesses, as well as with other media, entertainment and digital platforms, such as streaming audio services, satellite radio, podcasts, other Internet-based streaming music services, ad tech, television, live entertainment, large scale online advertising platforms, and social media. 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. Additionally, many customers rely on audience measurement data to make advertising decisions. An inability to obtain audience measurement data that is acceptable to customers can lead to a reduction of advertising revenue, and our business, financial condition, and results of operations could be adversely impacted. 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 effect on us if an advertiser client shifts its relationship to an agency with whom we do not have as 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 customers to our competitors who offer lower rates that we are or 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 and entertainment platforms and technologies may continue to increase competition with our operations.
The audio entertainment industry is characterized by rapid technological change, frequent product and feature innovations, changes in customer requirements and expectations, evolving standards and new entrants offering products and services. Our terrestrial radio broadcasting and digital operations face increasing competition from alternative media and
entertainment platforms and technologies, such as broadband wireless, satellite radio, television and streaming services, other podcast platforms, internet-based music streaming services, and social media, as well as mobile and other connected devices, such as portable digital audio players, smart phones, wearable devices, tablets, gaming consoles, in-home entertainment and enhanced automotive platforms. These technologies and alternative media and entertainment platforms, including those used by us, compete with our platforms and content for listeners and advertising revenues. We are unable to predict the long-term 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 and make our products less competitive in the marketplace.
Our business is dependent upon the performance of on-air talent, program hosts, and acquisition of programming.
We employ or independently contract with many on-air personalities and hosts of radio programs, podcasts and other audio platforms and contract for certain programming, including podcasts, with significant loyal audiences. Although we have entered into long-term agreements with some of our key talent and programming to protect our interests in those relationships, we can give no assurance that all or any of these persons or programs will remain with us, will retain their audiences or will continue to be profitable. Competition for talent and programming is intense and many of these individuals and programs are under no legal obligation to remain with us. Our competitors may choose to extend offers to any talent or programs on terms that we may be unwilling to meet. Furthermore, the popularity and audience loyalty of our key talent and programs are 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 listenership and could result in increased expenses. Our investments in talent and programming have been and may continue to be significant and involve complex negotiations with numerous third parties. These costs may not be recouped and higher costs may lead to decreased or potential write-downs.
Emerging industry trends may adversely impact our ability to generate revenue from our digital advertising inventory and materially adversely affect our business, operations, and financial condition.
There are no uniform methods by which our advertiser clients measure advertising effectiveness. As a result, new methods are regularly created and used by different advertiser clients. We cannot integrate with all possible technological standards to measure advertising effectiveness and there is no guarantee that the standards with which we choose to integrate will be the standards ultimately selected by the majority of our advertiser clients. There is also no guarantee that such standards will accurately reflect the true effectiveness of our advertising. Finally, as discussed in “ Compliance with ever evolving regulations, third-party restrictions, and consumer concerns or litigation regarding data privacy and data protection involves significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect our business, operations, and financial condition ”, our ability to integrate with technological standards may be limited by both emerging laws and third parties. If we fail to integrate with the technological standards preferred by our clients, or if those methodologies are , our revenue may be affected.
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 brand ties together our radio stations, digital platforms, social media, 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 within or 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;
• technological developments, including new uses for generative AI;
• 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;
• natural catastrophes such as earthquakes, hurricanes, tornados, wildfires, and floods, which could damage our facilities, interrupt our services and harm our business (including to the extent climate change increases the frequency or intensity of such events, or results in chronic changes to meteorological or hydrological patterns that pose similar risks); 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 investments or 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, dispositions and other strategic initiatives 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:
◦ recruit additional senior management because 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. We can give no assurances that the 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 proceedings. Future changes could restrict our ability to dispose of or acquire new radio assets or businesses. See Regulation of our Business in Part I, Item 1, Business, included elsewhere in this Annual Report on Form 10-K.
If we or our third-party providers fail to protect confidential information and/or experience data security incidents, we could lose valuable information, suffer disruptions to our business, and/or incur material expenses and liabilities in the investigation and remediation of such incidents, as well as damages to our relationships with listeners, consumers, business partners, employees and advertisers, which would materially adversely affect our business, results of operations, and financial condition.
We rely on computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (“IT Systems”). We own and operate some of these IT Systems ourselves, but we also rely on third-party providers for various IT Systems and related products and services, including but not limited to cloud computing services, across both our internal and external-facing operations. We and certain of our third-party providers collect, maintain and process data about customers, employees, business partners and others, including personal information, as well as proprietary information belonging to our business such as trade secrets (collectively, “Confidential Information”). We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information. Cyberattacks are expected to accelerate on a global basis in frequency and magnitude and, as a result, we may be unable to anticipate, investigate, remediate, or recover from future cyberattacks and other security incidents, or to avoid a material impact to our IT Systems, Confidential Information, or business. We and certain of our third-party providers have experienced from time to time in the past and other , and we expect to experience these in the future. Our IT Systems and Confidential Information are to a range of cybersecurity risks and , including software bugs, computer viruses, internet worms, -ins, phishing and social engineering attacks, attempts to servers with -of-service, or other attacks and similar (for example, due to ransomware), any of which could lead to system , , , or theft or of Confidential Information. Our remote and hybrid working arrangements for employees (and employees of third-party providers) also present additional risks due to the prevalence of social engineering and other that are launched in relation to non-corporate and home networking environments and remote access into our computer networks.
A security breach could occur due to the actions of outside parties, employee error, malfeasance or a combination of these or other actions. 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 or third parties we rely on may not be able to implement security controls as intended for various reasons, including if we do not recognize or underestimate a particular risk. We cannot assure you that our cybersecurity risk management program or the policies, controls, and/or processes that we or our third-party providers have designed to protect our Confidential Information and IT Systems will be effective. In addition, security controls, no matter how well designed or implemented, may only mitigate and not fully eliminate risks and events and, when detected by security tools or third parties, risks and events may not always be immediately understood or acted upon. that or result in access to third party IT Systems can materially impact our operations and financial results. If there is an actual or perceived impact to the availability, , or confidentiality of our IT Systems or Confidential Information, we may incur significant response and remediation costs in protecting or remediating cyber-attacks and we may face regulatory or civil liability, Confidential Information, personal information, or 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 and we could listeners, consumers, business partners and advertisers. In the event of a security , we could financial exposure in connection with , remediation and restoration efforts, and legal proceedings (such as class action lawsuits) and changes in our security and system protection measures.
We may be subject to rapidly evolving data security frameworks and/or laws that require us to maintain a certain level of security. For example, the Federal Trade Commission expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. In the event a regulator or court were to determine we had not adequately complied with the security requirements under U.S. state privacy laws, the EU/UK General Data Protection Regulation (“GDPR”), and/or other international, federal, or state data privacy, cybersecurity, consumer protection or related rules or regulations, we may be subject to regulatory and litigation proceedings, financial fines and penalties, injunctive requirements that negatively affect our business model, and/or costly remediation requirements. We may also be required to
notify affected individuals and authorities in the event of a personal information breach. For example, the California Consumer Privacy Act provides for per-violation fines, as well as a private right of action to individuals and statutory damages for certain types of data breaches, and the GDPR provides potential fines up to EUR 20 million or 4% of worldwide annual turnover of the preceding financial year, whichever is greater. We expect these and other developing rules and regulations to increase both upfront compliance costs and liability exposure in the event of a cyberattack or security incident.
Additionally, as we accept debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard (“PCI DSS”), issued by the Payment Card Industry Security Standards Council. PCI DSS contains compliance guidelines with regard to our security surrounding the physical and electronic storage, processing and transmission of cardholder data. If we or our service providers are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could materially and adversely affect our business.
Furthermore, any losses, costs and/or liabilities directly or indirectly related to cyberattacks or other security incidents may not be covered by, or may exceed the coverage limits of, any of our insurance policies.
We use artificial intelligence ("AI") in our business, and challenges in managing its use could result in reputational harm, competitive disadvantage, legal liability, and adverse effects on our results of operations.
AI solutions are increasingly integrated into our business operations and are expected to become even more important to our operations over time. Our competitors or other third parties may adopt AI more quickly or more effectively than we do, which could impair our ability to compete and negatively impact our results of operations. Additionally, if our AI-generated content, analyses, search results, or recommendations are, or are alleged to be, inaccurate, biased, infringing, harmful, or otherwise deficient, our business, reputation, financial condition, and results of operations could be adversely affected.
AI also raises emerging ethical and legal challenges, including issues related to the use of copyrighted material and potential violations of name, image, and likeness rights. If our use of AI becomes controversial, we could face brand or reputational harm, competitive disadvantage, or legal liability. In addition, the rapid evolution of AI will require significant resources to develop, test and maintain our platforms, offerings, services, and features to help us ensure responsible implementation and to minimize unintended, harmful impacts.
The legal and regulatory framework for AI technologies is also evolving rapidly. Federal, state, and foreign governments and authorities have introduced or are currently considering laws and regulations governing AI. Existing laws and regulations may be interpreted in ways that impact our use of AI, and industry standards and best practices remain unsettled. As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. We cannot predict the impact that future laws, regulations, standards, or market expectations may have on our business. Compliance costs could be significant and may increase our operating expenses, including through imposing additional AI reporting obligations. Any such increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could adversely affect our business, financial condition and results of operations.
We have engaged in restructuring activities in the past and may 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 and to take advantage of the investments we have made in new technologies to build an operating infrastructure that provides better quality and newer products and delivers new cost efficiencies. 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 implement further restructuring activities and make additions, reductions 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.
Our subsidiary, iHeartCommunications currently has a $450.0 million senior secured asset-based revolving credit facility with $50.0 million outstanding that matures in 2027, approximately $4.7 billion in principal amount of secured debt, of which approximately $28.2 million matures in 2026, approximately $71.5 million matures in 2027, approximately $298.4 million matures in 2028, approximately $2.8 billion matures in 2029, approximately $1.3 billion matures in 2030, and approximately $180.8 million has various subsequent maturity dates, and approximately $125.2 million in principal amount of unsecured debt, of which approximately $45.2 million matures in 2026, approximately $79.8 million matures in 2027, and approximately $0.2 million matures in 2028. This substantial amount of indebtedness could have important consequences to us, including:
◦ increasing our vulnerability to adverse general economic, industry, or competitive developments;
◦ requiring 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;
◦ limiting our ability to make required payments under our existing contractual commitments, including our existing long-term indebtedness;
◦ requiring us to sell certain assets;
◦ restricting us from making strategic investments, including acquisitions, or causing us to make non-strategic divestitures;
◦ limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
◦ placing us at a competitive disadvantage compared to our competitors that have less debt;
◦ causing us to incur substantial fees from time to time in connection with debt amendments or refinancings;
◦ increasing our exposure to rising interest rates because a substantial portion of our borrowings is at variable interest rates; and
◦ limiting our ability to borrow additional funds or to borrow on terms that are satisfactory to us.
If we are unable to generate sufficient cash flow to repay or refinance our debt on favorable terms, it could significantly adversely affect our financial condition and the value of our outstanding debt. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
The agreements governing iHeartCommunications' secured indebtedness contain covenants that limit iHeartCommunications' and its subsidiaries’ ability to, among other things (and subject to certain exceptions): incur additional indebtedness; pay dividends on, or make distributions in respect of, their capital stock or repurchase their capital stock; make certain investments or other restricted payments; sell certain assets; create liens; merge, consolidate or transfer or dispose of all or substantially all of their assets; repay certain indebtedness prior to maturity thereof; restrict the ability of subsidiaries that are not guarantors to pay dividends or cash distributions, or repay indebtedness owed, to iHeartCommunications or its subsidiaries or make or repay loans or advances to the guarantors, or restrict the ability of any guarantor to create liens on its property for the benefit of the holders of such debt; permit the subsidiaries that hold FCC licenses to engage in other businesses; transfer FCC licenses; transfer material assets to non-guarantors; engage in transactions with affiliates; and change lines of business. Although the covenants in such debt 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 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 to our business objectives. For example, certain of our debt agreements include total net leverage ratio covenants (which fall away upon certain conditions being met) tested 30 days prior to the maturity dates of iHeartCommunications’ 5.25% senior notes due 2027, 8.375% senior notes due 2027 and 4.75% senior secured notes due 2028 to the extent the aggregate outstanding principal amount of such notes to which such maturity date applies exceeds $50 million on such date. A of any of these covenants could result in a under our debt agreements and the exercise of remedies by the lenders thereunder. In addition, we may be to incur additional indebtedness in the future. To the extent we incur additional indebtedness, the risks associated with our leverage described above would increase.
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.
The FCC grants broadcast licenses for a term of up to eight years. Although the FCC renewed each of our broadcast licenses during the most recent renewal cycle for a full term and without material conditions, we cannot be sure that the FCC will approve renewal of the licenses we must have in order to operate our stations in all subsequent renewal cycles. The non-renewal, or conditioned renewal, of a substantial number of our FCC licenses in a subsequent renewal cycle 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 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, our licensing fees and related costs for rights to use musical compositions and sound recordings in our programming could materially increase as a result of private negotiations, rate-setting processes, or administrative and judicial decisions. While we are not currently engaged in active negotiations with major performing rights organizations, our existing agreements have limited durations, and future negotiations could result in significantly higher royalty obligations. In addition, there is no assurance that direct licenses will be renewed or that future licenses will be available on terms comparable to those under our current agreements.
In addition, the rates for the royalties that we pay to SoundExchange for certain types of digital music transmissions are periodically the subject of rate-setting proceedings before the Copyright Royalty Board to determine statutory rates and terms for the public performance and ephemeral reproduction of sound recordings by various non-interactive webcasters, including us. The outcome of these proceedings may result in an increase to our licensing costs.
From time-to-time, SoundExchange and various record labels and other music licensors notify us that certain calendar years are subject to routine audits of the royalty payments that we make to them in connection with our various uses of music. The results of such audits could result in us having to make higher royalty payments for the subject years.
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.
Compliance with ever evolving regulations, third-party restrictions, and consumer concerns or litigation regarding data privacy and data protection involves significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect our business, operations, and financial condition.
We collect, receive, store, handle, transmit, use and otherwise process personal, demographic and other information related to individuals, including from and about our listeners, consumers, employees, 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, participate in polls
and contests and sign-up to receive email newsletters; (2) we use tracking technologies, such as “cookies,” to automatically 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; and (4) we collect precise location data in limited circumstances about certain of our platform users for analytics, attribution and advertising purposes. We also depend on a number of third-party vendors in relation to the operation of our business, a number of which process data on our behalf.
We are subject to limitations imposed by third parties that control the devices or platforms on which our users access our services. Changes to the policies promulgated by these third parties may adversely impact our advertising revenue. For example, Apple has updated its products and services to make it more difficult to track its users and has indicated they may impose additional restrictions in the future and other companies may impose similar restrictions. These changes have reduced and may in the future further reduce the quality and quantity of tracking data available to us and our clients. Some web browsers have begun to limit the use of third-party cookies or have announced an intention to do so or have enabled the "global privacy control" opt-out of targeted advertising by default. These changes may increase the cost of the data we use to target advertisements, reduce our ability to effectively deliver relevant ads to our users and impact our ability to demonstrate to our business partners and advertisers the value of the advertisements we are able to deliver.
Further, we and our vendors are subject to a variety of federal, state and foreign data privacy laws, rules, regulations, industry standards and other requirements, including those that apply generally to the handling of information about individuals, and those that are specific to certain industries, sectors, contexts, or locations. For additional information on applicable laws, rules and regulations, see Privacy, Data Protection and Consumer Protection in Part I, Item 1, Business, included elsewhere in this Annual Report on Form 10-K.
These requirements, and their application, interpretation and amendment, are constantly evolving and developing and have increased upfront compliance costs and liability exposure in the event of a cyberattack or security incident, which costs are likely to further increase in the future. In some cases, these requirements may be either unclear in their interpretation and application or they may have inconsistent or conflicting requirements with each other. Further, there has been a substantial increase in legislative activity and regulatory focus on data privacy and security in the United States and elsewhere, including in relation to cybersecurity incidents .
We are party to a letter of agreement (the “LOA”) with the DOJ in its capacity as a representative of The Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, an interagency federal government group that analyzes certain transactions for national security, law enforcement, and public safety issues. The LOA requires us, among other things, to obtain consent from the DOJ prior to allowing certain third parties to act as custodians of certain data about our subscribers or to process payments on our behalf. Should the DOJ choose not to approve, or revoke approval of, certain third party vendors, our business and operations could be materially adversely affected.
Moreover, further 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 opt out of the use or sharing of their personal information for targeted advertising purposes, to opt out of the sale of their personal information, or to have their personal information 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 and otherwise hinder our ability to grow our business by extracting value from our data assets.
Although we have implemented and are implementing policies and procedures designed to comply with these laws and regulations, these laws are in some cases relatively new and the interpretation and application of these laws are uncertain. Any failure or perceived failure by us or our vendors to comply with applicable laws, rules, and regulation 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 or actions against us by individuals, consumer rights groups, governmental authorities or others. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. If any of these events were to occur, our operations and financial condition could be materially affected.
Environmental, health, safety and land use laws and regulations may limit or restrict some of our operations.
As the current or former 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 and regulations. However, additional laws or other requirements which may be passed in the future, or a finding of a violation of or liability under existing laws or other requirements, could require us to make significant expenditures and otherwise limit or restrict some of our operations.
We may face lawsuits, incur liability or suffer reputational harm as a result of content published or made available through our services.
The nature of our business could expose us to claims or public criticism related to defamation, illegal content, misinformation, and content regulation. We could incur costs investigating and defending any such claims. In addition, some stakeholders may disagree with content provided through our services, and negative public criticism of this content could damage our reputation and brands. If we incur material costs, liability, or negative consumer reaction as a result of these occurrences, our business, financial condition and operating results could be adversely impacted.
We are subject to a series of risks regarding scrutiny and regulation of environmental, social, and governance matters.
Companies across industries continue to face scrutiny from a variety of stakeholders, including government officials and other policymakers, related to their sustainability or environmental, social, and governance (“ESG”) practices, such as climate change and human capital, among others. Unfavorable perceptions of our approach to or performance regarding such matters could negatively impact our business, whether from a reputational perspective, through a reduction in interest in purchasing our stock or products, issues in attracting/retaining employees, customers and business partners, or otherwise. As with other companies, our approach to such matters is expected to continue to evolve over time, and we cannot guarantee that our approach will align with the preferences or expectations of any particular stakeholder. Stakeholder expectations vary and, increasingly different stakeholder groups have divergent (or conflicting) views on ESG matters, which increases the risk that any action, or lack thereof, with respect to ESG matters will be perceived negatively by at least some stakeholders and adversely impact our reputation and business. Both advocates and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including legislation, regulation, media campaigns and , to advance their perspectives. To the extent we are subject to such activism, it may require us to incur material costs and any to navigate such stakeholder expectations may our reputation, including our relationships with various stakeholders, or result in other impacts.
While we have engaged, and expect to continue to engage in, certain voluntary initiatives (such as voluntary disclosures, certifications, and/or goals) to address sustainability matters or respond to stakeholder concerns, such initiatives may be costly and may not have the desired effect. For example, actions or statements that we may take based on expectations, assumptions, or third-party information that we currently believe to be reasonable may subsequently be determined, or perceived, to be erroneous or not in keeping with best practice. We may also modify or terminate certain initiatives or targets, or may be unable to complete them, either on timelines/costs initially anticipated or at all. If we fail to, or are perceived to fail to, comply with or advance certain ESG initiatives (including the manner in which we complete such initiatives), we may be subject to various adverse impacts, including reputational damage and potential stakeholder engagement and/or , even if such initiatives are currently voluntary.
There are also increasing and changing regulatory expectations for ESG matters. Various policymakers are imposing domestic and international laws and regulations relating to climate change and sustainability that might require additional investments, disclosure, and the attention of our management team, in connection with implementation and oversight of new practices and reporting processes. These requirements are not always uniform across jurisdictions, and other policymakers have sought to constrain companies' consideration of such matters. Both of these developments, particularly when combined with other stakeholder expectations, will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Additionally, many of our customers, business partners, and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.
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 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 25, 2026, we had 129,552,146 shares of Class A common stock, 21,090,196 shares of Class B common stock and 5,038,369 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 media ownership rules and alien ownership restrictions described in Part I, Item 1, Business, included elsewhere in this Annual Report on Form 10-K. 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:
• 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; and
• advance notice for all stockholder proposals is required.
We are also subject to the anti-takeover provisions contained in Section 203 of the General Corporation Law of the State of Delaware ("DGCL"). 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.
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.
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 for with us or our directors, officers or other employee, which may such lawsuits 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 affect our business and financial condition.
Regulations imposed by the Communications Act and the FCC limit the 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 interest. 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 exceed 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. The FCC has issued declaratory rulings that permit us to be up to 100% foreign-owned and specifically approve certain of our foreign shareholders, subject to certain conditions. We also have pending a petition for declaratory ruling seeking approval for one of our existing, approved foreign investors to reorganize its ownership interest. The acquisition of a significant amount of our stock by a new foreign holder could require us to request additional or modified declaratory rulings from the FCC and to take actions under our certificate of incorporation to ensure our compliance with the Communications Act and FCC regulations until such rulings are granted.
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 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 and FCC rules, policies, and orders, 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.
The price of our Class A common stock has been and may in the future be volatile.
The price of our Class A common stock has fluctuated and may fluctuate in the future due to a variety of factors, including:
• changes in the industries in which we and our customers operate;
• developments involving our competitors;
• changes in laws and regulations affecting our business;
• variations in our operating performance and the performance of our competitors in general;
• actual or anticipated fluctuations in our quarterly or annual operating results;
• publication of research reports by securities analysts about us or our competitors or our industry;
• changes in financial estimates and recommendations by securities analysts;
• issuances of shares of our Class A common stock, including upon conversion of our Class B common stock;
• short sellers manipulating our stock, resulting in a price decrease;
• "short squeezes" of our Class A common stock or the common equity of companies in our industry;
• the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
• actions by stockholders, including the sale of their shares of our Class A common stock;
• additions and departures of key personnel;
• commencement of, or involvement in, litigation involving our Company;
• changes in our capital structure, such as future issuances of securities or the incurrence of additional debt or equity;
• the volume of shares of our Class A common stock available for public sale; and
• general economic and political conditions.
Information available in public media that is published by third parties, including blogs, articles, message boards and social and other media may include statements not attributable to the Company and may not be reliable or accurate.
We have received, and may continue to receive, media coverage that is published or otherwise disseminated by third parties, including blogs, articles, message boards and social and other media. This includes coverage that is not attributable to statements made by our officers or employees. Information provided by third parties may not be reliable or accurate and could materially impact the trading price of our Class A common stock, which could cause stockholders to lose their investments.
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, 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,” “commit,” “believe,” “may,” “will,” “should,” “can have,” “dedicated to,” “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, potential impacts from inflation and economic trends, 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;
• risks related to advertising revenue fluctuations;
• intense competition including increased competition from alternative media and entertainment platforms and technologies;
• dependence upon the performance of on-air talent, program hosts and management as well as maintaining or enhancing our brand;
• fluctuations in operating costs and other factors within or beyond our control;
• 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 related to scrutiny of environmental, social, and governance matters;
• 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.
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. Additionally, our discussion of certain sustainability assessments, goals and related issues in this or other disclosures is informed by various sustainability standards and frameworks (including standards for the measurement of underlying data) and the interests of various stakeholders. As such, such information may not, and should not be interpreted as necessarily being, “material”; any references to “materiality” in the context of such discussions and any related assessment of sustainability “materiality” may differ from the definition of “materiality” under the federal securities laws for SEC reporting purposes. Furthermore, much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change. Similarly, we cannot guarantee strict adherence to standard recommendations, and our disclosures based on any standards may change due to revisions in framework or legal requirements, availability of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control.
