iHeartMedia - Q4 2022

Transcript

Operator (participant)

Good day, everyone. My name is Kelly Ann. I'll be your conference operator for today. At this time, I'd like to welcome everyone to the iHeartMedia Q4 2022 earnings call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, please press star one again. At this time, I'd like to turn the conference over to Mr. Mike McGuinness, Head of Investor Relations. Please go ahead, sir.

Mike B. McGuinness (CFO)

Good afternoon, everyone, and thank you for taking the time to join us for our fourth quarter of 2022 earnings call. Joining me for today's discussion are Bob Pittman, our Chairman and CEO, and Rich Bressler, our President, COO, and CFO. At the conclusion of our prepared remarks, management will take your questions. In addition to our press release, we have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward-looking statements regarding our financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings. Additionally, during this call, we will refer to certain non-GAAP financial measures.

Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release, investor presentation, and our SEC filings, which are available in the Investor Relations section of our website. Now I'll turn the call over to Bob.

Bob Pittman (Chairman and CEO)

Thanks, Mike. Good afternoon, everybody. We're pleased to report another quarter of solid operating results for iHeart in consumer usage, revenue, and earnings growth. Even in this continuing challenging and uncertain economic environment, we're continuing our transformation of this company. Before I take you through the fourth quarter highlights, I want to take a step back and talk about the year we've just had. As a reminder, 2022 began strong for us and was poised to be robust for iHeart. However, as we're all aware, a number of macroeconomic factors led to increased volatility and uncertainty, which moderated our 2022 results. Despite these headwinds, we continued to innovate and find new ways to engage with our consumers and advertising partners. We remain committed to evolving our business, and we maintained our focus on expense management. Our financials reflect these commitments.

The fourth quarter was our best quarter for revenue and Adjusted EBITDA ever. On a full year basis in 2022, we generated the highest revenue and second highest Adjusted EBITDA and free cash flow year in iHeart's history. We continue to make strong progress in our transformation of iHeart into a true multi-platform audio company, driven by innovation, supported by data and technology, and powered by the largest sales force in audio, executing our unique multi-platform go-to-market strategy of any seller, anywhere can sell anything. iHeart's relationship with the consumer has never been stronger. Consumers are now spending 30% of their daily media time with audio. Yet audio only captures 9% of total advertising spend.

Not only do we believe that the allocation of advertising revenue to audio will increase, but because our broadcast radio assets alone reach 90% of consumers in the United States each month, which is now more than twice the reach of the largest TV network, four times the reach of the largest ad-enabled streaming music audio service, and two and a half times the reach of the next largest broadcast radio company, we also expect to continue to take an increasing share of audio advertising spend, driven in part by our large and well-trained sales force. While our digital assets continue to grow, our broadcast radio assets are importantly performing much better than they did during previous advertising downturns.

To put this in perspective, in 2020, our Multiplatform Group revenues declined 28%, they were up 4% for the full year in 2022. In 2020, at the beginning of the pandemic, digital accounted for 12% of the company's revenues; today it's over 25%, and we expect that percentage to continue to grow significantly over the long term, even as broadcast radio grows as well. Broadcast radio, with its unparalleled reach, will also continue to power the development of new platforms and opportunities for us, like our high-growth digital assets.

This includes the iHeartRadio app, our podcast business, our new metaverse platform, and our leading positions on all major social media platforms with our nearly 300 million followers, which is seven times larger than the next largest audio company, including our successful expansion into TikTok, where our follower count grew 300% in 2022 to 27 million TikTok users with twice as many user engagements as the next largest audio company. We remain committed to meeting our listeners wherever they are with the products and services they expect, and to effectively monetizing those relationships, reflected in the diversity of our products and platforms, as well as early adoption of technologies like AI, which we began rolling out in 2020 to enhance our music programming and scheduling.

By providing real-time evaluation of listener sentiment and predicting audience engagement and reactions, we give our programmers a unique advantage and are able to deliver the best experience possible to our listeners. Stations where we rolled out this proprietary system saw a 15% increase year-over-year in the average quarter-hour share of adults 18 to 49. This validates our ability to identify an opportunity, design the strategy, and execute it successfully, often using new technology. As those who've been following this company know, we're constantly evaluating our cost structure and technology usage, looking for ways to make our operations more efficient. To illustrate this point, back in 2020 before the pandemic began, we announced changes to prepare iHeart for the future.

We began to significantly reduce our real estate footprint, reimagine the structure of our sales force and go-to-market strategy, restructured some operational organizations, and identified new key ways that technologies could make us more efficient. Specifically, since the beginning of 2020, we've reduced our office space by half, and our U.S. workforce by approximately 20%. This illustrates the progress we're making to create a more efficient and effective organization. Over the past three years, we've completed savings programs of approximately $250 million, and on our Q3 2022 earnings call, we announced a new cost program generating $75 million in annualized savings, which will benefit us in 2023.

In light of the ongoing economic uncertainty and in support of our focus on free cash flow generation, we're also reducing our in-year capital expenditures below 2022 levels. With that backdrop, let me take you through highlights of our performance. In Q4, consolidated revenues grew 6% compared to prior year at the high end of the guidance range we provided of approximately 2%-6%. We generated Adjusted EBITDA of $316 million for the quarter, in the middle of the guidance range of $305 million-$325 million. Q4 Adjusted EBITDA margins were 28%, a 34 basis point improvement versus prior year. As I mentioned, our Q4 revenue and Adjusted EBITDA results were record highs for any quarter in the company's history.

Turning to our individual operating segments, in Q4, our Digital Audio Group revenues increased 10% versus prior year. Adjusted EBITDA was flat, and margins were 33%. Within the Digital Audio Group, podcast revenues grew 17% versus prior year, and non-podcast digital revenues grew 7%. The macroeconomic conditions impacted the entire advertising marketplace, including podcasting, which was up against strong prior year comps. As a reminder, Q4 2021 revenues were up 130% year-over-year. In January, iHeart was again ranked the #1 podcast publisher in the U.S., with more monthly downloads than the next two largest podcast publishers combined, according to Podtrac.

The podcasting industry remains the fastest-growing mass reach medium. According to a recent Edison survey, in 2022, total daily podcast listeners grew by 20%, now reaching over 60% of Americans. Marketers plan to continue increasing podcasting spending in 2023, even in a slow advertising market. We’ve avoided engaging in uneconomic behavior in podcasting, and this new market behavior will have a positive ripple effect across the industry, including us. iHeartMedia also has a depth of digital assets beyond our iHeartRadio app, streaming services, and podcasting.

We have over 160 million unique visitors a month across a network of 3,000 websites for national shows, local broadcast stations, on-air talent influencers, and podcast titles. Influencers continue to be hot in advertising. Our top 50 influencers reached 2 out of 3 Americans every month. Our iHeartLand destinations in the metaverse, specifically on Roblox and Fortnite, lead the industry in engagement, with almost 10 million visits. A Fall Out Boy concert we hosted on Roblox generated 3x the concurrent audience of competing events. Considering macroeconomic challenges, we think our digital and podcasting businesses performed well in Q4 and see ways to improve performance going forward.

The Digital Audio Group is a growth engine for us and comprises a range of growth channels with very attractive margins, and we're constantly looking for adjacent growth opportunities when they look attractive. In that spirit, during Q4, we increased our emphasis through sales initiatives and commission structures on targeting certain incremental revenue streams. In retrospect, we believe those decisions had a negative impact on our revenue growth and margin for the quarter. We've learned from this Q4 experience and have already initiated steps to realign our sales force's focus back to higher-margin digital revenue opportunities. We believe we'll start seeing the positive impact of those adjustments in both revenue growth and margins as early as Q2. Let's turn now to our Multiplatform Group, which includes our broadcast radio networks and events business. In the fourth quarter, revenues were up 1% versus prior year.

Adjusted EBITDA was down 8% versus prior year. Our Adjusted EBITDA margins were 31.4%. Our Multiplatform Group has again demonstrated its resiliency during this challenging economic climate, generating Adjusted EBITDA margins in the low 30s, which we expect to expand as the economy recovers and our revenue follows. Our broadcast radio assets alone reach more people than any other media company in the U.S. This is important because reach is at the very core of marketing. Marketers convert a certain percentage of people who hear their messages into customers. Therefore, the more people they can reach with their message, the more customers they can acquire.

Our unparalleled consumer reach is a compelling benefit to advertisers, and it is also a huge advantage for us as we've used it to build our own new high-growth businesses. The advertising world also continues to move toward unified media buying and planning, considering all media together rather than in silos. How this plays out is unique for each agency and advertiser, but given that broadcast radio has traditionally been underbought relative to the reach and scale it offers, we think iHeart's broadcast radio will be a beneficiary of this shift to data-driven planning algorithms making media allocation decisions instead of human beings that have both personal and historical biases. Before I turn it over to Rich, I want to leave you with this final thought.

We're taking all appropriate actions and executing with agility to navigate the current macroeconomic environment, an environment that Rich and I and our broader leadership team are no strangers to, given our long history leading organizations. At the same time, we remain steadfast in continuing to transform and position iHeart to take advantage of the coming economic recovery and the upturn in advertising. We're laser-focused on deploying our strong cash flow to improve our balance sheet and invest in growth and leveraging our core strengths, including our scale, deep industry expertise, operational prowess, and seasoned sales force to deliver revenue and profit growth as well as shareholder returns over the long term. Now I'll turn it over to Rich.

Rich Bressler (President, COO, and CFO)

Thanks, Bob. As I take you through our results, you'll notice that, as Bob mentioned, we performed well despite the increasingly challenging macroeconomic environment. Our Q4 2022 consolidated revenues were up approximately 6% year-over-year at the high end of the guidance range we provided of up approximately 2%-6%. Our direct operating expenses increased 7% for the quarter, driven primarily by the increase in revenue, which drives higher content and profit sharing expenses, third-party digital costs, and expenses related to the timing and return of local and national live events. Our SG&A expenses increased 4% for the quarter, driven primarily by investments in key high-growth areas and expenses related to the timing and return of local and national live events, partially offset by a lower bonus expense compared to our over-target bonus performance in the prior year.

Our fourth quarter GAAP operating income was $173 million compared to an operating income of $123 million in the prior year quarter. Our fourth quarter Adjusted EBITDA was $316 million compared to $294 million in the prior year quarter at the middle of the guidance range we provided of $305 million-$325 million. Turning now to the performance of our operating segments. As a reminder, there are slides in the earnings presentation on our segment revenue performance. In the fourth quarter, Digital Audio Group revenues were up 10% year-over-year, while Adjusted EBITDA was flat and our Q4 margins were 33%.

Within the Digital Audio Group are our podcasting revenues, which grew 17% year-over-year, and our non-podcasting digital revenues, which grew 7% year-over-year. To reiterate what Bob said in his remarks about our Q4 2022 performance, first, we are comparing to an exceptionally strong prior year quarter when Q4 2021 podcasting revenues were up 130% year-over-year. Second, we were impacted by costs of targeting certain revenue streams, which in retrospect had a negative impact on our overall revenue growth and margin for the quarter. We have learned from this experience and have initiated steps to realign our sales force focus back on high-margin digital revenue opportunities. Multiplatform Group revenues were up 1% year-over-year, and Adjusted EBITDA was down 7.5% year-over-year.

Excluding the impact of political, Multiplatform Group revenues were down 2.8% year-over-year. Multiplatform Group Adjusted EBITDA margins were 31.4% compared to 34.2% in Q4 2021. The increase in Multiplatform Group expenses was primarily driven by the timing of costs associated with live events. Audio & Media Services Group revenues were up 44% year-over-year, and Adjusted EBITDA was up 149% year-over-year. These increases were primarily attributable to radio and TV political revenues within our CATS business. At quarter end, we had approximately $5.1 billion of net debt outstanding. Our total liquidity is $761 million, which includes a cash balance of $336 million. In the fourth quarter, we reduced our net debt by $180 million.

We finished 2022 with a net debt to Adjusted EBITDA ratio of 5.3 times and remain committed to our long-term goal of approximately 4 times. As highlighted on past calls, we have no material maintenance covenants and no debt maturities until 2026. In the current macro environment, this type of debt profile positions us to both be resilient and opportunistic in responding to debt market developments. In Q4, we proactively repurchased $141 million of the principal balance of our 8 3/8 Senior Unsecured Notes, bringing our full year 2022 repurchase total to $330 million, resulting in annualized interest savings of approximately $28 million. We were able to repurchase these notes in the market at a meaningful discount to their par value, generating both earnings and free cash flow accretion.

We will continually monitor market conditions and look to further improve and optimize our capital structure as opportunities arise. In the fourth quarter, we generated $165 million of free cash flow, slightly below the target that we discussed in our last quarter earnings call due to the timing of working capital items. This implies a full year free cash flow yield in the high 20% range. Our cash balance is $336 million, and our total available liquidity is $761 million. As Bob highlighted, we remain focused on free cash flow generation and are committed to utilizing that cash in a manner that creates the most value for our shareholders. Turning now to our outlook on Q1. As we touched on, 2022 was a year of macroeconomic uncertainty, which is continuing into 2023.

To that end, I want to provide some insights into what we are seeing in Q1, as well as some high level thoughts about cash and liquidity for the full year. I also want to remind you that Q1 2022 was a strong quarter for us, and that the economic uncertainty last year didn't really affect our business until the very end of the quarter, which is impacting our Q1 2023 comps. With that in mind, we expect our Q1 2023 revenues to be down mid single digits year-over-year. Our January revenues were down 1% year-over-year. Turning to Adjusted EBITDA for Q1 2023, we expect to generate Adjusted EBITDA in the range of $80 million-$90 million. Let me provide some assumptions regarding cash.

We expect our full year capital expenditures to be between $100 million and $120 million, a significant year-over-year reduction from $161 million in 2022, driven by our deliberate reduction of capital outlay in times of economic uncertainty. We expect lower cash restructuring expenses as our savings initiatives are fully implemented. We will be a full cash taxpayer in 2023. While our interest expense has been reduced by our debt repurchase program, we are impacted by the high interest rate environment as approximately 40% of our debt is floating. I want to leave you with this. iHeart has unparalleled assets that have proven their resiliency through economic downturns like the one we're in now.

We continue to make solid progress on our transformation, which enables us to operate through a softer macroeconomic environment better than ever before. As we navigate these uncertain economic conditions, we remain committed to driving shareholder value through our rigorous allocation of capital, identifying additional cost savings opportunities, utilizing new technologies to expand our product offerings, and improving our operational efficiency. We believe the strength of our assets will become even more apparent as the economic environment and the advertising sector recovers. In closing, I'd like to thank the entire iHeart team who continue to deliver for our communities, advertisers, and our shareholders. We will turn it over to the operator to take your questions. Thank you.

Operator (participant)

Thank you. As a reminder, if you have a question, press star one. First up, Steven Cahall with Wells Fargo.

Steven Cahall (Senior Equity Analyst)

Thanks. Rich, could you provide more context on the Q1 EBITDA guide? It seems low, even compared to Q1 2021. Is anything in OpEx driving this? Any significant investments? The top line looks closer to expectations, but the EBITDA guide was a bigger surprise.

Rich Bressler (President, COO, and CFO)

Steve, thanks. No additional insight. Remember, we deal with small numbers due to fixed costs in parts of the business. Q1 is always smaller than Q4, both in absolute and relative terms. Nothing more than that.

Bob Pittman (Chairman and CEO)

I’d add that in Q4, we pushed some new revenue streams and adjusted commission plans, which negatively impacted DAG’s product mix. We expect this to continue in Q1 and normalize by Q2.

Rich Bressler (President, COO, and CFO)

Yep.

Steven Cahall (Senior Equity Analyst)

On the ad market: December was weak, then slightly better in January. Your Q1 guidance is down more than January’s 1%. Is that expected deterioration, or related to product strategy changes, Bob?

Bob Pittman (Chairman and CEO)

Q1 is historically the weakest sales quarter. Advertisers hold back, assessing the year ahead. Big advertisers were stronger last year than small ones, but this is typical of Q1.

Brand advertisers can pull back more than direct-response advertisers. This explains Q1’s trends. We continue monitoring, but it’s mainly uncertainty-driven spend holdback.

Rich Bressler (President, COO, and CFO)

Steve, one more point. The business fundamentals remain strong. Q4 had 52% conversion of EBITDA to free cash flow. For DAG, mid-single digit EBITDA margin modeling remains appropriate.

Steven Cahall (Senior Equity Analyst)

On podcasting: higher-priced content deals cooled. Does this create opportunity or change your investment approach?

Bob Pittman (Chairman and CEO)

Yes, opportunity exists. Rational pricing returned, which benefits us. With our size and economics-based bidding, we’re well-positioned.

Operator (participant)

Anything further, Mr. Cahall?

Steven Cahall (Senior Equity Analyst)

Nope, I'm all set. Thank you.

Operator (participant)

Thank you.

Rich Bressler (President, COO, and CFO)

Thank you, Steve.

Operator (participant)

We'll hear next from Daniel Day with B. Riley Securities.

Daniel Day (Research Analyst)

Afternoon, guys. Appreciate you taking the questions. Maybe just to go back to podcasting, just anything you can provide so far in 2023 in terms of, you know, pricing, volume and impression growth? Anything that you could just anchor us in our models as we set up for 2023 on the podcasting line. Thanks.

Bob Pittman (Chairman and CEO)

We haven't, but, you know, given any of that guidance. Again, I would say, you know, if you look at the revenue streams in media, podcasting appears to be the strongest of them all. Certainly is not immune from the downdraft of an ad slowdown.

Rich Bressler (President, COO, and CFO)

You know, the only thing, Dan, I might add to that is, and you've heard us say this before about all the platforms we have and all the businesses we have, is advertising revenue always follows the consumer and always follows consumer engagement. I think Bob noted that podcasting now reaches over 60% of Americans, and the fundamental aspects of podcasting, you know, in terms of the amount of time people spend, the larger advertisers that are coming to podcasting, which has really started to happen in the last couple years, none of those have changed in our mind and we continue to be very optimistic. It really starts with consumer engagement, which is rock solid.

Daniel Day (Research Analyst)

Got it. On the other line within digital, the digital ex-podcasting, any like, you know, I know there's some like social media reselling in there, some third-party extension. Just wondering how those are doing just given the kind of volatility we've seen in social media lands, the last few quarters, and whether that.

Operator (participant)

Yeah

Daniel Day (Research Analyst)

…you know, the 7% growth, whether there's a big difference between like, the radio streaming inventory sold versus, the other buckets. Thanks.

Bob Pittman (Chairman and CEO)

You know, we haven't given that breakout, so I don't wanna do it here, but I will say I'll refer back to, you know, we did goose a couple of lower margin aspects of it by accident. We didn't intend to do it at the expense of the others. We are reconfiguring our sales priorities and commissions to rectify that for going forward.

Daniel Day (Research Analyst)

Okay. That's all I've got, guys. Thanks for the time.

Bob Pittman (Chairman and CEO)

Thanks. Appreciate it.

Operator (participant)

Once again, for questions, that is star 1 at this time. We'll move next to Jim Goss with Barrington.

James Jim Goss (Managing Director and Senior Research Analyst)

Thanks. Couple of questions about political advertising or I guess the categories in which they showed up. Absent those. In the Multiplatform Group, primarily broadcast radio, I presume, there tends not to be a lot of displacement. I'm wondering what accounted for the slide in ad revenues then in that category. Were there any key categories that were to blame?

Bob Pittman (Chairman and CEO)

Well, I think you just saw the ad slowdown continuing into Q4 and slowing down enough that the political advertising could not offset it the whole way.

James Jim Goss (Managing Director and Senior Research Analyst)

Okay. The other area, the Audio & Media Services Group, I gather it's mostly CATS, which is more directional, I think.

Rich Bressler (President, COO, and CFO)

Yes. Yes.

James Jim Goss (Managing Director and Senior Research Analyst)

So, um, seems like-

Bob Pittman (Chairman and CEO)

It's got TV in that too.

Rich Bressler (President, COO, and CFO)

Yeah. Hey, Jim, just on CATS, as I know you know, but just as a quick reminder, we benefited greatly from political advertising on the TV side.

Bob Pittman (Chairman and CEO)

Excuse me. CATS is both radio and TV.

James Jim Goss (Managing Director and Senior Research Analyst)

Is the TV side. Okay. Also, what do you think is a sustainable growth rate in podcasting now? We had the sort of the surge. It was a little more modest now. Is the 17% growth you had something that is more normal or will it fade from there as the category matures somewhat?

Bob Pittman (Chairman and CEO)

I don't think we see the category maturing, but I do think, you know, it is as we said, Podcasting is not immune from the slowdown, but we do fully expect podcasting to continue to be the highest growth sector of the media business. Looking at the usage from consumers, I think is probably the lead for us, going to what Rich has earlier said, is that the advertising does follow consumers. I think that's a very positive trend.

James Jim Goss (Managing Director and Senior Research Analyst)

Okay. Last thing, your TikTok exposure. Could you talk about that a little bit more and discuss whether there are risks that we ought to be concerned about?

Bob Pittman (Chairman and CEO)

I don't think we see the category maturing, but I do think, you know, it is as we said, Podcasting is not immune from the slowdown, but we do fully expect podcasting to continue to be the highest growth sector of the media business. Looking at the usage from consumers, I think is probably the lead for us, going to what Rich has earlier said, is that the advertising does follow consumers. I think that's a very positive trend.

Rich Bressler (President, COO, and CFO)

You know, Jim, just give you one data point for context for Bob's number of the $300 million social followers. That's about seven times larger than the next largest audio service, Spotify there.

James Jim Goss (Managing Director and Senior Research Analyst)

Okay. Thank you very much. Appreciate it.

Bob Pittman (Chairman and CEO)

Thank you.

Operator (participant)

From JPMorgan, we'll hear next from Sebastiano Petti.

Sebastiano Petti (Senior Research Analyst)

Hi, guys. Thanks for taking the question. I just wanna kind of go back to the EBITDA margin guide for the first quarter. If you, it assumes a, call it at the midpoint, 11% implied EBITDA margin, which is below, you know. The revenue flow-through, if you were to just do a midpoint decline, is higher than what you had in 2020, 2019. You have everything besides 2022. The implied EBITDA margin of 11% is also below, you know, prior years, you know, excluding the pandemic period. Anything to unpack there? Is there anything going on at the segment level that we should perhaps be thinking about as well?

Bob Pittman (Chairman and CEO)

Yeah.

Rich Bressler (President, COO, and CFO)

I don't think anything different than we've talked about. You know, we've highlighted, you know, Bob mentioned and we highlighted the flow-through in terms of, I think the word Bob used was kinda goosing some of the non, you know, less high margin businesses in Q4. I think we've talked about that and we've rectified that, but we won't fully work through that until you get to Q2. When you have the advertising headwinds that we talked about as we turn the page into 2023 and the continued uncertainty in the environment.

I think as, you know, as you all know, the multi-platform business in particular, that we have all high margin businesses, but that's like, you know, 75%-80% incremental flow-through margin. At the same time, when you don't have this robust revenue number there, as we've talked about in Q1, you get hit on the downside of a margin. At the same time, and I'm just gonna revert to a comment that Bob made, not just commenting on the results here, but also that we're in addition to being focused on cost and taking out cost and generating cash flow, wanna make sure that we're very well positioned as the economy starts to come back stronger, as advertising revenue starts to come back stronger with ad capture.

Bob Pittman (Chairman and CEO)

Yeah, look, I think Q1 is simply, you're seeing, operating leverage. You're seeing, you know, when revenue goes down, the operating leverage bites you. When things go up, it's your friend. You know, we have hyper-focused the company on being ready for the recovery, making sure we're well prepared for it and can take full advantage of it. At that point, we're gonna see the operating leverage again as our helper.

Sebastiano Petti (Senior Research Analyst)

Could you perhaps unpack a little bit some of the, you know, some of these new businesses that you kind of delved into this, you know, that you know, you just put it goosed as high margin growth businesses? Rich, I think you talked about realigning the sales force. Anything that we should be thinking about, or can you perhaps unpack that a little bit? Yeah.

Bob Pittman (Chairman and CEO)

Sure. In the DAG Group, we've got a number of digital businesses which some have pretty high margins, some have not ridiculously low, but much lower margins. For us, the proper balance is to make sure whatever we're doing at low margin is incremental to the higher margin business. We don't want a flow of revenue going from high margin to low margin. We may have overdone it a bit trying to do some of these lower margin businesses, which we thought could all be incremental. They turned out not to be. Learned our lesson, and we've adjusted.

Rich Bressler (President, COO, and CFO)

Sebastiano, I just want to come back to just what I said. I think in response to when Steve was asking a couple of those questions, just again, as you know, we wanted to obviously share and be fully transparent. These are the steps we made, some of the missteps we made, the changes that we've made. You know, as you think about modeling out, we still are committed to believe that the Digital Audio Group is a mid-30s kind of, you know, EBITDA margin business.

Sebastiano Petti (Senior Research Analyst)

Just a quick follow-up. Was this more pronounced, you know, some of these not, you know, high margin businesses, was that more pronounced perhaps in the fourth quarter? Is this something that's perhaps been building? Just kinda, you know, as we're thinking about extrapolating into the go forward in terms of 23 and beyond.

Bob Pittman (Chairman and CEO)

We really think the impact was in Q4, and we think it will continue into Q1. We think we will have it rebalanced by Q2.

Sebastiano Petti (Senior Research Analyst)

Thanks for the time.

Bob Pittman (Chairman and CEO)

Okay. Well, thank you very much for joining us today, and thanks for all your support.

Rich Bressler (President, COO, and CFO)

Yep. Thanks. Mike and the team are available, also with any follow questions, and as are Bob and I.

Operator (participant)

That does conclude today's conference. Again, thank you all for joining us, and you may now disconnect.