UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019
[   ]☒
TRANSITIONQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO __________
Commission File Number
000-53354001-38987
IHEARTMEDIA, INC.
(Exact name of registrant as specified in its charter)
Delaware26-0241222
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer Identification No.)
20880 Stone Oak Parkway
San Antonio, Texas
78258
San Antonio,Texas78258
(Address of principal executive offices)(Zip Code)
(210) 822-2828
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock"IHRT"The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)Title of the Securities Exchange Acteach classTrading Symbol(s)Name of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X] No [   ]each exchange on which registered
Class A Common StockIHRTThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes [X] No [  ]Series A Preferred Stock Purchase RightsIHRTThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [   ]   Accelerated filer [   ]   Non-accelerated filer [X]  Smaller reporting company [   ] Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at August 9, 20193, 2020
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Class A Common Stock, $.001 par value57,369,97862,229,135 
Class B Common Stock, $.001 par value6,947,4806,900,475 

IHEARTMEDIA, INC.
INDEX
Page No.


IHEARTMEDIA, INC.
INDEX
Page No.
Part I – Financial Information
Item 1.
1
1
2


4
8
9
Item 2.
5433
Item 3.
7653
Item 4.
7653
Part II – Other Information
Item 1.
7754
Item 1A.
7954
Item 2.
8856
Item 3.
8856
Item 4.
8856
Item 5.
8856
Item 6.
8856
9259




PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)Successor Company  Predecessor Company(In thousands, except share and per share data)Successor Company
June 30,
2019		  December 31,
2018		June 30,
2020		December 31,
2019
(Unaudited)   (Unaudited)
CURRENT ASSETS    CURRENT ASSETS
Cash and cash equivalents$127,159
  $224,037
Cash and cash equivalents$517,684  $400,300  
Accounts receivable, net of allowance of $3,081 in 2019 and $26,584 in 2018843,064
  868,861
Accounts receivable, net of allowance of $26,201 in 2020 and $12,629 in 2019Accounts receivable, net of allowance of $26,201 in 2020 and $12,629 in 2019570,117  902,908  
Prepaid expenses109,101
  99,532
Prepaid expenses86,003  71,764  
Other current assets34,361
  26,787
Other current assets35,745  41,376  
Current assets of discontinued operations—
  1,015,800
Total Current Assets1,113,685
  2,235,017
Total Current Assets1,209,549  1,416,348  
PROPERTY, PLANT AND EQUIPMENT    PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net834,232
  502,202
Property, plant and equipment, net819,259  846,876  
INTANGIBLE ASSETS AND GOODWILL    INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses2,282,697
  2,417,915
Indefinite-lived intangibles - licenses1,775,723  2,277,735  
Other intangibles, net2,305,407
  200,422
Other intangibles, net2,047,954  2,176,540  
Goodwill3,323,207
  3,412,753
Goodwill2,101,657  3,325,622  
OTHER ASSETS    OTHER ASSETS
Operating lease right-of-use assets900,755
  —
Operating lease right-of-use assets840,797  881,762  
Other assets237,841
  149,736
Other assets110,920  96,216  
Long-term assets of discontinued operations—
  3,351,470
Total Assets$10,997,824
  $12,269,515
Total Assets$8,905,859  $11,021,099  
CURRENT LIABILITIES 
   
CURRENT LIABILITIES  
Accounts payable$47,885
  $49,435
Accounts payable$114,400  $117,282  
Current operating lease liabilities77,050
  —
Current operating lease liabilities82,430  77,756  
Accrued expenses338,398
  298,383
Accrued expenses138,817  240,151  
Accrued interest69,473
  767
Accrued interest71,324  83,768  
Deferred revenue139,381
  123,143
Deferred revenue156,047  139,529  
Current portion of long-term debt53,406
  46,105
Current portion of long-term debt30,061  8,912  
Current liabilities of discontinued operations—
  729,816
Total Current Liabilities725,593
  1,247,649
Total Current Liabilities593,079  667,398  
Long-term debt5,757,097
  —
Long-term debt5,807,061  5,756,504  
Series A Mandatorily Redeemable Preferred Stock, par value $0.001, authorized 60,000 shares, 60,000 shares issued in 2019 and no shares issued in 201860,000
  —
Series A Mandatorily Redeemable Preferred Stock, par value $0.001, authorized 60,000 shares, 60,000 shares issued in 2020 and 2019Series A Mandatorily Redeemable Preferred Stock, par value $0.001, authorized 60,000 shares, 60,000 shares issued in 2020 and 201960,000  60,000  
Noncurrent operating lease liabilities805,866
  —
Noncurrent operating lease liabilities771,013  796,203  
Deferred income taxes773,824
  —
Deferred income taxes539,294  737,443  
Other long-term liabilities55,396
  229,679
Other long-term liabilities69,770  58,110  
Liabilities subject to compromise—
  16,480,256
Long-term liabilities of discontinued operations—
  5,872,273
Commitments and contingent liabilities (Note 9)

  

STOCKHOLDERS’ EQUITY (DEFICIT)    
Commitments and contingent liabilities (Note 7)Commitments and contingent liabilities (Note 7)
STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY
Noncontrolling interest8,372
  30,868
Noncontrolling interest9,123  9,123  
Predecessor Preferred stock, par value $.001 per share, 150,000,000 shares authorized, no shares issued and outstanding—
  —
Predecessor common stock—
  92
Successor Preferred stock, par value $.001 per share, 150,000,000 shares authorized, no shares issued and outstanding—
  —
Successor Class A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, 56,873,782 shares issued and outstanding in 2019 and no shares issued and outstanding in 201857
  —
Successor Class B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, 6,947,567 shares issued and outstanding in 2019 and no shares issued and outstanding in 20187
  —
Successor Special Warrants, 81,453,648 issued and outstanding in 2019 and none issued and outstanding in 2018—
  —
Preferred stock, par value $.001 per share, 100,000,000 shares authorized, 0 shares issued and outstandingPreferred stock, par value $.001 per share, 100,000,000 shares authorized, 0 shares issued and outstanding—  —  
Class A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 61,432,341 and 57,776,204 shares in 2020 and 2019, respectivelyClass A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 61,432,341 and 57,776,204 shares in 2020 and 2019, respectively61  58  
Class B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 6,900,195 and 6,904,910 shares in 2020 and 2019, respectivelyClass B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 6,900,195 and 6,904,910 shares in 2020 and 2019, respectively7  7  
Special Warrants, 78,038,412 and 81,046,593 issued and outstanding in 2020 and 2019, respectivelySpecial Warrants, 78,038,412 and 81,046,593 issued and outstanding in 2020 and 2019, respectively—  —  
Additional paid-in capital2,773,147
  2,074,632
Additional paid-in capital2,835,005  2,826,533  
Retained earnings (Accumulated deficit)38,793
  (13,345,346)Retained earnings (Accumulated deficit)(1,774,974) 112,548  
Accumulated other comprehensive loss(328)  (318,030)Accumulated other comprehensive loss(562) (750) 
Cost of shares (0 in 2019 and 805,982 in 2018) held in treasury—
  (2,558)
Total Stockholders' Equity (Deficit)2,820,048
  (11,560,342)
Total Liabilities and Stockholders' Equity (Deficit)$10,997,824
  $12,269,515
Cost of shares (232,623 in 2020 and 128,074 in 2019) held in treasuryCost of shares (232,623 in 2020 and 128,074 in 2019) held in treasury(3,018) (2,078) 
Total Stockholders' EquityTotal Stockholders' Equity1,065,642  2,945,441  
Total Liabilities and Stockholders' EquityTotal Liabilities and Stockholders' Equity$8,905,859  $11,021,099  

See Notes to Consolidated Financial Statements

1


IHEARTMEDIA, INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(In thousands, except per share data)Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
202020192019
Revenue$487,648  $635,646  $277,674  
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)249,866  198,772  98,310  
Selling, general and administrative expenses (excludes depreciation and amortization)261,219  220,231  102,296  
Corporate expenses (excludes depreciation and amortization)26,419  26,818  14,506  
Depreciation and amortization103,347  59,383  14,544  
Impairment charges5,378  —  —  
Other operating income (expense), net(506) 3,246  (127) 
Operating income (loss)(159,087) 133,688  47,891  
Interest expense (income), net81,963  69,711  (400) 
Gain on investments, net1,280  —  —  
Equity in loss of nonconsolidated affiliates(31) (24) (59) 
Other income (expense), net(1,258) (9,157) 150  
Reorganization items, net—  —  9,497,944  
Income (loss) from continuing operations before income taxes(241,059) 54,796  9,546,326  
Income tax benefit (expense)43,742  (16,003) (100,289) 
Income (loss) from continuing operations(197,317) 38,793  9,446,037  
Income from discontinued operations, net of tax—  —  1,854,677  
Net income (loss)(197,317) 38,793  11,300,714  
Less amount attributable to noncontrolling interest—  —  2,190  
Net income (loss) attributable to the Company$(197,317) $38,793  $11,298,524  
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments292  (328) (3,493) 
Other comprehensive income (loss), net of tax292  (328) (3,493) 
Comprehensive income (loss)(197,025) 38,465  11,295,031  
Less amount attributable to noncontrolling interest—  —  (788) 
Comprehensive income (loss) attributable to the Company$(197,025) $38,465  $11,295,819  
Net income (loss) attributable to the Company per common share:
Basic net income (loss) per share
From continuing operations$(1.35) $0.27  $110.28  
From discontinued operations—  —  21.63  
Basic net income (loss) per share$(1.35) $0.27  $131.91  
Weighted average common shares outstanding - Basic145,963  145,275  85,652  
Diluted net income (loss) per share
From continuing operations$(1.35) $0.27  $110.28  
From discontinued operations—  —  21.63  
Diluted net income (loss) per share$(1.35) $0.27  $131.91  
Weighted average common shares outstanding - Diluted145,963  145,298  85,652  
(In thousands, except per share data)Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30,
 2019  2019 2018
Revenue$635,646
  $277,674
 $891,764
Operating expenses:      
Direct operating expenses (excludes depreciation and amortization)184,291
  92,581
 263,752
Selling, general and administrative expenses (excludes depreciation and amortization)227,140
  103,552
 328,200
Corporate expenses (excludes depreciation and amortization)34,390
  18,979
 52,478
Depreciation and amortization59,383
  14,544
 64,877
Other operating income (expense), net3,246
  (127) (1,218)
Operating income133,688
  47,891
 181,239
Interest expense (income), net69,711
  (400) 10,613
Gain (loss) on investments, net—
  —
 9,175
Equity in loss of nonconsolidated affiliates(24)  (59) (32)
Other income (expense), net(9,157)  150
 (2,058)
Reorganization items, net—
  9,497,944
 (68,740)
Income from continuing operations before income taxes54,796
  9,546,326
 108,971
Income tax expense(16,003)  (100,289) (142,032)
Income (loss) from continuing operations38,793
  9,446,037
 (33,061)
Income (loss) from discontinued operations, net of tax—
  1,854,677
 (33,229)
Net income (loss)38,793
  11,300,714
 (66,290)
Less amount attributable to noncontrolling interest—
  2,190
 3,609
Net income (loss) attributable to the Company$38,793
  $11,298,524
 $(69,899)
Other comprehensive income (loss), net of tax:      
Foreign currency translation adjustments(328)  (3,493) (19,094)
Other comprehensive loss, net of tax(328)  (3,493) (19,094)
Comprehensive income (loss)38,465
  11,295,031
 (88,993)
Less amount attributable to noncontrolling interest—
  (788) (9,063)
Comprehensive income (loss) attributable to the Company$38,465
  $11,295,819
 $(79,930)
Net income (loss) attributable to the Company per common share:      
Basic net income (loss) per share      
From continuing operations$0.27
  $110.28
 $(0.39)
From discontinued operations—
  21.63
 (0.43)
Basic net income (loss) per share$0.27
  $131.91
 $(0.82)
Weighted average common shares outstanding - Basic145,275
  85,652
 85,280
Diluted net income (loss) per share      
From continuing operations$0.27
  $110.28
 $(0.39)
From discontinued operations—
  21.63
 (0.43)
Diluted net income (loss) per share$0.27
  $131.91
 $(0.82)
Weighted average common shares outstanding - Diluted145,298
  85,652
 85,280

See Notes to Consolidated Financial Statements

2


IHEARTMEDIA, INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(In thousands, except per share data)Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
Revenue$1,268,282  $635,646  $1,073,471  
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)551,498  198,772  381,184  
Selling, general and administrative expenses (excludes depreciation and amortization)605,360  220,231  427,230  
Corporate expenses (excludes depreciation and amortization)66,368  26,818  53,647  
Depreciation and amortization200,115  59,383  52,834  
Impairment charges1,733,235  —  91,382  
Other operating income (expense), net(1,572) 3,246  (154) 
Operating income (loss)(1,889,866) 133,688  67,040  
Interest expense (income), net172,052  69,711  (499) 
Loss on investments, net(8,675) —  (10,237) 
Equity in loss of nonconsolidated affiliates(595) (24) (66) 
Other income (expense), net(9,118) (9,157) 23  
Reorganization items, net—  —  9,461,826  
Income (loss) from continuing operations before income taxes(2,080,306) 54,796  9,519,085  
Income tax benefit (expense)194,253  (16,003) (39,095) 
Income (loss) from continuing operations(1,886,053) 38,793  9,479,990  
Income from discontinued operations, net of tax—  —  1,685,123  
Net income (loss)(1,886,053) 38,793  11,165,113  
Less amount attributable to noncontrolling interest—  —  (19,028) 
Net income (loss) attributable to the Company$(1,886,053) $38,793  $11,184,141  
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments188  (328) (1,175) 
Other comprehensive income (loss), net of tax188  (328) (1,175) 
Comprehensive income (loss)(1,885,865) 38,465  11,182,966  
Less amount attributable to noncontrolling interest—  —  2,784  
Comprehensive income (loss) attributable to the Company$(1,885,865) $38,465  $11,180,182  
Net income (loss) attributable to the Company per common share:
Basic net income (loss) per share
From continuing operations$(12.94) $0.27  $109.92  
From discontinued operations—  —  19.76  
Basic net income (loss) per share$(12.94) $0.27  $129.68  
Weighted average common shares outstanding - Basic145,788  145,275  86,241  
Diluted net income (loss) per share
From continuing operations$(12.94) $0.27  $109.92  
From discontinued operations—  —  19.76  
Diluted net income (loss) per share$(12.94) $0.27  $129.68  
Weighted average common shares outstanding - Diluted145,788  145,298  86,241  
(In thousands, except per share data)Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30,
 2019  2019 2018
Revenue$635,646
  $1,073,471
 $1,664,536
Operating expenses:      
Direct operating expenses (excludes depreciation and amortization)184,291
  359,696
 504,818
Selling, general and administrative expenses (excludes depreciation and amortization)227,140
  436,345
 674,292
Corporate expenses (excludes depreciation and amortization)34,390
  66,020
 105,376
Depreciation and amortization59,383
  52,834
 132,251
Impairment charges—
  91,382
 —
Other operating income (expense), net3,246
  (154) (4,450)
Operating income133,688
  67,040
 243,349
Interest expense (income), net69,711
  (499) 331,746
Gain (loss) on investments, net—
  (10,237) 9,175
Equity in loss of nonconsolidated affiliates(24)  (66) (63)
Other income (expense), net(9,157)  23
 (22,474)
Reorganization items, net—
  9,461,826
 (260,795)
Income (loss) from continuing operations before income taxes54,796
  9,519,085
 (362,554)
Income tax benefit (expense)(16,003)  (39,095) 20,701
Income (loss) from continuing operations38,793
  9,479,990
 (341,853)
Income (loss) from discontinued operations, net of tax—
  1,685,123
 (157,477)
Net income (loss)38,793
  11,165,113
 (499,330)
Less amount attributable to noncontrolling interest—
  (19,028) (12,437)
Net income (loss) attributable to the Company$38,793
  $11,184,141
 $(486,893)
Other comprehensive income (loss), net of tax:      
Foreign currency translation adjustments(328)  (1,175) (12,533)
Other comprehensive loss, net of tax(328)  (1,175) (12,533)
Comprehensive income (loss)38,465
  11,182,966
 (499,426)
Less amount attributable to noncontrolling interest—
  2,784
 (3,617)
Comprehensive income (loss) attributable to the Company$38,465
  $11,180,182
 $(495,809)
Net income (loss) attributable to the Company per common share:      
Basic net income (loss) per share      
From continuing operations$0.27
  109.92
 $(4.01)
From discontinued operations—
  19.76
 (1.70)
Basic net income (loss) per share$0.27
  $129.68
 $(5.71)
Weighted average common shares outstanding - Basic145,275
  86,241
 85,248
Diluted net income (loss) per share      
From continuing operations$0.27
  109.92
 $(4.01)
From discontinued operations—
  19.76
 (1.70)
Diluted net income (loss) per share$0.27
  $129.68
 $(5.71)
Weighted average common shares outstanding - Diluted145,298
  86,241
 85,248

See Notes to Consolidated Financial Statements

3


IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands, except share data)Controlling Interest
Common Shares(1)
Non-
controlling
Interest		Common
Stock		Additional
Paid-in
Capital		Accumulated DeficitAccumulated
Other
Comprehensive
Loss		Treasury
Stock
Class A
Shares		Class B
Shares		Special WarrantsTotal
Balances at
March 31, 2020 (Successor)
59,930,396  6,899,611  78,919,386  $9,123  $67  $2,830,788  $(1,577,657) $(854) $(2,165) $1,259,302  
Net loss—  —  —  (197,317) —  —  (197,317) 
Vesting of restricted stock and other624,537  —  1  (23) —  —  (853) (875) 
Share-based compensation—  —  4,240  —  —  —  4,240  
Conversion of Special Warrants to Class A and Class B Shares877,263  729  (877,992) —  —  —  —  —  —  —  
Conversion of Class B Shares to Class A Shares145  (145) —  —  —  —  —  —  —  
Cancellation of Special Warrants(2,982) —  —  —  —  —  —  —  
Other comprehensive income—  —  —  —  292  —  292  
Balances at
June 30, 2020 (Successor)
61,432,341  6,900,195  78,038,412  $9,123  $68  $2,835,005  $(1,774,974) $(562) $(3,018) $1,065,642  

(1) The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2020.
See Notes to Consolidated Financial Statements




















4

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(In thousands, except share data)(In thousands, except share data)     Controlling Interest  (In thousands, except share data)Controlling Interest
Common Shares(1)
 
Non-
controlling
Interest
 
Common
Stock
 
Additional
Paid-in
Capital
 
Retained Earnings (Accumulated
Deficit)
 
Accumulated
Other
Comprehensive
Loss
 
Treasury
Stock
  
Common Shares(1)
Non-
controlling
Interest		Common
Stock		Additional
Paid-in
Capital		Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive
Loss		Treasury
Stock
Class A
Shares		 
Class B
Shares
 
Class C
Shares
 Special Warrants TotalClass A SharesClass B
Shares		Class C SharesSpecial WarrantsTotal
Balances at
March 31, 2019 (Predecessor)		32,247,361
 555,556
 58,967,502
 —
 $11,437
 $92
 $2,075,025
 $(13,330,821) $(319,284) $(2,562) $(11,566,113)
Balances at
March 31, 2019 (Predecessor)
32,247,361  555,556  58,967,502  —  $11,437  $92  $2,075,025  $(13,330,821) $(319,284) $(2,562) $(11,566,113) 
Net income        2,190
 —
 —
 11,298,524
 —
 —
 11,300,714
Net income2,190  —  —  11,298,524  —  —  11,300,714  
Non-controlling interest - Separation        (13,199) —
 —
 —
 —
 —
 (13,199)Non-controlling interest - Separation(13,199) —  —  —  —  —  (13,199) 
Accumulated other comprehensive loss - Separation        —
 —
 —
 —
 307,813
 —
 307,813
Accumulated other comprehensive loss - Separation—  —  —  —  307,813  —  307,813  
Issuance of restricted stock        132
 —
 —
 —
 —
 —
 132
Issuance of restricted stock132  —  —  —  —  —  132  
Forfeitures of restricted stock(64,750)       —
 —
 —
 —
 —
 —
 —
Forfeitures of restricted stock(64,750) —  —  —  —  —  —  —  
Share-based compensation        —
 —
 1,635
 —
 —
 —
 1,635
Share-based compensation—  —  1,635  —  —  —  1,635  
Share-based compensation - discontinued operations        614
 —
 —
 —
 —
 —
 614
Share-based compensation - discontinued operations614  —  —  —  —  —  614  
Other        —
 —
 —
 —
 1
 —
 1
Other—  —  —  —  1  —  1  
Other comprehensive loss        (788) —
 —
 —
 (2,705) —
 (3,493)Other comprehensive loss(788) —  —  —  (2,705) —  (3,493) 
Cancellation of Predecessor equity(32,182,611) (555,556) (58,967,502)   (386) (92) (2,076,660) 2,059,998
 14,175
 2,562
 (403)Cancellation of Predecessor equity(32,182,611) (555,556) (58,967,502) (386) (92) (2,076,660) 2,059,998  14,175  2,562  (403) 
Issuance of Successor common stock and warrants56,861,941
 6,947,567
   81,453,648
 8,943
 64
 2,770,108
 (27,701) —
 —
 2,751,414
Issuance of Successor common stock and warrants56,861,941  6,947,567  81,453,648  8,943  64  2,770,108  (27,701) —  —  2,751,414  
Balances at
May 1, 2019 (Predecessor)		56,861,941
 6,947,567
 —
 81,453,648
 $8,943
 $64
 $2,770,108
 $—
 $—
 $—
 $2,779,115
Balances at
May 1, 2019 (Predecessor)
56,861,941  6,947,567  —  81,453,648  $8,943  $64  $2,770,108  $—  $—  $—  $2,779,115  
                     
                     
Balances at
May 2, 2019 (Successor)		56,861,941
 6,947,567
 —
 81,453,648
 $8,943
 $64
 $2,770,108
 $—
 $—
 $—
 $2,779,115
Balances at
May 2, 2019 (Successor)
56,861,941  6,947,567  —  81,453,648  $8,943  $64  $2,770,108  $—  $—  $—  $2,779,115  
Net income        —
 —
 —
 38,793
 —
 —
 38,793
Net income—  —  —  38,793  —  —  38,793  
Vesting of restricted stock11,841
       —
 —
 —
 —
 —
 —
 —
Vesting of restricted stock11,841  —  —  —  —  —  —  —  
Share-based compensation        —
 —
 3,039
 —
 —
 —
 3,039
Share-based compensation—  —  3,039  —  —  —  3,039  
Dividend declared        (571) —
 —
 —
 —
 —
 (571)
Dividends declaredDividends declared(571) —  —  —  —  —  (571) 
Other comprehensive loss        —
 —
 —
 —
 (328) —
 (328)Other comprehensive loss—  —  —  —  (328) —  (328) 
Balances at
June 30, 2019 (Successor)		56,873,782
 6,947,567
 —
 81,453,648
 $8,372
 $64
 $2,773,147
 $38,793
 $(328) $—
 $2,820,048
Balances at
June 30, 2019 (Successor)
56,873,782  6,947,567  —  81,453,648  $8,372  $64  $2,773,147  $38,793  $(328) $—  $2,820,048  
(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019.
See Notes to Consolidated Financial Statements



(In thousands, except share data)   Controlling Interest  
 
Common Shares(1)
 
Non-
controlling
Interest
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
  
 Class A Shares 
Class B
Shares
 Class C Shares       Total
Balances at
March 31, 2018 (Predecessor)		32,552,286
 555,556
 58,967,502
 $29,429
 $92
 $2,073,144
 $(13,560,430) $(311,168) $(2,477) $(11,771,410)
Consolidated net income (loss)      3,609
 —
 —
 (69,899) —
 —
 (66,290)
Issuance of restricted stock      3
 —
 —
 —
 —
 —
 3
Forfeitures of restricted stock(73,695)     —
 —
 —
 —
 —
 —
 —
Share-based compensation      1,520
 —
 593
 —
 —
 —
 2,113
Dividend declared      (7,006) —
 —
 —
 —
 —
 (7,006)
Other      (631) —
 1
 —
 —
 (16) (646)
Other comprehensive loss      (9,063) —
 —
 —
 (10,031) —
 (19,094)
Balances at
June 30, 2018 (Predecessor)		32,478,591
 555,556
 58,967,502
 $17,861
 $92
 $2,073,738
 $(13,630,329) $(321,199) $(2,493) $(11,862,330)
(1) The PredecessorSuccessor Company's Class D Common Stock and Preferred Stock areis not presented in the data above as there were no shares issued and outstanding in 2018.2019.
See Notes to Consolidated Financial Statements

5



IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands, except share data)Controlling Interest
Common Shares(1)
Non-
controlling
Interest		Common
Stock		Additional
Paid-in
Capital		Retained Earnings (Accumulated
Deficit)		Accumulated
Other
Comprehensive
Loss		Treasury
Stock
Class A
Shares		Class B
Shares		Special WarrantsTotal
Balances at
December 31, 2019 (Successor)
57,776,204  6,904,910  81,046,593  $9,123  $65  $2,826,533  $112,548  $(750) $(2,078) $2,945,441  
Net loss—  —  —  (1,886,053) —  —  (1,886,053) 
Vesting of restricted stock and other646,223  —  3  (25) —  —  (940) (962) 
Share-based compensation—  —  8,497  —  —  —  8,497  
Conversion of Special Warrants to Class A Shares and Class B Shares3,003,854  1,345  (3,005,199) —  —  —  —  —  —  —  
Conversion of Class B Shares to Class A Shares6,060  (6,060) —  —  —  —  —  —  —  
Cancellation of Special Warrants(2,982) —  —  —  —  —  —  —  
Other—  —  —  (1,469) —  —  (1,469) 
Other comprehensive income—  —  —  —  188  —  188  
Balances at
June 30, 2020 (Successor)
61,432,341  6,900,195  78,038,412  $9,123  $68  $2,835,005  $(1,774,974) $(562) $(3,018) $1,065,642  

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

See Notes to Consolidated Financial Statements


















6

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

(In thousands, except share data)(In thousands, except share data)     Controlling Interest  (In thousands, except share data)Controlling Interest
Common Shares(1)
 
Non-
controlling
Interest
 
Common
Stock
 
Additional
Paid-in
Capital
 Retained Earnings (Accumulated
Deficit)		 
Accumulated
Other
Comprehensive
Loss
 
Treasury
Stock
  Common Shares(1)Non- controlling InterestCommon StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive LossTreasury Stock
Class A
Shares
 
Class B
Shares
 
Class C
Shares
 Special Warrants TotalClass A SharesClass B SharesClass C SharesSpecial WarrantsTotal
Balances at
December 31, 2018 (Predecessor)		32,292,944
 555,556
 58,967,502
 —
 $30,868
 $92
 $2,074,632
 $(13,345,346) $(318,030) $(2,558) $(11,560,342)
Balances at
December 31, 2018 (Predecessor)
32,292,944  555,556  58,967,502  —  $30,868  $92  $2,074,632  $(13,345,346) $(318,030) $(2,558) $(11,560,342) 
Net income        (19,028) —
 —
 11,184,141
 —
 —
 11,165,113
Net income (loss)Net income (loss)(19,028) —  —  11,184,141  —  —  11,165,113  
Non-controlling interest - Separation        (13,199) —
 —
 —
 —
 —
 (13,199)Non-controlling interest - Separation(13,199) —  —  —  —  —  (13,199) 
Accumulated other comprehensive loss - Separation        —
 —
 —
 —
 307,813
 —
 307,813
Accumulated other comprehensive loss - Separation—  —  —  —  307,813  —  307,813  
Adoption of ASC 842, Leases        —
 —
 —
 128,908
 —
 —
 128,908
Adoption of ASC 842, Leases—  —  —  128,908  —  —  128,908  
Issuance of restricted stock    

   196
 —
 —
 —
 —
 (4) 192
Issuance of restricted stock196  —  —  —  —  (4) 192  
Forfeitures of restricted stock(110,333)   
   —
 —
 —
 —
 —
 —
 —
Forfeitures of restricted stock(110,333) —  —  —  —  —  —  —  
Share-based compensation        —
 —
 2,028
 —
 —
 —
 2,028
Share-based compensation—  —  2,028  —  —  —  2,028  
Share-based compensation - discontinued operations        2,449
 —
 —
 —
 —
 —
 2,449
Share-based compensation - discontinued operations2,449  —  —  —  —  —  2,449  
Dividend declared        (3,684) —
 —
 —
 —
 —
 (3,684)
Payments to non-controlling interestsPayments to non-controlling interests(3,684) —  —  —  —  —  (3,684) 
Other        —
 —
 —
 —
 1
 —
 1
Other—  —  —  —  1  —  1  
Other comprehensive income (loss)        2,784
 —
 —
 —
 (3,959) —
 (1,175)Other comprehensive income (loss)2,784  —  —  —  (3,959) —  (1,175) 
Cancellation of Predecessor equity(32,182,611) (555,556) (58,967,502)   (386) (92) (2,076,660) 2,059,998
 14,175
 2,562
 (403)Cancellation of Predecessor equity(32,182,611) (555,556) (58,967,502) (386) (92) (2,076,660) 2,059,998  14,175  2,562  (403) 
Issuance of Successor common stock and warrants56,861,941
 6,947,567
 —
 81,453,648
 8,943
 64
 2,770,108
 (27,701) —
 —
 2,751,414
Issuance of Successor common stock and warrants56,861,941  6,947,567  —  81,453,648  8,943  64  2,770,108  (27,701) —  —  2,751,414  
Balances at
May 1, 2019 (Predecessor)		56,861,941
 6,947,567
 —
 81,453,648
 $8,943
 $64
 $2,770,108
 $—
 $—
 $—
 $2,779,115
Balances at
May 1, 2019 (Predecessor)
56,861,941  6,947,567  —  81,453,648  $8,943  $64  $2,770,108  $—  $—  $—  $2,779,115  
                     
                     
Balances at
May 2, 2019 (Successor)		56,861,941
 6,947,567
 —
 81,453,648
 $8,943
 $64
 $2,770,108
 $—
 $—
 $—
 $2,779,115
Balances at
May 2, 2019 (Successor)
56,861,941  6,947,567  —  81,453,648  $8,943  $64  $2,770,108  $—  $—  $—  $2,779,115  
Net income        —
 —
 —
 38,793
 —
 —
 38,793
Net income—  —  —  38,793  —  —  38,793  
Vesting of restricted stock11,841
       —
 —
 —
 —
 —
 —
 —
Vesting of restricted stock11,841  —  —  —  —  —  —  —  
Share-based compensation        —
 —
 3,039
 —
 —
 —
 3,039
Share-based compensation—  —  3,039  —  —  —  3,039  
Dividend declared        (571) —
 —
 —
 —
 —
 (571)
OtherOther(571) —  —  —  —  —  (571) 
Other comprehensive loss        —
 —
 —
 —
 (328) —
 (328)Other comprehensive loss—  —  —  —  (328) —  (328) 
Balances at
June 30, 2019 (Successor)		56,873,782
 6,947,567
 —
 81,453,648
 $8,372
��$64
 $2,773,147
 $38,793
 $(328) $—
 $2,820,048
Balances at
June 30, 2019 (Successor)
56,873,782  6,947,567  —  81,453,648  $8,372  $64  $2,773,147  $38,793  $(328) $—  $2,820,048  
(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019 or 2018.
See Notes to Consolidated Financial Statements



(In thousands, except share data)   Controlling Interest  
 
Common Shares(1)
 
Non-
controlling
Interest
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
  
 
Class A
Shares
 
Class B
Shares
 
Class C
Shares
       Total
Balances at
December 31, 2017 (Predecessor)		32,626,168
 555,556
 58,967,502
 $41,191
 $92
 $2,072,566
 $(13,142,001) $(313,718) $(2,474) $(11,344,344)
Consolidated net loss      (12,437) —
 —
 (486,893) —
 —
 (499,330)
Issuance of restricted stock70,000
     8
 —
 —
 —
 —
 —
 8
Forfeitures of restricted stock(217,577)     —
 —
 —
 —
 —
 —
 —
Share-based compensation      3,625
 —
 1,172
 —
 —
 —
 4,797
Dividend declared      (10,257) —
 —
 —
 —
 —
 (10,257)
Other      (652) —
 —
 (1,435) 1,435
 (19) (671)
Other comprehensive income      (3,617) —
 —
 —
 (8,916) —
 (12,533)
Balances at
June 30, 2018 (Predecessor)		32,478,591
 555,556
 58,967,502
 $17,861
 $92
 $2,073,738
 $(13,630,329) $(321,199) $(2,493) $(11,862,330)
(1) The PredecessorSuccessor Company's Class D Common Stock and Preferred Stock areis not presented in the data above as there were no shares issued and outstanding in 2018 or 2017.2019.

See Notes to Consolidated Financial Statements




7

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)Successor Company  Predecessor Company(In thousands)Successor CompanyPredecessor Company
Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30,Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
2019  2019 2018202020192019
Cash flows from operating activities:      Cash flows from operating activities:
Net income (loss)$38,793
  $11,165,113
 $(499,330)Net income (loss)$(1,886,053) $38,793  $11,165,113  
(Income) loss from discontinued operations—
  (1,685,123) 157,477
Income from discontinued operationsIncome from discontinued operations—  —  (1,685,123) 
Reconciling items:      Reconciling items:
Impairment charges—
  91,382
 —
Impairment charges1,733,235  —  91,382  
Depreciation and amortization59,383
  52,834
 132,251
Depreciation and amortization200,115  59,383  52,834  
Deferred taxes13,056
  115,839
 (27,271)Deferred taxes(197,689) 13,056  115,839  
Provision for doubtful accounts3,081
  3,268
 12,642
Provision for doubtful accounts18,210  3,081  3,268  
Amortization of deferred financing charges and note discounts, net216
  512
 11,871
Amortization of deferred financing charges and note discounts, net1,033  216  512  
Non-cash Reorganization items, net—
  (9,619,236) 254,920
Non-cash Reorganization items, net—  —  (9,619,236) 
Share-based compensation3,039
  498
 1,172
Share-based compensation8,497  3,039  498  
(Gain) loss on disposal of operating and other assets(3,960)  (143) 2,143
(Gain) loss on investments—
  10,237
 (9,175)
(Gain) Loss on disposal of operating and other assets(Gain) Loss on disposal of operating and other assets426  (3,960) (143) 
Loss on investmentsLoss on investments8,675  —  10,237  
Equity in loss of nonconsolidated affiliates24
  66
 63
Equity in loss of nonconsolidated affiliates595  24  66  
Barter and trade income(1,934)  (5,947) (2,607)Barter and trade income(5,244) (1,934) (5,947) 
Other reconciling items, net73
  (65) (568)Other reconciling items, net887  73  (65) 
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:      Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease in accounts receivable(108,613)  117,263
 55,188
Decrease (increase) in accounts receivableDecrease (increase) in accounts receivable314,515  (108,613) 117,263  
Increase in prepaid expenses and other current assets(14,773)  (24,044) (13,770)Increase in prepaid expenses and other current assets(12,720) (14,773) (24,044) 
Increase (decrease) in accrued expenses18,006
  (123,971) (31,775)
Increase (decrease) in accounts payable2,995
  (32,914) 14,660
Increase in accrued interest69,294
  256
 301,399
Increase (decrease) in deferred income4,745
  13,377
 (3,403)
Changes in other operating assets and liabilities(224)  (86,707) 4,298
Cash provided by (used for) operating activities from continuing operations83,201
  (7,505) 360,185
Cash provided by (used for) operating activities from discontinued operations—
  (32,681) 84,172
Increase in other long-term assetsIncrease in other long-term assets(654) (1,591) (7,098) 
Increase (decrease) in accounts payable and accrued expensesIncrease (decrease) in accounts payable and accrued expenses(90,103) 21,001  (156,885) 
Increase (decrease) in accrued interestIncrease (decrease) in accrued interest(12,099) 69,294  256  
Increase in deferred incomeIncrease in deferred income8,281  4,745  13,377  
Increase (decrease) in other long-term liabilitiesIncrease (decrease) in other long-term liabilities13,002  1,367  (79,609) 
Cash provided by (used in) operating activities from continuing operationsCash provided by (used in) operating activities from continuing operations102,909  83,201  (7,505) 
Cash used for operating activities from discontinued operationsCash used for operating activities from discontinued operations—  —  (32,681) 
Net cash provided by (used in) operating activities83,201
  (40,186) 444,357
Net cash provided by (used in) operating activities102,909  83,201  (40,186) 
Cash flows from investing activities:      Cash flows from investing activities:
Purchases of investmentsPurchases of investments(9,964) (500) (226) 
Purchases of property, plant and equipment(17,435)  (36,197) (27,306)Purchases of property, plant and equipment(39,546) (17,435) (36,197) 
Proceeds from disposal of assets471
  99
 832
Change in other, net(823)  (2,680) 6,452
Change in other, net(1,171) 148  (2,355) 
Cash provided by (used for) investing activities from continuing operations(17,787)  (38,778) (20,022)
Cash provided by (used for) investing activities from discontinued operations—
  (222,366) (58,263)
Cash used for investing activities from continuing operationsCash used for investing activities from continuing operations(50,681) (17,787) (38,778) 
Cash used for investing activities from discontinued operationsCash used for investing activities from discontinued operations—  —  (222,366) 
Net cash used for investing activities(17,787)  (261,144) (78,285)Net cash used for investing activities(50,681) (17,787) (261,144) 
Cash flows from financing activities:      Cash flows from financing activities:
Draws on credit facilities—
  —
 143,332
Payments on credit facilities—
  —
 (133,308)
Proceeds from long-term debt—
  269
 —
Payments on long-term debt—
  (8,294) (363,442)
Proceeds from long-term debt and credit facilitiesProceeds from long-term debt and credit facilities350,000  —  269  
Payments on long-term debt and credit facilitiesPayments on long-term debt and credit facilities(283,335) —  (8,294) 
Proceeds from Mandatorily Redeemable Preferred Stock
—
  60,000
 —
Proceeds from Mandatorily Redeemable Preferred Stock—  —  60,000  
Settlement of intercompany related to discontinued operations—
  (159,196) —
Settlement of intercompany related to discontinued operations—  —  (159,196) 
Dividends and other payments to noncontrolling interests(571)  —
 (4,862)
Change in other, net(113)  (5) (14)Change in other, net(1,153) (684) (5) 
Cash provided by (used for) financing activities from continuing operations(684)  (107,226) (358,294)Cash provided by (used for) financing activities from continuing operations65,512  (684) (107,226) 
Cash provided by (used for) financing activities from discontinued operations—
  51,669
 (2,527)
Net cash used for financing activities(684)  (55,557) (360,821)
Cash provided by financing activities from discontinued operationsCash provided by financing activities from discontinued operations—  —  51,669  
Net cash provided by (used for) financing activitiesNet cash provided by (used for) financing activities65,512  (684) (55,557) 
Effect of exchange rate changes on cash, cash equivalents and restricted cash11
  562
 (4,699)Effect of exchange rate changes on cash, cash equivalents and restricted cash(325) 11  562  
Net increase in cash, cash equivalents and restricted cash64,741
  (356,325) 552
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash117,415  64,741  (356,325) 
Cash, cash equivalents and restricted cash at beginning of period74,009
  430,334
 311,300
Cash, cash equivalents and restricted cash at beginning of period411,618  74,009  430,334  
Cash, cash equivalents and restricted cash at end of period138,750
  74,009
 311,852
Less cash, cash equivalents and restricted cash of discontinued operations at end of period—
  —
 219,196
Cash, cash equivalents and restricted cash of continuing operations at end of period$138,750
  $74,009
 $92,656
Cash, cash equivalents and restricted cash of continuing operations at end of period$529,033  $138,750  $74,009  
SUPPLEMENTAL DISCLOSURES:      SUPPLEMENTAL DISCLOSURES:
Cash paid for interest$430
  $137,042
 $206,948
Cash paid for interest$185,364  $430  $137,042  
Cash paid for income taxes1,549
  22,092
 23,375
Cash paid for income taxes1,745  1,549  22,092  
Cash paid for Reorganization items, net13,049
  183,291
 5,875
Cash paid for Reorganization items, net443  13,049  183,291  
See Notes to Consolidated Financial Statements

8




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 – BASIS OFPRESENTATION
Preparation of Interim Financial Statements
All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to iHeartMedia, Inc. and its consolidated subsidiaries. The accompanying consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. As described below, as a result of the application of fresh start accounting and the effects of the implementation of the Company's Plan of Reorganization (as defined below), the consolidated financial statements after the Effective Date (as defined below), are not comparable with the consolidated financial statements on or before that date. Refer to Note 3, "Fresh Start Accounting," for additional information. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 20182019 Annual Report on Form 10-K.
TheThe Company’s reportable segments are:
▪Audio, which provides media and entertainment services via broadcast and digital delivery, and also includes the Company’s events and national syndication businesses and  
▪Audio & Media Services, which provides other audio and media services, including the Company’s media representation business, Katz Media Group (“Katz Media”) and the Company's provider of scheduling and broadcast software, Radio Computing Services (“RCS”).
The consolidated financial statements include the accounts of the Company and its subsidiaries. Also included in the consolidated financial statements are entities for which the Company has a controlling financial interest or is the primary beneficiary. Investments in companies in which the Company owns 20% to 50% of the voting common stock or otherwise exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process.
Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations. Certain of the Company's operations have been presented as discontinued. The Company presents businesses that represent components as discontinued operations when the components meet the criteria for held for sale, are sold, or spun-off and their disposal represents a strategic shift that has, or will have, a major effect on its operations and financial results. See Note 4, 2, Discontinued Operations.
COVID-19
Our business has been adversely impacted by the novel coronavirus pandemic (“COVID-19”), its impact on the operating and economic environment and related, near-term advertiser spending decisions. On March 26, 2020, the Company announced that it was withdrawing its previously issued financial guidance for the fiscal year ending December 31, 2020 due to heightened uncertainty related to COVID-19. In addition, iHeartCommunications borrowed $350.0 million principal amount under its $450.0 million senior secured asset-based revolving credit facility (the “ABL Facility”) as a precautionary measure to preserve iHeartCommunications’ financial flexibility in light of this uncertainty. In the second quarter of 2020, the Company repaid $115.0 million of the amounts borrowed under the ABL Facility. As of June 30, 2020, the ABL Facility had a borrowing base of $289.4 million and utilization of $235.0 million in outstanding borrowings and $41.2 million of outstanding letters of credit, resulting in $13.2 million of availability, such availability being subject to further restrictions contained within the credit agreement governing the ABL Facility.
In July 2020, iHeartCommunications issued $450.0 million of incremental term loans pursuant to an amendment (the “Amendment No. 2”) to the credit agreement (as amended, the “Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Bank of America, N.A., as administrative agent, governing the Company’s $2.5 billion aggregate principal amount of senior secured term loans (the “Term Loan Facility”) and used a portion of the proceeds to repay the $235.0 million outstanding balance under the ABL Facility. The remaining proceeds will be available if needed to fund iHeartCommunications' future working capital requirements or other general corporate purposes.

9


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company's revenue in the latter half of the month ended March 31, 2020 and in the three months ended June 30, 2020 was significantly and negatively impacted as a result of a decline in advertising spend driven by COVID-19, and the Company's management took proactive actions to expand the Company’s financial flexibility by reducing expenses and preserving cash as a result of such impact.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.  The Company continues to examine the impacts the CARES Act may have on its business. For more information on the expected benefits of the CARES Act on the Company's income tax liabilities, see Note 8, Income Taxes.
As partof June 30, 2020, the Company had approximately $517.7 million in cash, which includes the $235.0 million borrowed under the ABL Facility that was subsequently repaid in July 2020 using the proceeds of the Separation and Reorganization (as defined below),$450.0 million issuance of incremental term loans.  While the Company reevaluatedexpects COVID-19 to negatively impact the results of operations, cash flows and financial position of the Company, the related financial impact cannot be reasonably estimated at this time. Based on the plans that the Company has put in place, it expects to be able to meet its segment reporting, resulting inobligations as they become due over the presentationcoming year.

As a result of two businesses:
▪Audio, which provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses and  
▪Audio & Media Services, which provides other audio and media services, including the Company’s media representation business and the Company's provider of scheduling and broadcast software.
Prior periods have been recastuncertainty related to reflectCOVID-19 and its negative impact on the Company's current segment presentation. Seebusiness and the public trading values of its debt and equity, the Company was required to perform interim impairment tests on its long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020. The interim impairment tests resulted in a non-cash impairment of the Company's Federal Communication Commission (“FCC”) licenses of $502.7 million and a non-cash impairment charge of $1.2 billion to reduce goodwill.
Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s weighted average cost of capital (“WACC”) and other economic factors, additional interim impairment testing of the Company's intangible assets and indefinite-lived intangible was not required as of June 30, 2020. For more information, see Note 13, Segment Data5, Property, Plant and Equipment, Intangible Assets and Goodwill.
Certain prior period amounts have been reclassified to conform to the 2019 presentation.
Voluntary Filing under Chapter 11
OnAs previously disclosed, on March 14, 2018, (the "Petition Date"), the Company, iHeartCommunications, Inc. ("iHeartCommunications") and certain of the Company's direct and indirect domestic subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief (the "Chapter 11 Cases") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court"). Clear Channel Outdoor Holdings, Inc. (“CCOH”) and its direct and indirect subsidiaries did not file voluntary petitions for reorganization under the Bankruptcy Code and were not Debtors in the Chapter 11 Cases. On April 28, 2018, the Company and the other Debtors filed a plan of reorganization (as amended, the “Plan of Reorganization”) and a related disclosure statement with the Bankruptcy Court, which we subsequently amended by filing the second, third, fourth and fifth amended Plan of Reorganization and amended versions of the Disclosure Statement.Court. On January 22, 2019, the Plan of Reorganization was confirmed by the Bankruptcy Court.
On May 1, 2019 (the “Effective Date”), the conditions to the effectiveness of the Plan of Reorganization were satisfied and the Company emerged from Chapter 11 through (a)and effectuated a series of transactions (the “Separation”) through which CCOH,Clear Channel Outdoor Holdings, Inc. ("CCOH"), its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “iHeart Group”“Separation”), and (b) a series of transactions

9


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(the “Reorganization”) through which iHeartCommunications’ debt was reduced from approximately $16 billion to approximately $5.8 billion and a global compromise and settlement among holders of claims (“Claimholders”) in connection with the Chapter 11 Cases was effected. The compromise and settlement involved, among others, (i) the restructuring of iHeartCommunications’ indebtedness by (A) replacing its “debtor-in-possession” credit facility with a $450 million senior secured asset-based revolving credit facility (the “ABL Facility”) and (B) issuing to certain Claimholders, on account of their claims, approximately $3.5 billion aggregate principal amount of new senior secured term loans (the “Term Loan Facility”), approximately $1.45 billion aggregate principal amount of new 8.375% Senior Notes due 2027 (the “Senior Unsecured Notes”) and approximately $800 million aggregate principal amount of new 6.375% Senior Secured Notes due 2026 (the “Senior Secured Notes”), (ii) the Company’s issuance of new Class A common stock, new Class B common stock and special warrants to purchase shares of new Class A common stock and Class B common stock (“Special Warrants”) to Claimholders, subject to ownership restrictions imposed by the Federal Communications’ Commission (“FCC”), (iii) the settlement of certain intercompany transactions, and (iv) the sale of the preferred stock (the “iHeart Operations Preferred Stock”) of the Company’s wholly-owned subsidiary iHeart Operations, Inc. (“iHeart Operations”) in connection with the Separation.
. All of the Predecessor (as defined below) Company's equity existing as of the Effective Date was canceled on such date pursuant to the Plan of Reorganization.
Upon the Company's emergence from the Chapter 11 Cases, the Company adopted fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after the Effective Date, are not comparable with the consolidated financial statements on or before that date. Refer to Note 3, "Fresh Start Accounting," for additional information.
References to "Successor"“Successor” or "Successor Company"“Successor Company” relate to the financial position and results of operations of the Company after the Effective Date. References to "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of the Company on or before the Effective Date.
During the Predecessor period, the Company applied Accounting Standards Codification (“ASC”) 852 - Reorganizations (“ASC 852”) in preparing the consolidated financial statements. ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during 2018 and 2019 related
10


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
to the Chapter 11 Cases, including the write-off of unamortized long-term debt fees and discounts associated with debt classified as liabilities subject to compromise, and professional fees incurred directly as a result of the Chapter 11 Cases are recorded as Reorganization items, net in the Predecessor period.
ASC 852 requires certain additional reporting for financial statements prepared betweenReclassifications
Certain prior period amounts have been reclassified to conform to the bankruptcy filing date2020 presentation. In the first quarter of 2020, in connection with a reorganization of the Company’s management structure after the Separation and the date of emergence from bankruptcy, including:
Reclassification of Debtor pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured, to a separate line item in the Consolidated Balance Sheet called, "Liabilities subject to compromise"; and
Segregation of Reorganization items, net as a separate line in the Consolidated Statement of Comprehensive Loss, included within income from continuing operations.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. During the Chapter 11 Cases,cases, the Company’s abilityCompany reevaluated the classification of certain expenses to continue as a going concern was contingent upon the Company’s ability to successfully implement the Company’s Plan of Reorganization, among other factors.determine whether such expenses should be included within Direct operating expenses, Selling, general & administrative (“SG&A”) expenses or Corporate expenses. As a result, of the effectiveness and implementation of the Plan of Reorganization, there iscertain expenses were reclassified from Corporate expenses to Direct operating or SG&A expenses. In addition, certain expenses were reclassified from SG&A expenses to Direct operating expenses. The reclassifications had no longer substantial doubt aboutimpact on the Company's abilityOperating Income (Loss) or Net Income (Loss). Accordingly, the Company recast the corresponding amounts in the prior period to continue as a going concern.

conform to the current expense classifications. The corresponding current and prior period segment disclosures were recast to reflect the current expense classifications. See Note 10,


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Segment Data.
Restricted Cash 
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts reported in the Consolidated Statements of Cash Flows:
(In thousands)Successor Company
June 30,
2020		December 31,
2019
Cash and cash equivalents$517,684  $400,300  
Restricted cash included in:
  Other current assets11,349  11,318  
Total cash, cash equivalents and restricted cash in the Statement of Cash Flows$529,033  $411,618  
(In thousands)Successor Company  Predecessor Company
 June 30,
2019		  December 31,
2018
Cash and cash equivalents$127,159
  $224,037
Restricted cash included in:    
  Other current assets11,591
  3,428
Total cash, cash equivalents and restricted cash in the Statement of Cash Flows(1)
$138,750
  $227,465
Certain Relationships and Related Party Transactions
(1) The Predecessor Company's Cash and cash equivalents, restricted cash includedFrom time to time, certain companies in other current assets and restricted cash included in other assets as of December 31, 2018which the Company holds minority equity interests, purchase advertising in the table above exclude $202.9 million classified as current and long-term assetsordinary course. None of CCOH.these ordinary course transactions have a material impact on the Company.
New Accounting Pronouncements Recently Adopted
Leases
During the second quarter of 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and finalized amendments to FASB ASC Subtopic 825-15, Financial Instruments-Credit Losses ("ASC 326").  The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.  The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses.  ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate.  Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a write-down.  The Company adopted ASU No. 2016-02, which created ASC 842, Leases, and all subsequent ASUs relating to this Topic, as of January 1, 2019 (collectively, "ASC 842"). This new lease accounting standard, which supersedes previous lease accountingthe updated guidance under U.S. GAAP, results in significant changes to the balance sheets of lessees, most significantly by requiring the recognition of a right-of-use ("ROU") asset and lease liability by lessees for those leases classified as operating leases. Lessor accounting is also updated to align with certain changes in the lessee model and the revenue recognition standard ("ASC Topic 606"), which was adopted in 2018.
The Company applied the transition provisions of this standard at January 1, 2019 following the optional transition method provided by ASU No. 2018-11; consequently, the consolidated financial statements and notes to the consolidated financial statements for periods before the date of adoption continue to be presented in accordance with ASC Topic 840. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to not reassess whether expired or existing contracts are or contain leases and to carry forward the historical lease classification for those leases that commenced prior to the date of adoption.
Upon adoption of ASC 842, prepaid and deferred rent balances, which were historically presented separately, were combined and presented net within the ROU asset. Additionally, deferred gains related to previous transactions that were historically accounted for as sale and operating leasebacks in accordance with ASC Topic 840 were eliminated and recognized as a cumulative-effect adjustment to equity, resulting in an increase to equity, net of tax, of $128.9 million. Under ASC Topic 840, such gains were recognized ratably over the lease term as a credit to operating lease expense, and operating lease expense for the three and six months ended June 30, 2018 included credits of $1.3 million and $2.6 million, respectively, for the amortization of these gains, which were not recognized in the Period from May 2, 2019 through June 30, 2019 (Successor), the Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor).
Adoption of the new standard had a material impact on our consolidated balance sheets, but it did not have a material impact on our other consolidated financial statements. Additionally, the standard requires disclosures to meet the objective of enabling users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. Refer to Note 5, Revenue, and Note 6, Leases, for more information.
Intangible Assets and Goodwill
During the first quarter of 2017,2020 utilizing the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350). This update eliminatedmodified retrospective approach, which resulted in the requirement to calculaterecognition of estimated credit loss reserves against certain available-for-sale debt securities from third-parties held by the implied fair value of goodwill to measure a goodwill impairment charge. Entities are required to record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The standard is effective for annual and any interim impairment tests performed for periods beginning after December 15, 2019. The CompanyCompany.

11




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Upon adoption, the Company recognized a $1.5 million cumulative-effect adjustment to opening retained earnings to reflect expected credit losses in relation to notes receivable held by the Company. In addition, the Company evaluated the potential impact of the COVID-19 pandemic on the collectability of its notes receivable from third-parties. To develop an estimate of the present value of expected cash flows of notes receivable, the Company used a probability-weighted discounted cash flow model. As a result of this analysis, the Company recognized an additional credit loss reserve against available-for-sale debt securities of $5.6 million, which was recognized within Loss on investments, net in the Company's Statement of Comprehensive Loss for the six months ended June 30, 2020. The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses
early adopted the proposed guidance under ASU 2017-04 beginning on January 1, 2019 on a prospective basis. The implementation of ASU 2017-04 did not have a material impact on our consolidated financial statements and related disclosures.
During the third quarter of 2018, theThe FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer'sNo. 2019-12, Simplifying the Accounting for Implementation Costs IncurredIncome Taxes (Topic 740). The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in a Cloud Computing Arrangement that is a Service Contract. This update requires that a customeran interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences.  It also clarifies and simplifies other aspects of the accounting for income taxes.  For public companies, the amendments in a cloud computing arrangement that is a service contract follow the internal use software guidance in Accounting Standards Codification (ASC) 350-402 to determine which implementation costs to capitalize as assets. The standard isthis ASU are effective for fiscal years beginning after December 15, 2019.2020 and interim periods within those fiscal years.  Early adoption is permitted in interim or annual periods with any adjustments reflected as of the beginning of the annual period that includes that interim period.  Additionally, entities that elect early adoption must adopt all the amendments in the same period.  Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings.  The Company early adopted the proposed guidance under ASU 2018-15 beginning on January 1, 2019 on a prospective basis. The implementation of ASU 2018-15this standard, which did not have a materialsignificant impact on our consolidated financial statementsposition, results of operations or cash flows.

New Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides temporary optional expedients and related disclosures.

NOTE 2 - EMERGENCE FROM VOLUNTARY REORGANIZATION UNDER CHAPTER 11 PROCEEDINGS
Plan of Reorganization
As described in Note 1,exceptions to accounting guidance on March 14, 2018, the Companycontract modifications and the other Debtors filed the Chapter 11 Cases and on April 28, 2018, the Company and the other Debtors filed a plan of reorganization, which was subsequently amendedhedge accounting to ease entities’ financial reporting burdens as the Plan of Reorganizationmarket transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The guidance was confirmed on January 22, 2019.effective upon issuance and generally can be applied through December 31, 2022. The Debtors then emerged from bankruptcy upon effectiveness of the Plan of Reorganization on May 1, 2019 (the “Effective Date”). Capitalized terms not defined in this report are defined in the Plan of Reorganization.
On or following the Effective Date and pursuant to the Plan of Reorganization, the following occurred:
▪Clear Channel Outdoor Holdings, Inc. (“CCOH”) was separated from, and ceased to be controlled by iHeartCommunications and its subsidiaries.
▪The existing indebtedness of iHeartCommunications of approximately $16 billion was discharged, the Company entered into the Term Loan Facility ($3,500 million) and issued Senior Secured Notes ($800 million) and Senior Unsecured Notes ($1,450 million), collectively the “Successor Emergence Debt.”
▪The Company adopted an amended and restated certificate of incorporation and bylaws.
▪Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were canceled, and on the Effective Date, reorganized iHeartMedia issued an aggregate of 56,861,941 shares of iHeartMedia Class A common stock, 6,947,567 shares of Class B common stock and special warrants to purchase 81,453,648 shares of Class A common stock or Class B common stock were issued to holders of claims pursuant to the Plan of Reorganization.
▪The following classes of claims received the Successor Emergence Debt and 99.1% of the new equity, as defined in the Plan of Reorganization:
▪Secured Term Loan / 2019 PGN Claims (Class 4)
▪Secured Non-9.0% PGN Due 2019 Claims Other Than Exchange 11.25% PGN Claims (Class 5A)
▪Secured Exchange 11.25% PGN Claims (Class 5B)
▪iHC 2021 / Legacy Notes Claims (Class 6)
▪Guarantor Funded Debt against other Guarantor Debtors Other than CCH and TTWN (Class 7)
▪The holders of the Guarantor Funded Debt Unsecured Claims Against CCH (Class 7F) received their Pro Rata share of 100 percent of the CCOH Interests held by the Debtors and CC Finco, LLC and Broader Media, LLC. Refer to the discussion below regarding the Separation Transaction.
▪Settled the following classes of claims in cash:
–General Unsecured Claims Against Non-Obligor Debtors (Class 7A); paid in full

12


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

–General Unsecured Claims Against TTWN Debtors (Class 7B); paid in full
–iHC Unsecured Claims (Class 7D); paid 14.44% of allowed claim
–Guarantor General Unsecured Claims (Class 7G); paid minimum of 45% and maximum of 55% of allowed claim
▪The CCOH Due From Claims (Class 8) represent the negotiated claim between iHeartMedia and CCOH, which was settled in cash on the date of emergence at 14.44%.
▪The Predecessor Company’s common stockholders (Class 9) received their pro rata share of 1% of the new common stock; provided that 0.1% of the new common stock that otherwise would have been distributed to the Company's former sponsors was instead distributed to Holders Legacy Notes Claims.
▪The Company entered into a new $450.0 million ABL Facility, which was undrawn at emergence.
▪The Company funded the Guarantor General Unsecured Recovery Cash Pool for $17.5 million in order to settle the Class 7G General Unsecured Claims.
▪The Company funded the Professional Fee Escrow Account.
▪On the Effective Date, the iHeartMedia, Inc. 2019 Equity Incentive Plan (the “Post-Emergence Equity Plan”) became effective. The Post-Emergence Equity Plan allows the Company to grant stock options and restricted stock units representing up to 12,770,387 shares of Class A common stock for key members of management and service providers and up to 1,596,298 for non-employee members of the board of directors. The amounts of Class A common stock reserved under the Post-Emergence Equity Plan were equal to 8% and 1%, respectively, of the Company’s fully-diluted and distributed shares of Class A common stock as of the Effective Date.
In addition, as part of the Separation, iHeartCommunications and CCOH consummated the following transactions:

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

▪iHeartCommunications, iHeartMedia, iHeartMedia Management Services, Inc. and CCOH entered into a transition services agreement (the “Transition Services Agreement”) pursuant to which, the Company or its subsidiaries will provide administrative services historically provided to CCOH by iHeartCommunications for a period of one year after the Effective Date, which may be extended under certain circumstances;

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

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

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

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

▪iHeart Operations, Inc. issued $60.0 million in preferred stock to a third party for cash (see Note 8 - Long-term Debt).



13


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

As set forth in the Plan of Reorganizationoperations and the Disclosure Statement, the enterprise value of the Successor Company was estimated to be between $8.0 billion and $9.5 billion. Based on the estimates and assumptions discussed below, the Company estimated the enterprise value to be $8.75 billion, which is the mid-point of the range of enterprise value.
Management estimated the enterprise value of the Successor Company utilizing the selected publicly traded companies analysis approach, the discounted cash flow analysis (“DCF”) approach and the selected transactions analysis approach. The use of each approach provides corroboration for the other approaches. To estimate enterprise value utilizing the selected publicly traded companies analysis method, management applied valuation multiples, derived from the operating data of publicly-traded benchmark companies to the same operating data of the Company. The selected publicly traded companies analysis identified a group of comparable companies giving consideration to lines of business and markets served, size and geography. The valuation multiples were derived based on historical and projected financial measures of revenue and earnings before interest, taxes, depreciation and amortization and applied to projected operating data of the Company.
To estimate enterprise value utilizing the discounted cash flow method, management established an estimate of future cash flows for the period 2019 to 2022 with a terminal value and discounted the estimated future cash flows to present value. The expected cash flows for the period 2019 to 2022 with a terminal value were based upon certain financial projections and assumptions provided to the Bankruptcy Court. The expected cash flows for the period 2019 to 2022 were derived from earnings forecasts and assumptions regarding growth and margin projections, as applicable. A terminal value was included, calculated using the terminal multiple method, which estimates a range of values at which the Successor Company will be valued at the end of the Projection Period based on applying a terminal multiple to final year OIBDAN, which is defined as consolidated operating income adjusted to exclude non-cash compensation expenses included within corporate expenses, as well as Depreciation and amortization, Impairment charges and Other operating income (expense), net.
To estimate enterprise value utilizing the selected transactions analysis, management applied valuation multiples derived from an analysis of consideration paid and net debt assumed from publicly disclosed merger or acquisition transactions to the broadcast cash flows of the Successor Company. The selected transactions analysis identified companies and assets involved in publicly disclosed merger and acquisition transactions for which the targets had operating and financial characteristics comparable in certain respects to the Successor Company.

14


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table reconciles the enterprise value per the Plan of Reorganization to the implied value (for fresh start accounting purposes) of the Successor common stock as of the Effective Date:
(In thousands, except per share data) 
Enterprise Value$8,750,000
Plus: 
  Cash and cash equivalents63,142
Less: 
  Debt issued upon emergence(5,748,178)
  Finance leases and short-term notes(61,939)
  Mandatorily Redeemable Preferred Stock(60,000)
  Changes in deferred tax liabilities(1)
(163,910)
  Noncontrolling interest(8,943)
  Implied value of Successor common stock$2,770,172
  
Shares issued upon emergence (2)
145,263
Per share value$19.07

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

The reconciliation of the Company’s enterprise value to reorganization value as of the Effective Date is as follows:

(In thousands) 
Enterprise Value$8,750,000
Plus: 
  Cash and cash equivalents63,142
  Current liabilities (excluding Current portion of long-term debt)426,944
  Deferred tax liability596,850
  Other long-term liabilities54,393
 Noncurrent Operating lease obligations818,879
Reorganization Value$10,710,208


Consolidated Balance Sheet

The adjustments set forth in the following consolidated balance sheet as of May 1, 2019 reflect the effect of the Separation (reflected in the column "Separation of CCOH Adjustments"), the consummation of the transactions contemplated by the Plan of Reorganization that are incremental to the Separation (reflected in the column "Reorganization Adjustments") and the fair value adjustments as a result of applying fresh start accounting (reflected in the column "Fresh Start Adjustments"). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities, as well as significant assumptions or inputs.

15


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(In thousands)  Separation of CCOH Adjustments Reorganization Adjustments Fresh Start Adjustments  
 Predecessor (A) (B) (C) Successor
CURRENT ASSETS         
Cash and cash equivalents$175,811
 $—
 $(112,669)(1)$—
 $63,142
Accounts receivable, net748,326
 —
 —
 (10,810)(1)737,516
Prepaid expenses127,098
 —
 —
 (24,642)(2)102,456
Other current assets22,708
 —
 8,125
(2)(1,668)(3)29,165
Current assets of discontinued operations1,000,753
 (1,000,753)(1)—
 —
  
Total Current Assets2,074,696
 (1,000,753) (104,544) (37,120) 932,279
PROPERTY, PLANT AND EQUIPMENT         
Property, plant and equipment, net499,001
 —
 —
 333,991
(4)832,992
INTANGIBLE ASSETS AND GOODWILL         
Indefinite-lived intangibles - licenses2,326,626
 —
 —
 (44,906)(5)2,281,720
Other intangibles, net104,516
 —
 —
 2,240,890
(5)2,345,406
Goodwill3,415,492
 —
 —
 (92,127)(5)3,323,365
OTHER ASSETS         
Operating lease right-of-use assets355,826
 —
 —
 554,278
(6)910,104
Other assets139,409
 —
 (384)(3)(54,683)(2)84,342
Long-term assets of discontinued operations5,351,513
 (5,351,513)(1)—
 —
 —
Total Assets$14,267,079
 $(6,352,266) $(104,928) $2,900,323
 $10,710,208
CURRENT LIABILITIES 
        
Accounts payable$41,847
 $—
 $3,061
(4)$—
 $44,908
Current operating lease liabilities470
 —
 31,845
(7)39,092
(6)71,407
Accrued expenses208,885
 —
 (32,250)(5)2,328
(9)178,963
Accrued interest462
 —
 (462)(6)—
 —
Deferred revenue128,452
 —
 —
 3,214
(7)131,666
Current portion of long-term debt46,618
 —
 6,529
(7)40
(6)53,187
Current liabilities of discontinued operations999,778
 (999,778)(1)—
 —
 —
Total Current Liabilities1,426,512
 (999,778) 8,723
 44,674
 480,131
Long-term debt—
 —
 5,758,516
(8)(1,586)(8)5,756,930
Series A Mandatorily Redeemable Preferred Stock—
 —
 60,000
(9)—
 60,000
Noncurrent operating lease liabilities828
 —
 398,154
(7)419,897
(6)818,879
Deferred income taxes—
 —
 575,341
(10)185,419
(10)760,760
Other long-term liabilities121,081
 —
 (64,524)(11)(2,164)(7)54,393
Liabilities subject to compromise16,770,266
 —
 (16,770,266)(7)—
 —
Long-term liabilities of discontinued operations7,472,633
 (7,472,633)(1)—
 —
 —
Commitments and contingent liabilities (Note 9)        

STOCKHOLDERS’ EQUITY (DEFICIT)         
Noncontrolling interest13,584
 (13,199)(1)—
 8,558
(11)8,943
Predecessor common stock92
 —
 (92)(12)—
 —
Successor Class A Common Stock—
 —
 57
(13)—
 57
Successor Class B Common Stock—
 —
 7
(13)—
 7
Predecessor additional paid-in capital2,075,130
 —
 (2,075,130)(12)—
 —
Successor additional paid-in capital—
   2,770,108
(13)—
 2,770,108
Accumulated deficit(13,288,497) 1,825,531
(1)9,231,616
(14)2,231,350
(12)—
Accumulated other comprehensive loss(321,988) 307,813
(1)—
 14,175
(12)—
Cost of share held in treasury(2,562) —
 2,562
(12)—
 —
Total Stockholders' Equity (Deficit)(11,524,241) 2,120,145
 9,929,128
 2,254,083
 2,779,115
Total Liabilities and Stockholders' Equity (Deficit)$14,267,079
 $(6,352,266) $(104,928) $2,900,323
 $10,710,208


16


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

A. Separation of CCOH Adjustments
(1) On May 1, 2019, as part of the Separation, the outstanding shares of both classes of CCOH common stock were consolidated such that CCH held all of the outstanding CCOH Class A common stock that was held by subsidiaries of iHeartCommunications, through a series of share distributions by other subsidiaries that held CCOH common stock and a conversion of CCOH Class B common stock that CCH held to CCOH Class A common stock. Prior to the Separation, iHeartCommunications owned approximately 89.1% of the economic rights and approximately 99% of the voting rights of CCOH. To complete the Separation, CCOH merged with and into CCH, with CCH surviving the merger and changing its name to Clear Channel Outdoor Holdings, Inc. (“New CCOH”), and pre-merger shares of CCOH Class A common stock (other than shares of CCOH Class A common stock held by CCH or any direct or indirect wholly-owned subsidiary of CCH) were converted into an equal number of shares of post-merger common stock of New CCOH. iHeartCommunications transferred the post-merger common stock of New CCOH it held to Claimholders pursuant to the Plan of Reorganization but retained 31,269,762 shares. Such retained shares were distributed to two affiliated Claimholders on July 18, 2019. Upon completion of the merger and Separation New CCOH became an independent public company. Upon distribution of the shares held by iHeartCommunications, the Company does not hold any ownership interest in CCOH.

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

B. Reorganization Adjustments
In accordance with the Plan of Reorganization, the following adjustments were made:
(1)The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan:
(In thousands)  
Cash at May 1, 2019 (excluding discontinued operations)$175,811
 
Sources:  
  Proceeds from issuance of Mandatorily Redeemable Preferred Stock$60,000
 
  Release of restricted cash from other assets into cash3,428
 
Total sources of cash$63,428
 
Uses:  
  Payment of Mandatorily Redeemable Preferred Stock issuance costs$(1,513) 
  Payment of New Term Loan Facility to settle certain creditor claims(1,822) 
  Payments for Emergence debt issuance costs(7,213) 
  Funding of the Guarantor General Unsecured Recovery Cash Pool(17,500) 
  Payments for fully secured claims and general unsecured claims(1,990) 
  Payment of contract cure amounts(15,763) 
  Payment of consenting stakeholder fees(4,000) 
  Payment of professional fees(85,091)(a)
  Funding of Professional Fees Escrow Account(41,205)(a)
Total uses of cash$(176,097) 
Net uses of cash$(112,669) 
Cash upon emergence$63,142
 
(a) Approximately $30.5 million of professional fees paid at emergence were accrued as of May 1, 2019. These payments also reflect both the payment of Success fees for $86.1 million and other professionals paid directly at emergence.

17


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


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


18


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

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

(5)
Reflects the reduction of accrued expenses related to the $21.2 million of professional fees paid directly, $9.3 million of professional fees paid through the Professional Fee Escrow Account and other accrued expense items. Additionally, the Company reinstated accrued expenses included within Liabilities subject to compromise to be satisfied in the ordinary course of business.

(In thousands) 
Reinstatement of accrued expenses$551
Payment of professional fees(21,177)
Payment of professional fees through the escrow account(9,260)
Impact on other accrued expenses(2,364)
  Net impact on Accrued expenses$(32,250)

(6)Reflects the write-off of the DIP facility accrued interest associated with the DIP facility fees paid at emergence.
(7)As part of the Plan of Reorganization, the Bankruptcy Court approved the settlement of claims reported within Liabilities subject to compromise in the Company's Consolidated balance sheet at their respective allowed claim amounts.

The table below indicates the disposition of Liabilities subject to compromise:

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


19


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(a) Includes finance lease liabilities and other debt of $6.6 million and $10.3 million classified as current and long-term debt, respectively.

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

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

The remaining $10.3 million is related to the reinstatement of the Long-term portion of finance leases and other debt as described above.

(In thousands)Term Interest Rate Amount
Term Loan Facility7 years Libor + 4.00% $3,500,000
Senior Secured Notes7 years 6.375% 800,000
Senior Unsecured Notes8 years 8.375% 1,450,000
Asset-based Revolving Credit Facility4 years 
Varies(a)
 —
  Total Long-Term Debt - Exit Financing    $5,750,000
Less:     
Payment of Term Loan Facility to settle certain creditor claims    (1,822)
Net proceeds from exit financing at emergence    $5,748,178
Long-term portion of finance leases and other debt reinstated    10,338
  Net impact on Long-term debt    $5,758,516

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

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

(10) Reflects the reinstatement of deferred tax liabilities included within Liabilities subject to compromise of $596.9 million, offset by an adjustment to net deferred tax liabilities of $21.5 million. Upon emergence from bankruptcy proceedings under Chapter 11 of the Bankruptcy Code, iHeartMedia’s federal and state net operating loss carryforwards are expected to be reduced in accordance with Section 108 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), due to cancellation of debt income, which is excluded from U.S. federal taxable income. The estimated remaining deferred tax assets attributed federal and state net operating loss carryforwards upon emergence totaled $114.9 million. The adjustments reflect a reductionmaterial.


20


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

in deferred tax assets for federal and state net operating loss carryforwards as described above, a reduction in deferred tax liabilities attributed to long-term debt as a result of the restructuring of our indebtedness upon Emergence and a reduction in valuation allowance.

(11) Reflects the reinstatement of Other long-term liabilities from Liabilities subject to compromise, offset by the reduction of liabilities for unrecognized tax benefits classified as Other long-term liabilities that were discharged and effectively settled upon Emergence.
(In thousands) 
Reinstatement of long-term asset retirement obligations$3,527
Reinstatement of non-qualified pension plan10,991
Reduction of liabilities for unrecognized tax benefits(79,042)
  Net impact to Other long-term liabilities$(64,524)

(12) Pursuant to the terms of the Plan of Reorganization, as of the Effective Date, all Predecessor common stock and stock-based compensation awards were canceled without any distribution. As a result of the cancellation, the Company recognized $1.5 million in compensation expense related to the unrecognized portion of share-based compensation as of the Effective Date.

(13) Reflects the issuance of Successor Company equity, including the issuance of 56,861,941 shares of iHeartMedia Class A common stock, 6,947,567 shares of Class B common stock and special warrants to purchase 81,453,648 shares of Class A common stock or Class B common stock in exchange for claims against or interests in iHeartMedia pursuant to the Plan of Reorganization.

(In thousands) 
Equity issued to Class 9 Claim holders (prior equity holders)$27,701
Equity issued to creditors in settlement of Liabilities subject to compromise2,742,471
  Total Equity issued at emergence$2,770,172

(14) The table reflects the cumulative impact of the reorganization adjustments discussed above:

(In thousands)

  
Gain on settlement of Liabilities subject to compromise$7,192,374
 
Payment of professional fees upon emergence(11,509) 
Payment of success fees upon emergence(86,065) 
Cancellation of unvested stock-based compensation awards(1,530) 
Cancellation of Predecessor prepaid director and officer insurance policy(2,331) 
Write-off of debt issuance and Mandatorily Redeemable Preferred Stock costs incurred at Emergence(8,726) 
  Total Reorganization items, net$7,082,213
 
   
Income tax benefit$102,914
 
Cancellation of Predecessor Equity2,074,190
(a)
Issuance of Successor Equity to prior equity holders(27,701) 
Net Impact on Accumulated deficit$9,231,616
 

(a) This value is reflective of Predecessor common stock, Additional paid in capital and the recognition of $1.5 million in compensation expense related to the unrecognized portion of share-based compensation, less Treasury stock.


21


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

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

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

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

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

22


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


The following table sets forth estimated fair values of the components of these intangible assets and their estimated useful lives:

(In thousands)Estimated Fair Value Estimated Useful Life
     FCC licenses$2,281,720
(a)Indefinite
     Customer / advertiser relationships1,643,670
(b)5 - 15 years
     Talent contracts373,000
(b)2 - 10 years
     Trademarks and tradenames321,928
(b)7 - 15 years
     Other6,808
(c) 
Total intangible assets upon emergence4,627,126
  
Elimination of historical acquired intangible assets$(2,431,142)  
Fresh start adjustment to acquired intangible assets2,195,984
  
(a) FCC licenses. The fair value of the indefinite-lived FCC licenses was determined primarily using the direct valuation method of the Income Approach and, for smaller markets a combination of the Income approach and the Market Approach. The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its FCC licenses.

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

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

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

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

For purposes of estimating the fair values of customer/advertiser relationships and talent contracts, the Company primarily utilized the Income Approach (specifically, the multi-period excess earnings method, or MPEEM) to

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

For purposes of estimating the fair value of trademarks and tradenames, the Company primarily used the Royalty Savings Method, a variation of the Income approach. Estimated royalty rates were determined for each of the trademarks and tradenames considering the relative contribution to the Company’s overall profitability as well as available public information regarding market royalty rates for similar assets. The selected royalty rates were applied to the revenue generated by the trademarks and tradenames to determine the amount of royalty payments saved as a result of owning these assets. The forecasted cash flows expected to be generated as a result of the royalty savings were discounted to present value utilizing a discount rate considering overall business risks and risks associated with the asset being valued. The historical book values of talent contracts, trademarks and tradenames and other intangible assets as of May 1, 2019 were subtracted from the fair values determined as described above to determine the adjustments as follows:

Customer/advertiser relationships$1,604.1
million increase in value
Talent contracts361.6
million increase in value
Trademarks and tradenames274.4
million increase in value
Other0.8
million increase in value
Total fair value adjustment$2,240.9
million increase in value

(c) Included within other intangible assets are permanent easements, which have an indefinite useful life. All other intangible assets are amortized over the respective lives of the agreements, or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows.

The following table sets forth the adjustments to goodwill:

(In thousands) 
Reorganization value$10,710,208
Less: Fair value of assets (excluding goodwill)(7,386,843)
Total goodwill upon emergence3,323,365
Elimination of historical goodwill(3,415,492)
Fresh start adjustment to goodwill$(92,127)


(6)The operating lease obligation as of May 1, 2019 had been calculated using an incremental borrowing rate applicable to the Company while it was a debtor-in-possession before its emergence from bankruptcy. Upon application of fresh start accounting, the lease obligation was recalculated using the incremental borrowing rate applicable to the Company after emergence from bankruptcy and commensurate to its new capital structure. The incremental borrowing rate used decreased from 12.44% as of March 31, 2019 to 6.54% as of June 30, 2019. As a result of this decrease, the Company's Operating lease liabilities and

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

corresponding Operating lease right-of-use assets increased by $541.2 million to reflect the higher balances resulting from the application of a lower incremental borrowing rate. The Operating lease right-of-use-assets were further adjusted to reflect the resetting of the Company's straight-line lease calculation. In addition, the Company increased the Operating lease right-of-use assets to recognize $13.1 million related to the favorable lease contracts.

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

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

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

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

(11) Reflects the adjustment as of May 1, 2019 to state the noncontrolling interest balance at estimated fair value.

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(12) The table below reflects the cumulative impact of the fresh start adjustments as discussed above:

(In thousands) 
Fresh start adjustment to Accounts receivable, net$(10,810)
Fresh start adjustment to Other current assets(1,668)
Fresh start adjustment to Prepaid expenses(24,642)
Fresh start adjustment to Property, plant and equipment, net333,991
Fresh start adjustment to Intangible assets2,195,984
Fresh start adjustment to Goodwill(92,127)
Fresh start adjustment to Operating lease right-of-use assets554,278
Fresh start adjustment to Other assets(54,683)
Fresh start adjustment to Accrued expenses(2,328)
Fresh start adjustment to Deferred revenue(3,214)
Fresh start adjustment to Debt1,546
Fresh start adjustment to Operating lease obligations(458,989)
Fresh start adjustment to Other long-term liabilities2,164
Fresh start adjustment to Noncontrolling interest(8,558)
  Total Fresh Start Adjustments impacting Reorganization items, net$2,430,944
Reset of Accumulated other comprehensive income(14,175)
Income tax expense(185,419)
  Net impact to Accumulated deficit$2,231,350

Reorganization Items, Net

The tables below present the Reorganization items incurred and cash paid for Reorganization items as a result of the Chapter 11 Cases during the periods presented:

(In thousands)Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30,
 2019  2019 2018
Write-off of deferred loans costs$—
  $—
 $(12,409)
Write-off of original issue discount—
  —
 —
Debtor-in-possession refinancing costs—
  —
 (10,546)
Professional fees and other bankruptcy related costs—
  (121,374) (45,785)
Net gain on settlement of Liabilities subject to compromise—
  7,192,379
 —
Impact of fresh start adjustments—
  2,430,944
 —
Other items, net—
  (4,005) —
Reorganization items, net$—
  $9,497,944
 $(68,740)
       
Cash payments for Reorganization items, net$13,049
  $149,346
 $5,723


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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(In thousands)Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30,
 2019  2019 2018
Write-off of deferred loans costs$—
  $—
 $(67,079)
Write-off of original issue discount—
  —
 (131,100)
Debtor-in-possession refinancing costs—
  —
 (10,546)
Professional fees and other bankruptcy related costs—
  (157,487) (52,070)
Net gain on settlement of Liabilities subject to compromise—
  7,192,374
 —
Impact of fresh start adjustments—
  2,430,944
 —
Other items, net—
  (4,005) —
Reorganization items, net$—
  $9,461,826
 $(260,795)
       
Cash payments for Reorganization items, net$13,049
  $183,291
 $5,875

As of June 30, 2019, $6.6 million of Reorganization items, net were unpaid and accrued in Accounts Payable and Accrued Expenses in the accompanying Consolidated Balance Sheet. As of June 30, 2018, $50.1 million of professional fees were unpaid and accrued in Accounts Payable and Accrued Expenses in the accompanying Consolidated Balance Sheet.

NOTE 42 - DISCONTINUED OPERATIONS
Discontinued operations relate to our domestic and international outdoor advertising businesses and were previously reported as the Americas outdoor and International outdoor segments prior to the Separation. Assets, liabilities, revenue,Revenue, expenses and cash flows for these businesses are separately reported as assets, liabilities, revenue, expensesIncome from discontinued operations, net of tax and cash flows from discontinued operations in the Company's financial statements for all periods presented.



27
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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Financial Information for Discontinued Operations


Income Statement Information


The following shows the revenue and income (loss) from discontinued operations and gain (loss) on disposal of the Predecessor Company's discontinued operations for the periods presented:
(In thousands)Predecessor Company
Period from April 1, 2019 through May 1,Period from January 1, 2019 through May 1,
20192019
Revenue$217,450  $804,566  
Loss from discontinued operations before income taxes$(21,684) $(133,475) 
  Income tax benefit (expense)50,830  (6,933) 
Income (loss) from discontinued operations, net of taxes$29,146  $(140,408) 
Gain on disposals before income taxes$1,825,531  $1,825,531  
  Income tax expense—  —  
Gain on disposals, net of taxes$1,825,531  $1,825,531  
Income from discontinued operations, net of taxes$1,854,677  $1,685,123  
(In thousands)Predecessor Company
 Period from April 1, 2019 through May 1, Three Months Ended June 30, Period from January 1, 2019 through May 1, Six Months Ended June 30,
 2019 2018 2019 2018
Revenue$217,450
 $711,980
 $804,566
 $1,310,378
        
Loss from discontinued operations before income taxes$(21,684) $(28,476) $(133,475) $(107,357)
  Income tax benefit (expense)50,830
 (4,753) (6,933) (50,120)
Income (loss) from discontinued operations, net of taxes$29,146
 $(33,229) $(140,408) $(157,477)
        
Gain (loss) on disposals before income taxes$1,825,531
 $—
 $1,825,531
 $—
  Income tax benefit (expense)—
 —
 —
 —
Gain (loss) on disposals, net of taxes$1,825,531
 $—
 $1,825,531
 $—
        
Income (loss) from discontinued operations, net of taxes$1,854,677
 $(33,229) $1,685,123
 $(157,477)


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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Balance Sheet Information

The following table shows the classes of assets and liabilities classified as discontinued operations for the Predecessor Company as of December 31, 2018:

(In thousands)Predecessor Company
 December 31,
2018
CURRENT ASSETS 
Cash and cash equivalents$182,456
Accounts receivable706,309
Prepaid expenses95,734
Other current assets31,301
Current assets of discontinued operations$1,015,800
  
LONG-TERM ASSETS 
Structures, net$1,053,016
Property, plant and equipment, net235,922
Indefinite-lived intangibles - permits971,163
Other intangibles, net252,862
Goodwill706,003
Other assets132,504
Long-term assets of discontinued operations$3,351,470
  
CURRENT LIABILITIES 
Accounts payable$113,714
Accrued expenses528,482
Accrued interest2,341
Deferred income85,052
Current portion of long-term debt227
Current liabilities of discontinued operations$729,816
  
LONG-TERM LIABILITIES 
Long-term debt$5,277,108
Deferred income taxes335,015
Other long-term liabilities260,150
Long-term liabilities of discontinued operations$5,872,273

In connection with the Separation, the Company and its subsidiaries entered into the agreements described below.
Transition Services Agreement
On the Effective Date, the Company, iHeartMediaiHM Management Services, Inc. (“iHM Management Services”), iHeartCommunications and CCOH entered into a transition services agreement (the “Transition Services Agreement”), pursuant to which iHM Management Services has agreed to provide, or cause the Company iHeartCommunications, iHeart Operations or any member of the iHeart Groupand its subsidiaries to provide CCOH with certain administrative and support services and other assistance which CCOH will utilize in the conduct of its business as such business was conducted prior to the Separation, for one year from the Effective Date (subject to certain rights of CCOH to extend up to one additional year, as described below). The transition services may include, among other things, (a) treasury, payroll and other financial related services, (b) certain executive officer services, (c) human resources and employee benefits, (d) legal and related services, (e) information systems, network and related services, (f) investment services and (g) procurement and sourcing support.

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The charges for the transition services are generally consistent with the Corporate Services Agreement, dated as of November 10, 2005, by and between iHeartMedia Management Services and CCOH (the “Corporate Services Agreement”), which governed the provision of certain services by the iHeart Group to the Outdoor Group prior to the Separation. The allocation of cost is based on various measures depending on the service provided, which measures include relative revenue, employee headcount, number of users of a service or other factors. As of June 30, 2020, most of these services have been successfully transitioned to CCOH. CCOH may request an extensionhas requested extensions of the term for allcertain individual services, or individual servicesprimarily related to information systems, for one-month periods forthrough August 31, 2020and may request further one-month extensions of such services up to an additional 12 months, and the price for transition services provided during such extended term will be increased for any service other than those identified in the schedules to the Transition Services Agreement as an “IT Service” or any other service the use and enjoyment of which requires the use of another IT Service.May 1, 2021.
CCOH may terminate the Transition Services Agreement with respect to all or any individual service, in whole or in part, upon 30 days’ prior written notice, provided that any co-dependent services must be terminated concurrently.
New Tax Matters Agreement
OnIn connection with the Effective Date,Separation, the Company entered into a new tax matters agreement (the “Newthe New Tax Matters Agreement”)Agreement by and among the Company,iHeartMedia, iHeartCommunications, iHeart Operations, Inc., CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of the CompanyiHeartMedia and its subsidiaries, on the one hand, and the Outdoor Group,CCOH and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.
The New Tax Matters Agreement requires that the CompanyiHeartMedia and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against (i) any taxes other than transfer taxes or indirect gains taxes imposed on the Company or any of its subsidiaries (other than CCOH and its subsidiaries) in connection with the Separation, (ii) any transfer taxes and indirect gains taxes arising in connection with the Separation, and (iii) fifty percent of the amount by which the amount of taxes (other than transfer taxes or indirect gains taxes) imposed on CCOH or any of its subsidiaries in connection with the Separation that are paidcertain tax claims related to the applicable taxing authority on or before the third anniversary of the separation of CCOH exceeds $5 million, provided that, the obligations of the Company and iHeartCommunications to indemnify CCOH and its subsidiaries with respect taxes (other than transfer taxes or indirect gains taxes) imposed on CCOH or any of its subsidiaries in connection with the Separation will not exceed $15 million.Separation. In addition, if the Company or its subsidiaries use certain tax attributes of CCOH and its subsidiaries (including net operating losses, foreign tax credits and other credits) and such use results in a decrease in the tax liability of the Company or its subsidiaries, then the Company is required to reimburse CCOH for the use of such attributes based on the amount of tax benefit realized. The New Tax Matters Agreement provides that any reduction of the tax attributes of CCOH and its subsidiaries as a result of cancellation of indebtedness income realized in connection with the Chapter 11 Cases is not treated as a use of such attributes (and therefore does not require the Company or iHeartCommunications to reimburse CCOH for such reduction).
The New Tax Matters Agreement also requires that (i) CCOH indemnify the CompanyiHeartMedia for anycertain income taxes paid by the CompanyiHeartMedia on behalf of CCOH and its subsidiaries or, with respect to any income tax return for which CCOH or any of its subsidiaries joins with the Company or any of subsidiaries in filing a consolidated, combined or unitary return, the amount of taxes that would have been incurred by CCOH and its subsidiaries if they had filed a separate return, and (ii) except as described in the preceding paragraph, CCOH indemnify the Company and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against any taxes other than transfer taxes or indirect gains taxes imposed on CCOH or any of its subsidiaries in connection with the Separation.
Any tax liability of CCH attributable to any taxable period ending on or before the date of the completion of the Separation, other than any such tax liability resulting from CCH’s being a successor of CCOH in connection with the merger of CCOH with and into CCOH or arising from the operation of the business of CCOH and its subsidiaries after the merger of CCOH with and into CCH, will not be treated as a liability of CCOH and its subsidiaries for purposes of the New Tax Matters Agreement.


subsidiaries.
30
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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


NOTE 53 – REVENUE
Disaggregation of Revenue
The following table shows revenue streams for the Successor Company for the Period from May 2, 2019periods presented:
Successor Company
(In thousands)AudioAudio and Media ServicesEliminationsConsolidated
Three Months Ended June 30, 2020
Revenue from contracts with customers:
  Broadcast Radio(1)
$244,035  $—  $—  $244,035  
  Digital(2)
93,227  —  —  93,227  
  Networks(3)
96,330  —  —  96,330  
  Sponsorship and Events(4)
14,809  —  —  14,809  
  Audio and Media Services(5)
—  39,251  (1,779) 37,472  
  Other(6)
1,544  —  (168) 1,376  
     Total449,945  39,251  (1,947) 487,249  
Revenue from leases(7)
399  —  —  399  
Revenue, total$450,344  $39,251  $(1,947) $487,648  
Period from May 2, 2019 through June 30, 2019
Revenue from contracts with customers:
  Broadcast Radio(1)
$390,540  $—  $—  $390,540  
  Digital(2)
64,238  —  —  64,238  
  Networks(3)
105,426  —  —  105,426  
  Sponsorship and Events(4)
31,790  —  —  31,790  
  Audio and Media Services(5)
—  40,537  (1,009) 39,528  
  Other(6)
3,957  —  (112) 3,845  
     Total595,951  40,537  (1,121) 635,367  
Revenue from leases(7)
279  —  —  279  
Revenue, total$596,230  $40,537  $(1,121) $635,646  
Six Months Ended June 30, 2020
Revenue from contracts with customers:
  Broadcast Radio(1)
$705,695  $—  $—  $705,695  
  Digital(2)
186,003  —  —  186,003  
  Networks(3)
230,907  —  —  230,907  
  Sponsorship and Events(4)
44,157  —  —  44,157  
  Audio and Media Services(5)
—  99,478  (3,590) 95,888  
  Other(6)
5,103  —  (335) 4,768  
     Total1,171,865  99,478  (3,925) 1,267,418  
Revenue from leases(7)
864  —  —  864  
Revenue, total$1,172,729  $99,478  $(3,925) $1,268,282  

(1)Broadcast Radio revenue is generated through June 30, 2019:the sale of advertising time on the Company’s domestic radio stations.
(2)Digital revenue is generated through the sale of streaming and display advertisements on digital platforms, subscriptions to iHeartRadio streaming services, podcasting and the dissemination of other digital content.
(3)Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies.
(4)Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent.
14
Successor Company
(In thousands)Audio Audio and Media Services Eliminations Consolidated
Period from May 2, 2019 through June 30, 2019
Revenue from contracts with customers:       
  Broadcast Radio(1)
$390,540
 $—
 $—
 $390,540
  Digital(2)
64,238
 —
 (132) 64,106
  Networks(3)
105,426
 —
 —
 105,426
 Sponsorship and Events(4)
31,790
 —
 —
 31,790
  Audio and Media Services(5)
—
 40,537
 (989) 39,548
  Other(6)
3,957
 —
 —
 3,957
     Total595,951
 40,537
 (1,121) 635,367
Revenue from leases(7)
279
 —
 —
 279
Revenue, total$596,230
 $40,537
 $(1,121) $635,646

(1)
Broadcast Radio revenue is generated through the sale of advertising time on the Company’s domestic radio stations.
(2)
Digital revenue is generated through the sale of streaming and display advertisements on digital platforms, subscriptions to iHeartRadio streaming services, podcasting and the dissemination of other digital content.
(3)
Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies.
(4)
Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent.
(5)
Audio and media services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media Group and Radio Computing Services (“RCS”) businesses. As a media representation firm, Katz Media Group generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast and webcast software and technology and services to radio stations, television music channels, cable companies, satellite music networks and Internet stations worldwide.
(6)
Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements.
(7)
Revenue from leases is primarily generated by the lease of towers to other media companies, which are all categorized as operating leases.

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(5)Audio and media services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast and webcast software and technology and services to radio stations, television music channels, cable companies, satellite music networks and Internet stations worldwide.
(6)Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements.
(7)Revenue from leases is primarily generated by the lease of towers to other media companies, which are all categorized as operating leases.

The following table shows revenue streams from continuing operations for the Predecessor Company. The presentation of amounts in the Predecessor periodsperiod has been revised to conform to the Successor period presentation.
Predecessor Company
(In thousands)
Audio(1)
Audio and Media Services(1)
EliminationsConsolidated
Period from April 1, 2019 through May 1, 2019
Revenue from contracts with customers:
  Broadcast Radio170,632  $—  $—  $170,632  
  Digital26,840  —  —  26,840  
  Networks50,889  —  —  50,889  
  Sponsorship and Events10,617  —  —  10,617  
  Audio and Media Services—  17,970  (701) 17,269  
  Other1,197  —  (56) 1,141  
     Total260,175  17,970  (757) 277,388  
Revenue from leases286  —  —  286  
Revenue, total$260,461  $17,970  $(757) $277,674  
Period from January 1, 2019 through May 1, 2019
Revenue from contracts with customers:
  Broadcast Radio$657,864  $—  $—  $657,864  
  Digital102,789  —  —  102,789  
  Networks189,088  —  —  189,088  
  Sponsorship and Events50,330  —  —  50,330  
  Audio and Media Services—  69,362  (2,325) 67,037  
  Other5,910  —  (243) 5,667  
     Total1,005,981  69,362  (2,568) 1,072,775  
Revenue from leases696  —  —  696  
Revenue, total$1,006,677  $69,362  $(2,568) $1,073,471  
Predecessor Company
(In thousands)
Audio(1)
 
Audio and Media Services(1)
 Eliminations Consolidated
Period from April 1, 2019 through May 1, 2019
Revenue from contracts with customers:       
  Broadcast Radio$170,632
 $—
 $—
 $170,632
  Digital26,840
 —
 (56) 26,784
  Networks50,889
 —
 —
 50,889
 Sponsorship and Events10,617
 —
 —
 10,617
  Audio and Media Services—
 17,970
 (701) 17,269
  Other1,197
 —
 —
 1,197
     Total260,175
 17,970
 (757) 277,388
Revenue from leases286
 —
 —
 286
Revenue, total$260,461
 $17,970
 $(757) $277,674
        
Three Months Ended June 30, 2018
Revenue from contracts with customers:
  Broadcast Radio$568,968
 $—
 $—
 $568,968
  Digital68,574
 —
 —
 68,574
  Networks146,981
 —
 —
 146,981
 Sponsorship and Events41,256
 —
 —
 41,256
  Audio and Media Services—
 61,417
 (1,601) 59,816
  Other5,537
 —
 —
 5,537
     Total831,316
 61,417
 (1,601) 891,132
Revenue from leases632
 —
 —
 632
Revenue, total$831,948
 $61,417
 $(1,601) $891,764
        
Period from January 1, 2019 through May 1, 2019
Revenue from contracts with customers:       
  Broadcast Radio$657,864
 $—
 $—
 $657,864
  Digital102,789
 —
 (223) 102,566
  Networks189,088
 —
 —
 189,088
 Sponsorship and Events50,330
 —
 —
 50,330
  Audio and Media Services—
 69,362
 (2,345) 67,017
  Other5,910
 —
 —
 5,910
     Total1,005,981
 69,362
 (2,568) 1,072,775
Revenue from leases696
 —
 —
 696
Revenue, total$1,006,677
 $69,362
 $(2,568) $1,073,471
        
Six Months Ended June 30, 2018
Revenue from contracts with customers:
  Broadcast Radio$1,059,111
 $—
 $—
 $1,059,111
  Digital127,941
 —
 —
 127,941
  Networks279,032
 —
 —
 279,032
 Sponsorship and Events79,148
 —
 —
 79,148
  Audio and Media Services—
 110,759
 (3,273) 107,486
  Other10,296
 
 
 10,296
     Total1,555,528
 110,759
 (3,273) 1,663,014
Revenue from leases1,522
 —
 —
 1,522
Revenue, total$1,557,050
 $110,759
 $(3,273) $1,664,536
(1)
Due to a re-evaluation of the Company’s internal segment reporting upon the effectiveness of the Plan of Reorganization, the Company’s RCS business is included in the Audio & Media Services results for all periods presented. See Note 1 for further information.

(1)Due to a re-evaluation of the Company’s internal segment reporting upon the effectiveness of the Plan of Reorganization, the Company’s RCS business is included in the Audio & Media Services results for all periods presented.
32
15




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


Trade and Barter
Trade and barter transactions represent the exchange of advertising spots for merchandise, services, advertising and promotion or other assets in the ordinary course of business. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised to the customer. Trade and barter revenues and expenses from continuing operations, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows:
Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
(In thousands)202020192019
  Trade and barter revenues$19,753  $29,699  $10,349  
  Trade and barter expenses17,075  28,023  8,474  
Successor Company  Predecessor CompanySuccessor CompanyPredecessor Company
Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30,Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
(In thousands)2019  2019 2018(In thousands)202020192019
Trade and barter revenues$29,699
  $10,349
 $35,992
Trade and barter revenues$72,431  $29,699  $65,934  
Trade and barter expenses28,023
  8,474
 31,688
Trade and barter expenses72,073  28,023  58,330  
The Successor Company recognized barter revenue of $0.2 million, $1.9 million and $5.2 million in the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020, respectively, in connection with investments made in companies in exchange for advertising services. The Predecessor Company recognized barter revenue of $0.9 million and $5.9 million in the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019, respectively, in connection with investments made in companies in exchange for advertising services.
 Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30,
(In thousands)2019  2019 2018
  Trade and barter revenues$29,699
  $65,934
 $89,938
  Trade and barter expenses28,023
  58,330
 96,220

33


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


Deferred Revenue
The following tables show the Company’s deferred revenue balance from contracts with customers, excluding discontinued operations:
Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
(In thousands)202020192019
Deferred revenue from contracts with customers:
  Beginning balance(1)
$175,321  $151,475  $155,114  
    Impact of fresh start accounting—  298  —  
    Revenue recognized, included in beginning balance(59,155) (59,018) (43,172) 
    Additions, net of revenue recognized during period, and other61,864  66,997  39,533  
  Ending balance$178,030  $159,752  $151,475  

16


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Successor Company  Predecessor CompanySuccessor CompanyPredecessor Company
Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30,Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
(In thousands)2019  2019 2018(In thousands)202020192019
Deferred revenue from contracts with customers:      Deferred revenue from contracts with customers:
Beginning balance(1)
$151,773
  $155,114
 $166,429
Beginning balance(1)
$162,068  $151,475  $148,720  
Impact of fresh start accounting Impact of fresh start accounting—  298  —  
Revenue recognized, included in beginning balance(59,018)  (43,172) (59,450) Revenue recognized, included in beginning balance(76,053) (59,018) (76,473) 
Additions, net of revenue recognized during period, and other66,997
  39,533
 53,390
 Additions, net of revenue recognized during period, and other92,015  66,997  79,228  
Ending balance159,752
  $151,475
 $160,369
Ending balance$178,030  $159,752  $151,475  
(1) Deferred revenue from contracts with customers, which excludes other sources of deferred revenue that are not related to contracts with customers, is included within deferred revenue and other long-term liabilities on the Consolidated Balance Sheets, depending upon when revenue is expected to be recognized.
 Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30,
(In thousands)2019  2019 2018
Deferred revenue from contracts with customers:      
  Beginning balance(1)
$151,773
  $148,720
 $155,228
    Revenue recognized, included in beginning balance(59,018)  (76,473) (82,215)
    Additions, net of revenue recognized during period, and other66,997
  79,228
 87,356
  Ending balance$159,752
  $151,475
 $160,369

(1)
Deferred revenue from contracts with customers, which excludes other sources of deferred revenue that are not related to contracts with customers, is included within deferred revenue and other long-term liabilities on the Consolidated Balance Sheets, depending upon when revenue is expected to be recognized. As described in Note 3, as part of the fresh start accounting adjustments on May 1, 2019, deferred revenue from contracts with customers was adjusted to its estimated fair value.
The Company’s contracts with customers generally have terms of one year or less; however, as of June 30, 2019,2020, the Company expects to recognize $199.8$226.6 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years. Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales.

34


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Revenue from Leases
As of June 30, 2019,2020, the future lease payments to be received by the Successor Company are as follows:
(In thousands)
2020$774  
20211,259  
2022860  
2023795  
2024695  
Thereafter10,021  
  Total$14,404  
(In thousands)
2019$556
20201,028
2021959
2022700
2023656
Thereafter10,602
  Total$14,501


NOTE 64 – LEASES
The Company enters into operating lease contracts for land, buildings, structures and other equipment. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases primarily include land and building lease contracts and leases of radio towers. Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers. Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use assets ("ROU assets") and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively.
The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt or within Liabilities subject to compromise.debt.
ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.
Certain
17


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company tests for impairment of right of use assets whenever events and circumstances indicate that such assets might be impaired. During the Company's operating lease agreements include rental payments that are adjusted periodically for inflationary changes. Payments due to changes in inflationary adjustments are included within variable rent expense, which is accounted for separately from periodic straight-line lease expense. Amountsthree months ended June 30, 2020, the Company recognized a non-cash impairment charge of $5.4 million related to insurancea decision by management to abandon and property taxes in lease arrangements when billed on a pass-through basis are allocated to the lease and non-lease componentssublease one of the lease based on their relative standalone selling prices.its operating leases.
Certain of the Company's leases provide options to extend the terms of the agreements. Generally, renewal periods are excluded from minimum lease payments when calculating the lease liabilities as, for most leases, the Company does not consider exercise of such options to be reasonably certain. As a result, unless a renewal option is considered reasonably assured, the optional terms and related payments are not included within the lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted the IBR used to value the Company's ROU assets and operating lease liabilities at the Effective Date (see Note 3 - Fresh Start Accounting). In addition, upon adoption of ASC 852 in the first quarter of 2019, the Company did not elect the practical expedient to combine non-lease components with the associated lease components. Upon application of fresh start accounting on the Effective Date, the Company elected to use the practical expedient to not separate non-lease components from the associated lease component for all classes of the Company's assets.

35


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following tables provide the components of lease expense included within the Consolidated Statement of Comprehensive Income (Loss) for the Period from May 2, 2019 through June 30, 2019 (Successor), the Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor):
 Successor Company  Predecessor Company
(In thousands)Period from May 2, 2019 through June 30, 2019  Period from April 1, 2019 through May 1, 2019
Operating lease expense$25,439
  $11,302
Variable lease expense$3,447
  $150
 Successor Company  Predecessor Company
(In thousands)Period from May 2, 2019 through June 30, 2019  Period from January 1, 2019 through May 1, 2019
Operating lease expense$25,439
  $44,667
Variable lease expense$3,447
  $476
The following table provides the weighted average remaining lease term and the weighted average discount rate for the Company's leases as of June 30, 2019 (Successor):
June 30,
2019
Operating lease weighted average remaining lease term (in years)14.0
Operating lease weighted average discount rate6.54%
As of June 30, 2019 (Successor), the Company’s future maturities of operating lease liabilities were as follows:
(In thousands)
2019$60,870
2020136,837
2021126,445
2022119,453
2023106,385
Thereafter841,655
  Total lease payments$1,391,645
Less: Effect of discounting508,729
  Total operating lease liability$882,916

36


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table provides supplemental cash flow information related to leases for the Period from May 2, 2019 through June 30, 2019 (Successor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor):periods presented:
Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1
(In thousands)202020192019
Cash paid for amounts included in measurement of operating lease liabilities$64,940  $23,400  $44,888  
Lease liabilities arising from obtaining right-of-use assets(1)
$18,047  $3,194  $913,598  
 Successor Company  Predecessor Company
(In thousands)Period from May 2, 2019 through June 30, 2019  Period from January 1, 2019 through May 1, 2019
Cash paid for amounts included in measurement of operating lease liabilities$23,400
  $44,888
Lease liabilities arising from obtaining right-of-use assets(1)
$3,194
  $913,598

(1) Lease liabilities from obtaining right-of-use assets include transition liabilities upon adoption of ASC 842, as well as new leases entered into during Periodthe six months ended June 30, 2020 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the period from May 2, 2019 through June 30, 2019 (Successor), Period from April 1, 2019 through May 1, 2019 (Predecessor).
The Company reflects changes in the lease liability and changes in the Period from January 1, 2019 through May 1, 2019 (Predecessor). Upon adoptionROU asset on a net basis in the Statements of fresh start accounting upon Emergence from the Chapter 11 Cases, the Company increased its operating lease obligation by $459.0 million to reflect its operating lease obligation as estimated fair value (see Note 3 - Fresh Start Accounting).Cash Flows.

NOTE 75– PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL
Property, Plant and Equipment
The Company’s property, plant and equipment consisted of the following classes of assets as of June 30, 2019 (Successor)2020 and December 31, 2018 (Predecessor),2019, respectively:
(In thousands)Successor Company
June 30,
2020		December 31,
2019
Land, buildings and improvements$388,096  $385,017  
Towers, transmitters and studio equipment160,955  156,739  
Furniture and other equipment390,680  361,527  
Construction in progress28,624  21,287  
968,355  924,570  
Less: accumulated depreciation149,096  77,694  
Property, plant and equipment, net$819,259  $846,876  
(In thousands)Successor Company  Predecessor Company
 June 30,
2019		  December 31,
2018
Land, buildings and improvements$375,661
  $427,501
Towers, transmitters and studio equipment152,274
  365,991
Furniture and other equipment280,726
  591,601
Construction in progress42,429
  43,809
 851,090
  1,428,902
Less: accumulated depreciation16,858
  926,700
Property, plant and equipment, net$834,232
  $502,202
In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted Property, plant and equipment to their respective fair values at the Effective Date (see Note 3 - Fresh Start Accounting).
Indefinite-lived Intangible Assets
The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Audio segment. In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted its FCC licenses to their respective estimated fair values as of the Effective Date of $2,281.7 million (see Note 3 - Fresh Start Accounting).
The Company performs its annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. In addition, the Company tests for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired.
18


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company applied fresh start accounting as of May 1, 2019 in connection with its emergence from Chapter 11 bankruptcy which required stating the Company’s intangible assets at estimated fair value. Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence. The economic downturn in March 2020 and the COVID-19 pandemic had an adverse impact on the trading values of the Company’s publicly-traded debt and equity and on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic has had a negative impact on the Company's forecasted future cash flows. As a result, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses.
For purposes of initial recording in fresh start accounting and for annual impairment testing purposes, our FCC licenses are valued using the direct valuation approach, with the key assumptions being forecasted market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average asset within a market.
In estimating the fair value of its FCC licenses, the Company obtained the most recent broadcast radio industry revenue projections which consider the impact of COVID-19 on future broadcast radio advertising revenue. Such projections reflect a significant and negative impact from COVID-19. In addition to using these broadcast radio industry revenue projections, the Company used various sources to analyze media and broadcast industry market forecasts and other data in developing the assumptions used for purposes of performing impairment testing on our FCC licenses as of March 31, 2020. As a result of COVID-19, the United States economy is undergoing a period of economic disruption and uncertainty, which has caused, among other things, lower consumer and business spending. The uncertainty surrounding the demand for advertising negatively impacted the key assumptions used in the discounted cash flow models used to value the Company's FCC licenses. Considerations in developing these assumptions included the extent of the economic downturn, ranges of expected timing of recovery, discount rates and other factors. As a result of the Company’s assessment the estimated fair value of FCC licenses was determined to be below their carrying values as of March 31, 2020. As a result, during the three months ended March 31, 2020, the Successor Company recognized a non-cash impairment charge of $502.7 million on its FCC licenses.
Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s WACC and other economic factors, no additional interim impairment charge to the Company's indefinite-lived intangible was required as of June 30, 2020.
During the Period from January 1, 2019 through May 1,six months ended June 30, 2019, the Predecessor Company recognized non-cash impairment charges of $91.4 million in relation to indefinite-lived FCC licenses as a result of an increase in the weighted average cost of capital used in performing the annual impairment test.
Other Intangible Assets
Other intangible assets includeconsists of definite-lived intangible assets, and permanent easements.  The Company’s definite-lived intangible assetswhich primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows. Permanent easements are indefinite-lived intangible assets which include certain rights to use real property not owned by the Company.  The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets.  These assets are recorded at amortized cost. In connection with
The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the Company's emergence from bankruptcy and in accordance with ASC 852,undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.  When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.
The Company applied the provisions of fresh start accounting toas of May 1, 2019 in connection with its Consolidated Financial Statementsemergence from Chapter 11 bankruptcy which required stating the Company’s intangible assets at estimated fair value. Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence. The economic downturn in March 2020 and the COVID-19 pandemic had an adverse impact on the Effective Date.Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic has had a negative impact on the Company's forecasted future cash flows. As a result, the Company adjusted Otherperformed interim impairment tests as of March 31, 2020 on its other intangible assets. Based on the Company’s test of recoverability using estimated undiscounted future cash flows, the carrying values of the Company’s definite-lived intangible assets were determined to their respective fair values at the Effective Date (see Note 3 - Fresh Start Accounting).

be recoverable, and no impairment was recognized.
37
19




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of June 30, 2019 (Successor)2020 and December 31, 2018 (Predecessor),2019, respectively:
(In thousands)Successor Company  Predecessor Company(In thousands)Successor Company
June 30, 2019  December 31, 2018June 30, 2020December 31, 2019
Gross Carrying Amount Accumulated Amortization  Gross Carrying Amount Accumulated AmortizationGross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Customer / advertiser relationships1,645,880
 (29,095)  1,326,636
 (1,278,885)Customer / advertiser relationships1,625,376  (199,991) 1,629,236  (114,280) 
Talent contracts373,000
 (8,240)  164,933
 (148,578)
Talent and other contractsTalent and other contracts375,400  (59,026) 375,399  (33,739) 
Trademarks and tradenames321,977
 (4,977)  —
 —
Trademarks and tradenames321,977  (37,907) 321,977  (21,661) 
Other7,057
 (195)  376,978
 (240,662)Other25,251  (3,126) 21,394  (1,786) 
Total$2,347,914
 $(42,507)  $1,868,547
 $(1,668,125)Total$2,348,004  $(300,050) $2,348,006  $(171,466) 
Total amortization expense related to definite-lived intangible assets for the Successor Company for the Periodthree months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020 was $64.3 million, $42.5 million.million and $128.6 million, respectively. Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the Periodperiod from April 1, 2019 through May 1, 2019 and the three months ended June 30, 2018, the Periodperiod from January 1, 2019 through May 1, 2019 and the six months ended June 30, 2018 was $3.0 million $40.1 million,and $12.7 million and $81.9 million, respectively.
As acquisitions and dispositions occur in the future, amortization expense may vary.  The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:
(In thousands)
2021$256,650  
2022255,870  
2023247,517  
2024246,827  
2025209,042  
20
(In thousands) 
2020$21,253
202120,456
202219,234
202319,062
202417,978


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Goodwill
The following table presents the changes in the carrying amount of goodwill:
(In thousands)AudioAudio & Media ServicesConsolidated
Balance as of December 31, 2018 (Predecessor)$3,330,922  $81,831  $3,412,753  
Acquisitions—  2,767  2,767  
Foreign currency—  (28) (28) 
Balance as of May 1, 2019 (Predecessor)$3,330,922  $84,570  $3,415,492  
Impact of fresh start accounting(111,712) 19,585  (92,127) 
Balance as of May 2, 2019 (Successor)$3,219,210  $104,155  $3,323,365  
     Acquisitions4,637  —  4,637  
     Dispositions(9,466) —  (9,466) 
     Foreign currency—  (1) (1) 
     Other7,087  —  7,087  
Balance as of December 31, 2019 (Successor)$3,221,468  $104,154  $3,325,622  
Impairment(1,224,374) —  (1,224,374) 
Acquisitions404  —  404  
Foreign currency—  5  5  
Balance as of June 30, 2020 (Successor)$1,997,498  $104,159  $2,101,657  
(In thousands)Consolidated
Balance as of December 31, 2017 (Predecessor)$3,337,039
Acquisitions77,320
Dispositions(1,606)
Balance as of December 31, 2018 (Predecessor)$3,412,753
Acquisitions2,767
Foreign currency(28)
Balance as of May 1, 2019$3,415,492
Impact of fresh start accounting(92,127)
  
  
Balance as of May 2, 2019 (Successor)$3,323,365
     Acquisitions4,637
     Dispositions(4,834)
     Foreign currency39
Balance as of June 30, 2019 (Successor)$3,323,207
Goodwill Impairment

At least annually, the Company performs its impairment test for each reporting unit’s goodwill.  The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.
As described in Note 1, the economic disruption as a result of COVID-19 had a significant impact to the trading values of the Company’s publicly-traded debt and equity and on the Company's results in the latter half of the month ended March 31, 2020. In addition, the Company expects that the pandemic will continue to impact the operating and economic environment of our customers and will impact the near-term spending decisions of advertisers. As a result, the Company performed an interim impairment test on its indefinite-lived intangible assets as of March 31, 2020.
The goodwill impairment test requires measurement of the fair value of the Company's reporting units, which is compared to the carrying value of the reporting units, including goodwill. Each reporting unit is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value. Assessing the recoverability of goodwill requires estimates and assumptions about sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. As with the impairment testing performed on the Company’s FCC licenses described above, the significant deterioration in market conditions and uncertainty in the markets impacted the assumptions used to estimate the discounted future cash flows of the Company’s reporting units for purposes of performing the interim goodwill impairment test. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.
As discussed above, the carrying values of the Company’s reporting units were based on estimated fair values determined upon our emergence from bankruptcy on May 1, 2019, and the rapid deterioration in economic conditions resulting from the COVID-19 pandemic resulted in lower estimated fair values determined in connection with our interim goodwill impairment testing as of March 31, 2020. The estimated fair value of one of the Company's reporting units was below its carrying value, including goodwill. The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model. As a result, the Company recognized a non-cash impairment charge of $1.2 billion in the first quarter of 2020 to reduce goodwill. The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model.
38
21




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s WACC and other economic factors, no additional interim impairment charge to the Company's reporting units was required as of June 30, 2020.
While management believes the estimates and assumptions utilized to calculate the fair value of the Company's tangible and intangible long-lived assets, indefinite-lived FCC licenses and reporting units are reasonable, it is possible a material change could occur to the estimated fair value of these assets. Uncertainty regarding the full extent of the economic downturn as a result of COVID-19, as well as the timing of any recovery, may result in the Company's actual results not being consistent with its estimates, and the Company could be exposed to future impairment losses that could be material to its results of operations.

NOTE 86 – LONG-TERM DEBT
Long-term debt outstanding for the Successor Company as of June 30, 2019 (Successor)2020 and December 31, 2018 (Predecessor)2019 consisted of the following:
(In thousands)Successor Company
June 30, 2020December 31, 2019
Term Loan Facility due 2026(1)(4)
$2,090,765  $2,251,271  
Asset-based Revolving Credit Facility due 2023(2)(4)
235,000  —  
6.375% Senior Secured Notes due 2026800,000  800,000  
5.25% Senior Secured Notes due 2027750,000  750,000  
4.75% Senior Secured Notes due 2028500,000  500,000  
Other secured subsidiary debt(3)
23,632  20,992  
Total consolidated secured debt4,399,397  4,322,263  
8.375% Senior Unsecured Notes due 20271,450,000  1,450,000  
Other unsecured subsidiary debt6,312  12,581  
Long-term debt fees(18,587) (19,428) 
Total debt5,837,122  5,765,416  
Less: Current portion30,061  8,912  
Total long-term debt$5,807,061  $5,756,504  
(In thousands)Successor Company  Predecessor Company
 June 30,
2019		  December 31,
2018
Term Loan Facility due 2026(1)
$3,498,178
  $—
Debtors-in-Possession Facility(2)
—
  —
Asset-based Revolving Credit Facility due 2023(2)
—
  —
6.375% Senior Secured Notes due 2026800,000
  —
Other secured subsidiary debt(3)
4,416
  —
Total consolidated secured debt4,302,594
  —
     
8.375% Senior Unsecured Notes due 20271,450,000
  —
Other subsidiary debt57,909
  46,105
Long-term debt, net subject to compromise(4)
—
  15,149,477
Total debt, prior to reclassification to Liabilities subject to compromise5,810,503
  15,195,582
Less: Current portion53,406
  46,105
Less: Amounts reclassified to Liabilities subject to compromise—
  15,149,477
Total long-term debt$5,757,097
  $—
(1)On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.
(1)On August 7, 2019, iHeartCommunications issued $750.0 million of 5.25% Senior Secured Notes due 2027 (the “New Senior Secured Notes”), the proceeds of which were used, together with cash on hand, to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility, plus $0.8 million of accrued and unpaid interest to, but not including, the date of prepayment.
(2)The Debtors-in-Possession Facility (the "DIP Facility"), which terminated with the emergence from the Chapter 11 Cases, provided for borrowings of up to $450.0 million. On the Effective Date, the DIP Facility was repaid and canceled and the Successor Company entered into the ABL Facility. As of June 30, 2019, the Successor Company had a facility size of $450.0 million under iHeartCommunications' ABL Facility, had no outstanding borrowings and had $59.2 million of outstanding letters of credit, resulting in $390.8 million of excess availability.
(3)Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2019 through 2045.
(4)In connection with the Company's Chapter 11 Cases, the $6,300.0 million outstanding under the Senior Secured Credit Facilities, the $1,999.8 million outstanding under the 9.0% Priority Guarantee Notes due 2019, the $1,750.0 million outstanding under the 9.0% Priority Guarantee Notes due 2021, the $870.5 million of 11.25% Priority Guarantee Notes due 2021, the $1,000.0 million outstanding under the 9.0% Priority Guarantee Notes due 2022, the $950.0 million outstanding under the 10.625% Priority Guarantee Notes due 2023, $6.0 million outstanding Other Secured Subsidiary debt, the $1,781.6 million outstanding under the 14.0% Senior Notes due 2021, the $475.0 million outstanding under the Legacy Notes and $10.8 million outstanding Other Subsidiary Debt were reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheet as of the Petition Date. As of the Petition Date, the Company ceased making principal and interest payments, and ceased accruing interest expense in relation to long-term debt reclassified as Liabilities subject to compromise during the Predecessor period.
(2)On March 13, 2020, iHeartCommunications borrowed $350.0 million under the ABL Facility, the proceeds of which were invested as cash on the Balance Sheet. During the three months ended June 30, 2020, iHeartCommunications voluntarily repaid $115.0 million principal amount drawn under the ABL Facility. As of June 30, 2020, the ABL Facility had a borrowing base of $289.4 million and $235.0 million of outstanding borrowings and $41.2 million of outstanding letters of credit, resulting in $13.2 million of availability. Amounts available under the ABL Facility are calculated using a borrowing base calculated by reference to our outstanding accounts receivable. To the extent decreases in our accounts receivable result in the borrowing base decreasing to an amount below the amount drawn, we may be required to make a partial repayment of amounts outstanding under our ABL Facility.
(3)Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2021 through 2045.
(4)On July 16, 2020, iHeartCommunications issued $450.0 million of incremental term loans under the Amendment No. 2, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding on the Company's ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.

The Successor Company’s weighted average interest rate was 7.1%5.3% and 9.9%6.4% as of June 30, 2019 (Successor)2020 and December 31, 2018 (Predecessor),2019, respectively. The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $5.9$5.5 billion and $8.7$6.1 billion as of June 30, 2019 (Successor)2020 and December 31, 2018 (Predecessor),2019, respectively. The trading value of the Company’s publicly traded debt decreased significantly in March 2020 as a result of the market’s reaction to COVID-19. While trading values have increased as of June 30, 2020 and the date of this filing, prices have not fully recovered to levels
22


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
prior to the initial impact of COVID-19. Under the fair value hierarchy established by ASC 820-10-35, the market value of the Successor Company’s debt is classified as either Level 1 or Level 2.
Asset-based Revolving Credit Facility due 2023

On the Effective Date,February 3, 2020, iHeartCommunications as borrower, entered into aan amendment to the Credit Agreement (the “ABL Credit Agreement”) with iHeartMedia Capital I, LLC, the direct parent of iHeartCommunications (“Capital I”), as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, Citibank, N.A., as administrative and collateral agent, and the lenders party thereto from time to time, governing the ABL Facility. The ABL Facility includes a letter of credit sub-facility and a swingline loan sub-facility.

39


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Size and Availability

The ABL Facility provides for a senior secured asset-based revolving credit facility in the aggregate principal amount of up to $450.0 million, with amounts available from time to time (including in respect of letters of credit) equal to the lesser of (A) the borrowing base, which equals the sum of (i) 90.0% of the eligible accounts receivable of iHeartCommunications and the subsidiary guarantors and (ii) 100% of qualified cash, each subject to customary reserves and eligibility criteria, and (B) the aggregate revolving credit commitments. Subject to certain conditions, iHeartCommunications may at any time request one or more increases in the amount of revolving credit commitments, in an amount up to the sum of (x) $150.0 million and (y) the amount by which the borrowing base exceeds the aggregate revolving credit commitments.
Interest Rate and Fees

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

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

Maturity

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

Prepayments

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

Guarantees and Security

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

Certain Covenants and Events of Default

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


40


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

its Term Loan Facility due 2026

2026. The amendment reduces the interest rate to LIBOR plus a margin of 3.00% (from LIBOR plus a margin of 4.00%), or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% (from Base Rate plus a margin of 3.00%) and modifies certain covenants contained in the Credit Agreement.
On the Effective Date,July 16, 2020, iHeartCommunications as borrower, entered into a Credit Agreement (the “Term Loan Credit Agreement”) with Capital I, as guarantor, certain subsidiariesAmendment No. 2 to issue $450.0 million of iHeartCommunications, as guarantors,incremental term loan commitments, resulting in net proceeds of $425.8 million, after original issue discount and Citibank N.A., as administrative and collateral agent, governing the approximately $3.5 billion Term Loan Facility. On the Effective Date, iHeartCommunications issued an aggregatedebt issuance costs. A portion of approximately $3.5 billion principal amount of senior secured term loans under the Term Loan Facility to certain Claimholders pursuant to the Plan of Reorganization. The Term Loan Facility matures on May 1, 2026. As described below, on August 7, 2019, the proceeds from the issuance of $750.0 million in aggregate principal amount of 5.25% Senior Secured Notes due 2027 was used togetherto repay the remaining balance outstanding under the ABL Facility of $235.0 million, with cash on hand,the remaining $190.6 million of the proceeds available for general corporate purposes. The incremental term loans issued pursuant to prepayAmendment No. 2 have an interest rate of 4.00% for Eurocurrency Rate Loans and 3.00% for Base Rate Loans (subject to a LIBOR floor of 0.75% and Base Rate floor of 1.75%). Amendment No. 2 also modifies certain other provisions of the Credit Agreement.
In connection with the Term Loan Facility amendment in February 2020, iHeartCommunications also prepaid at par $740.0$150.0 million of borrowings outstanding under the Term Loan Facility due 2026.

Interest Rate and Fees

Term loans underwith cash on hand. Under the Term Loan Facility bear interest at a rate per annum equal toterms of the applicable rate plus, at iHeartCommunications’ option, either (1) a base rate or (2) a eurocurrency rate. The applicable rate for such term loans is 3.00% with respect to base rate loans and 4.00% with respect to eurocurrency rate loans.

Collateral and Guarantees

The Term Loan Facility is guaranteed by Capital I andCredit Agreement, iHeartCommunications made quarterly payments of $5.25 million during each of iHeartCommunications’ existingthe three months ended March 31, 2020 and future material wholly-owned restricted subsidiaries, subject to certain exceptions. All obligations underthree months ended June 30, 2020.Under the Term Loan Facility, and the guaranteesterms of those obligations, are secured, subject to permitted liens and other exceptions, by a first priority lien in substantially all of the assets of iHeartCommunications and all of the guarantors’ assets, including a lien on the capital stock of iHeartCommunications and certain of its subsidiaries owned by a guarantor, other than the accounts receivable and related assets of iHeartCommunications and all of the subsidiary guarantors, and by a second priority lien on accounts receivable and related assets securing iHeartCommunications’ ABL Facility.

Prepayments

Amendment No. 2, iHeartCommunications is required to prepay outstanding term loans under the Term Loan Facility, subject to certain exceptions, with:

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

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

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

iHeartCommunications may voluntarily repay outstanding loans under the Term Loan Facility at any time, without prepayment premium or penalty, except in connection with a repricing event within nine months of the Effective Date and subject to customary “breakage” costs with respect to eurocurrency loans.

Certain Covenants and Events of Default

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

• incur additional indebtedness;
• create liens on assets;
• engage in mergers, consolidations, liquidations and dissolutions;
• sell assets;

41


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

• pay dividends and distributions or repurchase Capital I’s capital stock;
• make investments, loans, or advances;
• prepay certain junior indebtedness;
• engage in certain transactions with affiliates;
• amend material agreements governing certain junior indebtedness; and
• change lines of business.

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

6.375% Senior Secured Notes due 2026
On the Effective Date, iHeartCommunications entered into an indenture (the “Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $800.0$6.4 million aggregate principal amount of 6.375% Senior Secured Notes due 2026 that were issued to certain Claimholders pursuant to the Plan of Reorganization. The Senior Secured Notes mature on May 1, 2026 and bear interest at a rate of 6.375% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2020.

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

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

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

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

• incur or guarantee additional debt or issue certain preferred stock;
• make certain restricted payments;
• create restrictions on distributions to iHeartCommunications or Capital I;
• sell certain assets;
• create liens on certain assets;
• enter into certain transactions with affiliates; and

42


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

• merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of its
assets.
8.375% Senior Unsecured Notes due 2027

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

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

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

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

• incur or guarantee additional debt or issue certain preferred stock;
• make certain restricted payments;
• create restrictions on distributions to iHeartCommunications or Capital I;
• sell certain assets;
• create liens on certain assets;
• enter into certain transactions with affiliates; and
• merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of its
assets.2020.
Mandatorily Redeemable Preferred Stock
On the Effective Date, in accordance with the Plan of Reorganization, iHeart Operations issued 60,000 shares of its Series A Perpetual Preferred Stock, par value $0.001 per share (the "iHeart Operations Preferred Stock"), having an aggregate initial liquidation preference of $60.0 million for a cash purchase price of $60.0 million. The iHeart Operations Preferred Stock was purchased by a third party investor. As of June 30, 2019,2020, the liquidation preference of the iHeart Operations Preferred Stock was approximately $60.0 million.
There are no sinking fund provisions applicable to the iHeart Operations Preferred Stock. Shares of As further described below, the iHeart Operations Preferred Stock upon issuance, were fully paidis mandatorily redeemable for cash at a date certain and non-assessable. The iHeart Operations Preferred Stock are not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of iHeart Operations. The holders of shares oftherefore is classified as a liability in the iHeart Operations Preferred Stock have no pre-emptive rights with respect to any shares of our capital stock or any of iHeart Operations’ other securities convertible into or carrying rights or options to purchase any such capital stock.

43


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Company's balance sheet.
Holders of the iHeart Operations Preferred Stock are entitled to receive, as declared by the board of directors of iHeart Operations, in respect of each share, cumulative dividends accruing daily and payable quarterly at a per annum rate equal to the sum of (1) the greater of (a) LIBOR and (b) two percent, plus (2) the applicable margin, which is calculated as a function of iHeartMedia’s consolidated total leverage ratio. Dividends will be payable on the liquidation preference. Unless all accrued and unpaid dividends on the iHeart Operations Preferred Stock are paid in full, no dividends or distributions may be paid on any equity interests of iHeartMedia or its subsidiaries other than iHeart Operations, and no such equity interests may be repurchased or redeemed (subject to certain exceptions that are specified in the certificate of designation for the iHeart Operations Preferred Stock).quarterly. Dividends, if declared, will be payable on March 31, June 30, September 30 and December 31 of each year (or on the next business day if such date is not a business day). During the three and six months ended June 30, 2020 the Company recognized $2.4 million and $4.2 million of interest expense related to dividends on mandatorily redeemable preferred stock.
Other than as set forth below, iHeart Operations may not redeem the iHeart Operations Preferred Stock at its option prior to the third anniversary of the issue date of the iHeart Operations Preferred Stock. Upon consummation of certain equity offerings, iHeart Operations may, at its option, redeem all or a part of the iHeart Operations Preferred Stock for the liquidation preference plus a make-whole premium. At any time on or after the third anniversary of the issue date, the iHeart Operations Preferred Stock may be redeemed at the option of iHeart Operations, in whole or in part, for cash at a redemption price equal to the liquidation preference per share.
Upon (i) a liquidation, dissolution or winding up of iHeart Operations, iHeartMedia or iHeartCommunications, together with the subsidiaries of such entity, taken as a whole, (ii) a bankruptcy event, (iii) a change of control, (iv) a sale or transfer of all or substantially all of iHeart Operations’, iHeartMedia’s or iHeartCommunications’ assets and the assets of such entity’s subsidiaries, taken as a whole in a single transaction (other than to iHeartMedia or any of its subsidiaries), or a series of transactions, (v) an acceleration or payment default of indebtedness of iHeart Operations, iHeartMedia or any of its subsidiaries of $100 million or more or (vi) consummation of certain equity offerings of iHeartMedia, iHeart Operations or iHeartCommunications or certain significant subsidiaries, then any holder of shares of iHeart Operations Preferred Stock may require iHeartMedia to purchase such holder’s shares of iHeart Operations Preferred Stock at a purchase price equal to (a) the liquidation preference plus a make-whole premium, if such purchase is consummated prior to the third anniversary of the issue date or (b) the liquidation preference, if the purchase is consummated on or after the third anniversary of the issue date.
The shares of iHeart Operations Preferred Stock include repurchase rights, pursuant to which the holders may require iHeartMedia or iHeartCommunications to purchase the iHeart Operations Preferred Stock after the fifth anniversary of the issue date.
On the tenth anniversary of the issue date, the shares of iHeart Operations Preferred Stock will be subject to mandatory redemption for an amount equal to the liquidation preference.
If a default occurs or dividends payable on the shares of iHeart Operations Preferred Stock have not been paid in cash for twelve consecutive quarters, the holders of the iHeart Operations Preferred Stock will have the right, voting as a class, to elect one director to iHeartMedia’s Board of Directors. Upon any termination of the rights of the holders of shares of the iHeart Operations Preferred Stock as a class to vote for a director as described above, the director so elected to iHeartMedia’s Board of Directors will cease to be qualified as a director and the term of such director’s office shall terminate immediately.
New 5.25% Senior Secured Notes due 2027
On August 7, 2019, iHeartCommunications completed the sale of $750.0 million in aggregate principal amount of 5.25% Senior Secured Notes due 2027 (the “New Senior Secured Notes”) in a private placement to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside the United States pursuant to Regulation S under the Securities Act. iHeartCommunications used the net proceeds from the New Senior Secured Notes, together with cash on hand, to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility due 2026, plus approximately $0.8 million of accrued and unpaid interest to, but not including, the date of prepayment. The New Senior Secured Notes were issued pursuant to an indenture, dated as of August 7, 2019 (the “New Senior Secured Notes Indenture”), by and among iHeartCommunications, the guarantors party thereto and U.S. Bank National Association, as trustee and collateral agent. The New Senior Secured Notes Indenture contains covenants that limit iHeartCommunications’ ability and the ability of its restricted subsidiaries to, among other things: (i) incur or guarantee additional debt or issue certain preferred stock; (ii) redeem, purchase or retire subordinated debt; (iii) make certain investments; (iv) create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries; (v) enter into certain transactions with affiliates; (vi) merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets; (vii) sell certain assets, including capital stock of iHeartCommunications’ subsidiaries; (viii) designate iHeartCommunications’ subsidiaries as unrestricted

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

subsidiaries, and (ix) pay dividends, redeem or repurchase capital stock or make other restricted payments. The New Senior Secured Notes mature on August 15, 2027 and bear interest at a rate of 5.25% per annum. Interest will be payable semi-annually on February 15 and August 15 of each year, beginning on February 15, 2020.
Surety Bonds, Letters of Credit and Guarantees
As of June 30, 2019,2020, the Successor Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $17.8$19.8 million and $59.2$41.2 million, respectively. Included within the Successor Company's outstanding commercial standby letters of credit were $0.9 million held on behalf of CCOH. These surety bonds and letters of credit relate to various operational matters including insurance, lease and performance bonds as well as other items.


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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 97 – COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations.
Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.
Chapter 11 CasesAlien Ownership Restrictions and FCC Petition for Declaratory Ruling
iHeartCommunications' filingThe Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership is in the public interest (the “Foreign Ownership Rule”). Under the Plan of Reorganization, the Company committed to file a Petition for Declaratory Ruling ("PDR") requesting the FCC to permit up to 100% of the Company's voting and equity to be owned by non-U.S. individuals and entities, but the FCC’s granting the PDR was not a condition to the Company's emergence. 
The equity allocation mechanism (“Equity Allocation Mechanism”) set forth in the Plan of Reorganization was intended to enable the Company to comply with the Foreign Ownership Rule and other FCC ownership restrictions in connection with emergence. The Equity Allocation Mechanism imposed an obligation on each of the Company's former claimholders in connection with the Chapter 11 Cases constituted(the "Claimholders") to provide written certification sufficient for the Company to determine whether issuance of common stock to such Claimholders would cause the Company to violate the Foreign Ownership Rule, and restricted the Company from issuing common stock to Claimholders such that it would cause the Company to exceed an eventaggregate alien ownership or voting percentage of default22.5 percent (the “22.5 Percent Threshold”). 
After emerging from bankruptcy, the Company discovered that accelerated its obligations under its debt agreements. Duea group of Claimholders that had certified to having no foreign ownership or voting control in connection with the Equity Allocation Mechanism had subsequently undergone a separate merger transaction without our knowledge or control. As a result of this merger, these Claimholders’ interests in iHeartMedia (amounting to approximately nine percent of the Company's issued and outstanding Class A common stock) can be voted by a U.S. subsidiary of a foreign parent. The Company notified the FCC of this development in writing promptly after discovering and confirming it. The FCC responded to the Chapter 11 Cases, however,Company's notification on July 9, 2019, indicating that (1) the creditors' abilityFCC has not determined that this development is contrary to exercise remedies under iHeartCommunications' debt agreements were stayed as of March 14, 2018, the Petition Date,public interest, and continue(2) the FCC has deemed the Company to be stayed. On March 21, 2018, Wilmington Savings Fund Society, FSB ("WSFS"), solely in compliance with the FCC’s foreign ownership reporting rules, pending its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027, and not in its individual capacity, filed an adversary proceeding against the Company in the Chapter 11 Cases. In the complaint, WSFS alleged, among other things, that the "springing lien" provisions of the priority guarantee notes indentures and the priority guarantee notes security agreements amounted to "hidden encumbrances"decision on the Company's property, to which the holders of the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027 were entitled to "equal and ratable" treatment.PDR. On March 26, 2018, Delaware Trust Co. ("Delaware Trust"), in its capacity as successor indenture trustee to the 14% Senior Notes due 2021, filed a motion to intervene as a plaintiff in the adversary proceeding filed by WSFS. In the complaint, Delaware Trust alleged, among other things, that the indenture governing the 14% Senior Notes due 2021 also has its own "negative pledge" covenant, and, therefore, to the extent the relief sought by WSFS in its adversary proceeding is warranted, the holders of the 14% Senior Notes due 2021 are also entitled to the same "equal and ratable" liens on the same property. On April 6, 2018,July 25, 2019 the Company filed a motionthe PDR. The FCC requested public comment on the PDR, which comment period closed on March 26, 2020.  The FCC subsequently referred the PDR to dismissTeam Telecom - the adversary proceedinginteragency federal government group that analyzes requests for national security, law enforcement, and a hearing on such motion was held on May 7, 2018. We answeredpublic safety issues. On June 29, 2020, Team Telecom indicated its consent to the complaint and completed discovery.  The trial was held on October 24, 2018. On January 15, 2019,grant by the Bankruptcy Court entered judgment in the Company's favor denying all relief sought by WSFS and all other parties. Pursuant to a settlement (the “Legacy Plan Settlement”) with WSFS and certain consenting Legacy Noteholders of all issues related to confirmationFCC of the Company's planPDR.  The Company cannot predict whether the FCC will issue a ruling granting the PDR, the amount of reorganization, on May 1, 2019 upon the Company's confirmed plan of reorganization becoming effective, this adversary proceeding was deemed withdrawn and/foreign equity and voting rights any such a ruling will allow us to have, or dismissed, with respecthow long it will take to all parties thereto, with prejudice and in its entirety.
On October 9, 2018, WSFS, solely in its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027, and not in its individual capacity, filed an adversary proceeding against Clear Channel Holdings, Inc. (“CCH”) and certain shareholders of iHeartMedia. The named shareholder defendants are Bain Capital LP; Thomas H. Lee Partners L.P.; Abrams Capital L.P.; and Highfields Capital Management L.P. In the complaint, WSFS alleged, among other things, that the shareholder defendants engaged inobtain such a “pattern of inequitable and bad faith conduct, including the abuse of their insider positions to benefit themselves at the expense of third-party creditors including particularly the Legacy Noteholders.” The complaint asks

ruling.
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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

the court to grant relief in the form of equitable subordination of the shareholder defendants’ term loan, priority guarantee notes and 2021 notes claims to any and all claims of the legacy noteholders. In addition, the complaint seeks to have any votes to accept the Fourth Amended Plan of Reorganization by Abrams and Highfields on account of their 2021 notes claims, and any votes to accept the Fourth Amended Plan of Reorganization by defendant CCH on account of its junior notes claims, to be designated and disqualified. The Court held a pre-trial conference and oral argument on October 18, 2018. Pursuant to the Legacy Plan Settlement, on May 1, 2019 upon the Company's confirmed Plan of Reorganization becoming effective, this adversary proceeding was deemed withdrawn and/or dismissed, with respect to all parties thereto, with prejudice and in its entirety.
Stockholder Litigation
On May 9, 2016, a stockholder of CCOH filed a derivative lawsuit in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management Inc. v. iHeartMedia, Inc. et al., C.A. No. 12312-VCS. The complaint named as defendants the Company, iHeartCommunications, Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P., the Company's pre-bankruptcy private equity sponsors and pre-bankruptcy majority owners (together, the "Former Sponsor Defendants"), and the members of CCOH's board of directors. CCOH also was named as a nominal defendant. The complaint alleged that CCOH had been harmed by the intercompany agreements with iHeartCommunications, CCOH’s lack of autonomy over its own cash and the actions of the defendants in serving the interests of the Company, iHeartCommunications and the Former Sponsor Defendants to the detriment of CCOH and its minority stockholders. The plaintiff sought, among other things, a ruling that the defendants breached their fiduciary duties to CCOH and that the Company, iHeartCommunications and the Former Sponsor Defendants aided and abetted the CCOH board of directors' breaches of fiduciary duty, rescission of payments made by CCOH to iHeartCommunications and its affiliates pursuant to dividends declared in connection with the CCIBV Note Offering and Outdoor Asset Sales, and an order requiring the Company, iHeartCommunications and the Former Sponsor Defendants to disgorge all profits they have received as a result of the alleged fiduciary misconduct.
On July 20, 2016, the defendants filed a motion to dismiss plaintiff's verified stockholder derivative complaint for failure to state a claim upon which relief can be granted. On November 23, 2016, the Court granted defendants' motion to dismiss all claims brought by the plaintiff. On December 19, 2016, the plaintiff filed a notice of appeal of the ruling. The oral hearing on the appeal was held on October 11, 2017. On October 12, 2017, the Supreme Court of Delaware affirmed the lower court's ruling, dismissing the case.
On December 29, 2017, another stockholder of CCOH filed a derivative lawsuit (the “Norfolk Lawsuit”) in the Court of Chancery of the State of Delaware, captioned Norfolk County Retirement System, v. iHeartMedia, Inc., et al., C.A. No. 2017-0930-JRS. The complaint names as defendants the Company, iHeartCommunications, the Former Sponsor Defendants, and the members of CCOH's board of directors.  CCOH is named as a nominal defendant. The complaint alleges that CCOH has been harmed by the CCOH Board’s November 2017 decision to extend the maturity date of the intercompany revolving note (the “Third Amendment”) at what the complaint describes as far-below-market interest rates. The plaintiff is seeking, among other things, a ruling that the defendants breached their fiduciary duties to CCOH, a modification of the Third Amendment to bear a commercially reasonable rate of interest, and an order requiring disgorgement of all profits, benefits and other compensation obtained by defendants as a result of the alleged breaches of fiduciary duties.
On March 7, 2018, the defendants filed a motion to dismiss plaintiff's verified derivative complaint for failure to state a claim upon which relief can be granted. On March 16, 2018, the Company filed a Notice of Suggestion of Pendency of Bankruptcy and Automatic Stay of Proceedings. On May 4, 2018, plaintiff filed its response to the motion to dismiss. On June 26, 2018, the defendants filed a reply brief in further support of their motion to dismiss. Oral argument on the motion to dismiss was held on September 20, 2018.
On August 27, 2018, the same stockholder of CCOH that had filed a derivative lawsuit against the Company and others in 2016 (GAMCO Asset Management Inc.) filed a putative class action lawsuit (the “GAMCO II Lawsuit”) in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management, Inc. v. Hendrix, et al., C.A. No. 2018-0633-JRS. The complaint names as defendants the Former Sponsor Defendants and the members of CCOH’s board of directors. The complaint alleges that minority shareholders in CCOH during the period NovemberNOTE 8 2017 to March 14, 2018 were harmed by decisions of the CCOH Board and the intercompany note committee of the Board relating to the Intercompany Note. The plaintiff seeks, among other things, a ruling that the CCOH Board, the intercompany note committee, and the Sponsor Defendants breached their fiduciary duties and that the Sponsor Defendants aided and abetted the Board’s breach of fiduciary duty; and an award of damages, together with pre- and post-judgment interests, to the putative class of minority shareholders.

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

On December 16, 2018, the Debtors, CCOH, GAMCO Asset Management, Inc., and Norfolk County Retirement System entered into a settlement (the “CCOH Separation Settlement”) of all claims, objections, and other causes of action that have been or could be asserted by or on behalf of CCOH, GAMCO Asset Management, Inc., and/or Norfolk County Retirement System by and among the Debtors, CCOH, GAMCO Asset Management, Inc., certain individual defendants in the GAMCO Asset Management, Inc. action and/or the Norfolk County Retirement System action, and the private equity sponsor defendants in such actions. The CCOH Separation Settlement provides for the consensual separation of the Debtors and CCOH, including approximately $149.0 million of recovery to CCOH on account of its claim against iHeartCommunications in the Chapter 11 cases, a $200 million unsecured revolving line of credit from certain of the Debtors to CCOH for a period of up to three years, the transfer of certain of the Debtors’ intellectual property to CCOH, the waiver by the Debtors of the setoff for the value of the transferred intellectual property, mutual releases, the termination of the cash sweep under the existing Corporate Services Agreement, the termination of any agreements or licenses requiring royalty payments from CCOH to the Debtors for trademarks or other intellectual property, the waiver of any post-petition amounts owed by CCOH relating to such trademarks or other intellectual property, and the execution of a new transition services agreement and other separation documents. The CCOH Separation Settlement was approved by the Bankruptcy Court and the United States District Court for the Southern District of Texas on January 22, 2019. On May 1, 2019, the Debtors’ Plan of Reorganization went effective, and the Norfolk Lawsuit and GAMCO II Lawsuit were each subsequently dismissed with prejudice.

NOTE 10 – INCOME TAXES
Income Tax ExpenseBenefit (Expense)
The Company’s income tax expensebenefit (expense) from continuing operations for the Periodthree and six months ended June 30, 2020 (Successor) the period from May 2, 2019 through June 30, 2019 (Successor), the Periodperiod from April 1, 2019 through May 1, 2019 (Predecessor), and the three months ended June 30, 2018 (Predecessor), the Periodperiod from January 1, 2019 through May 1, 2019 (Predecessor) and the six months ended June 30, 2018 (Predecessor), respectively, consisted of the following components:
(In thousands)Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
202020192019
Current tax benefit (expense)$(1,731) $(2,947) $6,950  
Deferred tax benefit (expense)45,473  (13,056) (107,239) 
Income tax benefit (expense)$43,742  $(16,003) $(100,289) 
(In thousands)Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30,
 2019  2019 2018
Current tax benefit (expense)$(2,947)  $6,950
 $(30,354)
Deferred tax expense(13,056)  (107,239) (111,678)
Income tax expense$(16,003)  $(100,289) $(142,032)

(In thousands)Successor CompanyPredecessor Company
Six Months Ended June 30, 2020Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
Current tax benefit (expense)$(3,436) $(2,947) $76,744  
Deferred tax benefit (expense)197,689  (13,056) (115,839) 
Income tax benefit (expense)$194,253  $(16,003) $(39,095) 
(In thousands)Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30,
 2019  2019 2018
Current tax benefit (expense)$(2,947)  $76,744
 $(6,570)
Deferred tax benefit (expense)(13,056)  (115,839) 27,271
Income tax benefit (expense)$(16,003)  $(39,095) $20,701

The effective tax rate from continuing operations for the Successor Company for the three and six months ended June 30, 2020 was 18.1% and 9.3%, respectively. The effective tax rate for the six months ended June 30, 2020 was primarily impacted by the impairment charges to non-deductible goodwill discussed in Note 1. The deferred tax benefit primarily consists of $125.5 million related to the FCC license impairment charges recorded during the period.
The effective tax rate for the Successor Company for the Period from May 2, 2019 through June 30, 2019 was 29.2%.The effective tax rate for continuing operations of the Predecessor Company for Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) was 1.1% and 0.4%, respectively. The income tax expense for the Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consists of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1)tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above.The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.

On March 27, 2020 the CARES Act, which included numerous tax provisions, was signed into law.  While the Company is continuing to evaluate the impact of the enacted tax provisions as additional guidance is provided, upon the Company's initial review the provision with the most significant impact on the Company’s income taxes is the increase to the Section 163(j) interest deduction limitation and the ability to elect to use the Company’s 2019 Adjusted Taxable Income (as defined under Section 163(j)) for purposes of calculating the 2020 Section 163(j) limitation. There were several other tax provisions included in the CARES Act allowing companies more flexibility in carrying back net operating losses generated in 2018, 2019 or 2020,
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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
temporarily eliminating the provision limiting net operating losses utilization to 80% of taxable income and the acceleration of refunds available from alternative minimum tax credits.  The effectiveCompany does not expect to benefit from any of these provisions.  In addition to the income tax rateprovisions mentioned above, the CARES Act also included provisions impacting employment taxes allowing companies to defer the payment of the employee portion of certain employment taxes that would be due from the enactment date through January 1, 2021.  The amounts deferred are due fifty percent by December 31, 2021 and fifty percent by December 31, 2022.  The Company has deferred $11.3 million in employment taxes as of June 30, 2020. In addition, the CARES Act included a provision providing an Employee Retention tax credit, which would offset employment taxes, for qualified companies and wages.  The Company has recorded approximately $0.7 million in credits during the three and six monthsperiod ended June 30, 2018 (Predecessor) was 130.3% and 5.7%, respectively. The 2018 effective tax rates were primarily impacted by the valuation allowance recorded against deferred tax assets resulting from current period interest expense limitation carryforward in U.S. federal and certain state jurisdictions due to uncertainty regarding our ability to realize those assets in future periods.2020.
As a result of the Plan of Reorganization, the Company expects the majority of its federal NOL carryforwards and certain state NOL carryforwards to be reduced or eliminated as a result of the CODI realized from the bankruptcy emergence. Pursuant to the attribute reduction and ordering rules set forth in the Internal Revenue Code of 1986, as amended (the “Code”), the reduction in the Company’s tax attributes for excludible CODI does not occur until the last day of the Company’s tax year, December 31, 2019. Accordingly, the tax adjustments recorded in the Predecessor period represent our best estimate using all available information at June 30, 2019. Additionally, the Company recognized a capital loss for tax purposes as a result of the series of transactions to effect the Plan of Reorganization. This capital loss may be carried forward to offset capital gains recognized by the Company in the next five years, subject to annual limitations under Section 382 of the Code. The deferred tax asset associated with the capital loss carryforward is offset by a valuation allowance due to significant uncertainty regarding the Company’s ability to utilize the carryforward prior to its expiration. The final tax impacts of the bankruptcy emergence, as well as the Plan of Reorganization’s overall effect on the Company’s tax attributes and tax basis in assets will be refined based on the Company’s final December 31, 2019 financial position as required under the Code. The final tax impacts on the companies tax attributes could change significantly from the current estimates.

NOTE 119 – STOCKHOLDER'S EQUITY (DEFICIT)
Historically, the Company granted restricted shares of the Company's Class A common stock to certain key individuals. In connection with the effectiveness of the Plan of Reorganization, all unvested restricted shares were canceled.
Pursuant to the new equity incentive planCompany's 2019 Equity Incentive Plan, the Company entered into in connection with the effectiveness of our Plan of Reorganization, we havehas granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.
Share-based Compensation
Share-based compensation expenses are recorded in corporate expenses and were $4.2 million, $3.0 million and $8.8 million for the Successor Company for three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020, respectively. Share-based compensation expenses for the Predecessor Company were $0.1 million and $0.5 million for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019, respectively.
As of June 30, 2020, there was $48.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions. This cost is expected to be recognized over a weighted average period of approximately 3 years.
Successor Common Stock and Special Warrants
The Company is authorized to issue 2,100,000,000 shares, consisting of (a) 1,000,000,000 shares of Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”), (b) 1,000,000,000 shares of Class B Common Stock, par value $0.001 per share (the “Class B Common Stock”), and (c) 100,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).
The following table presents the balances of theSuccessor Company's Class A Common Stock, Class B Class CCommon Stock and Class D Common StockSpecial Warrants issued and outstanding as of June 30, 2019 and December 31, 2018 are as below:
2020:
(In thousands, except share and per share data)Successor CompanyJune 30,
2020		Predecessor Company
June 30,
2019(Unaudited)		December 31,
2018
(Unaudited)
PredecessorSuccessor Class A Common Stock, par value $.001 per share, authorized 400,000,0001,000,000,000 shares no shares issued in 2019 and 32,292,944 shares issued in 2018authorized—61,432,341 
32
PredecessorSuccessor Class B Common Stock, par value $.001 per share, authorized 150,000,0001,000,000,000 shares no shares issued in 2019 and 555,556 shares issued in 2018authorized—6,900,195 
1
PredecessorSuccessor Special Warrants78,038,412 
  Total Successor Class CA Common Stock, par value $.001 per share, authorized 100,000,000 shares, no shares issued in 2019 and 58,967,502 shares issued in 2018—
59
Predecessor Class DB Common Stock par value $.001 per share, authorized 200,000,000 shares, no sharesand Special Warrants issued in 2019 and 2018—146,370,948 
—
Successor Common Stock
Class A Common Stock
Holders ofDuring the three and six months ended June 30, 2020, stockholders converted 145 and 6,060 shares of the Successor Company's Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the Successor Company's Class A common stock will have the exclusive right to vote for the election of directors. There will be no cumulative voting rights in the election of directors.
Holders of shares of the Successor Company's Class A common stock are entitled to receive dividends, on a per share basis, when and if declared by the Company's Board out of funds legally available therefor and whenever any dividend is made on the shares of the Successor Company's Class B common stock subject to certain exceptions set forth in our certificate.
The Successor Company may not subdivide or combine (by stock split, reverse stock split, recapitalization, merger, consolidation or any other transaction) its shares of Class A common stock or Class B common stock without subdividing or combining its shares of Class B common stock or Class A common stock, respectively, in a similar manner.
Upon our dissolution or liquidation or the sale of all or substantially all of the Successor Company's assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Successor Company's Class A common stock will be entitled to receive pro rata together with holders of the Successor Company's Class B common stock our remaining assets available for distribution.
New Class A common stock certificates issued upon transfer or new issuance of Class A common stock shares will contain a legend stating that such shares of Class A common stock are subject to the provisions of our amended and restated certificate of incorporation, including but not limited to provisions governing compliance with requirements of the Communications Act and regulations thereunder, including, without limitation, those concerning foreign ownership and media ownership.
On July 18, 2019, the Company’s Class A common stock was listed and began trading on the NASDAQ Global Select Market ("Nasdaq") under the ticker symbol “IHRT”.
Class B Common Stock
Holders of shares of the Successor Company's Class B common stock are not entitled to vote for the election of directors or, in general, on any other matter submitted to a vote of the Company’s stockholders, but are entitled to one vote per share on the following matters: (a) any amendment or modification of any specific rights or obligations of the holders of Class B common stock that does not similarly affect the rights or obligations of the holders of Class A common stock, in which case the holders of Class B Common Stock will be entitled to a separate class vote, with each share of Class B common stock having one vote; and (b) to the extent submitted to a vote of our stockholders, (i) the retention or dismissal of outside auditors by the Company, (ii) any dividends or distributions to our stockholders, (ii) any material sale of assets, recapitalization, merger, business combination, consolidation, exchange of stock or other similar reorganization of the Company or any of its subsidiaries, (iv) the adoption of any amendment to our certificate of incorporation, (v) other than in connection with any management equity or similar plan adopted by the Company's Board, any authorization or issuance of equity interests, or any security or instrument convertible into or exchangeable for equity interests, in the Company or any of its subsidiaries, and (vi) the liquidation of the Company, in which case in respect to any such vote concerning the matters described in clause (b), the holders of Class B common stock are entitled to vote with the holders of the Class A common stock, with each share of common stock having one vote and voting together as a single class.
Holders of shares of the Successor Company's Class B common stock are generally entitled to convert shares of Class B common stock into shares of Class A common stock, on a one-for-one basis, subject to the Company’s ability to restrict conversion in order to comply with the Communications Act and FCC regulations.
Holders of shares of the Successor Company's Class B common stock are entitled to receive dividends when and if declared by the Company's Board out of funds legally available therefor and whenever any dividend is made on the shares of the Successor Company's Class A common stock subject to certain exceptions set forth in our certificate of incorporation. Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Successor Company's Class B common stock will be entitled to receive pro rata with holders of the Successor Company's Class A common stock our remaining assets available for distribution.

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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

respectively.
Special Warrants
Each Special Warrant issued under the special warrant agreement entered into in connection with the Reorganization may be exercised by its holder to purchase one share of Successor Class A common stock or Successor Class B common stock at an exercise price of $0.001 per share, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, subject to certain exceptions, (a) such exercising holder owning more than 4.99 percent of the Successor Company's outstanding Class A common stock, (b) more than 22.5 percent of the Successor Company's capital stock or voting interests being owned directly or indirectly by foreign individuals or entities, (c) the  Company exceeding any foreign ownership threshold set by the FCC pursuant to a declaratory ruling or specific approval requirement or (d) the Company violating any provision of the Communications Act or restrictions
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IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
on ownership or transfer imposed by the Company's certificate of incorporation or the decisions, rules and policies of the FCC. Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and certifications required under the special warrant agreement.
To  The 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 a licensee’s equity, unless the extent there are any dividends declared or distributions made with respectFCC determines that greater indirect foreign ownership is in the public interest.  As described further in Note 7 above, on July 25, 2019, the Company filed a PDR requesting FCC consent to exceed the 25 percent foreign ownership and voting benchmarks that currently apply to us, on which the FCC has requested public comment.  The public comment period closed on March 26, 2020.  The FCC referred our PDR to Team Telecom - the interagency federal government group that analyzes requests for national security, law enforcement, and public safety issues.  On June 29, 2020, Team Telecom indicated its consent to the Successorgrant by the FCC of the PDR. We cannot predict whether the FCC will issue a ruling granting the PDR, the amount of foreign equity and voting rights any such a ruling will allow us to have, or how long it will take to obtain such a ruling.

During the three and six months ended June 30, 2020, stockholders exercised 877,263 and 3,003,854 Special Warrants for an equivalent number of shares of Class A common stock, or Successorrespectively. During the three and six months ended June 30, 2020, stockholders exercised 729 and 1,345 Special Warrants for an equivalent number of shares of Class B common stock, those dividends or distributions will also be maderespectively.
Stockholder Rights Plan
On May 5, 2020, the Company’s Board of Directors (the “Board”) approved the adoption of a short-term stockholder rights plan (the “Stockholder Rights Plan”) in order to holdersprotect the best interests of Special Warrants concurrentlyall Company stockholders during the current period of high equity-market volatility and onprice disruption.

Pursuant to the stockholder rights plan, the Board has declared a pro rata basis based on their ownership of common stock underlying their Special Warrants on an as-exercised basis; provided, that no such distribution will be made to holders of Special Warrants if (x) the Communications Act or an FCC rule prohibits such distribution to holders of Special Warrants or (y) our FCC counsel opines that such distribution is reasonably likely to cause (i) the Company to violate the Communications Act or any applicable FCC rule or (ii) any such holder not to be deemed to hold a noncognizable (under FCC rules governing foreign ownership) future equity interest in the Company; provided further, that, if anydividend distribution of common stock or any other securities to a holder of Special Warrants is not permitted pursuant to clauses (x) or (y), the Company will cause economically equivalent warrants to be distributed to such holder in lieu thereof, to the extent that such distribution of warrants would not violate the Communications Act or any applicable FCC rules.
To the extent within the Company's control, any tender or exchange offer subject to Sections 13 or 141 right on each outstanding share of the Exchange Act for the SuccessorCompany’s Class A common stock, Successorshare of Class B common stock and special warrant issued in connection with the Plan of Reorganization. The record date for such dividend distribution was May 18, 2020.

Under the Stockholder Rights Plan, subject to certain exceptions, the rights will generally be exercisable only if, in a transaction not approved by the Board, a person or group acquires beneficial ownership of 10% or more of the Company’s Class A common stock (or 20% in the case of certain passive investors), including through such person’s ownership of the convertible Class B common stock and/or special warrants, as further detailed in the Stockholder Rights Plan. In that situation, each holder of a right (other than the acquiring person or group) will have the right to purchase, upon payment of the exercise price, a number of shares of the Company’s Class A common stock, Class B common stock or Special Warrants will be made concurrently and onspecial warrants, as applicable, having a pro rata basis (inmarket value of twice such price. In addition, the case of holders of Special Warrants, based upon theirStockholder Rights Plan contains a similar provision if the Company is acquired in a merger or other business combination after an acquiring person acquires beneficial ownership of common stock underlying their Special Warrants on an as-exercised basis) to all holders10% or more of Successorthe Company’s Class A common stock Successor Class B common stock and Special Warrants. Distributions to holders(or 20% in the case of Special Warrants and payments to holderscertain passive investors).

The Stockholder Rights Plan has a duration of Special Warrants pursuant to a tenderless than one year, expiring on May 5, 2021. The Stockholder Rights Plan may also be terminated, or exchange offer for Special Warrants subject to Sections 13 or 14the rights may be redeemed, by action of the Exchange Act will be made in compliance with FCC ownership conditions.
The number of shares of the Successor Company's common stock to be received upon exercise of each special warrant is subject to adjustment from time to time. Such number will increase or decrease proportionally upon any increase or decrease in the number of shares of the Successor Company's common stock outstanding resulting from any subdivisions, splits, combination or reverse splits (except in connection with a change of control). The Company is not required to issue fractional shares in connection with the exercise of Special Warrants, and may either pay an amount in cash in lieu of such fractional shares or round the number of shares received to the nearest whole number. The exercise price is not subject to any adjustment.
Upon the occurrence of any reclassification or recapitalization whereby holders of the Successor Company's common stock are entitled to receive proceeds in cash, stock, securities or other assets or property with respect to or in exchange for common stock, holders who exercise Special Warrants are entitled to receive such proceeds commensurate with the number of shares of common stock they would have received if they had exercised their Special Warrants immediately prior to such reclassification or recapitalization. Upon a change of control in which the only consideration payable to holders of common stock is cash, each special warrant will be deemed to be exercised immediately prior to the consummation of such change of controlscheduled expiration date under certain circumstances, including if the Board determines that market and the holder will receive solely the cash consideration to which such holder would have been entitled as a result of such change of control. Upon a change of control inother conditions warrant, which the consideration payableBoard intends to holdersmonitor. The adoption of common stock is other than only cash, at the Company's option, each special warrantStockholder Rights Plan will not be either (A) assumed by the party surviving such change of controla taxable event and will continue to be exercisable fornot have any impact on the kind and amount of consideration to which such holder would have been entitled as a result of such change of control had the special warrant been exercised immediately prior, or (B) if not assumed by the party surviving such change of control, deemed to be exercised immediately prior to the consummation of such change of control and the holder will receive the consideration to which such holder would have been entitled as a result of such Change of Control, less the exercise price, as though the special warrant had been exercised immediately prior.

Company’s financial reporting.
49
27




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The Special Warrants will expire on the earlier of the twentieth anniversary of the issuance date and the occurrence of a change in control of the Company.
Computation of Income (Loss) per Share
(In thousands, except per share data)Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
 202020192019
NUMERATOR:  
Net income (loss) attributable to the Company – common shares$(197,317) $38,793  $11,298,524  
Exclude:
  Income from discontinued operations, net of
tax		$—  $—  $1,854,677  
  Noncontrolling interest from discontinued operations, net of tax - common shares—  —  (2,190) 
Total income from discontinued operations, net of tax - common shares$—  $—  $1,852,487  
Income (loss) from continuing operations$(197,317) $38,793  $9,446,037  
DENOMINATOR(1):
 
Weighted average common shares outstanding - basic145,963  145,275  85,652  
  Stock options and restricted stock(2):
—  23  —  
Weighted average common shares outstanding - diluted145,963  145,298  85,652  
Net income (loss) attributable to the Company per common share: 
From continuing operations - Basic$(1.35) $0.27  $110.28  
From discontinued operations - Basic$—  $—  $21.63  
From continuing operations - Diluted$(1.35) $0.27  $110.28  
From discontinued operations - Diluted$—  $—  $21.63  
(In thousands, except per share data)Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30,
 2019  2019 2018
NUMERATOR:      
Net loss attributable to the Company – common shares$38,793
  $11,298,524
 $(69,899)
Less:      
  Non-controlling interest from discontinued operations, net of tax - common shares$—
  $(2,190) $(3,609)
  Income (loss) from discontinued operations, net of tax—
  1,854,677
 (33,229)
Total income (loss) from discontinued operations, net of tax - common shares$—
  $1,852,487
 $(36,838)
Income (loss) from continuing operations$38,793
  $9,446,037
 $(33,061)
       
DENOMINATOR(1):
 
     
Weighted average common shares outstanding - basic145,275
  85,652
 85,280
  Stock options and restricted stock(2):
23
  —
 —
Weighted average common shares outstanding - diluted145,298
  85,652
 85,280
       
Net loss attributable to the Company per common share: 
     
From continuing operations - Basic$0.27
  $110.28
 $(0.39)
From discontinued operations - Basic$—
  $21.63
 $(0.43)
From continuing operations - Diluted$0.27
  $110.28
 $(0.39)
From discontinued operations - Diluted$—
  $21.63
 $(0.43)


50
28




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(In thousands, except per share data)Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
NUMERATOR:
Net income (loss) attributable to the Company – common shares$(1,886,053) $38,793  $11,184,141  
Exclude:
Income from discontinued operations, net of tax$—  $—  $1,685,123  
  Noncontrolling interest from discontinued operations, net of tax - common shares—  —  19,028  
Total income from discontinued operations, net of tax - common shares$—  $—  $1,704,151  
Income (loss) from continuing operations$(1,886,053) $38,793  $9,479,990  
DENOMINATOR(1):
Weighted average common shares outstanding - basic145,788  145,275  86,241  
Stock options and restricted stock(2):
—  23  —  
Weighted average common shares outstanding - diluted145,788  145,298  86,241  
Net income (loss) attributable to the Company per common share:
From continuing operations - Basic$(12.94) $0.27  $109.92  
From discontinued operations - Basic$—  $—  $19.76  
From continuing operations - Diluted$(12.94) $0.27  $109.92  
From discontinued operations - Diluted$—  $—  $19.76  
(In thousands, except per share data)Successor Company  Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended
June 30,
 2019  2019 2018
NUMERATOR:      
Net loss attributable to the Company – common shares$38,793
  $11,184,141
 $(486,893)
Less:      
  Non-controlling interest from discontinued operations, net of tax - common shares$—
  $19,028
 $12,437
  Income (loss) from discontinued operations, net of tax—
  1,685,123
 (157,477)
Total income (loss) from discontinued operations, net of tax - common shares$—
  $1,704,151
 $(145,040)
Income (loss) from continuing operations$38,793
  $9,479,990
 $(341,853)
       
DENOMINATOR(1):
 
     
Weighted average common shares outstanding - basic145,275
  86,241
 85,248
  Stock options and restricted stock(2):
23
  —
 —
Weighted average common shares outstanding - diluted145,298
  86,241
 85,248
       
Net loss attributable to the Company per common share: 
     
From continuing operations - Basic$0.27
  $109.92
 $(4.01)
From discontinued operations - Basic$—
  $19.76
 $(1.70)
From continuing operations - Diluted$0.27
  $109.92
 $(4.01)
From discontinued operations - Diluted$—
  $19.76
 $(1.70)
(1)
The 81,453,648(1)All of the outstanding Special Warrants issued at Emergence are included in both the basic and diluted weighted average common shares outstanding of the Successor Company for the Period from May 2, 2019 through June 30, 2019.
(2)
Outstanding equity awards of 1.3 million for the Successor Company for the Period from May 2, 2019 through June 30, 2019 were not included in the computation of diluted earnings per share because to do so would have been antidilutive. Outstanding equity awards of 5.9 million, 8.0 million, 5.9 million and 8.0 million of the Predecessor Company for the Period from April 1, 2019 through May 1, 2019, the three months ended June 30, 2018, the Period from January 1, 2019 through May 1, 2019 and the six months ended June 30, 2018 respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 12 — OTHER INFORMATION
Other Comprehensive Income (Loss)
There was no change in deferred income tax liabilities resulting from adjustments to comprehensive loss for the Periodthree months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 (Successor), the Period from April 1, 2019 through May 2 (Predecessor), the three months ended June 30, 2018 (Predecessor), the Period from January 1, 2019 through May 2 (Predecessor) and the six months ended June 30, 2018 (Predecessor).2020.
(2)Outstanding equity awards representing 7.7 million, 1.3 million and 7.9 million shares of Class A common stock of the Successor Company for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020 were not included in the computation of diluted earnings per share because to do so would have been antidilutive. Outstanding equity awards representing 5.9 million shares of Class A common stock of the Predecessor Company for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019 were not included in the computation of diluted earnings per share because to do so would have been antidilutive.


NOTE 1310 – SEGMENT DATA
The Company’s primary business is included in its Audio segment. Revenue and expenses earned and charged between Audio, Corporate and the Company's Audio & Media Services businesses are eliminated in consolidation.  The Audio segment provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses.  The Audio & Media Services business provides other audio and media services, including the Company’s media representation business (Katz Media) and its provider of scheduling and broadcast software.software (RCS).  Corporate includes infrastructure and support, including executive, information technology, human resources, legal, finance and administrative functions for the Company’s businesses. Share-based payments are recorded in corporate expense.
In conjunctionconnection with a reorganization of the Company’s management structure after the Separation and emergence from the Reorganization,Chapter 11 Cases, the Company revised its segment reporting, as discussed in Note 1.1 and all prior periods have been restated to conform to this presentation.
29


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table presents the Company's segment results for the Successor Company for the Period from May 2, 2019 through June 30, 2019:periods presented:
Successor Company
(In thousands)AudioAudio & Media ServicesCorporate and other reconciling itemsEliminationsConsolidated
Three Months Ended June 30, 2020
Revenue$450,344  $39,251  $—  $(1,947) $487,648  
Direct operating expenses243,976  7,304  —  (1,414) 249,866  
Selling, general and administrative expenses229,245  32,510  —  (536) 261,219  
Corporate expenses—  —  26,416  3  26,419  
Depreciation and amortization94,898  5,838  2,611  —  103,347  
Impairment charges—  —  5,378  —  5,378  
Other operating expense, net—  —  (506) —  (506) 
Operating loss$(117,775) $(6,401) $(34,911) $—  $(159,087) 
Intersegment revenues$168  $1,779  $—  $—  $1,947  
Capital expenditures$14,198  $961  $2,723  $—  $17,882  
Share-based compensation expense$—  $—  $4,218  $—  $4,218  
Period from May 2, 2019 through June 30, 2019
Revenue596,230  40,537  —  (1,121) 635,646  
Direct operating expenses193,952  4,872  —  (52) 198,772  
Selling, general and administrative expenses196,834  24,458  —  (1,061) 220,231  
Corporate expenses—  —  26,826  (8) 26,818  
Depreciation and amortization54,692  3,619  1,072  —  59,383  
Other operating income, net—  —  3,246  —  3,246  
Operating income (loss)$150,752  $7,588  $(24,652) $—  $133,688  
Intersegment revenues$112  $1,009  $—  $—  $1,121  
Capital expenditures$13,554  $830  $3,051  $—  $17,435  
Share-based compensation expense$—  $—  $3,039  $—  $3,039  
Six Months Ended June 30, 2020
Revenue$1,172,729  $99,478  $—  $(3,925) $1,268,282  
Direct operating expenses538,763  15,507  —  (2,772) 551,498  
Selling, general and administrative expenses539,301  67,184  —  (1,125) 605,360  
Corporate expenses—  —  66,396  (28) 66,368  
Depreciation and amortization183,699  11,534  4,882  —  200,115  
Impairment charges—  —  1,733,235  —  1,733,235  
Other operating expense, net—  —  (1,572) —  (1,572) 
Operating income (loss)$(89,034) $5,253  $(1,806,085) $—  $(1,889,866) 
Intersegment revenues$335  $3,590  $—  $—  $3,925  
Capital expenditures$32,800  $1,623  $5,123  $—  $39,546  
Share-based compensation expense$—  $—  $8,843  $—  $8,843  

30
Successor Company
(In thousands)Audio Audio & Media Services Corporate and other reconciling items Eliminations Consolidated
Period from May 2, 2019 through June 30, 2019
Revenue$596,230
 $40,537
 $—
 $(1,121) $635,646
Direct operating expenses179,471
 4,872
 —
 (52) 184,291
Selling, general and administrative expenses206,006
 22,195
 —
 (1,061) 227,140
Corporate expenses—
 —
 34,398
 (8) 34,390
Depreciation and amortization54,577
 3,619
 1,187
 —
 59,383
Other operating expense, net—
 —
 3,246
 —
 3,246
Operating income (loss)$156,176
 $9,851
 $(32,339) $—
 $133,688
Intersegment revenues$112
 $1,009
 $—
 $—
 $1,121
Capital expenditures$13,554
 $830
 $3,051
 $—
 $17,435
Share-based compensation expense$—
 $—
 $3,039
 $—
 $3,039


51




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table presents the Company's segment results for the Predecessor Company for the periods noted.presented. The presentation of prior period amounts has been restated to conform to the presentation of the Successor period.
Predecessor Company
(In thousands)AudioAudio and Media ServicesCorporate and other reconciling itemsEliminationsConsolidated
Period from April 1, 2019 through May 1, 2019
Revenue$260,461  $17,970  $—  $(757) $277,674  
Direct operating expenses95,983  2,549  —  (222) 98,310  
Selling, general and administrative expenses91,551  11,276  —  (531) 102,296  
Corporate expenses—  —  14,510  (4) 14,506  
Depreciation and amortization11,749  1,204  1,591  —  14,544  
Other operating expense, net—  —  (127) —  (127) 
Operating income (loss)$61,178  $2,941  $(16,228) $—  $47,891  
Intersegment revenues$56  $701  $—  $—  $757  
Capital expenditures$11,137  $576  $1,531  $—  $13,244  
Share-based compensation expense$—  $—  $105  $—  $105  
Period from January 1, 2019 through May 1, 2019
Revenue$1,006,677  $69,362  $—  $(2,568) $1,073,471  
Direct operating expenses371,989  9,559  —  (364) 381,184  
Selling, general and administrative expenses383,342  46,072  —  (2,184) 427,230  
Corporate expenses53,667  (20) 53,647  
Depreciation and amortization41,233  5,266  6,335  —  52,834  
Impairment charges—  —  91,382  —  91,382  
Other operating expense, net—  —  (154) —  (154) 
Operating income (loss)$210,113  $8,465  $(151,538) $—  $67,040  
Intersegment revenues$243  $2,325  $—  $—  $2,568  
Capital expenditures$31,177  $1,263  $3,757  $—  $36,197  
Share-based compensation expense$—  $—  $498  $—  $498  

31
Predecessor Company
(In thousands)Audio Audio and Media Services Corporate and other reconciling items Eliminations Consolidated
Period from April 1, 2019 through May 1, 2019
Revenue$260,461
 $17,970
 $—
 $(757) $277,674
Direct operating expenses90,254
 2,549
 —
 (222) 92,581
Selling, general and administrative expenses93,880
 10,203
 —
 (531) 103,552
Corporate expenses    18,983
 (4) 18,979
Depreciation and amortization11,682
 1,204
 1,658
 —
 14,544
Other operating expense, net—
 —
 (127) —
 (127)
Operating income (loss)$64,645
 $4,014
 $(20,768) $—
 $47,891
Intersegment revenues$56
 $701
 $—
 $—
 $757
Capital expenditures$11,136
 $577
 $1,530
 $—
 $13,243
Share-based compensation expense$—
 $—
 $105
 $—
 $105
          
Three Months Ended June 30, 2018
Revenue$831,948
 $61,417
 $—
 $(1,601) $891,764
Direct operating expenses256,861
 6,930
 —
 (39) 263,752
Selling, general and administrative expenses298,644
 31,118
 —
 (1,562) 328,200
Corporate expenses—
 —
 52,478
 —
 52,478
Depreciation and amortization55,245
 4,508
 5,124
 —
 64,877
Other operating expense, net—
 —
 (1,218) —
 (1,218)
Operating income (loss)$221,198
 $18,861
 $(58,820) $—
 $181,239
Intersegment revenues$—
 $1,601
 $—
 $—
 $1,601
Capital expenditures$14,877
 $654
 $1,744
 $—
 $17,275
Share-based compensation expense$—
 $—
 $594
 $—
 $594
          
Period from January 1, 2019 through May 1, 2019
Revenue$1,006,677
 $69,362
 $—
 $(2,568) $1,073,471
Direct operating expenses350,501
 9,559
 —
 (364) 359,696
Selling, general and administrative expenses396,032
 42,497
 —
 (2,184) 436,345
Corporate expenses    66,040
 (20) 66,020
Depreciation and amortization40,982
 5,266
 6,586
 —
 52,834
Impairment charges—
 —
 91,382
 —
 91,382
Other operating expense, net—
 —
 (154) —
 (154)
Operating income (loss)$219,162
 $12,040
 $(164,162) $—
 $67,040
Intersegment revenues$243
 $2,325
 $—
 $—
 $2,568
Capital expenditures$31,177
 $1,263
 $3,757
 $—
 $36,197
Share-based compensation expense$—
 $—
 $498
 $—
 $498
          
Six Months Ended June 30, 2018
Revenue$1,557,050
 $110,759
 $—
 $(3,273) $1,664,536
Direct operating expenses490,802
 14,108
 —
 (92) 504,818
Selling, general and administrative expenses614,561
 62,898
 —
 (3,167) 674,292
Corporate expenses—
 —
 105,390
 (14) 105,376
Depreciation and amortization112,294
 9,558
 10,399
 —
 132,251
Other operating income, net—
 —
 (4,450) —
 (4,450)
Operating income (loss)$339,393
 $24,195
 $(120,239) $—
 $243,349
Intersegment revenues$—
 $3,273
 $—
 $—
 $3,273
Capital expenditures$23,878
 $770
 $2,658
 $—
 $27,306
Share-based compensation expense$—
 $—
 $1,172
 $—
 $1,172

52




IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 11– REORGANIZATION ITEMS, NET

Reorganization items incurred as a result of the Chapter 11 Cases are presented separately in the accompanying statements of operations for the periods presented and were as follows:
(In thousands)Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
202020192019
Professional fees and other bankruptcy related costs$—  $—  $(121,374) 
Net gain on settlement of Liabilities subject to compromise—  —  7,192,379  
Impact of fresh start adjustments—  —  2,430,944  
Other items, net—  —  (4,005) 
Reorganization items, net$—  $—  $9,497,944  
Cash payments for Reorganization items, net$26  $13,049  $149,346  
NOTE 14– CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
iHeartCommunications Line
(In thousands)Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
Professional fees and other bankruptcy related costs$—  $—  $(157,487) 
Net gain on settlement of Liabilities subject to compromise—  —  7,192,374  
Impact of fresh start adjustments—  —  2,430,944  
Other items, net—  —  (4,005) 
Reorganization items, net$—  $—  $9,461,826  
Cash payments for Reorganization items, net$443  $13,049  $183,291  
Professional fees included in Reorganization items, net represent fees for post-petition expenses related to the Chapter 11 Cases.
The Company incurred additional professional fees related to the bankruptcy, post-emergence, of Credit

On$1.9 million, $9.1 million and $4.5 million for the Effective Date, iHeartCommunications entered into a revolving loan agreement with CCOL and Clear Channel International, Ltd., both subsidiaries of CCOH, governing a revolving credit facility that provides for borrowings of up to $200 million. The iHeartCommunications line of credit is unsecured. On Julythree months ended June 30, 2020, the period from May 2, 2019 in connection with the consummation of an underwritten public offering of common stock of CCOH, CCOL terminated the iHeartCommunications line of credit. As ofthrough June 30, 2019 and the date of termination, there were no amounts drawn under the facility.
Transition Services Agreement

Pursuant to the Transition Services Agreement between us, iHeartMedia Management Services, Inc. (‘‘iHM Management Services’’)six months ended June 30, 2020, respectively, which are included within Other income (expense), iHeartCommunications and CCOH, for one year from the Effective Date (subject to certain rights of New CCOH to extend up to one additional year, as described below), iHM Management Services has agreed to provide, or cause us, iHeartCommunications, iHeart Operations or any member of the iHeart Group to provide, CCH with certain administrative and support services and other assistance which CCH will utilizenet in the conductCompany's Consolidated Statements of its business as such business was conducted prior to the Separation. The transition services may include, among other things, (a) treasury, payroll and other financial related services, (b) certain executive officer services, (c) human resources and employee benefits, (d) legal and related services, (e) information systems, network and related services, (f) investment services and (g) procurement and sourcing support.Comprehensive Income (Loss).


The charges for the transition services will generally be intended to be consistent with the Corporate Services Agreement. The allocation of cost is based on various measures depending on the service provided, which measures include relative revenue, employee headcount or number of users of a service. New CCOH may request an extension of the term for all services or individual services for one-month periods for up to an additional 12 months, and the price for transition services provided during such extended term will be increased for any service other than those identified in the schedules to the Transition Services Agreement as an ‘‘IT Service’’ or any other service the use and enjoyment of which requires the use of another IT Service. New CCOH may terminate the Transition Services Agreement with respect to all or any individual service, in whole or in part, upon 30 days’ prior written notice, provided that any co-dependent services must be terminated concurrently.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Format of Presentation
Management’s discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related footnotes contained in Item 1 of this Quarterly Report on Form 10-Q. Our discussion is presented on both a consolidated and segment basis.
Our primary business provides media and entertainment services via broadcast and digital delivery, including our networks businesses, through our Audio segment. We also operate businesses that provide audio and media services, through our Audio and Media Services segment, including our full-service media representation business, Katz Media Group (“Katz Media”) and our provider of scheduling and broadcast software and services, Radio Computing ServicingServices ("RCS"). Following the Separation, we ceased to operate the outdoor business, which prior to the Separation was presented as our Americas outdoor segment and our International outdoor segment. The historical results of the outdoor business have been reclassified as results from discontinued operations.
On May 1, 2019, we consummated the Separation and Reorganization, resulting in a substantial reduction in our long-term indebtedness and corresponding cash interest expenses, and significantly extending the maturities of our outstanding indebtedness, as more fully described under “Liquidity and Capital Resources” below. Over the past ten years, we have transitioned our Audio business from a single platform radio broadcast operator to a company with multiple platforms including podcasting, networks and live events. We have also invested in numerous technologies and businesses to increase the competitiveness of our inventory with our advertisers and our audience. We believe that our ability to generate free cash flow from theseoperations from our business initiatives coupled with the significant reduction inand our current cash on hand will provide sufficient resources to fund and operate our business, fund capital expenditures and other obligations and make interest payments due toon our reduced level of indebtedness andlong-term debt for at least the elimination of the majority of our near-term debt maturities will enable us to generate sufficient cash flows to operate our businesses and de-lever our balance sheet over time.next 12 months.
Description of our Business
Our Audio strategy centers on delivering entertaining and informative content where our listeners want to find us across multiple platforms, including broadcast, mobiledigital and digital,live mobile, as well as events. Our primary source of revenue is derived from selling broadcast local and national advertising time on our radio stations, with contracts typically less than one year in duration. The programming formats of our radio stations are designed to reach audiences with targeted demographic characteristics. We are workingwork closely with our advertising and marketing partners to develop tools and leverage data to enable advertisers to effectively reach their desired audiences. We continue to expand the choices for listeners and we deliver our content and sell advertising across multiple distribution channels, including digitally via our iHeartRadio mobile application our station websites and other digital platforms which reach national, regional and local audiences. We also generate revenuesrevenue from our networks, including Premiere and Total Traffic & Weather, as well as through sponsorships andnetwork syndication, our nationally recognized live events, our station websites and other revenue streams. We also generate revenue by providing audio and media services to radio and TV broadcast industry participants through our Katz Media and RCS businesses.miscellaneous transactions.
Our advertising revenue is highly correlated to changes in gross domestic product (“GDP”) as advertising spending has historically trended in line with GDP.  Our broadcast nationalA recession or downturn in the U.S. economy may have a significant impact on the Company’s ability to generate revenue. In light of the novel coronavirus pandemic (“COVID-19”) and the resulting recession impacting the U.S. economy, our revenue for the six months ended June 30, 2020 has declined significantly compared to the comparable period in 2019 and we expect our full year 2020 revenue to decline compared to 2019, largely as a result of a decline in consumer and business spending and the related impact to the demand for advertising and pricing pressure resulting from greater competition for available advertising dollars. Beginning in March 2020 and continuing in the three months ended June 30, 2020, we saw a sharp decline in each of our Broadcast radio, Networks, and Sponsorships revenue streams. We also saw a sharp decline in revenues from our Audio and Media Services, particularly in Katz Media, as a result of lower advertising spending. This decrease was partially offset by a $1.7 million increase in political revenue.
When the business environment recovers, we expect that the traditional promotional use of radio to be a strong benefit to us. As businesses reopen both nationally and locally, we believe that we are advantaged by our unparalleled reach and the live and local revenue,trusted voices that advertisers need to get their messages out quickly.
In the first quarter of 2020, we announced our modernization initiatives, which will take advantage of the significant investments we have made in new technologies to build an operating infrastructure that provides better quality and newer products and delivers new cost efficiencies. We anticipate to incur approximately $50 million of restructuring costs related to achieving our cost savings in 2020. Our investments in modernization are expected to deliver annualized run-rate cost savings of approximately $100 million by mid-year 2021, and we expect to achieve approximately 50% of our anticipated run-rate savings in 2020. In addition, in response to the COVID-19 pandemic, we have taken significant steps to significantly reduce our capital and operating expenditures for the remainder of 2020. These initiatives are expected to generate approximately $200 million in operating cost savings in 2020. For more information, please see the Liquidity and Capital Resources - Anticipated Cash Requirements section below.
On March 26, 2020, we announced the withdrawal of our previously issued financial guidance for the fiscal year ending December 31, 2020 due to heightened uncertainty related to COVID-19. As a precautionary measure to preserve financial flexibility in light of this uncertainty, we borrowed $350.0 million principal amount under our senior secured asset-
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based revolving credit facility (the “ABL Facility”). During the three months ended June 30, 2020, we repaid $115.0 million principal amount drawn under our ABL Facility, resulting in a balance outstanding of $235.0 million as of June 30, 2020.
In July 2020, iHeartCommunications issued $450.0 million of incremental term loans pursuant to an amendment (the “Amendment No. 2”) to the credit agreement (as amended, the “Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Bank of America, N.A., as administrative agent, governing the Company’s $2.5 billion aggregate principal amount of senior secured term loans (the “Term Loan Facility”), resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds was used to repay the remaining balance outstanding on our ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. For more information please refer to the “Liquidity and Capital Resources section” in this MD&A.

Impairment Charges
As a result of uncertainty related to COVID-19 and its negative impact on our business and the public trading values of our debt and equity, we were required to perform interim impairment tests on our long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020. The interim impairment tests resulted in a non-cash impairment of our Federal Communication Commission (“FCC”) licenses of $502.7 million and a non-cash impairment charge of $1.2 billion to reduce goodwill during the three months ended March 31, 2020.
Based on management’s forecasted future cash flows and assessment of market values of our debt and equity securities, market interest rates affecting our weighted average cost of capital (WACC) and other economic factors, additional interim impairment testing of our intangible assets and indefinite-lived intangible was not required as of June 30, 2020. For more information, see Note 5, Property, Plant and Equipment, Intangible Assets and Goodwill to the consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for a further description of the impairment charges.
While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our long-lived assets, indefinite-lived FCC licenses and reporting units, it is possible a material change could occur to the estimated fair value of these assets as a result of the uncertainty regarding the magnitude of the economic downturn caused by the COVID-19 pandemic, as well as the timing of any recovery. If our Katz Media revenue,actual results are generally impacted by political cycles.not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.
Emergence from Bankruptcy
On March 14, 2018, iHeartMedia, Inc. (the “Company,” "iHeartMedia," "we" or "us"), iHeartCommunications, Inc. (“iHeartCommunications”) and certain of the Company's direct and indirect domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”). On April 28, 2018, the Debtors filed a plan of reorganization and a related disclosure statement (as amended, the “Disclosure Statement”) with the Bankruptcy Court, which was subsequently amended by filing the second, third, fourth and fifth amended Plan of Reorganization and amended versions of the Disclosure Statement. On January 22, 2019, the Modified Fifth Amended Joint Chapter 11 Plan of Reorganization of iHeartMedia, Inc. and Its Debtor Affiliates (as further modified, the “Plan of Reorganization”) was confirmed by the Bankruptcy Court.
On May 1, 2019 (the “Effective Date”), the conditions to the effectiveness of the Plan of Reorganization were satisfied and the Company“Debtors emerged from Chapter 11 through (a) a series of transactions (the “Separation”) through which Clear Channel Outdoor Holdings, Inc. (“CCOH”), its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “iHeart Group”), and (b) a series of transactions (the “Reorganization”) through which iHeartCommunications’ debt was reduced from approximately $16 billion to approximately $5.8 billion and a global compromise and settlement among holders of claims


(“Claimholders”) in connection with the Chapter 11 Cases was effected. The compromise and settlement involved, among others, (i) the restructuring of iHeartCommunications’ indebtedness by (A) replacing its “debtor-in-possession” credit facility with a $450 million senior secured asset-based revolving credit facility (the “ABL Facility”)ABL Facility and (B) issuing to certain Claimholders, on account of their claims, the approximately $3.5 billion aggregate principal amount of new senior secured term loans (the “TermTerm Loan Facility”),Facility, approximately $1.45 billion aggregate principal amount of new 8.375% Senior Notes due 2027 (the “Senior Unsecured Notes”) and approximately $800 million aggregate principal amount of new 6.375% Senior Secured Notes due 2026 (the “Senior“6.375% Senior Secured Notes”), (ii) the Company’s issuance of new Class A common stock, new Class B common stock and special warrants to purchase shares of new Class A common stock and Class B common stock (“Special Warrants”) to Claimholders, subject to ownership restrictions imposed by the Federal Communications’ Commission (“FCC”), (iii) the settlement of certain intercompany transactions, and (iv) the sale of the preferred stock (the “iHeart Operations Preferred Stock”) of the Company’s wholly-owned subsidiary iHeart Operations, Inc. (“iHeart Operations”) in connection with the Separation.
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All of the existing equity of the Company was canceled on the Effective SateDate pursuant to the Plan of Reorganization. 
Beginning on the Effective Date, the Company applied fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after May 1, 2019 are not comparable with the consolidated financial statements on or prior to that date. Refer to Note 3, "Fresh Start Accounting," to our Consolidated Financial Statements for further details.
Executive Summary
The key developments that impacted our business during the quarter are summarized below:
Our Plan of Reorganization became effective May 1, 2019 resulting in the Separation of the Outdoor business and emerging from the Chapter 11 Cases with a significantly de-leveraged capital structure.
As a result of our emergence from the Chapter 11 Cases, we reduced our long-term debt from approximately $16 billion to approximately $5.8 billion and reduced our leverage from approximately 13x to approximately 2.9x.
Revenue of $913.3 million increased $21.6 million or 2.4% during the Combined Predecessor and Successor three-month period ended June 30, 2019 compared to the same period of 2018.
Operating income of $181.6 million was up from $181.2 million in the prior year’s quarter.
Adjusted EBITDA of $262.9 million, up 3.2% year-over-year.

The table below presents a summary of our historical results of operations for the periods presented:
(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company  
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30, Three Months Ended June 30, %
 2019  2019 2019 2018 Change
Revenue$635,646
  $277,674
 $913,320
 $891,764
 2.4%
Operating income$133,688
  $47,891
 $181,579
 $181,239
 0.2%
Adjusted EBITDA194,753
  68,097
 262,850
 254,784
 3.2%
Net income (loss)$38,793
  11,300,714
 11,339,507
 (66,290) nm
As of June 30, 2019, we had 56,873,782 shares of Class A Common Stock, 6,947,567 shares of Class B Common Stock and 81,453,648 warrants convertible into Class A or Class B Common Stock outstanding.

In addition, on August 7, 2019, iHeartCommunications completed the sale of $750.0 million in aggregate principal amount of 5.25% Senior Secured Notes due 2027 (the "New Senior Secured Notes") in a private placement. We used the net proceeds from the New Senior Secured Notes, together with cash on hand, to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility.

Results of Operations
Our financial results for the periods from April 1, 2019 through May 1, 2019 and from January 1, 2019 through May 1, 2019 and for the three and six months ended June 30, 2018 are referred to as those of the “Predecessor” period. Our financial results for the period from May 2, 2019 through June 30, 2019, the three months ended June 30, 2020 and the six months ended June 30, 2020 are referred to as those of the “Successor” period. Our results of operations


as reported in our Consolidated Financial Statements for these periods are prepared in accordance with GAAP. Although GAAP requires that we report on our results for the period from April 1, 2019 through May 1, 2019, from January 1, 2019 through May 1, 2019 and the period from May 2, 2019 through June 30, 2019 separately, management views the Company’s operating results for the three and six months ended June 30, 2019 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison ofto our results to prior periods.in the three and six months ended June 30, 2020.

The Company cannot adequately benchmark the operating results of the period from May 2, 2019 through June 30, 2019 against any of the previouscurrent periods reported in its Consolidated Financial Statements without combining it with the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019 and does not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding the Company’s overall operating performance. Management believes that the key performance metrics such as revenue, operating income and Adjusted EBITDA for the Successor period when combined with the Predecessor period provides more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, in addition to presenting our results of operations as reported in our Consolidated Financial Statements in accordance with GAAP, the tables and discussion below also present the combined results for the three and six months ended June 30, 2019.

The combined results for the three months ended June 30, 2019, which we refer to herein as the results for the "three months ended June 30, 2019" represent the sum of the reported amounts for the Predecessor period from April 1, 2019 through May 1, 2019 and the Successor period from May 2, 2019 through June 30, 2019.The combined results for the six months ended June 30, 2019, which we refer to herein as the results for the "six“six months ended June 30, 2019"2019” represent the sum of the reported amounts for the Predecessor period from January 1, 2019 through May 1, 2019 and the Successor period from May 2, 2019 through June 30, 2019. These combined results are not considered to be prepared in accordance with GAAP and have not been prepared as pro forma results per applicable regulations. The combined operating results do not reflect the actual results we would have achieved absent our emergence from bankruptcy and may not be indicative of future results.



Executive Summary
As 2020 began, we saw strong growth across our revenue streams in January and February, particularly from digital and from political advertising. However, while digital and political revenue continued to grow, the economic downturn as a result of the COVID-19 pandemic had a significant and negative impact on our other revenue streams beginning in March 2020 and continuing through the second quarter of 2020, including broadcast radio which is our largest revenue stream. A significant decline in advertising spend and the postponement or cancellation of certain tent-pole events drove an overall decrease in revenue for the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019. The extent of the economic downturn and the timing of recovery, as well as the future impact on our operations, are subject to significant uncertainty. In an effort to further strengthen the Company's financial flexibility and efficiently manage through the COVID-19 pandemic, we implemented measures to cut costs and preserve cash. For additional information on these actions, see the Liquidity and Capital Resources - Anticipated Cash Requirements section below.
The key developments that impacted our business during the quarter are summarized below:
•Effects of the COVID-19 pandemic significantly adversely impacted revenue for all revenue streams, with the exception of digital and political revenue, which increased during the quarter.
•Revenue of $487.6 million decreased 46.6% during the quarter ended June 30, 2020 compared to Revenue of $913.3 million in the same period in 2019.
•Operating loss of $159.1 million was down from Operating income of $181.6 million in the prior year’s quarter.
•Net loss of $197.3 million decreased from Net income of $11,339.5 million in the prior year's quarter.
•Adjusted EBITDA(1) of $(29.3) million, was down from $262.9 million year-over-year.
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•Cash flows provided by operating activities from continuing operations of $11.4 million increased from Cash flows used for operating activities of $61.0 million in the same period in 2019.
•Free cash flow(2) (used for) continuing operations of $(6.5) million decreased from $(91.6) million in the same period in 2019.
•Repaid $115.0 million of principal amount drawn under our ABL Facility, resulting in a balance outstanding of $235.0 million as of June 30, 2020.
•On July 16, 2020, we issued $450.0 million of incremental Term Loan commitments, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.


The table below presents a summary of our historical results of operations for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,%
2020201920192019Change
Revenue$487,648  $635,646  $277,674  $913,320  (46.6)%
Operating income (loss)$(159,087) $133,688  $47,891  $181,579  NM
Net income (loss)$(197,317) $38,793  $11,300,714  $11,339,507  NM
Cash provided by (used for) operating activities from continuing operations$11,369  $83,201  $(144,171) $(60,970) NM
Adjusted EBITDA(1)
$(29,283) $194,753  $68,097  $262,850  NM
Free cash flow from (used for) continuing operations(2)
$(6,513) $65,766  $(157,415) $(91,649) NM
(1) For a definition of Adjusted EBITDA and a reconciliation to Operating income (loss), the most closely comparable GAAP measure, and to Net income (loss), please see "Reconciliation of Operating Income to Adjusted EBITDA" and "Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA" in this MD&A.
(2) For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations” in this MD&A.


36

Results of Operations
The tables below present the comparison of our historical results of operations for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,
2020201920192019
Revenue$487,648  $635,646  $277,674  $913,320  
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)249,866  198,772  98,310  297,082  
Selling, general and administrative expenses (excludes depreciation and amortization)261,219  220,231  102,296  322,527  
Corporate expenses (excludes depreciation and amortization)26,419  26,818  14,506  41,324  
Depreciation and amortization103,347  59,383  14,544  73,927  
Impairment charges5,378  —  —  —  
Other operating income (expense), net(506) 3,246  (127) 3,119  
Operating income (loss)(159,087) 133,688  47,891  181,579  
Interest expense (income), net81,963  69,711  (400) 69,311  
Gain on investments, net1,280  —  —  —  
Equity in loss of nonconsolidated affiliates(31) (24) (59) (83) 
Other income (expense), net(1,258) (9,157) 150  (9,007) 
Reorganization items, net—  —  9,497,944  9,497,944  
Income (loss) from continuing operations before income taxes(241,059) 54,796  9,546,326  9,601,122  
Income tax benefit (expense)43,742  (16,003) (100,289) (116,292) 
Income (loss) from continuing operations(197,317) 38,793  9,446,037  9,484,830  
Income from discontinued operations, net of tax—  —  1,854,677  1,854,677  
Net income (loss)(197,317) 38,793  11,300,714  11,339,507  
Less amount attributable to noncontrolling interest—  —  2,190  2,190  
Net income (loss) attributable to the Company$(197,317) $38,793  $11,298,524  $11,337,317  


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(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2019  2019 2019 20182020201920192019
Revenue$635,646
  $277,674
 $913,320
 $891,764
Revenue$1,268,282  $635,646  $1,073,471  $1,709,117  
Operating expenses:        Operating expenses:
Direct operating expenses (excludes depreciation and amortization)184,291
  92,581
 276,872
 263,752
Direct operating expenses (excludes depreciation and amortization)551,498  198,772  381,184  579,956  
Selling, general and administrative expenses (excludes depreciation and amortization)227,140
  103,552
 330,692
 328,200
Selling, general and administrative expenses (excludes depreciation and amortization)605,360  220,231  427,230  647,461  
Corporate expenses (excludes depreciation and amortization)34,390
  18,979
 53,369
 52,478
Corporate expenses (excludes depreciation and amortization)66,368  26,818  53,647  80,465  
Depreciation and amortization59,383
  14,544
 73,927
 64,877
Depreciation and amortization200,115  59,383  52,834  112,217  
Impairment chargesImpairment charges1,733,235  —  91,382  91,382  
Other operating income (expense), net3,246
  (127) 3,119
 (1,218)Other operating income (expense), net(1,572) 3,246  (154) 3,092  
Operating income133,688
  47,891
 181,579
 181,239
Operating income (loss)Operating income (loss)(1,889,866) 133,688  67,040  200,728  
Interest expense (income), net69,711
  (400) 69,311
 10,613
Interest expense (income), net172,052  69,711  (499) 69,212  
Gain on investments, net—
  —
 —
 9,175
Loss on investments, netLoss on investments, net(8,675) —  (10,237) (10,237) 
Equity in loss of nonconsolidated affiliates(24)  (59) (83) (32)Equity in loss of nonconsolidated affiliates(595) (24) (66) (90) 
Other income (expense), net(9,157)  150
 (9,007) (2,058)Other income (expense), net(9,118) (9,157) 23  (9,134) 
Reorganization items, net—
  9,497,944
 9,497,944
 (68,740)Reorganization items, net—  —  9,461,826  9,461,826  
Income from continuing operations before income taxes54,796
  9,546,326
 9,601,122
 108,971
Income (loss) from continuing operations before income taxesIncome (loss) from continuing operations before income taxes(2,080,306) 54,796  9,519,085  9,573,881  
Income tax benefit (expense)(16,003)  (100,289) (116,292) (142,032)Income tax benefit (expense)194,253  (16,003) (39,095) (55,098) 
Income (loss) from continuing operations38,793
  9,446,037
 9,484,830
 (33,061)Income (loss) from continuing operations(1,886,053) 38,793  9,479,990  9,518,783  
Income (loss) from discontinued operations, net of tax—
  1,854,677
 1,854,677
 (33,229)
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax—  —  1,685,123  1,685,123  
Net income (loss)38,793
  11,300,714
 11,339,507
 (66,290)Net income (loss)(1,886,053) 38,793  11,165,113  11,203,906  
Less amount attributable to noncontrolling interest—
  2,190
 2,190
 3,609
Less amount attributable to noncontrolling interest—  —  (19,028) (19,028) 
Net income (loss) attributable to the Company$38,793
  $11,298,524
 $11,337,317
 $(69,899)Net income (loss) attributable to the Company$(1,886,053) $38,793  $11,184,141  $11,222,934  



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(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30, Six Months Ended June 30,
 2019  2019 2019 2018
Revenue$635,646
  $1,073,471
 $1,709,117
 $1,664,536
Operating expenses:        
Direct operating expenses (excludes depreciation and amortization)184,291
  359,696
 543,987
 504,818
Selling, general and administrative expenses (excludes depreciation and amortization)227,140
  436,345
 663,485
 674,292
Corporate expenses (excludes depreciation and amortization)34,390
  66,020
 100,410
 105,376
Depreciation and amortization59,383
  52,834
 112,217
 132,251
Impairment charges—
  91,382
 91,382
 —
Other operating income (expense), net3,246
  (154) 3,092
 (4,450)
Operating income133,688
  67,040
 200,728
 243,349
Interest expense (income), net69,711
  (499) 69,212
 331,746
Gain (loss) on investments, net—
  (10,237) (10,237) 9,175
Equity in loss of nonconsolidated affiliates(24)  (66) (90) (63)
Other income (expense), net(9,157)  23
 (9,134) (22,474)
Reorganization items, net—
  9,461,826
 9,461,826
 (260,795)
Income (loss) from continuing operations before income taxes54,796
  9,519,085
 9,573,881
 (362,554)
Income tax benefit (expense)(16,003)  (39,095) (55,098) 20,701
Income (loss) from continuing operations38,793
  9,479,990
 9,518,783
 (341,853)
Income (loss) from discontinued operations, net of tax—
  1,685,123
 1,685,123
 (157,477)
Net income (loss)38,793
  11,165,113
 11,203,906
 (499,330)
Less amount attributable to noncontrolling interest—
  (19,028) (19,028) (12,437)
Net income (loss) attributable to the Company$38,793
  $11,184,141
 $11,222,934
 $(486,893)

The tables below present the comparison of our revenue streams for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,%
2020201920192019Change
Broadcast Radio$244,035  $390,540  $170,632  $561,172  (56.5)%
Digital93,227  64,238  26,840  91,078  2.4 %
Networks96,330  105,426  50,889  156,315  (38.4)%
Sponsorship and Events14,809  31,790  10,617  42,407  (65.1)%
Audio and Media Services39,251  40,537  17,970  58,507  (32.9)%
Other1,943  4,236  1,483  5,719  (66.0)%
Eliminations(1,947) (1,121) (757) (1,878) 
  Revenue, total$487,648  $635,646  $277,674  $913,320  (46.6)%
(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30, Three Months Ended June 30,
 2019  2019 2019 2018
Broadcast Radio$390,540
  $170,632
 $561,172
 $568,968
Digital64,238
  26,840
 91,078
 68,574
Networks105,426
  50,889
 156,315
 146,981
Sponsorship and Events31,790
  10,617
 42,407
 41,256
Audio and Media Services40,537
  17,970
 58,507
 61,417
Other4,236
  1,483
 5,719
 6,169
Eliminations(1,121)  (757) (1,878) (1,601)
  Revenue, total$635,646
  $277,674
 $913,320
 $891,764




(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,%
2020201920192019Change
Broadcast Radio$705,695  $390,540  $657,864  $1,048,404  (32.7)%
Digital186,003  64,238  102,789  167,027  11.4 %
Networks230,907  105,426  189,088  294,514  (21.6)%
Sponsorship and Events44,157  31,790  50,330  82,120  (46.2)%
Audio and Media Services99,478  40,537  69,362  109,899  (9.5)%
Other5,967  4,236  6,606  10,842  (45.0)%
Eliminations(3,925) (1,121) (2,568) (3,689) 
  Revenue, total$1,268,282  $635,646  $1,073,471  $1,709,117  (25.8)%

(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30, Six Months Ended June 30,
 2019  2019 2019 2018
Broadcast Radio$390,540
  $657,864
 $1,048,404
 $1,059,111
Digital64,238
  102,789
 167,027
 127,941
Networks105,426
  189,088
 294,514
 279,032
Sponsorship and Events31,790
  50,330
 82,120
 79,148
Audio and Media Services40,537
  69,362
 109,899
 110,759
Other4,236
  6,606
 10,842
 11,818
Eliminations(1,121)  (2,568) (3,689) (3,273)
  Revenue, total$635,646
  $1,073,471
 $1,709,117
 $1,664,536
CombinedConsolidated results for the three months ended June 30, 2020 compared to the combined results for the three months ended June 30, 2019 compared to theand consolidated results for the threesix months ended June 30, 2018 and2020 compared to the combined results for the six months ended June 30, 2019 compared to the consolidated results for the six months ended June 30, 2018 were as follows:

Revenue
Revenue increased $21.6decreased $425.7 million during the three months ended June 30, 20192020 compared to the same period of 2018.2019. The decrease in Revenue increased asis primarily attributable to the effects of COVID-19, which began to unfold into a resultglobal pandemic in early March of higher digital2020, resulting in a significant economic downturn due to the shut-down of non-essential businesses and shelter-in-place orders. The impact continued through the second quarter of 2020, resulting in significant revenue which increased $22.5 million driven by growth in podcasting,declines impacting most of our revenue streams primarily as a result of our acquisition of Stuff Mediaa decrease in October 2018, as well as other digital revenue, including livebroadcast radio and other on-demand services.advertising spend. Broadcast spot revenue decreased $7.8$317.1 million, primarily driven by an $8.1a $188.7 million decrease in politicalLocal spot revenue asand a result of 2018 being a mid-term congressional election year, partially offset by increased programmatic buying by our national customers.$103.7 million decrease in National spot revenue. Revenue from our Network businesses, including both Premiere and Total Traffic & Weather, was also impacted by the downturn, resulting in a decrease of $60.0 million. Revenue from Sponsorship and Events decreased by $27.6 million, primarily as a result of the postponement or cancellations of events in response to the COVID-19 pandemic. Digital revenue increased $8.9$2.1 million, anddriven by continued growth in podcasting. Audio and Media Services revenue decreased $2.9$19.3 million primarily due to the effects of COVID-19 on advertising spend. This decrease was partially offset by a $1.7 million increase in political revenue as a result of 2020 being a $4.1 million decrease in political revenue.presidential election year.
39


Revenue increased $44.6decreased $440.8 million during the six months ended June 30, 20192020 compared to the same period of 2018.2019. The increasedecrease in Revenue is primarily attributable to the effects of COVID-19, which began to unfold into a global pandemic in early March of 2020, resulting in a significant economic downturn due to the shut-down of non-essential businesses and shelter-in-place orders. Strong Revenue growth in January and February was followed by a sharp decline in revenue is primarily due to higher digitalin March, which continued through the second quarter of 2020, resulting in significant revenue declines impacting most of $39.1 million driven by growth in podcasting,our revenue streams, primarily as a result of our acquisitiona decrease in broadcast radio advertising spend. Broadcast revenue decreased $342.7 million, driven by a $214.7 million decrease in Local spot revenue and a $121.9 million decrease in National spot revenue. The decrease in Broadcast revenue was offset by a $15.5 million increase in political revenue as a result of Stuff Media in October 2018, as well as other digital revenue, including live radio and other on-demand services and revenue2020 being a presidential election year. Revenue from our Network businesses, including both Premiere and Total Traffic & Weather, which increased $15.0was also impacted by the downturn, resulting in a decrease of $63.6 million. Broadcast spot revenueRevenue from Sponsorship and Events decreased $10.7by $38.0 million, primarily due to a $10.9 million decrease in political revenue as a result of 2018 being a mid-term congressional election year.the postponement or cancellations of events in response to the COVID-19 pandemic. Digital revenue increased $19.0 million, driven by continued growth in podcasting. Audio and Media Services revenue decreased $0.9$10.4 million primarily due to a $5.1the effects of COVID-19 on advertising spend. This decrease was offset by an $8.9 million decreaseincrease in political revenue.

Direct Operating Expenses
Direct operating expenses increased $13.1decreased $47.2 million during the three months ended June 30, 20192020 compared to the same period of 2018. Higher direct2019. The decrease in Direct operating expenses werewas driven primarily by higherlower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic. In addition, variable operating expenses, including digital royalties, content costsmusic license and productionperformance royalty fees, decreased in relation to lower revenue recognized during the period. Variable expenses from higher podcasting and digital subscription revenue. Werelated to events also incurred a $1.2 million increasedecreased as a result of the applicationpostponement or cancellation of fresh start accounting, and a $1.2 million increase dueevents in response to the impact of the adoption of the new leasing standard in the first quarter of 2019.COVID-19 pandemic.
Direct operating expenses increased $39.2decreased $28.5 million during the six months ended June 30, 20192020 compared to the same period of 2018. Higher direct2019. The decrease in Direct operating expenses werewas driven primarily by lower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic. In addition, variable operating expenses, including music license and performance royalty fees, decreased in relation to lower revenue recognized during the period. Variable expenses related to events also decreased as a result of the postponement or cancellation of events in response to the COVID-19 pandemic. The decrease in Direct operating expenses was partially offset by severance payments and other costs specific to our modernization initiatives, which were incurred mainly in January and February, as well as higher digital royalties, content costs and compensation-related expenses from higher podcasting and digital subscription revenue, as well as higher production costs related to our events, including the iHeartRadio Music Awards. We also incurred a $2.4 million increase in lease expense due to the impact of the adoption of the new leasing standard in the first quarter of 2019.revenue.

Selling, General and Administrative (“SG&A”) Expenses
SG&A expenses increased $2.5decreased $61.3 million during the three months ended June 30, 20192020 compared to the same period of 2018. Higher2019. The decrease in SG&A expenses was driven primarily by lower employee costs,compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic, along with lower sales commissions, which were impacted by the decrease in revenue. Trade and barter expenses also decreased primarily driven by the acquisitions of Stuff Media and Jellilower Local trade expenses, which declined in the fourth quarter of 2018, wereline with lower Trade revenue. The decrease in SG&A expenses was partially offset by lower commissions as a result of our revenue mix and by a $1.3 million impact as a result of the application of fresh start accounting.higher bad debt expense.


SG&A expenses decreased $10.8$42.1 million during the six months ended June 30, 20192020 compared to the same period of 2018.2019. The decrease in our SG&A expenses was duedriven primarily by lower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic, along with lower tradesales commissions, which were impacted by the decrease in revenue. Trade and barter expenses also decreased primarily resulting from timing,driven by lower Local trade expenses, which declined in line with lower Trade revenue. The decrease in SG&A expenses was partially offset by higher employee costs primarily driven by the acquisitions of Stuff Media and Jelliincurred in relation to our modernization initiatives announced in the fourthfirst quarter of 2018. 2020 and higher bad debt expense.
Corporate Expenses
Corporate expenses decreased $0.9$14.9 million during the three months ended June 30, 20192020 compared to the same period of 2018, primarily2019, as a result of lower employee compensation, including variable incentive compensation expense, partially offset by higherexpenses and employee benefit costs and share-based compensation expense, which increased $2.5 million as a result of a new equity compensation plan enteredbenefits, resulting from cost reduction initiatives taken in connection with our Plan of Reorganization. response to the COVID-19 pandemic.
Corporate expenses decreased $5.0$14.1 million during the six months ended June 30, 20192020 compared to the same period of 2018, primarily2019, as a result of lower employee compensation, including variable incentive compensation,expenses and employee benefits, resulting from cost reduction initiatives taken in response to the COVID-19 pandemic. The decrease in Corporate expenses was partially offset by higher employee benefit costs incurred to support our modernization initiatives in January and February, as well as higher share-based compensation expense, which increased $2.3$5.3 million as a result of aour new post-emergence equity compensation plan entered in connection with our Plan of Reorganization.plan.

40

Depreciation and Amortization
Depreciation and amortization increased $9.1$29.4 million and $20.0$87.9 million during the three and six months ended June 30, 2019,2020, compared to the same periods of 2018,2019, respectively, primarily as a result of the application of fresh start accounting, which resulted in significantly higher values of our tangible and intangible long-lived assets.
Impairment Charges
We perform our annual impairment test on our goodwill Federal Communication Commission ("FCC")and FCC licenses billboard permits, and other intangible assets as of July 1 of each year. In addition, we test for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired.  As discussed above, as a result of the assumed potential adverse effects caused by the COVID-19 pandemic on estimated future cash flows, we recognized non-cash impairment charges to our indefinite-lived intangible assets and goodwill of $1.7 billion in the six months ended June 30, 2020.
We recognized non-cash impairment charges of $91.4 million in the six months ended June 30, 2019 on our indefinite-lived FCC licenses as a result of an increase in theour weighted average cost of capital used in performing the annual impairment test.capital. See Note 45, Property, Plant and Equipment, Intangible Assets and Goodwill, to the consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for a further description of the impairment charges.
Other Operating Income (Expense), Net
Other operating expense, net of $0.5 million and Other operating income, net of $3.1 million and Other operating expense, net of $1.2 million for the three months ended June 30, 2020 and 2019, respectively, and 2018, respectively,Other operating expense, net of $1.6 million and Other operating income, net of $3.1 million and Other operating expense, net of $4.5 million for the six months ended June 30, 20192020 and 2018,2019, respectively, relate to net gains and losses recognized on asset disposals.
Interest Expense
Interest expense increased $58.7$12.7 million and $262.5$102.8 million during the three and six months ended June 30, 2019,2020, respectively, compared to the same periods of 20182019 as a result of the interest recognized on the new debt issued in connection with our emergence from the Chapter 11 Cases andCases. During the new debt issued upon emergence. period from March 14, 2018 to May 1, 2019, while the Company was a debtor-in-possession, no interest expense was recognized on pre-petition debt.

In the Predecessor periods, we ceased to accrue interest expense on long-term debt, which was reclassified as Liabilities subject to compromise as of the Petition Date,March 14, 2018 (the “Petition Date”), resulting in $135.9 million and $533.4 million in contractual interest not being accrued in the three and six months ended June 30, 2019, respectively and $373.9 million and $440.3 million in contractual interest not being accrued inrespectively.

Gain (Loss) on Investments, net
During the three and six months ended June 30, 2018,2020, we recognized a gain on investments, net of $1.3 million and a loss on investments of $8.7 million, respectively. The gain on investments, net recognized during the quarter primarily related to a gain on one of our marketable equity securities. The loss on investments, net recognized during the six months ended June 30, 2020 was primarily in connection with estimated credit losses and declines in the value of our investments.
Loss on Investments, net
During the six months ended June 30, 2019, we recognized a loss of $10.2 million, primarily in connection with other-than-temporary declines in the value of our investments. GainWe did not recognize any gain or loss on investments net was $9.2 million forduring the sixthree months ended June 30, 2018.2019.

Other Expense,Income (Expense), Net
Other expense, net was $9.0$1.3 million and $9.1 million for the three and six months ended June 30, 2019,2020, respectively, which related primarily to costs incurred to refinance our Term Loan Facility and professional fees incurred in connection with the Chapter 11 Cases in the Successor period. Such expenses were included within Reorganization items, net in the Predecessor period.period while the Company was a debtor-in-possession.


Other expense, net was $2.1$9.0 million and $22.5$9.1 million for the three and six months ended June 30, 2018,2019, respectively. Amounts in the six months ended June 30, 20182019 related primarily to professional fees incurred directly in connection with the Chapter 11 Cases before the March 14, 2018 Petition Date. Such expenses were included within Reorganization items, net in the post-petition period.period while the Company was a debtor-in-possession.



41

Reorganization Items, Net


During the three and six months ended June 30, 2019, we recognized Reorganization items, net of $9,497.9 million and $9,461.8 million respectively, related to our emergence from the Chapter 11 Cases, which consisted primarily of the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities.In addition, Reorganization items, net included professional fees recognized between the March 14, 2018 Petition Date and the May 1, 2019 Effective Date in connection with the Chapter 11 Cases. See Note 3 to our Consolidated Financial Statements included in Part I of this Quarterly Report on Form 10-Q.


DuringIncome Tax Benefit (Expense)

        The effective tax rate for the Successor Company for the three and six months ended June 30, 2018, we recognized Reorganization items, net2020 was 18.1% and 9.3%, respectively. The effective tax rate for the six months ended June 30, 2020 was primarily impacted by the impairment charges discussed above. The deferred tax benefit primarily consists of $(68.7)$125.5 million and $(260.8) million, respectively, related to the Chapter 11 Cases, consisting ofFCC license impairment charges recorded during the write-off of long-term debt fees and original issue discounts on debt subject to compromise, costs incurred in connection with our DIP facility and professional fees. See Note 3 to our Consolidated Financial Statements included in Part I of this Quarterly Report on Form 10-Q.period.


Income Tax Benefit (Expense)

The effective tax rate for the Successor Company for the Period from May 2, 2019 through June 30, 2019 was 29.2%. The effective tax rate for continuing operations of the Predecessor Company for Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) was 1.1%, and 0.4%, respectively. The income tax expense for the Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consists of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1)tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.


The effective tax rate for continuing operations for
42

Income from Discontinued Operations, Net

        During the three and six months ended June 30, 2018 was 130.3%2019, we recognized Income from discontinued operations, net of tax of $1,854.7 million and 5.7%, respectively. The 2018 effective tax rates$1,685.1 million, respectively, related to the separation of our domestic and international outdoor advertising businesses, which were primarily impacted bypreviously reported as the valuation allowance recorded against deferred tax assets resulting from current period interest expense limitation carryforward in U.S. federalAmericas outdoor and certain state jurisdictions dueInternational outdoor segments prior to uncertainty regarding our abilitythe Separation.

Net Income (Loss) Attributable to realize those assets in future periods.the Company


As a result of the Plan of Reorganization,        Net loss attributable to the Company expectsdecreased $11,534.6 million to $197.3 million during the majoritythree months ended June 30, 2020 compared to Net income attributable to the Company of its federal NOL carryforwards and certain state NOL carryforwards to be reduced or eliminated$11,337.3 million during the three months ended June 30, 2019, primarily as a result of the CODI realized$9.5 billion gain from the bankruptcy emergence. PursuantReorganization items net related to the attribute reduction and ordering rules set forthChapter 11 Cases in the Internal Revenue Code2019 period, the $1.9 billion gain on disposal of 1986, as amended (the “Code”), the reductionour Outdoor business in the Company’s tax attributes for excludible CODI does not occur until2019 period and due to the last day ofother factors discussed above.

Net loss attributable to the Company’s tax year, December 31, 2019. Accordingly,Company decreased $13,109.0 million to $1,886.1 million during the tax adjustments recorded in the Predecessor period represent our best estimate using all available information atsix months ended June 30, 2019. Additionally,2020 compared to Net income attributable to the Company recognized a capital loss for tax purposesof $11,222.9 million during the six months ended June 30, 2019, primarily as a result of the series of transactions$9.5 billion gain from Reorganization items net related to effect the Plan of Reorganization. This capital loss may be carried forward to offset capital gains recognized by the CompanyChapter 11 Cases in the next five years, subject to annual limitations under Section 3822019 period, the $1.7 billion gain on disposal of our Outdoor business in the Code. The deferred tax asset associated with the capital loss carryforward is offset by a valuation allowance2019 period and due to significant uncertainty regarding the Company’s abilityother factors discussed above.
Reconciliation of Operating Income (Loss) to utilize the carryforward prior to its expiration. The final tax impacts of the bankruptcy emergence, as well as the Plan of Reorganization’s overall effect on the Company’s tax attributes and tax basis in assets will be refined based on the Company’s final December 31, 2019 financial position as required under the Code. The final tax impacts on the companies tax attributes could change significantly from the current estimates.Adjusted EBITDA

(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,
2020201920192019
Operating income (loss)$(159,087) $133,688  $47,891  $181,579  
Depreciation and amortization(1)
103,347  59,383  14,544  73,927  
Impairment charges5,378  —  —  —  
Other operating (income) expense, net506  (3,246) 127  (3,119) 
Share-based compensation expense(2)
4,218  3,039  105  3,144  
Restructuring and reorganization expenses16,355  1,889  5,430  7,319  
Adjusted EBITDA(3)
$(29,283) $194,753  $68,097  $262,850  



The table below presents the comparison of our historical results of operations for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Operating income (loss)$(1,889,866) $133,688  $67,040  $200,728  
Depreciation and amortization(1)
200,115  59,383  52,834  112,217  
Impairment charges1,733,235  —  91,382  91,382  
Other operating (income) expense, net1,572  (3,246) 154  (3,092) 
Share-based compensation expense(2)
8,843  3,039  498  3,537  
Restructuring and reorganization expenses57,157  1,889  13,241  15,130  
Adjusted EBITDA(3)
$111,056  $194,753  $225,149  $419,902  
43

(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30, Three Months Ended June 30,
 2019  2019 2019 2018
Revenue$635,646
  $277,674
 $913,320
 $891,764
Operating expenses:        
Direct operating expenses (excludes depreciation and amortization)184,291
  92,581
 276,872
 263,752
Selling, general and administrative expenses (excludes depreciation and amortization)227,140
  103,552
 330,692
 328,200
Corporate expenses (excludes depreciation and amortization)34,390
  18,979
 53,369
 52,478
Depreciation and amortization59,383
  14,544
 73,927
 64,877
Other operating income (expense), net3,246
  (127) 3,119
 (1,218)
Operating income133,688
  47,891
 181,579
 181,239
Interest expense (income), net69,711
  (400) 69,311
 10,613
Gain on investments, net—
  —
 —
 9,175
Equity in loss of nonconsolidated affiliates(24)  (59) (83) (32)
Other income (expense), net(9,157)  150
 (9,007) (2,058)
Reorganization items, net—
  9,497,944
 9,497,944
 (68,740)
Income from continuing operations before income taxes54,796
  9,546,326
 9,601,122
 108,971
Income tax benefit (expense)(16,003)  (100,289) (116,292) (142,032)
Income (loss) from continuing operations38,793
  9,446,037
 9,484,830
 (33,061)
Income (loss) from discontinued operations, net of tax—
  1,854,677
 1,854,677
 (33,229)
Net income (loss)38,793
  11,300,714
 11,339,507
 (66,290)
Less amount attributable to noncontrolling interest—
  2,190
 2,190
 3,609
Net income (loss) attributable to the Company$38,793
  $11,298,524
 $11,337,317
 $(69,899)


(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30, Six Months Ended June 30,
 2019  2019 2019 2018
Revenue$635,646
  $1,073,471
 $1,709,117
 $1,664,536
Operating expenses:        
Direct operating expenses (excludes depreciation and amortization)184,291
  359,696
 543,987
 504,818
Selling, general and administrative expenses (excludes depreciation and amortization)227,140
  436,345
 663,485
 674,292
Corporate expenses (excludes depreciation and amortization)34,390
  66,020
 100,410
 105,376
Depreciation and amortization59,383
  52,834
 112,217
 132,251
Impairment charges—
  91,382
 91,382
 —
Other operating income (expense), net3,246
  (154) 3,092
 (4,450)
Operating income133,688
  67,040
 200,728
 243,349
Interest expense (income), net69,711
  (499) 69,212
 331,746
Gain (loss) on investments, net—
  (10,237) (10,237) 9,175
Equity in loss of nonconsolidated affiliates(24)  (66) (90) (63)
Other income (expense), net(9,157)  23
 (9,134) (22,474)
Reorganization items, net—
  9,461,826
 9,461,826
 (260,795)
Income (loss) from continuing operations before income taxes54,796
  9,519,085
 9,573,881
 (362,554)
Income tax benefit (expense)(16,003)  (39,095) (55,098) 20,701
Income (loss) from continuing operations38,793
  9,479,990
 9,518,783
 (341,853)
Income (loss) from discontinued operations, net of tax—
  1,685,123
 1,685,123
 (157,477)
Net income (loss)38,793
  11,165,113
 11,203,906
 (499,330)
Less amount attributable to noncontrolling interest—
  (19,028) (19,028) (12,437)
Net income (loss) attributable to the Company$38,793
  $11,184,141
 $11,222,934
 $(486,893)
The tables below present the comparison of our revenue streams for the periods presented:
(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30, Three Months Ended June 30,
 2019  2019 2019 2018
Broadcast Radio$390,540
  $170,632
 $561,172
 $568,968
Digital64,238
  26,840
 91,078
 68,574
Networks105,426
  50,889
 156,315
 146,981
Sponsorship and Events31,790
  10,617
 42,407
 41,256
Audio and Media Services40,537
  17,970
 58,507
 61,417
Other4,236
  1,483
 5,719
 6,169
Eliminations(1,121)  (757) (1,878) (1,601)
  Revenue, total$635,646
  $277,674
 $913,320
 $891,764


(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30, Six Months Ended June 30,
 2019  2019 2019 2018
Broadcast Radio$390,540
  $657,864
 $1,048,404
 $1,059,111
Digital64,238
  102,789
 167,027
 127,941
Networks105,426
  189,088
 294,514
 279,032
Sponsorship and Events31,790
  50,330
 82,120
 79,148
Audio and Media Services40,537
  69,362
 109,899
 110,759
Other4,236
  6,606
 10,842
 11,818
Eliminations(1,121)  (2,568) (3,689) (3,273)
  Revenue, total$635,646
  $1,073,471
 $1,709,117
 $1,664,536



Reconciliation of Net Income (Loss)(Income) Loss to EBITDA and Adjusted EBITDA
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,
2020201920192019
Net income (loss)$(197,317) $38,793  $11,300,714  $11,339,507  
Income from discontinued operations, net of tax—  —  (1,854,677) (1,854,677) 
Income tax (benefit) expense(43,742) 16,003  100,289  116,292  
Interest expense (income), net81,963  69,711  (400) 69,311  
Depreciation and amortization(1)
103,347  59,383  14,544  73,927  
EBITDA$(55,749) $183,890  $9,560,470  $9,744,360  
Reorganization items, net—  —  (9,497,944) (9,497,944) 
Gain on investments, net(1,280) —  —  —  
Other expense (income), net1,258  9,157  (150) 9,007  
Equity in loss of nonconsolidated affiliates31  24  59  83  
Impairment charges5,378  —  —  —  
Other operating (income) expense, net506  (3,246) 127  (3,119) 
Share-based compensation expense(2)
4,218  3,039  105  3,144  
Restructuring and reorganization expenses16,355  1,889  5,430  7,319  
Adjusted EBITDA(3)
$(29,283) $194,753  $68,097  $262,850  

(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Net income (loss)$(1,886,053) $38,793  $11,165,113  $11,203,906  
Income from discontinued operations, net of tax—  —  (1,685,123) (1,685,123) 
Income tax (benefit) expense(194,253) 16,003  39,095  55,098  
Interest expense (income), net172,052  69,711  (499) 69,212  
Depreciation and amortization(1)
200,115  59,383  52,834  112,217  
EBITDA$(1,708,139) $183,890  $9,571,420  $9,755,310  
Reorganization items, net—  —  (9,461,826) (9,461,826) 
Loss on investments, net8,675  —  10,237  10,237  
Other (income) expense, net9,118  9,157  (23) 9,134  
Equity in loss of nonconsolidated affiliates595  24  66  90  
Impairment charges1,733,235  —  91,382  91,382  
Other operating (income) expense, net1,572  (3,246) 154  (3,092) 
Share-based compensation expense(2)
8,843  3,039  498  3,537  
Restructuring and reorganization expenses57,157  1,889  13,241  15,130  
Adjusted EBITDA(3)
$111,056  $194,753  $225,149  $419,902  
44

(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from April 1, 2019 through May 1, Three Months Ended June 30, Three Months Ended June 30,
 2019  2019 2019 2018
Net income (loss)$38,793
  $11,300,714
 $11,339,507
 $(66,290)
(Income) loss from discontinued operations, net of tax—
  (1,854,677) (1,854,677) 33,229
Income tax expense16,003
  100,289
 116,292
 142,032
Interest expense (income), net69,711
  (400) 69,311
 10,613
Depreciation and amortization59,383
  14,544
 73,927
 64,877
EBITDA from continuing operations$183,890
  $9,560,470
 $9,744,360
 $184,461
Reorganization items, net—
  (9,497,944) (9,497,944) 68,740
Gain on investments, net—
  —
 —
 (9,175)
Other (income) expense, net9,157
  (150) 9,007
 2,058
Equity in loss of nonconsolidated affiliates24
  59
 83
 32
Other operating (income) expense, net(3,246)  127
 (3,119) 1,218
Share-based compensation3,039
  105
 3,144
 594
Restructuring and reorganization expenses1,889
  5,430
 7,319
 6,856
Adjusted EBITDA from continuing operations(1)
$194,753
  $68,097
 $262,850
 $254,784
(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30, Six Months Ended June 30,
 2019  2019 2019 2018
Net income (loss)$38,793
  $11,165,113
 $11,203,906
 $(499,330)
(Income) loss from discontinued operations, net of tax—
  (1,685,123) (1,685,123) 157,477
Income tax (benefit) expense16,003
  39,095
 55,098
 (20,701)
Interest expense (income), net69,711
  (499) 69,212
 331,746
Depreciation and amortization59,383
  52,834
 112,217
 132,251
EBITDA from continuing operations$183,890
  $9,571,420
 $9,755,310
 $101,443
Reorganization items, net—
  (9,461,826) (9,461,826) 260,795
(Gain) loss on investments, net—
  10,237
 10,237
 (9,175)
Other (income) expense, net9,157
  (23) 9,134
 22,474
Equity in loss of nonconsolidated affiliates24
  66
 90
 63
Impairment charges—
  91,382
 91,382
 —
Other operating (income) expense, net(3,246)  154
 (3,092) 4,450
Share-based compensation3,039
  498
 3,537
 1,172
Restructuring and reorganization expenses1,889
  13,241
 15,130
 13,536
Adjusted EBITDA from continuing operations(1)
$194,753
  $225,149
 $419,902
 $394,758
(1)We define Adjusted EBITDA as consolidated Operating income adjusted to exclude restructuring and reorganization expenses included within Direct operating expenses, Selling, General and Administrative expenses, (“SG&A”) and Corporate expenses and non-cash compensation expenses included within Corporate expenses, as well as the following line items presented(1)Increase in our Statements of Operations:


Depreciation and amortization;amortization is driven by the application of fresh start accounting, resulting in significantly higher value of our tangible and intangible assets.
(2)Increase in Share-based compensation expense is due to our new equity compensation plan entered into in connection with our Plan of Reorganization.
(3)We define Adjusted EBITDA as consolidated Operating income (loss) adjusted to exclude restructuring and reorganization expenses included within Direct operating expenses, SG&A expenses, Corporate expenses and share-based compensation expenses included within Corporate expenses, as well as the following line items presented in our Statements of Operations: Depreciation and amortization, Impairment charges;charges and Other operating income (expense), net. Alternatively, Adjusted EBITDA is calculated as Net income (loss), adjusted to exclude (Income) loss from discontinued operations, net of tax, Income tax (benefit) expense, Interest expense (income), net, Depreciation and amortization, Reorganization items, net, Other (income) expense, net, Gain (loss)(Gain) Loss on investments, net, Other (income) expense, net, Equity in earnings (loss)loss of nonconsolidated affiliates, net, Impairment charges, Other operating (income) expense, net, Share-based compensation expense, and Restructuringrestructuring and reorganization expenses. Restructuring expenses primarily include severance expenses incurred in connection with cost saving initiatives.initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle. Reorganization expenses primarily include the amortization of retention bonus amounts paid or payable to certain members of management directly as a result of the Reorganization. We use Adjusted EBITDA, among other measures, to evaluate the Company’s operating performance. This measure is among the primary measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates. In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry. Since Adjusted EBITDA is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, operating income or net income (loss) as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies. Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs. Because it excludes certain financial information compared with operating income and compared with consolidated net income (loss), the most directly comparable GAAP financial measure,measures, users of this financial information should consider the types of events and transactions which are excluded.

Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,
2020201920192019
Cash provided by (used for) operating activities from continuing operations$11,369  $83,201  $(144,171) $(60,970) 
Purchases of property, plant and equipment by continuing operations(17,882) (17,435) (13,244) (30,679) 
Free cash flow from (used for) continuing operations(1)
$(6,513) $65,766  $(157,415) $(91,649) 

45

(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Cash provided by (used for) operating activities from continuing operations$102,909  $83,201  $(7,505) $75,696  
Purchases of property, plant and equipment by continuing operations(39,546) (17,435) (36,197) (53,632) 
Free cash flow from (used for) continuing operations(1)
$63,363  $65,766  $(43,702) $22,064  
(1)We define Free cash flow from (used for) continuing operations ("Free Cash Flow") as Cash provided by (used for) operating activities from continuing operations less capital expenditures, which is disclosed as Purchases of property, plant and equipment by continuing operations in the Company's Consolidated Statements of Cash Flows. We use Free Cash Flow, among other measures, to evaluate the Company’s liquidity and its ability to generate cash flow. We believe that Free Cash Flow is meaningful to investors because we review cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations. In addition, we believe that Free Cash Flow helps improve investors' ability to compare our liquidity with other companies. Since Free Cash Flow is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, Cash provided by operating activities and may not be comparable to similarly titled measures employed by other companies. Free Cash Flow is not necessarily a measure of our ability to fund our cash needs.

Share-Based Compensation Expense
Historically, we had granted restricted shares of the Company's Class A common stock to certain key individuals. In connection with the effectiveness of our Plan of Reorganization, all unvested restricted shares were canceled.
Pursuant to the new equity incentive plan (the "Post-Emergence Equity Plan") we entered intoadopted in connection with the effectiveness of our Plan of Reorganization, we have granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.
Share-based compensation expenses are recorded in corporate expenses and were $3.1$4.2 million and $0.6$3.1 million for the three months ended June 30, 20192020 and 2018,2019, respectively, and $3.5$8.8 million and $1.2$3.5 million for the six months ended June 30, 20182020 and 2017,2019, respectively.
As of June 30, 2019,2020, there was $79.0$48.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions. This cost is expected to be recognized over a weighted average period of approximately 3.93 years. In addition, as of June 30, 2019, there was $3.4 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on market performance and service conditions. This cost will be recognized when it becomes probable that the performance condition will be satisfied.
46


LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following discussion highlights cash flow activities during the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Cash provided by (used for):
Operating activities$102,909  $83,201  $(40,186) $43,015  
Investing activities$(50,681) $(17,787) $(261,144) $(278,931) 
Financing activities$65,512  $(684) $(55,557) $(56,241) 
Free Cash Flow(1)
$63,363  $65,766  $(43,702) $22,064  
(In thousands)Successor Company  Predecessor Company Non-GAAP Combined Predecessor Company
 Period from May 2, 2019 through June 30,  Period from January 1, 2019 through May 1, Six Months Ended June 30, Six Months Ended June 30,
 2019  2019 2019 2018
Cash provided by (used for):        
Operating activities$83,201
  $(40,186) $43,015
 $444,357
Investing activities$(17,787)  $(261,144) $(278,931) $(78,285)
Financing activities$(684)  $(55,557) $(56,241) $(360,821)




(1) For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations” in this MD&A.
Operating Activities
Cash provided by operating activities for the six months ended June 30, 2020 was $102.9 million compared to $43.0 million duringof cash provided by operating activities in the six months ended June 30, 2019. 
Cash provided by operating activities from continuing operations increased from $75.7 million in the six months ended June 30, 2019 compared to $444.4$102.9 million of cash provided by operating activities duringin the six months ended June 30, 2018.  The decrease2020 primarily as a result of changes in cash providedworking capital balances, particularly accounts receivable, as well as accounts payable and accrued expenses, which were affected by operating activities is primarily attributed to cashthe timing of payments. In addition, we paid in relation to Reorganization items, net of $196.3 million during the six months ended June 30, 2019 the impact of Separation of CCOH of $115.9 million and changes in working capital balances, particularly accounts payable, which were affectedrelation to Reorganization items, net. The increase in cash provided by operating activities was offset by a decrease in Revenue driven by the timingdecline in advertising spend resulting from the economic slow-down impacted by the COVID-19 pandemic. In addition, cash interest payments made by continuing operations increased $181.2 million as a result of payments. Cash paid for interest was $137.5 million during the six months ended June 30, 2019payments on our debt issued upon our emergence compared to $206.9 million during the six months ended June 30, 2018. The decrease of $69.5 million in cash paid forpre-petition interest is due primarily to the interest paid on long-term debtpayments made in the Predecessor period prior to the Petition Date.year.  The Company ceased to paypaying interest on long-term debt classified as Liabilities subject to compromise fromafter the Petition Date.March 14, 2018 petition date. 

Investing Activities

Cash used for investing activities of $50.7 million during the six months ended June 30, 2020 primarily reflects $39.5 million in cash used for capital expenditures. We spent $32.8 million for capital expenditures in our Audio segment primarily related to IT infrastructure, $1.6 million in our Audio & Media Services segment, primarily related to acquired software and $5.1 million in Corporate primarily related to equipment and software purchases.
Cash used for investing activities of $278.9 million during the six months ended June 30, 2019 primarily reflects $222.4 million in cash used for investing activities from discontinued operations. In addition, we used $53.6 million for capital expenditures. We spent $44.7 million for capital expenditures in our Audio segment primarily related to IT infrastructure, $2.1 million in our Audio & Media Services segment, primarily related to acquired software and $6.8 million in Corporate primarily related to equipment and software purchases.

47

Financing Activities
Cash used for investingprovided by financing activities of $78.3$65.5 million during the six months ended June 30, 20182020 primarily reflects $58.3resulted from the $350.0 million in cash used for investing activities from discontinued operations. In addition, we used $27.3draw on our ABL Facility, partially offset by the $150.0 million for capital expenditures. We spent $23.9 prepayment on our Term Loan Facility and repayments of $115.0 million for capital expenditures in our Audio segment primarily related to IT infrastructure, $0.8 million in our Audio & Media Services segment, primarily related to acquired software and $2.7 million in Corporate primarily related to equipment and software purchases.
Financing Activities of amounts drawn under the ABL Facility.
Cash used for financing activities ofwas $56.2 million during the six months ended June 30, 2019 primarily resulted from the payment by iHeartCommunications to CCOH as CCOH's recovery of its claims under the Due from iHeartCommunications Note, partially offset by $60.0 million in proceeds received from the issuance of the iHeart Operations Preferred Stock.
Cash used for financing activities of $360.8 million during the six months ended June 30, 2018 primarily resulted from payments on long-term debt and on our receivables based credit facility. In connection with the replacement of the iHeartCommunications' receivables based credit facility with a new DIP Facility on June 14, 2018, we repaid the outstanding $306.4 million and $74.3 million balances of the receivables based credit facility's term loan and revolving credit commitments, respectively.
Anticipated Cash Requirements
The Separation and Reorganization resulted in a new capital structure with significantly lower levels of long-term debt and a corresponding decrease in debt service requirements after emergence compared to historical debt levels. As a result of the Separation and Reorganization, our consolidated long-term debt decreased from approximately $16 billion to $5.8 billion. In the six months ended June 30, 2019, we paid $137.5 million of cash interest, and incurred contractual interest of $533.4 million that was not paid.
In connection with the Separation and Reorganization, we paid CCOH $115.8 million in settlement of intercompany payable balances, including settlement of the Due from iHeartCommunications Note and post-petition intercompany balances, $15.8 million to cure contracts, $17.5 million for general unsecured claims, and $196.3 million for professional fees (of which $125 million was paid on the Effective Date).
Our primary sources of liquidity are cash on hand, which consisted of $127.2$517.7 million as of June 30, 2019,2020, cash flow from operations and borrowing capacity under our $450.0 million ABL Facility. On March 13, 2020, iHeartCommunications, Inc. (“iHeartCommunications”), our indirect wholly-owned subsidiary, borrowed $350.0 million principal amount under our $450.0 million ABL Facility as a precautionary measure to preserve iHeartCommunications’ financial flexibility in light of the uncertainty in the global economy resulting from the COVID-19 pandemic. During the three months ended June 30, 2020, we repaid $115.0 million principal amount drawn under our ABL Facility. As of June 30, 2019, we2020, iHeartCommunications had a facility sizeborrowing base of $450.0$289.4 million under iHeartCommunications' ABL Facility, had noand utilization of $235.0 million in outstanding borrowings outstanding and $59.2$41.2 million ofin outstanding letters of credit, resulting in $390.8$13.2 million of excess availability.availability, such availability being subject to further restrictions contained within the credit agreement governing the ABL Facility.

In July 2020, the Company issued $450.0 million of incremental term loans, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. Following the repayment of all outstanding borrowings under the ABL Facility, due to restrictions contained primarily in our mandatorily redeemable preferred stock agreements, we had the ability to borrow approximately $160 million under the ABL Facility. Our cash balance was $517.7 million as of June 30, 2020. Together with our adjusted cash balance1 as of June 30, 2020 of approximately $708 million and our borrowing capacity under the ABL Facility, our total available liquidity2 was approximately $868 million. We will have the option to redeem the preferred stock beginning on May 1, 2022, or at an earlier date under certain circumstances in accordance with the documents governing the preferred stock instrument. We cannot determine the full extent of COVID-19’s impact on our business at this time and we are monitoring this rapidly evolving situation closely. While the challenges that COVID-19 has created for advertisers and consumers have had a significant impact on our revenue for the three and six months ended June 30, 2020 and has created a business outlook that is less clear in the near term, we believe that we have sufficient liquidity to fund our operations for at least the next twelve months.

We expect that our primary anticipated uses of liquidity will be to fund our working capital, make interest payments, and voluntary prepayments of principal on our long-term debt and to fund capital expenditures and maintain operations in light of the COVID-19 pandemic and other obligations. These other obligations include dividend payments to be due to the investor of preferred stockholder of iHeart Operations Preferred Stock, the terms of which are further described in Note 86, Long-term Debt to our financial statements included herein. For 2019, weWe anticipate that we will have approximately


$400 $84 million of annual cash interest payments. payments in the third quarter of 2020 and approximately $170 million of cash interest payments in the remainder of 2020.

As a result of certain favorable tax provisions in the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, we expect our 2020 cash income tax payments to be insignificant. As a result of the provisions regarding interest deductions and the deferral of certain employment taxes into future periods, cash tax payments in 2020 are expected to be approximately $100 million lower than they would been absent these favorable provisions.

Over the past ten years, we have transitioned our Audio business from a single platform radio broadcast operator to a company with multiple platforms, including podcasting, networks and live events. Early in the first quarter of 2020, we implemented our modernization initiatives to take advantage of the significant investments we have made in new technologies to build an operating infrastructure that provides better quality and newer products and delivers new cost efficiencies. We have also invested in numerous technologies and businesses to increase the competitiveness of our inventory with our advertisers and our audience.

1 Adjusted for the impact of the amendment entered into in July 2020 to issue $450.0 million of incremental term loan commitments, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.
2 Total available liquidity defined as cash and cash equivalents plus available borrowings under the ABL Facility. We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.
48

In response to the COVID-19 pandemic, in an effort to further strengthen the Company's financial flexibility and efficiently manage through the period of economic slowdown and uncertainty, the Company is continuing to take the following measures, which are expected to generate approximately $200 million in operating cost savings in 2020:
•Substantial reduction in certain operating expenses, such as suspension of new employee hiring, travel and entertainment expenses, 401(k) matching expenses, consulting fees and other discretionary expenses.
•Reduction in planned capital expenditures to a level that we believe will still enable the Company to make key investments to continue our strategic initiatives related to Smart Audio and Digital, including podcasting.
•Reduction in compensation for senior management and other employees of the Company, including a 100% reduction of the Company's Chief Executive Officer's annual base salary and bonus.
•Implementation of a furlough for certain employees that are non-essential at this time.
In addition, as a result of the decrease in revenue as a result of the COVID-19 pandemic, certain variable expenses including event production costs and sales commissions, as well as other variable compensation, showed a corresponding decrease.
We believe that our cash balance, our cash flow from operations and availability under our ABL Facility provide us with sufficient liquidity to fund our core operations, maintain key personnel and meet our other material obligations. In addition, none of our long-term debt includes maintenance covenants that could trigger early repayment. We fully appreciate the unprecedented challenges posed by the COVID-19 pandemic, however, we remain confident in our business, our employees and our strategy. We believe that our ability to generate cash flow from operations from theseour business initiatives, our current cash on hand and borrowing capacityavailability under ourthe ABL Facility taken together, will provide sufficient resources to fund and operate our business, fund capital expenditures and other obligations and make interest payments and voluntary prepayments of principal on our long-term debt for at least the next 12 months and thereafter formonths. If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the foreseeableissuance of debt or equity securities; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms or at all in the future.
On August 7, 2019,February 3, 2020, iHeartCommunications completed the sale of $750.0made a $150.0 million in aggregate principal amount of 5.25% Senior Secured Notes due 2027 (the "New Senior Secured Notes") in a private placement. We used the net proceeds from the New Senior Secured Notes, together withprepayment using cash on hand and entered into an agreement to prepay at par $740.0 million of borrowings outstanding under our Term Loan Facility. Our Term Loan Facility called for quarterly principal payments of approximately $8.75 million in addition to interest payments at LIBOR + 4.00%.  As a result of our $740 million prepayment, no such principal payments are required for the remaining term ofamend the Term Loan Facility -to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.

On July 16, 2020, iHeartCommunications entered into an additional amendment to the Credit Facility (“Amendment No. 2”) to provide for $450.0 million, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. The incremental term loans issued pursuant to Amendment No. 2 have an approximately $35 million annual reductioninterest rate of 4.00% for Eurocurrency Rate Loans and 3.00% for Base Rate Loans (subject to a LIBOR floor of 0.75% and Base Rate floor of 1.75%). Amendment No. 2 also modifies certain other provisions of the Credit Agreement.

In connection with the Separation and Reorganization, we entered into the following transactions which may require ongoing capital commitments:
Transition Services Agreement
Pursuant to the Transition Services Agreement between us, iHeartMedia Management Services, Inc. (“iHM Management Services”), iHeartCommunications and CCOH, for one year from the Effective Date, we have agreed to provide, CCOH with certain administrative and support services and other assistance which CCOH will utilize in required debtthe conduct of its business as such business was conducted prior to the Separation. As of June 30, 2020, most of these services have been successfully transitioned to CCOH. The Company continues to provide certain information systems and other limited support services. CCOH has requested extensions of the term for certain individual services, primarily related to information systems, for one-month periods through August 31, 2020 and may request further one-month extensions of such services up to May 1, 2021.
CCOH may terminate the Transition Services Agreement with respect to all or any individual service, payments.in whole or in part, upon 30 days’ prior written notice, provided that any co-dependent services must be terminated concurrently. For
49

additional information, see Note 2, Discontinued Operations to the consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for a further description.
New Tax Matters Agreement
In connection with the Separation, we entered into the New Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and CCOH and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.
The New Tax Matters Agreement requires that iHeartMedia and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against certain tax claims related to the Separation. In addition, annual cash interest payments are expected to be approximately $7 million lower than would have been required before the refinancing transaction.New Tax Matters Agreement requires that CCOH indemnify iHeartMedia for certain income taxes paid by iHeartMedia on behalf of CCOH and its subsidiaries.
Sources of Capital
As of June 30, 20192020 and December 31, 2018,2019, we had the following debt outstanding, net of cash and cash equivalents:
(In millions)Successor Company
June 30, 2020December 31, 2019
Term Loan Facility due 2026(1)(3)
$2,090.8  $2,251.3  
Asset-based Revolving Credit Facility due 2023(2)(3)
235.0  —  
6.375% Senior Secured Notes due 2026800.0  800.0  
5.25% Senior Secured Notes due 2027750.0  750.0  
4.75% Senior Secured Notes due 2028500.0  500.0  
Other Secured Subsidiary Debt23.6  21.0  
Total Secured Debt4,399.4  4,322.3  
8.375% Senior Unsecured Notes due 20271,450.0  1,450.0  
Other Subsidiary Debt6.3  12.5  
Long-term debt fees(18.6) (19.4) 
Total Debt5,837.1  5,765.4  
Less: Cash and cash equivalents517.7  400.3  
$5,319.4  $5,365.1  
(In millions)Successor Company  Predecessor Company
 June 30, 2019  December 31, 2018
Term Loan Facility due 2026(1)
$3,498.2
  $—
Debtors-in-Possession Facility(2)
—
  —
Asset-based Revolving Credit Facility due 2023(2)
—
  —
6.375% Senior Secured Notes due 2026800.0
  —
Other Secured Subsidiary Debt4.4
  —
Total Secured Debt4,302.6
  —
     
8.375% Senior Unsecured Notes due 20271,450.0
  —
Other Subsidiary Debt57.9
  46.1
Liabilities subject to compromise(3)
—
  15,149.5
Total Debt5,810.5
  15,195.6
Less: Cash and cash equivalents127.2
  224.0
 $5,683.3
  $14,971.6
(1)On August 7, 2019, iHeartCommunications issued the New Senior Secured Notes, the proceeds of which were used, together with(1)On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility, plus approximately $0.8 million of accrued and unpaid interest to, but not including, the date of prepayment.
(2)The Debtors-in-Possession Facility (the "DIP" Facility), which terminated with our emergence from the Chapter 11 Cases, provided for borrowings of up to $450.0 million. On the Effective Date, the DIP Facility was repaid and canceled and we entered into the ABL Facility. As of June 30, 2019, we had a facility size of $450.0 million under iHeartCommunications' ABL Facility, had no outstanding borrowings and had $59.2 million of outstanding letters of credit, resulting in $390.8 million of excess availability.
(3)In connection with our Chapter 11 Cases, the $6.3 billion outstanding under the Senior Secured Credit Facilities, the $1,999.8 million outstanding under the 9.0% Priority Guarantee Notes due 2019, the $1,750.0 million outstanding under the 9.0% Priority Guarantee Notes due 2021, the $870.5 million of 11.25% Priority Guarantee Notes due 2021, the $1,000.0 million outstanding under the 9.0% Priority Guarantee Notes due 2022, the $950.0 million outstanding under the 10.625% Priority Guarantee Notes due 2023, $6.0 million outstanding Other Secured Subsidiary Debt, the $1,781.6 million outstanding under the 14.0% Senior Notes due 2021, the $475.0 million outstanding under the Legacy Notes and $10.8 million outstanding Other Subsidiary Debt were reclassified to Liabilities subject to compromise in our Consolidated Balance Sheet as of December 31, 2018. As of the Petition Date, we ceased accruing interest expense in relation to long-term debt reclassified as Liabilities subject to compromise.


Asset-based Revolving Credit Facility due 2023

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

The ABL Facility provides for a senior secured asset-based revolving credit facility in the aggregate principal amount of up to $450.0 million, with amounts available from time to time (including in respect of letters of credit) equal to the lesser of (A) the borrowing base, which equals the sum of (i) 90.0% of the eligible accounts receivable of iHeartCommunications and the subsidiary guarantors and (ii) 100% of qualified cash, each subject to customary reserves and eligibility criteria, and (B) the aggregate revolving credit commitments. Subject to certain conditions, iHeartCommunications may at any time request one or more increases in the amount of revolving credit commitments, in an amount up to the sum of (x) $150.0 million and (y) the amount by which the borrowing base exceeds the aggregate revolving credit commitments.
Interest Rate and Fees

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

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

Maturity

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

Prepayments

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

Guarantees and Security

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



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

Term Loan Facility due 2026

On the Effective Date, iHeartCommunications, as borrower, entered into a Credit Agreement (the “Term Loan Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Citibank N.A., as administrative and collateral agent, governing the approximately $3.5 billion Term Loan Facility. On the Effective Date, iHeartCommunications issued an aggregate of approximately $3.5 billion principal amount of senior secured term loans underamend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% and to modify certain Claimholders pursuant tocovenants contained in the Plan of Reorganization. The Term Loan Facility matures on May 1, 2026.Credit Agreement.

Interest Rate and Fees

Term loans(2)On March 13, 2020, iHeartCommunications borrowed $350.0 million under the Term LoanABL Facility, bear interest at a rate per annum equal to the applicable rate plus, at iHeartCommunications’ option, either (1) a base rate or (2) a eurocurrency rate. The applicable rate for such term loans is 3.00% with respect to base rate loans and 4.00% with respect to eurocurrency rate loans.

Collateral and Guarantees

The Term Loan Facility is guaranteed by Capital I and eachproceeds of iHeartCommunications’ existing and future material wholly-owned restricted subsidiaries, subject to certain exceptions. All obligationswhich were invested as cash on the Balance Sheet. During the three months ended June 30, 2020, iHeartCommunications voluntarily repaid $115.0 million principal amount drawn under the Term LoanABL Facility. As of June 30, 2020, the ABL Facility had a borrowing base of $289.4 million and $235.0 million of outstanding borrowings and $41.2 million of outstanding letters of credit, resulting in $13.2 million of availability. Amounts available under the guarantees of those obligations,ABL Facility are secured, subjectcalculated using a borrowing base calculated by reference to permitted liens and other exceptions, by a first priority lienour outstanding accounts receivable. To the extent decreases in substantially all of the assets of iHeartCommunications and all of the guarantors’ assets, including a lien on the capital stock of iHeartCommunications and certain of its subsidiaries owned by a guarantor, other than theour accounts receivable and related assets of iHeartCommunications and all ofresult in the subsidiary guarantors, and by a second priority lien on accounts receivable and related assets securing iHeartCommunications’ ABL Facility.

Prepayments

iHeartCommunications isborrowing base decreasing to an amount below the amount drawn, we may be required to prepaymake a partial repayment of amounts outstanding under our ABL Facility.
(3)On July 16, 2020, iHeartCommunications issued $450.0 million of incremental term loans under the Term Loan Facility, subject to certain exceptions, with:

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

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

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

iHeartCommunications may voluntarily repay outstanding loans under the Term Loan Facility at any time, without prepayment premium or penalty, exceptAmendment No. 2, resulting in connection with a repricing event within nine months of the Effective Date and subject to customary “breakage” costs with respect to eurocurrency loans.

Certain Covenants and Events of Default

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

incur additional indebtedness;


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

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

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

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

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

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

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

incur or guarantee additional debt or issue certain preferred stock;
make certain restricted payments;
create restrictions on distributions to iHeartCommunications or Capital I;
sell certain assets;
create liens on certain assets;


enter into certain transactions with affiliates; and
merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of its assets.
8.375% Senior Unsecured Notes due 2027

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

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

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

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

incur or guarantee additional debt or issue certain preferred stock;
make certain restricted payments;
create restrictions on distributions to iHeartCommunications or Capital I;
sell certain assets;
create liens on certain assets;
enter into certain transactions with affiliates; and
merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of its assets.

5.25% Senior Secured Notes due 2027

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

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



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

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

The New Senior Secured Notes Indenture contains covenants that limit$425.8 million, after original issue discount and debt issuance costs. A portion of the ability of iHeartCommunications and its restricted subsidiaries,proceeds from the issuance was used to among other things:

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

Mandatorily Redeemable Preferred Stock
On the Effective Date, in accordance$235.0 million, with the Planremaining $190.6 million of Reorganization, iHeart Operations issued 60,000 sharesthe proceeds available for general corporate purposes.

For additional information regarding our debt refer to Note 6, Long-Term Debt.

50

Supplemental Financial Information under Debt Agreements and Certificate of its Series A Perpetual Preferred Stock, par value $0.001 per share (the "iHeart Operations Preferred Stock"), having an aggregate initial liquidation preference of $60.0 million for a cash purchase price of $60.0 million. The iHeart Operations Preferred Stock was purchased by a third party investor. As of June 30, 2019, the liquidation preference ofDesignation Governing the iHeart Operations Preferred Stock was approximately $60.0 million.
There are no sinking fund provisions applicable to the iHeart Operations Preferred Stock. Shares of the iHeart Operations Preferred Stock, upon issuance, were fully paid and non-assessable. The iHeart Operations Preferred Stock are not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of iHeart Operations. The holders of shares of the iHeart Operations Preferred Stock have no pre-emptive rights with respect to any shares of our capital stock or any of iHeart Operations’ other securities convertible into or carrying rights or options to purchase any such capital stock.
Holders of the iHeart Operations Preferred Stock are entitled to receive, as declared by the board of directors of iHeart Operations, in respect of each share, cumulative dividends accruing daily and payable quarterly at a per annum rate equal to the sum of (1) the greater of (a) LIBOR and (b) two percent, plus (2) the applicable margin, which is calculated as a function of iHeartMedia’s consolidated total leverage ratio. Dividends will be payable on the liquidation preference. Unless all accrued and unpaid dividends on the iHeart Operations Preferred Stock are paid in full, no dividends or distributions may be paid on any equity interests of iHeartMedia or its subsidiaries other than iHeart Operations, and no such equity interests may be repurchased or redeemed (subject to certain exceptions that are specified in the certificate of designation for the iHeart Operations Preferred Stock). Dividends, if declared, will be payable on March 31, June 30, September 30 and December 31 of each year (or on the next business day if such date is not a business day).
Other than as set forth below, iHeart Operations may not redeem the iHeart Operations Preferred Stock at its option prior to the third anniversary of the issue date of the iHeart Operations Preferred Stock. Upon consummation of certain equity offerings, iHeart Operations may, at its option, redeem all or a part of the iHeart Operations Preferred Stock for the liquidation preference plus a make-whole premium. At any time on or after the third anniversary of the issue date, the iHeart Operations Preferred Stock may be redeemed at the option of iHeart Operations, in whole or in part, for cash at a redemption price equal to the liquidation preference per share.


Upon (i) a liquidation, dissolution or winding up of iHeart Operations, iHeartMedia or iHeartCommunications, together with the subsidiaries of such entity, taken as a whole, (ii) a bankruptcy event, (iii) a change of control, (iv) a sale or transfer of all or substantially all of iHeart Operations’, iHeartMedia’s or iHeartCommunications’ assets and the assets of such entity’s subsidiaries, taken as a whole in a single transaction (other than to iHeartMedia or any of its subsidiaries), or a series of transactions, (v) an acceleration or payment default of indebtedness of iHeart Operations, iHeartMedia or any of its subsidiaries of $100 million or more or (vi) consummation of certain equity offerings of iHeartMedia, iHeart Operations or iHeartCommunications or certain significant subsidiaries, then any holder of shares of iHeart Operations Preferred Stock may require iHeartMedia to purchase such holder’s shares of iHeart Operations Preferred Stock at a purchase price equal to (a) the liquidation preference plus a make-whole premium, if such purchase is consummated prior to the third anniversary of the issue date or (b) the liquidation preference, if the purchase is consummated on or after the third anniversary of the issue date.
The shares of iHeart Operations Preferred Stock include repurchase rights, pursuant to which the holders may require iHeartMedia or iHeartCommunications to purchase the iHeart Operations Preferred Stock after the fifth anniversary of the issue date.
On the tenth anniversary of the issue date, the shares of iHeart Operations Preferred Stock will be subject to mandatory redemption for an amount equal to the liquidation preference.
If a default occurs or dividends payable on the shares of iHeart Operations Preferred Stock have not been paid in cash for twelve consecutive quarters, the holders of the iHeart Operations Preferred Stock will have the right, voting as a class, to elect one director to iHeartMedia’s Board of Directors. Upon any termination of the rights of the holders of shares of the iHeart Operations Preferred Stock as a class to vote for a director as described above, the director so elected to iHeartMedia’s Board of Directors will cease to be qualified as a director and the term of such director’s office shall terminate immediately.
iHeart Operations and its subsidiaries comprised 89% of our consolidated assets as of June 30, 2019 and 86% of our consolidated revenues for the Period from May 2, 2019 through June 30, 2019.
Material Differences between the Financial Information Relating to iHeartMedia and Capital I and its Subsidiaries
Pursuant to iHeartCommunications' material debt agreements, Capital I, the parent guarantor and a subsidiary of iHeartMedia, is permitted to satisfy its reporting obligations under such agreements by furnishing iHeartMedia’s consolidated financial information and an explanation of the material differences between iHeartMedia’s consolidated financial information, on the one hand, and the financial information of Capital I and its consolidated restricted subsidiaries, on the other hand. Because neither iHeartMedia nor iHeartMedia Capital II, LLC, a wholly-owned direct subsidiary of iHeartMedia and the parent of Capital I, have any operations or material assets or liabilities, there are no material differences between iHeartMedia’s consolidated financial information for the three and six months ended June 30, 2019,2020, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same periods.
Uses of Capital
Debt Repayments, Maturities and Other
On August 7, 2019, iHeartCommunications completed the sale of $750.0 million in aggregate principal amount of 5.25% Senior Secured Notes due 2027 in a private placement to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside the United States pursuant to Regulation S under the Securities Act. iHeartCommunications used the net proceeds from the New Senior Secured Notes, together with cash on hand, to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility due 2026.
Certain Relationships with Related Parties
Prior        According to the Effective Date, we were partycertificate of designation governing the iHeart Operations Preferred Stock, iHeart Operations is required to a management agreement withprovide certain affiliatessupplemental financial information of iHeart Operations in comparison to the Company and its consolidated subsidiaries.  iHeart Operations and its subsidiaries comprised 86.3% of the Sponsors and certain other parties pursuant to which such affiliatesCompany's consolidated assets as of the Sponsors provided management and financial advisory services until December 31, 2018.  These arrangements required management fees to be paid to such affiliates of the Sponsors for such services at a rate not greater than $15.0 million per year, plus reimbursable expenses.  The Company did not recognize management fees following the Petition Date. The Company recognized management fees and reimbursable expenses of $3.1 million forJune 30, 2020. For the three and six months ended June 30, 2018. As2020, iHeart Operations and its subsidiaries comprised 83.6% and 85.0% of the Effective Date, these management fees were waived.


Company's consolidated revenue, respectively.
Commitments, Contingencies and Guarantees
We are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued our estimate of the probable costs for resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.  These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.  Please refer to “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q.


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


MARKET RISK
We are exposed to market risks arising from changes in market rates and prices, including movements in interest rates and inflation.
Interest Rate Risk
A significant amount of our long-term debt bears interest at variable rates. Accordingly, our earnings will be affected by changes in interest rates. As of June 30, 2019,2020, approximately 61%41% of our aggregate principal amount of long-term debt bore interest at floating rates. Assuming the current level of borrowings and assuming a 50% change in LIBOR, it is estimated that our interest expense for the Period from May 2, 2019 throughsix months ended June 30, 20192020 would have changed by $7.6$6.6 million.
In the event of an adverse change in interest rates, management may take actions to mitigate our exposure.  However, due to the uncertainty of the actions that would be taken and their possible effects, the preceding interest rate sensitivity analysis assumes no such actions.  Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.
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Inflation


Inflation is a factor in the economies in which we do business and we continue to seek ways to mitigate its effect.  Inflation has affected our performance in terms of higher costs for wages, salaries and equipment.  Although the exact impact of inflation is indeterminable, we believe we have offset these higher costs by increasing the effective advertising rates of most of our broadcasting stations in our Audio operations.
Critical Accounting Estimates
The preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material. There have been no significant changes to our critical accounting policies and estimates disclosed in “Critical Accounting Estimates” of Item 7, Management’s Discussion and Analysis of our Annual Report on Form 10-K for the year ended December 31, 2019 except as disclosed in Note 1, Basis of Presentation to our consolidated financial statements.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf.  This report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, the anticipated impacts of the COVID-19 pandemic on our ability to comply with the covenants in the agreements governingbusiness, financial position and results of operations, our indebtednessRights Plan, our expected costs, savings and the availabilitytiming of our modernization initiatives and other capital and the terms thereof.operating expense reduction initiatives, our business plans, strategies and initiatives, our expectations about certain markets, our expectations regarding our FCC petition for declaratory ruling and our anticipated financial performance and liquidity.  Statements expressing expectations and projections with respect to future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  We caution that these forward-looking statements involve a number of risks and uncertainties and are subject to many variables which could impact our future performance.  These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance.  There can be no assurance, however, that management’s expectations will necessarily come to pass.  Actual future events and performance may differ materially from the expectations reflected in our forward-looking statements.  We do not intend, nor do we undertake any duty, to update any forward-looking statements.


A wide range of factors could materially affect future developments and performance, including but not limited to:
•risks associated with weak or uncertain global economic conditions and their impact on the level of expenditures for advertising;
•the impact of the COVID-19 pandemic on advertising;our business, financial position and results of operations;
•intense competition including increased competition from alternative media platforms and technologies;
•dependence upon the performance of on-air talent, program hosts and management as well as maintaining or enhancing our master brand;
•fluctuations in operating costs;
•technological changes and innovations;
•shifts in population and other demographics;
•the impact of our substantial indebtedness;
•the impact of future acquisitions, dispositions acquisitions and other strategic transactions;
•legislative or regulatory requirements;
•the impact of legislation or ongoing litigation on music licensing and royalties;
•regulations and consumer concerns regarding privacy and data protection, and breaches of information security measures;
•risks associated with our recent emergence from the Chapter 11 Cases;
volatility in the trading price of•risks related to our Class A common stock, which has a limited trading history;including our significant number of outstanding warrants;
substantial market overhang from securities issued in the Reorganization;
•regulations impacting our business and the ownership of our securities; and
•certain other factors set forth in our other filings with the SEC.
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This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive.  Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Required information is presented under “Market Risk” within Item 2 of this Part I.

ITEM 4. CONTROLS AND PROCEDURES
AsDisclosure Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
        In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect that there are resource constraints and that management is required by Rule 13a-15(b)to apply judgment in evaluating the benefits of the Securities Exchange Actpossible controls and procedures relative to their costs.
Evaluation of 1934, as amended (the “Exchange Act”), under the supervisionDisclosure Controls and Procedures
        Our management, with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, we have carried outconducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in RuleRules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.  Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in reports that are filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified by the SEC.. Based on thatthis evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2019 at the reasonable assurance level.2020. 
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 20192020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




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PART II-- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
We currently are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on our financial condition or results of operations.
Although weWe are involved in a variety of legal proceedings in the ordinary course of business and a large portion of our litigation arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.
Chapter 11 CasesAlien Ownership Restrictions and FCC Petition for Declaratory Ruling
iHeartCommunications' filingThe Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the Chapter 11 Cases constituted an eventlicensee of default that accelerated its obligations under its debt agreements. Due toa radio broadcast station unless the Chapter 11 Cases, however, the creditors' ability to exercise remedies under iHeartCommunications' debt agreements were stayed as of March 14, 2018, the date of the Chapter 11 petition filing, and continue to be stayed. See Note 6 to our consolidated financial statements located in Item 8 of Part II of this Annual Report on Form 10-K for more information about the debt agreements. On March 21, 2018, Wilmington Savings Fund Society, FSB ("WSFS"), solely in its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027 (collectively with the 5.50% Senior Notes due 2016, the “Legacy Notes”), and not in its individual capacity, filed an adversary proceeding against usFCC finds greater foreign ownership is in the Chapter 11 Cases. In the complaint, WSFS alleged, among other things, that the "springing lien" provisions of the priority guarantee notes indentures and the priority guarantee notes security agreements amounted to "hidden encumbrances" on the Company's property, to which the holders of the 6.875% senior notes due 2018 and 7.25% senior notes due 2027 were entitled to "equal and ratable" treatment. On March 26, 2018, Delaware Trust Co. ("Delaware Trust"), in its capacity as successor indenture trustee to the 14.0% Senior Notes due 2021, filed a motion to intervene as a plaintiff in the adversary proceeding filed by WSFS. In the complaint, Delaware Trust alleged, among other things, that the indenture governing the 14.0% Senior Notes due 2021 also has its own "negative pledge" covenant, and, therefore, to the extent the relief sought by WSFS in its adversary proceeding is warranted, the holders of the 14.0% Senior Notes due 2021 are also entitled to the same "equal and ratable" liens on the same property. On April 6, 2018, we filed a motion to dismiss the adversary proceeding and a hearing on such motion was held on May 7, 2018. We answered the complaint and completed discovery.  The trial was held on October 24, 2018. On January 15, 2019, the Bankruptcy Court entered judgment in our favor denying all relief sought by WSFS and all other parties. Pursuant to a settlementpublic interest (the “Legacy Plan Settlement”“Foreign Ownership Rule”) with WSFS and certain consenting Legacy Noteholders of all issues related to confirmation of. Under our Plan of Reorganization, on May 1, 2019 uponwe committed to file a Petition for Declaratory Ruling ("PDR") requesting the FCC to permit up to 100% of the Company's voting and equity to be owned by non-U.S. individuals and entities, but the FCC’s granting our confirmedPDR was not a condition to our emergence. 
The equity allocation mechanism (“Equity Allocation Mechanism”) set forth in the Plan of Reorganization becoming effective, this adversary proceeding was deemed withdrawn and/or dismissed,intended to enable us to comply with respect to all parties thereto,the Foreign Ownership Rule and other FCC ownership restrictions in connection with prejudice and in its entirety.
On October 9, 2018, WSFS, solely in its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027, and not in its individual capacity, filedour emergence. The Equity Allocation Mechanism imposed an adversary proceeding against Clear Channel Holdings Inc. (“CCH”) and certain shareholders of iHeartMedia. The named shareholder defendants are Bain Capital LP; THL; Abrams Capital L.P. ("Abrams"); and Highfields Capital Management L.P. ("Highfields"). In the complaint, WSFS alleged, among other things, that the shareholder defendants engaged in a “pattern of inequitable and bad faith conduct, including the abuse of their insider positions to benefit themselves at the expense of third-party creditors including particularly the Legacy Noteholders.” The complaint asks the court to grant relief in the form of equitable subordinationobligation on each of the shareholder defendants’ term loan, Priority Guarantee NotesCompany's Claimholders to provide written certification sufficient for us to determine whether issuance of common stock to such Claimholder would cause us to violate the Foreign Ownership Rule, and 14.0% Senior Notes due 2021 claimsrestricted us from issuing common stock to any and all claimsClaimholders such that it would cause us to exceed an aggregate alien ownership or voting percentage of the legacy noteholders. In addition, the complaint sought22.5 percent (the “22.5 Percent Threshold”). 
After emerging from bankruptcy, we discovered that a group of Claimholders that had certified to have any votes to accept the fourth amended plan of reorganization by Abrams and Highfields on account of their 2021 notes claims, and any votes to accept the fourth amended plan of reorganization by the defendant Clear Channel Holdings, Inc., ("CCH") on account of its junior notes claims, to be designated and disqualified. The court held a pre-trial conference and oral argument on October 18, 2018. Pursuant to the Legacy Plan Settlement, on May 1, 2019 upon our confirmed Plan of Reorganization becoming effective, this adversary proceeding was deemed withdrawn and/having no foreign ownership or dismissed, with respect to all parties thereto, with prejudice and in its entirety.


Stockholder Litigation
On May 9, 2016, a stockholder of CCOH filed a derivative lawsuit in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management Inc. v. iHeartMedia Inc. et al., C.A. No. 12312-VCS. The complaint names as defendants the Company, iHeartCommunications, Bain Capital and THL (together, the "Former Sponsor Defendants"), the Company's pre-bankruptcy private equity sponsors and pre-bankruptcy majority owners, and the members of CCOH's board of directors. CCOH also is named as a nominal defendant. The complaint alleges that CCOH has been harmed by the intercompany agreements with iHeartCommunications, CCOH’s lack of autonomy over its own cash and the actions of the defendants in serving the interests of the Company, iHeartCommunications and the Former Sponsor Defendants to the detriment of CCOH and its minority stockholders. The plaintiff sought, among other things, a ruling that the defendants breached their fiduciary duties to CCOH and that the Company, iHeartCommunications and the Former Sponsor Defendants aided and abetted the CCOH board of directors' breaches of fiduciary duty, rescission of payments made by CCOH to iHeartCommunications and its affiliates pursuant to dividends declaredvoting control in connection with the CCIBV Note Offering and Outdoor Asset Sales, and an order requiring the Company, iHeartCommunications and the Former Sponsor Defendants to disgorge all profits they have received asEquity Allocation Mechanism had subsequently undergone a separate merger transaction without our knowledge or control. As a result of this merger, these Claimholders’ interests in iHeartMedia (amounting to approximately nine percent of our issued and outstanding Class A common stock) can be voted by a U.S. subsidiary of a foreign parent. We notified the alleged fiduciary misconduct.
FCC of this development in writing promptly after discovering and confirming it. The FCC responded to our notification on July 9, 2019, indicating that (1) the FCC has not determined that this development is contrary to the public interest, and (2) the FCC has deemed us to be in compliance with the FCC’s foreign ownership reporting rules, pending its decision on our PDR. On July 20, 2016,25, 2019 we filed our PDR. The FCC requested public comment on the defendants filed a motionPDR, which comment period closed on March 26, 2020.  The FCC subsequently referred our PDR to dismiss plaintiff's verified stockholder derivative complaintTeam Telecom - the interagency federal government group that analyzes requests for failurenational security, law enforcement, and public safety issues.  On June 29, 2020, Team Telecom indicated its consent to state a claim upon which relief can be granted. On November 23, 2016, the Court granted defendants’ motion to dismiss all claims broughtgrant by the plaintiff.  On December 19, 2016, the plaintiff filed a notice of appealFCC of the ruling. The oral hearing onPDR. We cannot predict whether the appeal was held on October 11, 2017. On October 12, 2017, the Supreme Court of Delaware affirmed the lower court's ruling, dismissing the case.
On December 29, 2017, another stockholder of CCOH filed a derivative lawsuit (the “Norfolk Lawsuit”) in the Court of Chancery of the State of Delaware, captioned Norfolk County Retirement System, v. iHeartMedia, Inc., et al., C.A. No. 2017-0930-JRS. The complaint names as defendants the Company, iHeartCommunications, the Former Sponsor Defendants, and the members of CCOH's board of directors.  CCOH is named as a nominal defendant. The complaint alleges that CCOH has been harmed by the CCOH board of directors' November 2017 decision to extend the maturity date of the intercompany revolving note (the “Third Amendment”) at what the complaint describes as far-below-market interest rates.  The plaintiff sought, among other things,FCC will issue a ruling thatgranting the defendants breached their fiduciary duties to CCOH, a modificationPDR, the amount of the Third Amendment to bear a commercially reasonable rate of interest,foreign equity and an order requiring disgorgement of all profits, benefits and other compensation obtained by defendants as a result of the alleged breaches of fiduciary duties.
On March 7, 2018, the defendants filed a motion to dismiss plaintiff's verified derivative complaint for failure to state a claim upon which relief can be granted. On March 16, 2018, the Company filed a Notice of Suggestion of Pendency of Bankruptcy and Automatic Stay of Proceedings. On May 4, 2018, plaintiff filed its response to the motion to dismiss. On June 26, 2018, the defendants filed a reply brief in further support of their motion to dismiss. Oral argument on the motion to dismiss was held on September 20, 2018.
On August 27, 2018, the same stockholder of CCOH that had filed a derivative lawsuit against the Company and others in 2016 (GAMCO Asset Management Inc.) filed a putative class action lawsuit (the “GAMCO II Lawsuit”) in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management, Inc. v. Hendrix, et al., C.A. No. 2018-0633-JRS. The complaint names as defendants the Former Sponsor Defendants and the members of CCOH’s board of directors. The complaint alleges that minority shareholders in CCOH during the period November 8, 2017 to March 14, 2018 were harmed by decisions of the CCOH board and the intercompany note committee of the board of directors relating to the Intercompany Note. The plaintiff sought, among other things,voting rights any such a ruling that the CCOH board, the intercompany note committee, and the Sponsor Defendants breached their fiduciary duties and that the Sponsor Defendants aided and abetted the board of directors' breach of fiduciary duty; and an award of damages, together with pre- and post-judgment interests,will allow us to the putative class of minority shareholders.have, or how long it will take to obtain such a ruling.
On December 16, 2018, the Debtors, CCOH, GAMCO Asset Management, Inc., and Norfolk County Retirement System entered into the CCOH Separation Settlement to settle of all claims, objections, and other causes of action that have been or could be asserted by or on behalf of CCOH, GAMCO Asset Management, Inc., and/or Norfolk County Retirement System by and among the Debtors, CCOH, GAMCO Asset Management, Inc., certain individual defendants in the GAMCO Asset Management, Inc. action and/or the Norfolk County Retirement System action, and the private equity sponsor defendants in such actions. The CCOH Separation Settlement provides for the consensual separation of the Debtors and CCOH, including approximately $149.0 million of recovery to CCOH on account of its claim against iHeartCommunications in the Chapter 11 Cases, a $200 million unsecured revolving line of credit from certain of the Debtors to CCOH for a period of up to three years, the transfer of certain of the Debtors’ intellectual property to CCOH, the waiver by the Debtors of the setoff for the value of the transferred intellectual property, mutual releases, the termination of the cash sweep under the existing Corporate Services Agreement, the termination of any agreements or licenses requiring royalty payments from CCOH to the Debtors for trademarks or other intellectual property, the waiver of any post-petition amounts owed by CCOH relating to such trademarks or other intellectual property, and the execution of a new transition services agreement and other separation documents. The CCOH Separation Settlement was approved by the Bankruptcy


Court and the United States District Court for the Southern District of Texas on January 22, 2019. On May 1, 2019, the Debtors’ plan of reorganization went effective, and the Norfolk Lawsuit and GAMCO II Lawsuit were each subsequently dismissed with prejudice.

ITEM 1A.  RISK FACTORS
There have not been any material changes toExcept for the risk factors disclosed under the caption “Liquidity Risk” and “Risks Related toin Part II, Item 1A of our Business”Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which are hereby incorporated by reference into this Part II, Item IA of this Form 10-Q, there have been no material changes in Part I, Item 1A ofour risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “Annual Report”),2019, except that we are updating the risk factors entitled “We face intense competition in our iHeartMedia and our outdoor advertising businesses,” “Our business is dependent on our management team and other key individuals,” “Our financial performance may be adversely affected by many factors beyond our control,” Future acquisitions, dispositions and other strategic transactions could pose risks,” “Extensive current government regulation, and future regulation, may limit our radio broadcasting and other iHeartMedia operations or adversely affect our business and financial results,” “If our security measures are breached, wecould lose valuable information, suffer disruptions to our business, and incur expenses and liabilities including damages to our relationships withlisteners, consumers, business partners and advertisers,” and “Transfers of our equity and issuances of equity in connection with the Chapter 11 Cases may impair our ability to utilize our federal income tax NOL carryforwards in future years” as set forth below, and we are supplementing these risk factors with the risk factor entitled “We face intense competition in our business,” “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,” “The Separation could result in significant tax liability or other unfavorable tax consequences to us” and “Transfers of iHeartMedia’s equity in connection with iHeartMedia’s Chapter 11 proceedings and cancellation of indebtedness income realized by the debtors in the iHeartMedia Chapter 11 proceedings may impair the iHeartMedia Group’s ability to utilize its U.S. federal income tax NOL carryforwards in future years” as set forth below:
We face intense competition in our business.
We operate in a highly competitive industry, and we may not be able to maintain or increase our current audience ratings and advertising revenues. Our business competes for audiences and advertising revenues with other radio businesses, as well as with other media, such as newspapers, magazines, television, direct mail, portable digital audio players, mobile devices, satellite radio, Internet-based services and live entertainment, within their respective markets. Audience ratings and market shares are subject to change for various reasons, including through consolidation of our competitors through processes such as mergers and acquisitions, which could have the effect of reducing our revenues in a specific market. Our competitors may develop technology, services or advertising media that are equal or superior to those we provide or that achieve greater market acceptance and brand recognition than we achieve. For example, our competitors may develop analytic products for programmatic advertising, and data and research tools that are superior to those that we provide or that achieve greater market acceptance. It also is possible that new competitors may emerge and rapidly acquire significant market share in our business, or make it more difficult for us to increase our share of advertising partners' budgets. The advertiser/agency ecosystem is diverse and dynamic, with advertiser/agency relationships subject to change. This could have an adverse effect on us if an advertiser client shifts its relationship to an agency with whom we do not have as good a relationship. An increased level of competition for advertising dollars may lead to lower advertising rates as we attempt to retain customers or may cause us to lose customers to our competitors who offer lower rates that we are unable or unwilling to match.
Our ability to compete effectively depends in part on our ability to achieve a competitive cost structure. If we cannot do so, then our business, financial condition and operating results would be adversely affected.
If events occur that damage our reputation and brand, our ability to grow our user base, advertiser relationships, and partnerships may be impaired and our business may be harmed.
We have developed a brand that we believe has contributed to our success. We also believe that maintaining and enhancing our brand is critical to growing our user base, advertiser relationships and partnerships. The iHeartRadio master brand ties together our radio stations, digital platforms, social, podcasts and live 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 be able to extend the terms of our agreements with them. We may also


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. We also experienced management transition in connection with the Separation and Reorganization. For instance, our former treasurer became the Chief Financial Officer of CCOH, and we have a relatively new General Counsel. If members of our management or key individuals decide to leave us in the future, if we decide to make further changes to the composition of, or the roles and responsibilities of, these individuals, or if we are not successful in attracting, motivating and retaining other key employees, our business could be adversely affected.
Our financial performance may be adversely affected by many factors beyond our control.
Certain factors that could adversely affect our financial performance by, among other things, decreasing overall revenues, the numbers of advertising customers, advertising fees or profit margins include:
▪unfavorable fluctuations in operating costs, which we may be unwilling or unable to pass through to our customers; 
▪our inability to successfully adopt or our being late in adopting technological changes and innovations that offer more attractive advertising or listening alternatives than what we offer, which could result in a loss of advertising customers or lower advertising rates, which could have a material adverse effect on our operating results and financial performance; 
▪our inability to realize or maintain cost savings from the Separation or other expense discipline and cost management initiatives; 
▪the impact of potential new or increased royalties or license fees charged for terrestrial radio broadcasting or the provision of our digital services, which could materially increase our expenses; 
▪unfavorable shifts in population and other demographics, which may cause us to lose advertising customers as people migrate to markets where we have a smaller presence or which may cause advertisers to be willing to pay less in advertising fees if the general population shifts into a less desirable age or geographical demographic from an advertising perspective; 
▪continued dislocation of advertising agency operations from new technologies and media buying trends; 
▪adverse political effects and acts or threats of terrorism or military conflicts; and 
▪unfavorable changes in labor conditions, which may impair our ability to operate or require us to spend more to retain and attract key employees.
Future acquisitions, dispositions and other strategic transactions could pose risks.
We frequently evaluate strategic opportunities both within and outside our existing lines of business. We expect from time to time to pursue acquisitions of certain businesses as well as strategic dispositions. These acquisitions or dispositions could be material. Acquisitions or dispositions involve numerous risks, including:
▪our acquisitions may prove unprofitable and fail to generate anticipated cash flows: 
▪to successfully manage our business, we may need to: 
–recruit additional senior management as we cannot be assured that senior management of acquired businesses will continue to work for us and we cannot be certain that our recruiting efforts will succeed, and 
–expand corporate infrastructure to facilitate the integration of our operations with those of acquired businesses, because failure to do so may cause us to lose the benefits of any expansion that we decide to undertake by leading to disruptions in our ongoing businesses or by distracting our management;
▪we may enter into markets and geographic areas where we have limited or no experience; 
▪we may encounter difficulties in the integration of new management teams, operations and systems; 
▪our management's attention may be diverted from other business concerns; 
▪our dispositions may negatively impact revenues from our national, regional and other sales networks; and 


▪our dispositions may make it difficult to generate cash flows from operations sufficient to meet our anticipated cash requirements, including debt service requirements.
Acquisitions and dispositions of media and entertainment businesses may require antitrust review by U.S. federal antitrust agencies and may require review by foreign antitrust agencies under the antitrust laws of foreign jurisdictions. We can give no assurances that the Department of Justice ("DOJ"), the U.S. Federal Trade Commission ("FTC") or foreign antitrust agencies will not seek to bar us from acquiring or disposing of media and entertainment businesses or impose stringent undertaking 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, including with respect to the number of broadcast licenses in which a person or entity may have an ownership or attributable interest in a given local market and the level of interest that may be held by foreign individuals or entities. The FCC's media ownership rules remain subject to ongoing agency and court proceedings. Future changes could restrict our ability to dispose of or acquire new radio assets or businesses.
Extensive current government regulation, and future regulation, may limit our radio broadcasting and other operations or adversely affect our business and financial results.discussed below. 
The U.S. Congress (the "Congress")COVID-19 pandemic has adversely impacted, and several federal agencies, including the FCC, extensively regulate the domestic radio broadcasting industry. 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 committed violations of FCC regulations governing programming or other matters. For instance, FCC regulations prohibit the broadcast of "obscene" material at any time, and "indecent" material between the hours of 6:00 a.m. and 10:00 p.m. The FCC has historically enforced licensee compliance in this area through the assessment of monetary forfeitures. Such forfeitures may include: (i) imposition of the maximum authorized fine for egregious cases ($407,270 for a single violation, up to a maximum of $3,759,410 for a continuing violation); and (ii) imposition of fines on a per utterance basis instead of a single fine for an entire program. The FCC has also recently increased its enforcement of regulations requiring a radio station to include an on-air announcement which identifies the sponsor of all advertisements and other matter broadcast by any radio station for which any money, service or other valuable consideration is received. Similarly, the FCC has recently sought to impose substantial fines on broadcasters who transmit EAS codes, or simulations thereof, in the absence of an actual emergency or authorized test of the EAS.
Additionally, we cannot be sure that the FCC will approve renewal of the licenses we must have in order to operate our stations. Nor can we be assured that our licenses will be renewed without conditions and for a full term. Beginning in June 2019 and continuing through April 2022, we (along with all other FCC radio broadcast licensees) are submitting applications to renew the FCC licenses for each of our broadcast radio stations on an every two-month rolling schedule by state. The non-renewal, or conditioned renewal, of a substantial number of these FCC licenses could have a materially adverse impact on our operations. Furthermore, possible changes in interference protections, spectrum allocations and other technical rules may negatively affect the operation of our stations. For example, in October 2015, the FCC proposed rules which could reduce the degree of interference protection afforded to certain of our AM radio stations that serve wide areas. The FCC has adopted rules which may limit our ability to prevent interference by FM translators to the reception of our full-power radio 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. For example, Congress may consider and adopt legislation that would impose an obligation upon all U.S. broadcasters to pay performing artists a royalty for the on-air broadcast of their sound recordings (this would be in addition to payments already made by broadcasters to owners of musical work rights, such as songwriters, composers and publishers). In October 2018, legislation was signed into law that creates a public performance right for pre-February 15, 1972 recordings streamed online. This law may increase our licensing costs. Moreover, it is possible that our license fees and negotiating costs associated with obtaining rights to use musical compositions and sound recordings in our programming content could sharply increase as a result of private negotiations, one or more regulatory rate-setting processes, or administrative and court decisions. The Copyright Royalty Board ("CRB") has issued a final determination establishing copyright royalty rates for the public performance and ephemeral reproduction of sound recordings by various non-interactive webcasters, including radio broadcasters that simulcast their terrestrial programming online, to apply to the period from January 1, 2016 to December 31, 2020 under the webcasting statutory license. A proceeding to establish the rates for 2021 to 2025 began in 2019. Increased royalty rates could significantly increase our expenses, which could adversely affect our business. Additionally, there are conditions applicable to the webcasting statutory license. Some, but not all, record companies have agreed to waive or provide limited relief from certain of these conditions under certain circumstances for set periods of time. Some of these conditions may be inconsistent with customary radio broadcasting practices and various 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.


If our security measures are breached, we could lose valuable information, suffer disruptions to our business, and incur expenses and liabilities including damages to our relationships with listeners, consumers, business partners, employees and advertisers.
Although we have implemented physical and electronic security measures that are designed to protect against the loss, misuse and alteration of our websites, digital assets and proprietary business information as well as listener, consumer, business partner and advertiser personally identifiable information, no security measures are perfect and impenetrable and we may be unable to anticipate or prevent unauthorized access. Our websites and digital platforms are vulnerable to software bugs, computer viruses, Internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service, or other attacks and similar disruptions from unauthorized use of our and third-party computer systems, any of which could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access to personal data. A security breach could occur due to the actions of outside parties, employee error, malfeasance or a combination of these or other actions. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security, and availability of our services and technical infrastructure to the satisfaction of our listeners may harm our reputation and our ability to retain existing listeners and attract new listeners. We cannot assure you that the systems and processes that we have designed to protect our data and our listeners' data, to prevent data loss and to prevent or detect security breaches will provide absolute security, and we may incur significant costs in protecting against or remediating cyber-attacks. If an actual or perceived breach of our security occurs, we may face regulatory or civil liability, lose competitively sensitive business information or suffer disruptions to our business operations, information processes and internal controls. In addition, the public perception of the effectiveness of our security measures or services could be harmed, we could lose listeners, consumers, business partners and advertisers. In the event of a security breach, we could suffer financial exposure in connection with penalties, remediation efforts, investigations and legal proceedings and changes in our security and system protection measures. Currently, not all of our systems are fully compliant with the new E.U. GDPR standards and, as a result, we may face additional liability in the event of a security breach. In Europe, we may be required to notify European Data Protection Authorities, within strict time periods, about any personal data breaches, unless the personal data breach is unlikely to result in a risk to the rights and freedoms of the affected individuals. We may also be required to notify the affected individuals of the personal data breach where there is a high risk to their rights and freedoms. If we suffer a personal data breach, we could be fined up to EUR 20 million or 4% of worldwide annual turnover of the preceding financial year, whichever is greater. Any data breach by service providers that are acting as data processors (i.e., processing personal data on our behalf) could also mean that we are subject to these fines and have to comply with the notification obligations set out above.
The Separation could result in significant tax liability or other unfavorable tax consequences to us.
The transactions related to the Separation were intended to be taxable transactions. The gain or loss recognized with respect to these transactions will depend on, among other things: (a) the value and tax basis of the assets transferred in the distribution of the radio business and the value and tax basis of the CCOH common stock on the Effective Date (such values will be determined by reference to, among other things, the trading value of the iHeartMedia equity and the CCOH common stock following the Effective Date); (b) complex modeling considerations under certain U.S. Treasury regulations; (c) the amount of cancellation of indebtedness income realized in connection with the iHeartMedia's Chapter 11 proceedings; and (d) the extent to which any "excess loss accounts" (as defined under applicable U.S. Treasury regulations) are taken into account. The extent to which any related taxable gain or loss will result in any cash tax liabilities will depend on whether the tax attributes of iHeartMedia and its subsidiaries, including the net operating losses ("NOLs") of iHeartMedia and its subsidiaries (including CCOH and its subsidiaries), are sufficient to offset any net taxable gain and income attributable to the transactions related to the Separation.
In addition, the merger of CCOH into CCH (the "Merger") was intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the obligation of each of the parties thereto to effect the Merger was conditioned upon the receipt of U.S. federal income tax opinions to that effect from their respective tax counsels. These tax opinions represent the legal judgment of counsel who rendered the opinions and are not binding on the Internal Revenue Service (the "IRS") or the courts. If the IRS makes a subsequent determination that the Merger does not qualify as a "reorganization," then additional tax liability could arise.
Based on our analysis to date of the various factors that will influence whether the Separation resulted in material cash tax liabilities, we do not expect any material cash tax liability resulting from the Separation. However, the analysis of the Separation will continue until the tax return for the 2019 tax year is filed. In addition, there may be some uncertainty with respect to the factors that determine whether the Separation gave rise to cash tax liability, even after appropriate tax returns are filed. Accordingly, we cannot say with certainty that no material cash tax liability will be owed as a result of the Separation and the transactions related thereto. To the extent the Separation and the transactions related thereto do give rise to any cash tax liability, CCOH, iHeartCommunications, iHeartMedia and various other entities would be jointly and severally liable under applicable law for any such amounts.


The allocation of such liabilities among iHeartMedia and its subsidiaries (the "iHeartMedia Group") and CCOH are addressed by a Tax Matters Agreement that was entered into in connection with the Separation.
In addition, we expect that, as a result of the cancellation of indebtedness income realized by the debtors in connection with iHeartMedia's Chapter 11 proceeds, certain of the iHeartMedia Group's tax attributes will be subject to significant reduction or elimination.
Transfers of iHeartMedia's equity in connection with iHeartMedia's Chapter 11 proceedings and cancellation of indebtedness income realized by the debtors in the iHeartMedia Chapter 11 proceedings may impair the iHeartMedia Group's ability to utilize its U.S. federal income tax NOL carryforwards in future years.
Under U.S. federal income tax law, a corporation is generally permitted to deduct from taxable income NOLs carried forward from prior years. To the extent any such tax attributes survive the reduction in tax attributes described above, the iHeartMedia Group's ability to utilize these tax attributes to offset future taxable income and to reduce U.S. federal income tax liability is subject to certain requirements and restrictions. Specifically, iHeartMedia experienced an "ownership change," as defined in Section 382 of the Code, in connection with the Chapter 11 proceedings. Accordingly, the iHeartMedia Group's ability to use any surviving tax attributes may be substantially limited, which could have a negative impact on our financial position and results of operations. Under Section 382 of the Code, absent an applicable exception, if a corporation undergoes an "ownership change," the amount of U.S. federal income tax attributes existing prior to the change that it can utilize to offset its taxable income in future taxable years generally is subject to an annual limitation in an amount equal to the value of its stock immediately prior to the ownership change multiplied by the long-term tax-exempt rate, subject to adjustments to reflect the differences between the fair market value of the corporation's assets and the tax basis in such assets and various other complex rules and adjustments.
Additionally, as noted above, we expect that certain of the iHeartMedia Group's tax attributes will be subject to significant reduction or elimination as a result of the cancellation of indebtedness income realized by the debtors in connection with iHeartMedia's Chapter 11 proceedings.
Accordingly, there can be no assurance that the iHeartMedia Group will be able to utilize the iHeartMedia Group's U.S. federal income tax NOL carryforwards or certain of the iHeartMedia Group's other tax attributes to offset future taxable income.
Chapter 11 Reorganization Risks

The following risk factors disclosed under the caption “Chapter 11 Reorganization Risks” below amend, restate and replace all of the risk factors under the caption “Chapter 11 Reorganization Risks” in Item 1A of our Annual Report:

The ongoing effects of the Chapter 11 Cases following our emergence could adversely affect our business and relationships.
We have only recently emerged from bankruptcy. Our ability to change the public perception relating to our recently consummated Chapter 11 Cases may have an impact on our abilityexpected to continue to attractadversely impact, our audience, which is critical to our ability to achieve long-term profitability, and a negative public perception of our business, due to our recently consummated bankruptcy proceedings may have a materially adverse effect on our results of operations and financial condition, particularly because our ability to achieve long-term profitability dependsposition.
        In December 2019, a strain of novel coronavirus disease, COVID-19, was identified in Wuhan, China. This virus has been declared a pandemic and has spread around the world, including throughout the United States. The outbreak and
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government measures taken in response have also had a significant impact, both direct and indirect, on our abilitybusinesses and the economy generally, as supply chains have been disrupted; facilities and production have been suspended; and demand for many goods and services has fallen. In response to reachthe spread of COVID-19, including shelter-in-place and stay-at-home orders, we implemented a work-from-home policy that remains in place for most of our audience.employees and have restricted on-site activities.
Furthermore, we may be subject to ongoing claims that were not discharged in the Chapter 11 Cases and such claims may be significant.
Our actual financial results following our emergence from the Chapter 11 Cases will not be comparable to our historical financial information.
Following the Separation and Reorganization, we began to operate under a new capital structure.        As a result of the Separation and Reorganization,COVID-19 pandemic, we will not include CCOH in our consolidated financial statements following the Effective Date. In addition, we adopted fresh-start accounting and, as a result, at the Effective Date, our assets and liabilities were recorded at fair value, which resulted in values that are different than the values recorded in our historical financial statements. Accordingly, our financial condition and results of operations from and after the Effective Date are not comparable to the financial condition or results of operations reflected in our historical financial statements. As a result of all these factors, our historical financial information is not indicative of our future financial performance.
In connection with the Separation, the Outdoor Group agreed to indemnify us and we agreed to indemnify the Outdoor Group for certain liabilities. There can be no assurance that the indemnities from the Outdoor Group will be sufficient to insure us against the full amount of such liabilities.


Pursuant to agreements that we entered into with the Outdoor Group in connection with the Separation, the Outdoor Group agreed to indemnify us for certain liabilities, and we agreed to indemnify the Outdoor Group for certain liabilities. For example, we will indemnify the Outdoor Group for liabilities to the extent such liabilities related to the business, assets and liabilities of the iHeartMedia as well as liabilities relating to a breach of the Separation Agreement. We will also indemnify the Outdoor Group for 50% of certain tax liabilities imposed on the Outdoor Group in connection with the Separation on or prior to the third anniversary of the Separation in excess of $5.0 million, with our aggregate liability limited to $15.0 million, and will reimburse the Outdoor Group for one-third of potential costs relating to certain agreements between the Outdoor Group and third parties in excess of $10.0 million up to the first $35.0 million of such costs such that we will not bear more than $8.33 million of such costs. However, third parties might seek to hold us responsible for liabilities that the Outdoor Group agreed to retain, and there can be no assurance that the Outdoor Group will be able to fully satisfy their respective indemnification obligations under these agreements. In addition, indemnities that we may be required to provide to the Outdoor Group could be significant and could adversely affect our business.
The transition of our board of directors following our emergence from bankruptcy may compromise our ability to compete effectively.
The new directors who began serving on our board of directors on the Effective Date have different backgrounds, experiences and perspectives from those individuals who have historically served on our board of directorsexperienced and may continue to experience disruptions that have different views on the direction ofadversely impacted our business, and the issues that will determine our future. The effect of implementation of those views may be difficult to predict and may, in the short term, result in disruption to the strategic direction of the business.
Additionally, the ability of our new directors to quickly expand their knowledge of our operations will be critical to their ability to make informed decisions about our business and strategies, particularly given the competitive environment in which we operate. The transition of our board of directors may, during the period of transition, compromise our ability to compete effectively.
Risks Related to Ownership of our Class A Common Stock
The following risk factors disclosed under the caption “Risks Related to Ownership of our Class A Common Stock” below amend, restate and replace all of the risk factors under the caption “Risks Related to Ownership of Our Class A Common Stock” in Part I, Item 1A of our Annual Report:
Our Class A common stock price may be volatile or may decline regardless of our operating performance and you may not be able to resell your shares at or above the public offering price.
Volatility in the market price of our Class A common stock may prevent you from being able to sell your shares at or above the price you paid for them. Many factors, which are outside our control, may cause the market price of our Class A common stock to fluctuate significantly, including those described elsewhere in the “Risk Factors” section, as well as the following:

▪our operating and financial performance and prospects;
▪our quarterly or annual earnings or those of other companies in our industry compared to market expectations;
▪future announcements concerning our business or our competitors’ businesses;
▪the public’s reaction to our press releases, other public announcements and filings with the SEC;
▪the composition of our public float, including substantial holdings by former creditors that may wish to dispose of our securities;
▪coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;
▪market and industry perception of our success, or lack thereof, in pursuing our growth strategy;
▪strategic actions by us or our competitors, such as acquisitions or restructurings;
▪changes in laws or regulations which adversely affect our industry or us;
▪changes in accounting standards, policies, guidance, interpretations or principles;
▪changes in senior management or key personnel;


▪issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock;
▪adverse resolution of new or pending litigation against us; and
▪changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
These broad market and industry factors may materially reduce the market price of our Class A common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our Class A common stock is low. As a result, you may suffer a loss on your investment.
Substantial blocks of our outstanding shares may be sold into the market in this offering. If there are substantial sales of shares of our Class A common stock, the price of our Class A common stock could decline.
The price of our Class A common stock could decline if there are substantial sales of our Class A common stock, particularly sales by our directors, executive officers and significant stockholders. The market price of the shares of our Class A common stock could decline as a result of the sale of a substantial number of our shares of Class A common stock in the public market, or the perception in the market that the holders of a large number of such shares, or securities convertible or exercisable into such shares, intend to sell their shares or such other securities.
Your voting rights as a holder of Class A common stock will be diluted upon the exercise of Special Warrants or the conversion of Class B common stock.
A majority of our equity was issued in the form of Special Warrants, which have no voting rights, and Class B common stock, which have only limited voting rights. The Special Warrants are currently exercisable into Class A common stock or Class B common stock at an exercise price of $0.001 per share, and the Class B common stock is currently convertible into Class A common stock on a share-for-share basis, in each case subject to certain ownership restrictions. 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.
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 of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. Certain of our debt instruments contain covenants that restrict the ability of our subsidiaries to pay dividends to us.
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 mayfinancial position. The extent of future disruptions will depend on numerous evolving factors, which are highly uncertain, rapidly changing and cannot be restricted by, among other things, applicable laws limiting the amount of funds available for payment of dividendspredicted, and certain restrictive covenants containedcould result in significantly more severe impacts in the agreementsfuture, including:

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

        These disruptions have negatively impacted our subsidiariesrevenue, results of operations and financial position for any reason could limitthe three and six months ended June 30, 2020 and we expect these disruptions to continue to have a negative impact for the remainder of 2020.

        The COVID-19 pandemic continues to evolve. The extent to which the outbreak continues to impact our business, liquidity and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, stay-at-home and shelter-in-place orders, travel restrictions and social distancing throughout the United States, the duration and extent of business closures or impair theirbusiness disruptions and the effectiveness of actions taken to contain and treat the disease. If we or our customers continue to experience prolonged shutdowns or other business disruptions beyond current expectations, our ability to pay dividends or other distributions to us.
Delaware lawconduct our business in the manner 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 incorporationwithin planned timelines could be materially and adversely impacted, and our by-laws contain provisions that may makebusiness, liquidity and financial results will be adversely affected. Additionally, concerns over the acquisitioneconomic impact of our company more difficult without the approval of our Board, including, but not limited to, the following:
▪for the first three years following the Effective Date, our board of directors will be divided into three equal classes, with members of each class elected in different years for different terms, making it impossible for stockholders to change the composition of our entire Board in any given year;


▪action by stockholders may only be taken at an annual or special meeting duly called by or at the direction of a majority of our Board;
▪advance notice for all stockholder proposals is required;
▪subject to the rights of holders of any outstanding shares of our preferred stock, for so long as our board remains classified, our directors may only be removed for cause and upon the affirmative vote of holders of a majority of the voting power of the outstanding shares of our Class A common stock; and
▪for the first three years following the Effective Date, any amendment, alteration, rescission or repeal of the anti-takeover provisions of our certificate of incorporation requires the affirmative vote of at least 66 2/3% in voting power of the outstanding shares of our stock entitled to vote generally in the election of directors.
TheseCOVID-19 pandemic caused extreme volatility in financial 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 of directors or initiate actions that are opposed by our board of directors, 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,capital markets, 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. 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 described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employee, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our certificate of incorporation 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 couldhas adversely affect our business and financial condition.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our industry, or if they adversely change their recommendations regarding our stock,affected our stock price and trading volumecredit rating and could decline.
The trading market forimpact our common stock is influenced byability to access the research and reports that industry or securities analysts may publish about us, our business, our industry or our competitors. If we do not maintain adequate research coverage or if any of the analysts who may cover us downgrade our stock, publish inaccurate or unfavorable research about our business or provide relatively more favorable recommendations about our competitors, our stock price could decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports about us, we could lose visibilitycapital markets in the financial markets, which in turn could cause our stock price or trading volume to decline.future.
Regulations imposed by the Communications Act and the FCC limit the amount of foreign individuals or entities that may invest in our capital stock.
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The Communications Act and FCC regulations restrict foreign ownership or control of any entity licensed to provide broadcast and certain other communications services. Among other prohibitions, foreign entities may not have direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station if the FCC finds that the public interest will be served by the refusal or revocation of such a license due to foreign ownership or voting rights exceeding that threshold. The FCC has interpreted this provision to mean that it must make an affirmative public interest finding before a broadcast license may be held by a corporation that is more than 25 percent owned or controlled, directly or indirectly, by foreign persons or other non-U.S. entities.
We have filed a petition for declaratory ruling (“Declaratory Ruling”) requesting FCC consent to exceed the 25 percent foreign ownership and voting benchmarks that currently apply to us, but we cannot predict whether the FCC will grant a Declaratory



Ruling, the amount of foreign equity and voting rights such a ruling will allow us to have if one is granted, or how long it will take to obtain such a ruling.
The FCC calculates foreign voting rights separately from equity ownership, and both must be at or below the 25 percent threshold unless the FCC has issued a declaratory ruling allowing foreign ownership or voting in excess of that threshold. Warrants and other future interests typically are not taken into account in determining foreign ownership compliance. To the extent that our aggregate foreign ownership or voting percentages would 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.
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 for “investment companies” as defined in 15 U.S.C. § 80a-3, insurance companies and bank trust departments, whose holdings are subject to a 20 percent voting stock benchmark); (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, FCC rules and policies, and any FCC declaratory ruling, and in accordance with our certificate of incorporation, we may request information from any stockholder or proposed stockholder to determine whether such stockholder’s ownership of shares of capital stock may result in a violation of the Communications Act, FCC rules and policies, or any FCC declaratory ruling. We may further take the following actions, among others, to help ensure compliance with and to remedy any actual or potential violation of the Communications Act, FCC rules and policies, or any FCC declaratory ruling, or to prevent the loss or impairment of any of our FCC licenses: (i) prohibit, suspend or rescind the ownership, voting or transfer of any portion of our outstanding capital stock; (ii) redeem capital stock; and (iii) exercise any and all appropriate remedies, at law or in equity, in any court of competent jurisdiction, against any stockholder, to cure any such actual or potential violation or impairment.




ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth our purchases of shares of our Class A common stock made during the quarter ended June 30, 2019:2020:
Period
Total Number of Shares Purchased(1)
Average Price Paid per Share(1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 through April 30—  $—  —  $—  
May 1 through May 3188,738  8.70  —  —  
June 1 through June 3010,846  7.46  —  —  
Total99,584  $8.57  —  $—  
(1)The shares indicated consist of shares of our Class A common stock tendered by employees to us during the three months ended June 30, 2020 to satisfy the employees’ tax withholding obligation in connection with the vesting and release of restricted stock, which are repurchased by us based on their fair market value on the date the relevant transaction occurs.

Period
Total Number of Shares Purchased(1)
 
Average Price Paid per Share(1)
 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 through April 30512
 $1.25
 —
 $—
        
        
May 1 through May 31—
 —
 —
 —
June 1 through June 30—
 —
 —
 —
Total512
 $1.25
 —
 $—
(1)The shares indicated consist of shares of our Class A common stock tendered by employees to us during the three months ended June 30, 2019 to satisfy the employees’ tax withholding obligation in connection with the vesting and release of restricted shares, which are repurchased by us based on their fair market value on the date the relevant transaction occurs.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
Not applicable.


ITEM 4.  MINE SAFETY DISCLOSURES
Not applicable.


ITEM 5.  OTHER INFORMATION
On August 14, 2019,  the Company and Steven J. Macri, SVP - Finance, entered into a fourth amendment (the “Fourth Amendment”) to his employment agreement, (as so amended, the Employment Agreement”).  Pursuant to the Fourth Amendment, the term of Mr. Macri’s Employment Agreement, which was previously scheduled to expire on June 30, 2019, was extended through December 31, 2019.  In addition, the Fourth Amendment reflected a one-time award of 52,500 restricted stock unit awards and 97,500 options to purchase shares of the Company’s class A common stock, which were made on May 30, 2019 in connection with the Company’s Reorganization.  Of these awards, 20% vested on July 22, 2019, two business days following the listing of the Company’s class A common stock on the NASDAQ Global Select Market, and the remaining awards will vest equally on each of the next four anniversaries of the grant date, subject to the provisions of the applicable award agreement.  In addition, the Fourth Amendment increased the amount of any severance payments to be made pursuant to his employment agreement from $1.4 million to $2.0 million over a 12 month period.None.





56


ITEM 6. EXHIBITS
Exhibit

Number
Description
2.1


3.1
Fifth Amended and Restated Certificate of Incorporation of iHeartMedia, Inc. (incorporated by reference to Exhibit 3.1 toof iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

3.2


4.13.3

3.4

4.1

10.1

10.2

10.3

4.2
Form of 6.375% Senior Secured Notes due 2026 (incorporated by reference to Exhibit A to Exhibit 4.1 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

4.3
Indenture, dated as of May  1, 2019, by and among iHeartCommunications, Inc., iHeartMedia Capital I, LLC, as guarantor, the subsidiary guarantorsother lenders party thereto and U.S. Bank National Association, as trustee, governing the 8.375% Senior Notes due 2027 (incorporated by reference to Exhibit 4.3 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

4.4
Form of 8.375% Senior Notes due 2027 (incorporated by reference to Exhibit A to Exhibit 4.3 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

4.5
Warrant Agreement, dated as of May 1, 2019, by and between iHeartCommunications and Computershare, Inc. and Computershare Trust Company, N.A., as warrant agent (incorporated by reference to Exhibit 4.5 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

4.6
Indenture, dated as of August 7, 2019, by and among iHeartCommunications, Inc., the Guarantors party thereto and U.S. Bank National Association as trustee and collateral agent (incorporated by reference to Exhibit 4.1 to iHeartMedia, Inc.'s Current Report on Form 8-K filed on August 8, 2019).

4.7
Form of 5.25% Senior Secured Notes due 2027 (incorporated by reference to Exhibit A to Exhibit 4.1 filed herewith).

10.1
Settlement and Separation Agreement, dated as of March  27, 2019, between iHeartMedia, Inc., iHeartCommunications, Inc., Clear Channel Holdings, Inc. and Clear Channel Outdoor Holdings, Inc. (incorporated by reference to Exhibit 10.1 of Clear Channel Outdoor Holdings, Inc.’s Current Report on Form 8-K filed on March 28, 2019).

10.2
Transition Services Agreement, dated as of May  1, 2019, by and among iHeartMedia, Inc., iHeartMedia Management Services, Inc., iHeartCommunications, Inc. and Clear Channel Outdoor Holdings, Inc. (incorporated(Incorporated by reference to Exhibit 10.1 to Clear Channel Outdoor Holdings, Inc.’s Current Report onthe Form 8-K filed on May 2, 2019).

10.3
Tax Matters Agreement, dated as of May  1, 2019, by and among iHeartMedia, Inc., iHeartCommunications, Inc., iHeart Operations, Inc., Clear Channel Holdings, Inc., Clear Channel Outdoor Holdings, Inc. and Clear Channel Outdoor, LLC. (incorporated by reference to Exhibit 10.2 to Clear Channel Outdoor Holdings, Inc.’s Current Report on Form 8-K filed on May 2, 2019)July 16, 2020).
10.4
ABL Credit Agreement, dated as of May  1, 2019, by and among iHeartMedia Capital I, LLC, iHeartCommunications, Inc., as borrower, the other guarantors party thereto from time to time, Citibank, N.A., as Administrative Agent and Collateral Agent, and the lenders party thereto, governing the New ABL Facility (incorporated by reference to Exhibit 10.5 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).



10.5
ABL Intercreditor Agreement, dated as of May  1, 2019, by and among Citibank, N.A., as Tern Loan Collateral Agent and Designated Junior Priority Representative, U.S. National Bank Association, as Notes Collateral Agent, each additional junior priority representative party thereto, iHeartMedia Capital I, LLC, iHeartCommunications, Inc. and the other grantors party thereto (incorporated by reference to Exhibit 10.6 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

10.6
Credit Agreement, dated as of May  1, 2019, by and among iHeartMedia Capital I, LLC, iHeartCommunications, Inc., as borrower, the other guarantors party thereto from time to time, Citibank, N.A., as Administrative Agent and Collateral Agent, and the lenders party thereto, governing the New Term Loan Facility (incorporated by reference to Exhibit 10.7 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

10.7
First Lien Intercreditor Agreement, dated as of the Effective date, by and among Citibank, N.A., as Credit Agreement Agent, U.S. National Bank Association, as Senior Notes Collateral Agent and each additional collateral agent from time to time party thereto, iHeartMedia Capital I, LLC, iHeartCommunications, Inc. and the other grantors party thereto (incorporated by reference to Exhibit 10.8 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

10.8
Revolving Loan Agreement, dated as of May  1, 2019, by and among iHeartCommunications, Inc. and Clear Channel Outdoor, LLC and Clear Channel International, Ltd. (incorporated by reference to Exhibit 10.3 to Clear Channel Outdoor Holdings, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

10.9
Certificate of Designation of Series A Perpetual Preferred Stock of iHeart Operations filed with the office of the Secretary of State of the State of Delaware on April  30, 2019 and effective as of May 1, 2019 (incorporated by reference to Exhibit 10.10 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).
10.10
Series A Investors Rights Agreement, dated as of May 1, 2019, by and among iHeart Operations, iHeartCommunications, the Company and the purchaser listed therein (incorporated by reference to Exhibit 10.11 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 2, 2019).

10.11
Form of Indemnification Agreement, between iHeartMedia, Inc. and its directors (incorporated by reference to Exhibit 10.1 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 7, 2019).

10.12
Form of Indemnification Agreement between iHeartMedia, Inc. and its executive officers (incorporated by reference to Exhibit 10.5 to iHeartMedia, Inc.'s Current Report on Form 8-K filed on June 5, 2019).
10.13
iHeartMedia, Inc. 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 7, 2019)

10.14
Form of Non-Employee Director Restricted Stock Unit Award Agreement with respect to RSUs granted in lieu of annual cash compensation (incorporated by reference to Exhibit 10.3 to iHeartMedia, Inc.'s Current Report on Form 8-K filed on June 5, 2019).

10.15
Form of Non-Employee Restricted Stock Unit Award Agreement with respect to RSUs granted as part of the director’s equity compensation (incorporated by reference to Exhibit 10.4 to iHeartMedia, Inc.'s Current Report on Form 8-K filed on June 5, 2019).

10.16
Form of Employee Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 to iHeartMedia, Inc.’s Registration Statement on Form S-8 filed on May 17, 2019)

10.17
Form of Employee Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.5 to iHeartMedia, Inc.’s Registration Statement on Form S-8 filed on May 17, 2019)

10.18
 Amendment to the Amended and Restated Employment Agreement, dated as of May 1, 2019, between iHeartMedia Inc. and Robert W. Pittman (incorporated by reference to Exhibit 10.7 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 7, 2019)

10.19
Amendment to the Employment Agreement Amendment, dated as of May 1, 2019, between iHeartMedia Inc. and Richard J. Bressler (incorporated by reference to Exhibit 10.8 to iHeartMedia, Inc.’s Current Report on Form 8-K filed on May 7, 2019)



31.1*
10.20*
Fourth Amendment to the Employment Agreement, dated as of August 14, 2019, between iHeartMedia, Inc. and Steve J. Macri
31.1*
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*101.INS*Inline XBRL Instance Document - the instance document does not appear in the Interactive Data Files.File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
57

101.DEF*Inline XBRL Taxonomy Extension Definition Document
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
____________
* Filed herewith.
** Furnished herewith.

58


Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
IHEARTMEDIA, INC.
August 6, 2020IHEARTMEDIA, INC.
August 14, 2019/s/ SCOTT D. HAMILTON
Scott D. Hamilton
Senior Vice President, Chief Accounting Officer and Assistant Secretary

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