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Executives

Effie Epstein - VP. Investor Relations

Rich Bressler - President & CFO

Brian Coleman - SVP & Treasurer

Analysts

Jason Kim - Goldman Sachs

Marci Ryvicker - Wells Fargo Securities

Avi Steiner - JPMorgan

Lance Vitanza - CRT Capital Group

Davis Hebert - Wells Fargo Securities

Tracy Young - Evercore

CC Media Holdings, Inc (OTCQB:CCMO) Q4 2013 Earnings Conference Call February 20, 2014 8:30 AM ET

Operator

Ladies and gentlemen thank you for standing by. Welcome to the Clear Channel Fourth Quarter 2013 and Full Year Conference Call. (Operator Instructions). I’ll now turn the conference over to your opening speaker Effie Epstein, Vice President of Investor Relations. Please go ahead.

Effie Epstein

Good morning and thank you for joining our 2013 fourth quarter and full year earnings call. On the call today are Rich Bressler, President and Chief Financial Officer and Brian Coleman, Senior Vice President and Treasurer. We’ll provide an overview of the fourth quarter and full year 2013 financial and operating performances of the CC Media Holdings, Clear Channel Communications and Clear Channel Outdoor Holdings.

We published slides to accompany this call and you can find those on our website. For purposes of this call when we describe the financial and operating performance of CC Media Holdings that also describes the performance of its subsidiary, Clear Channel Communications. After an introduction and a review of the quarter and year, we’ll open up the line for questions.

Before we begin, I’d like to remind everyone that this conference call may include forward-looking statements that involve uncertainties and risks. There can be no assurance that management’s expectations, beliefs or projections will be achieved or the actual results will not differ from expectation. Please see our annual reports on Form 10-K and our quarterly reports on 10-Q filed with the Securities and Exchange Commission for a discussion of important factors that could affect our actual results.

Pacing data will also be mentioned during the call. For those of you not familiar with pacing data, it reflects revenues booked at a specific date versus the comparable date in the prior period and may or may not reflect the actual revenue growth rate at the end of the period.

The company’s revenue and pacing information includes an adjustment to prior periods to incorporate all acquisitions and exclude all divestitures in both periods for comparative purposes. We also eliminate the effects of movements in foreign exchange rates from pacing.

During today’s call, we will provide certain performance measures that do not conform to Generally Accepted Accounting Principles. We have provided schedules that reconciled these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases and the slide presentation which can be found on the Investor Section of our website clearchannel.com and clearchanneloutdoor.com.

Please note that our two earning releases and the slide presentation provide detailed breakdown of all foreign exchange and noncash compensation expense items as well as segment revenues and OIBDAN for the quarter and full year. Our discussion today also excludes the effects of movements in foreign exchange and an adjustment for divestitures in 2012 unless otherwise noted.

With that, I will now turn the call over to Rich Bressler.

Rich Bressler

Thanks Effie. Good morning everybody. As Effie mentioned OIBDAN remarks we did publish slides to accompany this call and you can find those on our websites. Before jumping into our results our I will start off by saying I just got back from Clear Channel’s Annual Leadership Summit where we got together with our top people from all around the world. They help give me confidence in our path to success. Our people are our greatest asset and I’m more confident than ever that we have the best leaders and we’re all steering towards the same goals.

Let’s review 2013, we continue to invest in expanding our services and making sure consumers can find us wherever they want. This past year we invested strategically in our people, digital platforms including our radio, our events business, and are continuing to deploy digital outdoor displays. Our focus is to be the number one multi-platform media company revenue and earnings in addition to reach.

We also put the efforts on key strategic partnerships like partnering with the CW Network to air 7 television shows that reach over 50 million viewers and we recently announced a multi-year cross platform partnership with Horizon Media the first of it's kind in the industry.

With the retirement of John Hogan, Bob, Kip and I have taken over the Direct Management of Clear Channel’s Media + Entertainment Division. We also went through some organizational realignment to strengthen our foundation for long term success. For example earlier this month we create a new unified networks at CCME, Head by Clear Channel veteran Darren Davis to further integrate our premier networks, Total Traffic and Weather Network, the 24/7 News Network and the iHeartRadio Network. This allows us to realize the value of our unique national reach by packaging it in a way that meets national advertiser needs as well as gives us the structure to expand our network offerings and cost efficiencies. As you all know 2013 was not a political year. So we took the time to further build our political efforts in order to continue to provide better options for advertisers and give out for 2014. We started by our Nathan Daschle, a well-known political strategist to head up our political strategy out of DC. He is focused on working with political and issue advertisers and advertising agencies to develop customer strategies and campaigns that leverage the unique reach and power of Clear Channel.

So as you can see we’re investing for growth and I’m excited by what we have done so far and what we plan to do next.

Now let me run through some key financial highlights from 2013 and the fourth quarter. Turning to slide 4, we delivered a steady financial performance inspite of challenging economic conditions. Starting with the full year CC Media Holding revenues totaled 6.2 billion close to flat year-over-year though would have been up 2% excluding political. Media and Entertainment grew 2% or 4% ex-political while our outdoor business remained flat. It's also important that our political revenue for our media representation business which is included in our other category was down 40 million year-over-year.

OIBDAN declined 4% to $1.7 billion in 2013 both on a reported basis and excluding the effects of movements in foreign currency exchange rates and divesture of businesses. I will talk about some of the key drivers of this decline a little bit later. Going to the fourth quarter we had some tough comps last year both in terms of the political spending and the loss of revenue from our Los Angeles digital boards. That said revenue was flat year-over-year or up 4% excluding political.

Performance was driven by 3% growth in Media and Entertainment were up 8% excluding political as well as 2% increase in international outdoor. OIBDAN was down 3% year-over-year driven mostly by greater expenses at Media and Entertainment which I will explain in more detail later on. I also want to mention two very successful transactions that we completed in the last few days which generate over 420 million in net proceeds, both recently was a sale of our 50 ownership stake in Australia and New Zealand radio asset while the $220 million in net proceeds.

We also sold some of our 14% senior notes held by subsidiary well over $200 million in net proceeds. Turning to slide 5, I will take you through some of our key highlights. We have done some really exciting stuff in the Media and Entertainment side of the house and our partnership perspective I mentioned our deal with Horizon earlier. We are also working with Nielsen to deliver the first ever single source ROI measurement for radio and of course we also continue to work with record labels and have signed 25 agreements to-date on a direct basis including one with one Warner Music Group. We believe that this is an important component to building a sustainable business model to drive the growth of digital radio while breaking new music and creating new marketing opportunities for established partners.

We continue to be thrilled with the growth of iHeartRadio. iHeartRadio reached 43 million registered users by the end of 2013 climbing 84% year-over-year. To put that growth in perspective iHeartRadio surpassed the 20 mi registered user milestone faster than any other digital service and reached 40 million faster than Facebook, Twitter or Pandora second only to Instagram.

Importantly iHeartRadio’s total listening hours were up 29% over the year with mobile representing 54% of iHeartRadio’s total listening hours during the fourth quarter of 2013. Our brand awareness climbed nearly 70% slightly behind Pandora but above Spotify. We also continued to lead with Facebook Engagement having over 6.7 million likes for our iHeartRadio page surpassing Pandora, Spotify and even Netflix. Lastly we continue to build out our events business because of the incredibly positive reaction we got. Social impressions to the iHeartRadio Music Festival grew a record $2.3 billion while the June Jingle Ball tour nearly cost 4 billion social impressions and our monetization perspective we create both local and national participation opportunities for advertisers to reach and engage with customers. Already for the coming year we have announced our first ever iHeartRadio Country Music festival in Austin, Texas in March featuring the best of the country stars such as Carrie Underwood and there is more to come.

Now let’s turn to slide 6 and talk about outdoor. I’m truly excited by some of the initiatives and

innovation that outdoor under Chief Executive Officer, William Eccleshare’s leadership. We continue to drive strong growth of many U.S. markets as well as China, Brazil and other emerging markets and some of the developed markets as such Norway and UK.

In the U.S. we continue to build our digital presence aiming yields over 1100 digital boards including new boards at Penn Plaza of course from Penn Station in New York as well as Boston’s South Station.

Outdoor International we ended 2013 with over 3700 digital displays across 14 countries, that total will climb in 2014 with our exclusive contract for advertising space at Rome’s two airports. Now let me spend a few minutes diving to our segment results and then we will wrap with liquidity before opening up the line questions.

Turning to slide 7, I will review Media and Entertainment’s financial results, starting with the full year revenue grew 2% in 2013 up 4% including political driven by primarily by an increase in national advertising revenue across various markets in advertising categories including telecom, retail and entertainment as well as growth in digital sales.

The iHeartRadio Music Festival, Jingle Ball tour, iHeartRadio Ultimate Pool Party and album release events drove higher promotional sponsorship revenue. Our revenue growth was partially offset by reduced political spend compared to 2012 which was a presidential election year as well as a decline on profit decline on our traffic business resulting from integration activities.

Operating expenses increased $80 million year-over-year driven mainly by continued investment in our national sales and programming capabilities, special events, promotional cost, compensation of the higher streaming of performance work expenses during 2013 due to increase in listenership on iHeartRadio platform. Also note that 2012 include a onetime $21 million credit for one of our performance rights organizations.

In addition we also have higher legal fees and research expenses related to sales and programming activities in 2013. For the quarter Media and Entertainment revenue drove 3% or 8% if you exclude political revenue due primarily the strong national digital advertising as well as promotional and event sponsorship with the expansion of the Jingle Ball tour and album release events.

Expenses were up 36 million due main with increased cost associated in our special events and the higher streaming and performance royalty expenses. Let me cover our first quarter pacing before moving on to CCLA.

Some of you have heard me say this before but I do hate giving out our pacings because it is a snapshot in time and does include everything. We do as a company the quest to grow. Okay with that out of way Q1 pacings of the CCME allowed 2.7% with core stations up 3.2%.

Turning to slide 8, Americas outdoor revenue increased 1% in 2013 driven primarily by higher occupancy rates from both bulletins and posters in connection with new contracts. On the digital front increased revenue with the higher occupancy and capacity. I want to point that our revenue growth was affected by the absence of revenue from the 77 digital billboards in LA that returned off in April of 2013.

We also have declined in our specialty and airport businesses after the loss of certain contracts. Our operating expenses declined by 1% year-over-year aided by our past investments and strategic revenue and efficiency initiatives. We also had a decrease in variable expenses such as site lease expenses that were related to decline in revenues and certain product lines that have lower margins. These declines were offset by higher legal cost related to the Los Angeles litigation. The fourth quarter Americas revenues decreased 2% resulting from lower revenues at airports due to lost contracts and the absence of revenue from the LA digital boards.

Operating expenses declined 5% in the quarter again because of our strategic revenue efficiency initiatives as well as a decrease in variable expenses. Q1 pacings and CCOA are down 7.5%. We have a slighter or tough comps relative to last year but just a reminder that the first quarter of last year included revenue from the 77 digital boards in Los Angeles that are currently turned off.

Also our Americas Outdoor segment typically experiences it's lowest financial performance in the first quarter of the calendar year. In terms of top categories, retail, business services and healthcare medical are performing strong in the first quarter. Turning to slide 9, international outdoor revenues increased less than 1% in 2013 after adjusting for divestures there in the third quarter of 2012 and a $5 million increase from movements in foreign exchange rates.

We had strong revenue growth in emerging markets including China and Brazil as relative to the UK and higher transit advertising sales resulting from new contracts in Norway. Some developed markets like France faced very challenging economic conditions which was a hit on our revenues. Operating expenses decreased 24 million in 2013 adjusting for $17 million of expenses resulting from the divestiture of businesses during the third quarter of 2012 and a $7 million increase from movements in foreign currency exchange rates. Operating expenses declined due to a $27 million of legal and other expenses in Latin America that occurred in 2012 that did not recur in 2013 as well as cost savings from strategic initiatives made in previous years. That was partially offset by higher costs in certain emerging markets and from new contracts in markets with greater revenue.

In the quarter revenues rose 2% driven by growth of emerging markets like China and Brazil. Again our revenue growth was partially offset by performance of our developed markets like France and faced tough macroeconomic conditions. Operating expenses in the quarter decreased 2% for the same reasons I’ve mentioned earlier. Q1 pacings at CCI are down 2.1%, emerging countries are strong but performance in France and other developed markets continue to hurt us.

Again similar to Americas Outdoor, CCI’s typical experiences it's lowest financial performance in the first quarter of the calendar year. On slide 10, let me review again for (indiscernible) that are affecting comparability year-over-year which are significant.

First 2012 was a presidential election year, so there was money coming in from federal, state and local levels. The reduction of political spending in 2013 affected CCME more than outdoor and that was also a big driver of the reduction in revenues of our media representation business which is captured in the other line. Looking ahead for this year our political but non-presidential realized [ph] in 2010 I suppose early about our new political strategy unit. We’re really doing some really innovative things around terrestrial and digital segmentation targeting and frankly we can’t compare digital only players to our extensive reach and scale so we’re confident in our ability to help advertisers target the right people at the right time.

Let’s shift to Americas Outdoor. Not much of an update around getting a new digital ordinance passed in LA but while working with the city and the industry on a long term legislative solution that create value for the city and the community. As we noted last year this could be a lengthy process. On a related note the litigation in LA among every thing’s has contributed to higher litigation expenses this year. Other items in the expense comparatively of the $21 million credit in 2012 related to music license fees as well as 7.8 million in executive transition cost in 2013.

Turning to our capital expenditures on slide 11, capital expenditure for the year as 325 million down 17% from 2012 at about 25 million less than (indiscernible) at our fourth quarter 2012 earnings call. The 325 million approximately 206 million was invested in outdoor; we spent 89 million in our Americas segment related primarily to the construction of new digital displays and a 109 million on our International segment. We’re allocating capital to where we see the highest return for all of our stakeholders.

Turning to slide 12, we have taken significant steps to improve our capital structure and liquidity both organically and through capital markets and strategic transaction. This past December we refinanced 1.9 billion of debt maturities that were due in 2016 further reducing maturities due over the next three years.

Our 2013 capital markets activities including spending on maturities and selling non-core assets have given us the financial flexibility to continue to grow our businesses.

As of December 31, total debt was 25 billion and we had 708 million of cash on the balance sheet. Looking ahead Clear Channel’s 2014 maturities consisting of 461 million up 5.5% notes due in September and maturities in 2015 consisting of mainly of $250 million of 4.9% notes.

Clear Channel asset holding has no significant maturities until 2020. Also during 2013 outdoor attributed to a 75 million five year senior secured revolving credit facilities for working capital to issue letters of credit and for other general, corporate purposes. There are no amounts outstanding on the revolving credit facilities and year end.

Turning to slide 13, I will review the balance sheet and debt ratios, as I just mentioned cash on the balance sheet was 708 million at year end for CC Media Holdings and our secured leverage ratio was 6.3 times. At Clear Channel outdoor we had 16 million in cash and our assuming the leverage ratio with 3.5 times and our consolidated leverage of share was 6.3 times.

As I briefly mentioned at the beginning of the call within the last 7 days Clear Channel closed two successful transactions which collectively generate over $420 million in net proceeds to us. Most recently we sold our 50% ownership stake in Australia and New Zealand radio assets, a joint venture that was not consolidated in our financial statements and was not being produced strategic.

Also our subsidiary sold a portion of the Clear Channel Communication’s 14% senior note and held due till 2021. In addition to the cash that were in the balance sheet we have number of levers we’re examining in terms of enhancing future liquidity. To that end we will continue working to improve our operations and reduce our working capital needs and explore the sale of additional non-core assets. To sum it up we are comfortable with our maturities schedules in the near term. We will continue to take disciplined, practiced steps to address our capital structures and liquidity. Let me just finish up by saying that we have now being in place a strong foundation to continue to drive momentum in 2014 and the years ahead. We have reorganized the company to offer our advertising partners customize marketing solutions that nobody else can, we continue to build new businesses using our unique mix of core assets and pursue all of our opportunities of the multiple platforms and we’ve now put in place a leadership team with a vision, skills and experience to execute and win in the marketplace and make us the number one profitable media company in revenue and earnings in addition to reach.

Thank you very much and let’s open up the line for questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question will come from the line of Jason Kim. Please go ahead.

Jason Kim - Goldman Sachs

I will start up with some business questions and maybe a capital structure question later and can you talk about your outlook for margin for 2014. In the past couple of years we have seen the company make a lot of investments in growth initiatives which has impacted your profitability somewhat and I’m hoping if you can share with us in broad terms how you think about the level of investments you will be making in 2014 compared to last year and if the historical increments of margin profile of somewhere along the lines of 70% to 80% on the radio side of the business can we have this year is it extent to what you see some revenue uptick.

Rich Bressler

So I guess I think there is a lot in that question so let me try and hit on a bunch of different levels. First of all just right on the market question, look we have invested in the company as everybody knows particularly in Media and Entertainment and particularly within Media and Entertainment our national sales and programming capabilities and our digital platform and our events with the expectation and I think you’re going to start to see that and will continue to see that but these investments we yield revenue growth. So if we look forward as we look for this year to next year moving forward I expect that you’re going to continue to see margin expansion. I think the second part there is that if you look at a lot of those investments and I think probably more focused what we call iHeartRadio you know just to be clear that’s a key asset for us that and when I highlight those it spans all of our Media and Entertainment businesses, the mobile app, the websites, of our stations, our events. So these investment also support the growth and monetization of our core radio business and as a reminder and again I know we would all like to see a more in the numbers and we will continue to see the financial numbers accelerate as we move forward for this year into next year but some of the things I point you to that our investments are working.

The fact that we were, I mentioned this in the operating remarks we have 29% over 2013 and total listening hours for iHeartRadio was nearly 300 million downloads and updates and we’re in the process of really focused on the monetization through our 1000 stations and 84 million visitors on a monthly basis.

So there is a lot of leverage here to pull in terms of the monetization and one of the reasons I give you the operating stats is so you guys could all benchmark that we’re making progress which is resulting in financial result and we will continue to result in more accelerated financial results which will continue to improve margins.

Jason Kim - Goldman Sachs

And then on the CC or Americas pacing side I know you typically do not talk about specific numbers in terms of your impact of the LA digital board situation and some losses in the airport contracts but can you just give us a sense of how your core trends in CC Americas excluding those two items are looking for 1Q, maybe compared to the most recently a couple of quarters?

Richard Solomons

I’m really not going to as I said on the call I really do hate pacings, given pacing understand it's a fact of life but I do hate pacings and I think when we get through the second quarter after we get by the second quarter and midway through second quarter we won't have to tuck comparisons anymore because we will be done with the overall pacings but you know look our business continues to perform well. The first quarter is always the toughest quarter for us, as I said our prime; we’re more excited than quite frankly in the outdoor business than we have ever been. I think if you look at our recent data we’re spending 70% of the time outside of the home [ph]. Quite frankly some of the innovative stuff William and his team is doing things like the virtual book store in Copenhagen which we have talked about and you guys should go online and look at stuff we did with Chiswick Towers in London, you know the rolling of the digital displays in the U.S. and where we’re putting our capital to. You know you look at all those things we’re very, very bullish about outdoor but giving, I’m not going to say anything more beyond the pacing information I gave.

Jason Kim - Goldman Sachs

And just one question with capital structures either for Brian or for Rich, clearly you’ve done a lot of work since the last earnings call but the one bucket of maturities that were not addressed since then are the legacy bond maturities. So can you talk about what your thought process is with respect to those notes, in the context of the fact that you’ve now raised over $400 million in liquidity from asset sales and sale of your notes of 2021 [ph].

Brian Coleman

I think in a way we have by selling some of the 2021 notes that were held by an unrestricted subsidiary and then since moving that cash up to the parent. That’s cash, that’s liquidity that’s available to repay the legacy note maturities both later this year in 2015. So it's an indirect way of really refinancing this legacy that with the issuance of the LBO notes with the 2021 maturity. I don’t know if you think about it that way but I kind of do. I think the reality is a lot of the holders of the ’14 and ’15 notes are expected to get paid at cash, at maturity. Now we have a liquidity and we will examine whether or not it's at maturity or sometimes before and that will be an economic decision. But I do think the actions we’re taking do address in an indirect way the refinancing of those maturities.

Operator

Our next question will come from the line of Marci Ryvicker. Please go ahead.

Marci Ryvicker - Wells Fargo Securities

So the negative 7.5% case in Q1 is clearly a little surprising to people and I’m curious if this has gotten worse throughout the quarter send out as a pacing number and also can you give us any color on maybe the overall outdoor market because this does feel like it's very Clear Channel. So you’re seeing weakness in the entire market or the industry or is it just company specific?

Rich Bressler

So couple of things, I’m not going to comment on the overall industry. I would comment about is really on Clear Channel. Remember you do have a couple of things, you do again hate to reiterating but we do have the 77 digital billboards that were turned off on April 15th. Where we’re seeing some strength is we’re seeing higher occupancy rates for bulletin and posters in connection with new contracts. We’re seeing higher occupancy and capacity on overall, on digital boards obviously axe [ph] away with the ones that we have up. So again as I did say we feel very, very good about the business and expect we will continue to see strength as we go throughout the quarter but not going to comment anything on that.

Marci Ryvicker - Wells Fargo Securities

And then it's interesting that radio that core stations are pacing up three. So is that something that’s specific to Clear Channel as well or are you feeling strength from overall advertising demand?

Rich Bressler

I think again I don’t want to talk a lot about in terms of the rest of industry. You guys will have your own opinions but as I said and I think an answer to the question earlier from Jason too is we have made a bunch of investments over the years which we talked about last year and we pointed out and I think you’re starting also to see the upside on the monetization that we’re doing in the company whether that comes from iHeartRadio, the rest we’re doing revenue management making sure that we’re allocating dollars to where we have inventory and maximizing the revenue. I think we’re doing a really good job quite frankly on capital allocation, and allocating and capital being broadly defined in terms of working capital in dollars that where we’re getting the return. And as I mentioned previously you know we’re seeing strong growth particularly in telecom, we love telecom, financial services and healthcare until you look across the board there.

Marci Ryvicker - Wells Fargo Securities

And my last question is do you have a target number for additional boards for ’14?

Rich Bressler

No ideally I would say we’re going to have more.

Marci Ryvicker - Wells Fargo Securities

But you’re going to put up more boards than you did in ’13?

Rich Bressler

I’m not going to comment on that, just we’re going to have more absolute digital boards.

Operator

Our next question will come from the line of Avi Steiner. Please go ahead.

Avi Steiner - JPMorgan

Few left here pretty easy, let’s start balance sheet. Can you think about monetizing the remaining 14% is it cost to capital perspective where you can sell them or now that your cash balance is I guess 1.1 billion pro forma, do you feel you’re not in a rush or don’t have time? Thanks.

Rich Bressler

Yeah. What I would tell you is we were definitely surprised at the demand. We got a lot of (indiscernible) inquiry, we clubbed together a deal and it was a pretty easy deal to do, we could have done more. The reason we didn’t is exactly as you kind of intimated in your question. It's a relatively expensive cost to capital and with this action combined with the proceeds from the ARN’s disposition. We feel pretty comfortable about our maturities over the next couple of years. It's still a currency, it's traded up, it's become a little more attractive perhaps, it's still it's relatively expensive. What we like about this trade was it was immediately actionable at a higher degree of certainty but the cost is such that we only get about half of the position and that’s why we did half. But you’re right we feel pretty good about the liquidity balance, we like our maturities are covered from next couple of years. Hopefully operations will continue to perform and grow but we have that currency in our back pocket if we needed in the future.

Avi Steiner - JPMorgan

And then another easy one, after tax proceeds on ARN and can you just confirm not required to use those proceeds (indiscernible).

Rich Bressler

That’s right we intend to reinvest the proceeds from ARN in the business. It will be providing the required notice under the credit agreement within the requisite period of time I think it's about 10 days, if you take a look at our anticipated CapEx I think we gave some guidance in the deck that we posted to our website, it's pretty easy to reinvest these proceeds in the business and that is our intention.

Avi Steiner - JPMorgan

Okay and after tax was it the 220 change converted?

Brian Coleman

I don’t think there is any material tax effect on these proceeds so it should be pretty much the net proceeds of the sale.

Avi Steiner - JPMorgan

Perfect Rich if I can turn it to you Pandora has a $7 billion enterprise value, plenty of articles about Spotify potentially going public. Facebook is making acquisitions, internet valuations are what they are digital, how do you think about what you’ve with iHeartRadio and how you can the company could potentially take advantages of those?

Rich Bressler

Well it's like you want to Zuckerberg this morning, because I will tell you when you look at the WhatsApp stuff I mean and I don’t know I’m sure many of you did but listening or hearing stuff about the call last night that they had and listening to both the press and a lot of you this morning taught me about it. It's so much about social, it's so much about community in terms of why Facebook did that deal and you just take a step back and Bob and I have been saying this for some period now. That’s what radio is, it is the amount of time you spend online every day I think it's almost 2.5 hours a day, people spend online with radio, engagement, about 92% of the American population listens to radio every week same for the last since the early 1970s and you couple that with a personalities that we have that people love and they tune in daily and the local element which is critical and what real radio is all about which has connected listeners to the community, our key emphasizing community in the social and the world around them and it's a social experience, then you consider your experience as the same as of the listeners, then you’re getting local news whether it's making traffic. It's anything you know WhatsApp if the market says WhatsApp is worth $19 billion you know you tell me what the value of the fact that we have 243 million people that we reach on a regular basis on a monthly basis.

And so that’s kind of first thought. I think just looking at standalone don’t even compare it with anybody just look at it again the market cap that you said on Pandora and even more recently what the market’s put on the market cap, the premarket has put on for WhatsApp this morning.

I think when you churn specifically let me just turn specifically for a second for Pandora I mean I think what’s really interesting I don’t know how many of you’ve seen but Nielsen recently put out a study that again confirms what I just said and this is important, this is like third party data as opposed to self-reported data and that AM/FM Radio still makes up 92% of all listening out there and that means digital accounts for just 8% of all listening and then you break that 8% between iHeartRadio, iTunes, Pandora and other services and what you really get down to is digital is not substituting for terrestrial radio but it's providing additional listening opportunities that are there. And so again if you look at us on a comparison basis it's really not apples-to-apples. You’ve heard us talk about this before, Pandora is a playlist what we have is called custom radio. We think it's a feature we don’t think it's a free standing service and probably the last thing I will say and then I will pause and happy to answer any other questions on the Pandora side is that they claim to be the number one radio station in most markets but it's really important just to do the math for a second and less than 40% of all consumers today can even stream and if Pandora remarkably got a 100%. Remarkably we get a 100% of all the people of all of the customers that stream they still couldn’t make it to number one in any market because number one station like in New York where we have WLTW, it's close to 60% and we have 90% of the cost there. It's mathematically impossible for them to be number one in these markets. So if I just do the math on what I just gave you on streaming and we’re number one and quite frankly we head up all the Pandora streams in New York, they wouldn’t even be in the Top 10. I think they are like in 17 or 18% and again that’s mostly self-reported data, we always use third party data to confirm.

Avi Steiner - JPMorgan

One quick follow-up on that, is iHeart discreet separable asset and is that part of the restricted group?

Rich Bressler

It's not part of the restricted group and again I think if you go back to what I said I think probably a couple of times and answering some questions, you know you got to look at digital and iHeart and everything within this company really as one. It's additive to our terrestrial opportunity and you’ve to look at them as complimentary.

Brian Coleman

One thing I would say obviously, we typically get that question and it refers on the unrestricted groups. Those assets as Rich said are part of the radio broadcasting group that they all are part of the restricted group.

Avi Steiner - JPMorgan

They are, I just wanted to clarify, they are part of the restricted group?

Rich Bressler

Yes.

Avi Steiner - JPMorgan

Two more very quickly (indiscernible). Number one you signed at least on the headline 100 million across platform you authorized in, can you give color on that around deals with SFX really what I guess revenue opportunities are there that maybe we’re not missing just looking directly at the numbers?

Rich Bressler

I think the Horizon deal is extremely critical because look it's a partnership that’s the first of the kind not only for Clear Channel but for the industry. We look forward to signing more strategic multi-platform arrangements for the clients. It's especially significant again for us to major agency that we have now formerly partnered with that recognizes our unmatched ability to really develop and execute multi-platform partnerships that leverage all the powerful properties that we have and the talent that we have to deliver results for the partners. You should think about it as this is really a deep integrated marketing partnership that enables Horizon and it's clients, most importantly the Horizon clients to leverage our assets including I’m going to go back to it again mobile, out of home, broadcast, digital or events and what that does is it improves the effectiveness and ROI and really prove the effect of ROI of broadcast and out of home and so the Horizon deal again SFX deal we have known Bob Sillerman a long time. He has built a great company with SFX and EDM, Electronic Dance Music and the ability again without repeating entirely our asset base again and our reach again and our 243 million again and our events and our ability to create brands and create awareness that’s why whether it's from the Horizon perspective which I just went through or from Bob Sillerman perspective SFX that I just went through, we continue to form these partnerships that are wins-wins for both sides.

Avi Steiner - JPMorgan

Excellent, very last question. You talked about other non-core assets I don’t know if you want to be specific but is there an opportunity set there that’s above 100 million?

Rich Bressler

So the answer to your last question is no, no I’m not going to be specific as you would be is shocking but I’m not going to be specific but this is something we do every day. I think when I did the first call when I came in to work and partner with you know 5 to 6 months ago. I said one of the things I thought we can do because the team has done a great job here on the capital structure even long before I got here but it's all we believe in step up our focus in our balance sheet and be more effective and more efficient and more cost efficient and the two deals that you just saw both Brian commented on the note deal but on the APN [ph] deal and they have been terrific to receive net cash proceeds of well over $200 million for assets that we don’t consolidate within the company and by the way we also have an ongoing license with them in iHeartRadio in Australia and New Zealand so we will continue to be evolved in those and we continue to get a management fee or a consulting fee from those. So it was really a win-win for both sides and you’re going to see us continue to without being specific look at our balance sheet and say we do things to more efficiently run the company which will be better for all of you and all of us as stakeholders.

Operator

Thank you. Our next question will come from the line of Lance Vitanza. Please go ahead.

Lance Vitanza - CRT Capital Group

I wanted to start with another iHeart question if I could. Listener hours are up 29%, I had imagine that most of it reflects new users but do you have any sense for whether existing iHeart users are listening or using the service streaming more or less about the same relative to what they were doing say six months ago?

Rich Bressler

More and more mobile, I think mobile was 52% of our listening hours last quarter. So I think that tells you the direction that we’re going. So it's a bit more.

Lance Vitanza - CRT Capital Group

So do you think you’re taking users away from Pandora in some of these other services or are you just getting your share of new users as they try streaming for the first time or is it a bit both?

Rich Bressler

The answer is, I don’t really answer that question, I’m not sure anybody knows the answer to that question and that’s why I thought to give you this status on a little bit just to go back in terms with little bit with Pandora. Remember we got digital is still as I said earlier we’re radio, okay? First and foremost and I go back to what Pandora is. Pandora is a playlist, it's really apples and oranges out there. It's a feature and we have feature, we have something called Perfect For which is a feature in iHeart offering out there and Pandora has had a feature and they have done a nice job with their feature but if you look at iHeart we got almost 70% awareness in the last 2, 3 or 4 period of time. I gave you the overall numbers that we talked about but we still believe that 90% of Americans say that they have both a music collection and a radio and they would like to have both and they use them for different listening experience. And so what the playlist is is what we call custom radio not free standing and as I mentioned we have Perfect For. And again no different, we’ve seen really no impact on sales which is a question that continues to be out there. We’re also just to get it on the table since everyone is kind of scratching out the edges here on Pandora. You know as I might as well add to that upfront because I’m sure it's going to come in a couple of minutes. We have seen in fact on local digital sales, we have got 3000 sellers across the country, we have been doing this for a long period of time and so and I also mentioned the point about the reach where Pandora having self-reported information versus ours which is other/Nielsen.

Lance Vitanza - CRT Capital Group

You gave us a lot of great data, one another piece that I would love to get, can you tell us what iHeart’s listener hours were for any recent period?

Rich Bressler

Sorry can you say that again?

Lance Vitanza - CRT Capital Group

Yeah wondering what the actual total number of listener hours on iHeart were for any recent period? You have given us the growth rates and I’m wondering if you can give us the absolute amount of hours?

Rich Bressler

Let me get back to you on that. I don’t have that offhand but let me back to you on that.

Lance Vitanza - CRT Capital Group

Okay and then just Brian maybe a question for you if I could and I apologize if I missed this earlier but can you give me a sense for where pro forma interest expense stands now with the issuance of the 14 to 21 and maybe assuming you repay the 5.5s of 14 ph?

Brian Coleman

Yeah I think we have given general guidance in the deck that we attached, you know interest expense should be around $1.6 billion level.

Lance Vitanza - CRT Capital Group

1.6 billion, okay. Thank you guys.

Operator

Thank you. Our next question will come from the line of Davis Hebert. Please go ahead.

Davis Hebert - Wells Fargo Securities

I want to ask you a question about the political, a lot of the TV guys are saying 2012 is going to be a tough comp with 2012 being a presidential year. Haven't heard as much on the radio side, do you think ’14 can match ’12 in terms of political revenue?

Rich Bressler

’14 as you know is a political non-presidential year like 2010 so I do think we’re going to have a very strong year in political. I mentioned earlier in my opening remarks that’s a really a force and drive political team [ph], we have created a political strategy unit which is led by Nathan Daschle. For those of you that don’t know Nathan his background, he is a well-known political strategist and a Former Democratic Governors Association Executive Director and he is really focused on ensuring that our campaigns known about our capabilities and known about the breadth across the country and remember because of who we’re with you know and this goes back to some of the questions about between terrestrial and digital and radio. We have segmentation and targeting capabilities for both terrestrial and radio. We’re able to do psychographic targeting and some demographic targeting and we continue to expand those capabilities and enhance the offering to advertisers. So when you look at our position I think we’re incredibly well positioned because of our extent of reach and scale coupled with I just talked about in terms of psychographic targeting capabilities that enable us to helping advertisers target the right people at the right time. So we expect a big year in political.

Davis Hebert - Wells Fargo Securities

And then on the Q1 pacing focusing on the Media and Entertainment side, I think you said the station business was pacing 3.2% and total segment revenue 2.7%, just curious what is dragging that number down a little bit? Is it network or traffic or any color there?

Rich Bressler

No because this is why I hate giving pacing, that’s why. I hate giving pacing because it's just a snapshot (indiscernible) time. I mean we have, we overall you know Bob and I and the rest of the management team and Tim Castelli and Tom Schurr or Matt Martin, we look at pacings but we look at pipeline reports. We’re in constant touch of what’s happening. So I wouldn’t read anything into that at all.

Davis Hebert - Wells Fargo Securities

And you guys have made a lot of progress on the 2016 bank debt well, I think you still have less than 2 billion less, any thoughts about taking additional steps this year on that?

Brian Coleman

We look at 2016 and the number the $2 billion, 2.4 billion I think in total, 2 billion of that senior secured debt is top of our capital structure, we’ve refinanced up to $7 billion of that last year. So we feel pretty comfortable that that can be refinanced and we will continue to watch the markets and be opportunistic. More than anything else it's probably the repricing of that earlier than you have to that additional cash interest you would be generating. So I think you balance that against the market and I suspect sometime during 2014 we will take steps to do something about it but feel pretty good that that’s refinanceable, Where our focus has been lately and the actions we have taken are the non-senior debt and so in 2016 we have 470 million something I think of junior debt that matures and we will continue to take the necessary measures to pay that off or refinance that as we get closure to maturities. I think as ’14 and ’15 are concerned we have taken some actions and we continue to look at other liquidity levers that we have to ensure that we have sufficient liquidity to manage through all these debt maturities.

Operator

Thank you. Our next question it will come from the line of Tracy Young. Please go ahead.

Tracy Young - Evercore

I’ve got two questions related to outdoor, if you can give some more color on France. I know it's a big market for you in Europe, is that the biggest drag right now for you and also will you down, can you just remind us if you were down in all of the quarters for 2013 and then second question relates to your strategic investments. They were certainly lower in 4Q are there any expectations that we will hear more about call ups for 2014 or is that pretty much done? Thank you.

Rich Bressler

So the first question I think was on France and then you just built up a little bit after the second and the third. So maybe just on the first question on France, look you know France as I think everybody all the film business in France it continues to be a challenged market and I’m not going to say it's the biggest drag but clearly it's a significant drag on the overall results. On the bright side we’re really seeing some strength in the UK and we’re seeing some strength in Norway, so we feel very, very good about that and one of the reasons I gave when I talked about how excited we’re about outdoor. If you go back to two examples I gave of the creative step that William and his team is doing, it's in Norway in terms of the book store capabilities and in the virtual book store and then London with the Chiswick Towers.

Tracy Young - Evercore

So second question was relating to the strategic investments that you had in fourth quarter, they were lower on a year-over-year basis. Are there an expectations that we will hear call out on 2014 for the outdoor business or it's pretty much done?

Rich Bressler

On strategic investments I think we’re always, I mean I don’t think we’re ever done quite frankly. I mean we’re always, your question on strategic investment, we’re always looking to be more efficient and the only criteria length [ph] that we have that we look through is can we make more money, how do we make more money for all of our stakeholders out there whether it's outdoor business or CCME so I don’t think we’re ever, ever done. Every single day we look at that.

Operator

Thank you. (Operator Instructions). And I show a question from the line of (indiscernible). Please go ahead.

Unidentified Analyst

There are two questions, the first is can you explain as to what the tax implications would be if you sold CCL equity to the public, does that fact that your additional paid in capital is now zero, I mean that any proceeds from that would be fully taxable and then secondly can you talk about what’s your expectations for the intercompany notes during the quarter? You paid some of it down and then it looks you reborrowed most of what you paid back down. Thank you.

Brian Coleman

So I will address the second question, the first one I don’t think we’ve given any type of disclosure around the tax impact of selling CCO or CCL equity. With respect to the intercompany notes we have the demand in Q4, 200 million was repaid and then dividend it out by CCO [ph]. The question was about plans with respect to the, I don’t think there is plans per se, a lot of it has if you take the $200 million reduction in Q4 it has the note balance has gone up not quite 200 million but by a 150 million - 160 million that’s just normal operation of the note. It's comprised of normal free cash flow generation during the quarter by outdoor, there was a special dividend that Clear Media paid of $90 million, 45 million of which went to Clear Channel Outdoor as a 50% owner of Clear Media and that amount was subsequently swept up under the note and made up another difference. And so this is just a normal operations but the Clear Media dividend was kind of a onetime event, this was a special dividend but you shouldn’t expect the note to continue to grow reflecting the free cash flow generation by outdoor. There is nothing special or planned with respect to the operation of the note. So I think that answered the second question, I don’t think we have anything on the first one.

Effie Epstein

Thank you for taking that question. That’s all the time we have today for Q&A. Thank you everyone for joining and we will appreciate you being with us today.

Operator

Thank you. Ladies and gentlemen that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.

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