On the morning of sept. 16, as Clear Channel was three days out from the iHeartRadio Music Festival held at Las Vegas’ MGM Grand Garden Arena, the company made a surprise announcement that shocked most of its 20,000 employees: It had a new name. “We came in that day and there was a company-wide email that all our email suffixes had been changed,” one staffer tells Billboard. “We had no idea.”
Switching the moniker was the result of a top-secret rebranding mission that came in the middle of planning the festival’s two-night lineup of pop, country and EDM all-stars. But the iHeartMedia announcement was merely the formalization of an aggressive digital repositioning for Clear Channel that has been in place ever since Bob Pittman, a co-founder of MTV Networks, joined the company in 2010 and was named CEO a year later.
Three years after the first iHeartRadio Festival (named after an app that streams live feeds of the company’s 850 stations), has Pittman’s rebranding mission paid off? Based on this year’s festival economics alone, the answer is yes.
Although costly to produce, the festival was estimated to net iHeartMedia a “healthy eight figures” in revenue, says one source familiar with the business model, thanks to 10 sponsor packages valued at $10 million to $15 million in collective ad dollars.
And the iHeartRadio app, despite a crowded U.S. streaming music marketplace, is making strides — in August, it trailed only Pandora among digital music properties, with 53.8 million unique visitors to its mobile and desktop applications, according to ComScore. That growth helped Clear Channel post a 1 percent revenue increase in 2014’s second quarter (up to $1.6 billion), during a period where radio rivals like CBS Radio, Emmis and Entercom were all either flat or down.
IHeartMedia’s transitional narrative is one the key players — chief among them Pittman and fellow MTV co-founder and iHeartMedia president John Sykes — can now recite by heart. “When we were at MTV Networks [in 1981], it started out as Warner Amex Satellite Entertainment Company. What was that?” asks Sykes with a laugh. “We had MTV, so we changed our name to MTV Networks. This is not too dissimilar.”
Tom Poleman, iHeartMedia national programming chief and a company employee since 1996, even flew out new business cards the morning of the fest.
But for all the practical purposes of recasting a 42-year-old media company into one primed to take on the 21st century, there remain persistent rumors that a sale is imminent, and that the shine on the company is primarily aimed at fetching the highest price. IHeartMedia carries $21.1 billion in consolidated debt, according to financial analyst firm Fitch Ratings, the result of a 2008 private-equity deal with Bain Capital and Thomas H. Lee Partners valued at $17.9 billion. “New name … same debt,” Fitch wrote in a Sept. 23 report.
In the big picture, insiders agree the renamed iHeartMedia is finishing off what Clear Channel set out to do when it acquired Jacor Communications in 1999 for a record $4.4 billion: nationalizing its programming and streamlining operations, be it by way of homogenized playlists, the familiar voice of Ryan Seacrest from coast to coast, and even a two-day “radio upfront” (last held in New York in August), where labels and managers showcase new acts and songs for programmers.
“You have to take advantage of scale,” says Sykes. “Scale gives you the opportunity to leverage what you can do for an artist and how you connect with advertisers and deliver unique events to the consumer.” For the company once known as a stodgy, market-gobbling, don’t-mess-with-Texas boys’ club, hosting iHeart is not just about socializing with the cool kids, but rather being seen as the cool kids.
This article first appeared in the Oct. 4 issue of Billboard.