U.S. Markets closed

Edited Transcript of CMLS earnings conference call or presentation 18-Mar-19 8:30pm GMT

Q4 2018 Cumulus Media Inc Earnings Call

ATLANTA Apr 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Cumulus Media Inc earnings conference call or presentation Monday, March 18, 2019 at 8:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Collin Jones

Cumulus Media Inc. - Former SVP of Corporate Development & Strategy

* John F. Abbot

Cumulus Media Inc. - Executive VP, Treasurer & CFO

* Mary G. Berner

Cumulus Media Inc. - President, CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Aaron Lee Watts

Deutsche Bank AG, Research Division - Research Analyst

* Michael A. Kupinski

NOBLE Capital Markets, Inc., Research Division - Director of Research and Senior Media & Entertainment Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Hello, and welcome to the Cumulus Media Quarterly Earnings Conference Call. (Operator Instructions) I'll now turn it over to Collin Jones, Senior Vice President of Corporate Development and Strategy. Sir, you may proceed.

--------------------------------------------------------------------------------

Collin Jones, Cumulus Media Inc. - Former SVP of Corporate Development & Strategy [2]

--------------------------------------------------------------------------------

Thank you, operator. Welcome, everyone, to our fourth quarter 2018 earnings conference call. I'm joined today by our President and CEO, Mary Berner; and our CFO, John Abbot. Before we start, please note that certain statements in today's press release and discussed on this call may constitute forward-looking statements under federal securities laws. Actual results may differ materially from the results expressed or implied in forward-looking statements. These statements are based on management's current assessments and assumptions, and they are subject to a number of risks and uncertainties. A full description of these risks, as well as financial reconciliations to non-GAAP terms, can be found in our SEC filings, including our press release and Form 10-K, both of which were filed earlier this afternoon. A recording of today's call will be available for about a month. Details for how to access that replay and our SEC filings can be found on our website.

With that, Mary, I'll turn it over to you.

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Thanks, Collin. Good afternoon, and thanks for joining us. I'm going to get right to the headline. Several weeks ago, we issued an earnings prerelease with the range of outcomes. And I'm delighted to announce that we finished the year at the higher end of or exceeded those ranges. Revenue for the quarter was $309.2 million versus our estimate of $307 million to $309 million, 5.2% above 2017. This performance reflects continued revenue share gains at the Station Group and Westwood One, marking our 8th straight quarter of company-wide revenue share growth. As you saw in our earnings release, revenue for the full year 2018 was up 0.4% over 2017 and we're especially pleased with those results given the headwinds of the local spot market. EBITDA for the quarter came in at $65.6 million versus our estimates of $64 million to $66 million, 31.6% ahead of where we finished last year, while EBITDA for the full year was up 7.6% in total and up 1.6% ex political, the second consecutive year of EBITDA growth for the company, with 2017 being the first year in 5 that the company had delivered EBITDA growth.

Speaking for the entire company, we are pretty pleased with our performance for the quarter and for the full year. Starting 2018 in bankruptcy as we did certainly added a few extra degrees of difficulty to the execution of our business plan. But our employees across the Radio Station Group, Westwood One and Corporate didn't allow the enormous distraction of bankruptcy to affect their performance, remaining fully focused on and disciplined about reaching our operating goals. I couldn't be more proud and appreciative of the whole team. As many of you know, our business plan is focused on 3 main strategic priorities: first, enhancing operating performance. That is our ability to maximize EBITDA in the core business. We're doing this by improving the effectiveness of how we do business day to day, primarily through pricing and inventory management, sales execution and cost reduction initiatives. Second, growing our high potential digital businesses. Focus for now on our local digital marketing services, streaming solutions and podcast network. And third, optimizing our app asset portfolio. Buying or swapping assets to attain or expand market leadership positions and divesting assets that are noncore or that are in markets where attaining a leadership position might be challenging. The execution of those priorities is critical to helping us achieve our 3 key financial goals: generating as much as $100 million of free cash flow per year; reducing net leverage to below 4x as quickly as possible; and finally, reinvesting in new opportunities with meaningful growth or valuation potential.

Looking at our results through the lens of this framework demonstrates how the pieces worked together to build value in the company. In 2018, our revenue performance began to reflect the dividends from our work to build a functional pricing and inventory management system, one of our key operational enhancement initiatives. We have discussed before the greater visibility and flexibility our new capabilities provide us and how those translate into an ability to move inventory among the different sales channels that we manage. Most important, with local demand lagging, the fact that we could leverage our station inventory in national and network channels, in ways that we cannot do or do well previously has been meaningful for the top and bottom line. The creation of custom networks which are designed to allow advertisers to buy the impressions they want in a specifically chosen group of stations or markets is an excellent example of the opportunities that our revenue management work has given us.

This past year for the first time, we had the ability to more clearly understand demand and inventory usage and we could see where it made economic sense to allocate inventory to custom networks allowing us to capture incremental dollars for inventory that might have otherwise gone unsold. We also kept and continue to keep our focus on reducing expenses, something that we believe is an essential requirement when operating in a mature industry. Expenses were down on a year-over-year basis in every quarter of 2018 and down 1.3% for the full year. Excluding the impact of USTN, they were down 1.7% for the year. A portion of that decline reflected bankruptcy related contract rejections or renegotiations but we also realized substantial additional benefits from active cost savings on new or renewed contracts, process efficiencies and in other areas as well.

Turning to our digital businesses, our second strategic priority. Digital revenue grew for the whole company by more than 60% for the full year, meaningfully outpacing the industry, driven by our local digital marketing services and podcasting businesses, our digital revenue growth accelerated each quarter this year from 46% growth in Q1, moving up steadily to Q4 growth of 76% year-over-year. The local digital marketing services businesses, which we referred to internally as C-Suite is about a year and a half from its initial rollout and really is beginning to hit its stride. We now have a sizable operation that continues to scale and has been solidly profitable from the beginning. It's a business that requires maintaining a fresh and relevant product portfolio but we've gained a lot of experience in understanding clients needs and successfully rolling out new offerings to meet those needs. By way of example, the EPC guarantee, the industry's first integrated local radio and Digital Lead Guarantee program, which we announced in November has helped us close numerous new business deals since its launch. Given its initial success, we expanded the EPC Guarantee to all of our markets last month and we'll be making additional advertising categories such as automotive and financial services eligible for the guarantee as the year goes on.

Digital growth of Westwood One reflects the podcast business, which continues to be a nice addition to our portfolio. From 2016 revenue of over only $100,000, we finished 2018 having generated over $12.5 million in profitable podcast revenue and remain excited about the future growth prospects. Similar to our approach with local digital marketing services, we are building this business thoughtfully and with an eye on maintaining profitability despite ambitious growth targets. While we do not see the podcast space as a winner takes all game, we do believe that we have all the necessary components to emerge as one of the leaders, once the dust settles.

And finally, I want to address our last strategic priority, optimizing our asset portfolio. Last month, we announced 2 transactions for the company. In combination, these deals perfectly reflect what is -- what this last strategy is all about. The first transaction is the $103.5 million sale of 6 stations to Educational Media Foundation or EMF. We expect to generate substantial net cash proceeds, $80 million to $90 million when this deal closes, and proforma for the impact of this transaction, net leverage will be reduced by about a 1/4 of a turn. The second transaction is a swap with Entercom where we are giving them our 2 Springfield, Mass stations as well as WNSH-FM in New York City for their 3 Indianapolis stations. On our side, the transaction lifts our Indianapolis market from number 3 to a leading position in ratings share, making an already good market for us even better. And that's without taking into account the synergies we anticipate from joining the 2 station groups together. This swap truly was a win-win for both sides and particularly if deregulation happens in any substantive way, we'd expect to see more transactions like this with station ownership moving around to create healthier competitors. Of course, what's most important about these strategic priorities is their impact on our ability to reach our financial goals.

So let me take a minute on those. First, as I said, we expect to generate as much as a $100 million of free cash flow a year and with that free cash flow, we are focused on reducing our net leverage to less than 4x as fast as possible. Since emerging from bankruptcy, we were able to use our free cash flow to execute a voluntary debt prepayment in October of $50 million. That prepayment combined with our EBITDA growth and the cash we added to the balance sheet reduced our net leverage at year-end to 5.2x down from 5.8x at our emergence from Chapter 11 in June. We expect to move that metric down further with continued pay downs from cash flow throughout the year, including the $25 million voluntary prepayment that we just completed as well as from the proceeds of our EMF transaction. Our last financial goal focuses on investment in growth opportunities. And for 2018, those investments were primarily in the form of people costs in our digital operations to expand our capabilities in digital marketing services and podcasting, as I touched on earlier. We'll continue to invest in both of these areas through 2019, mostly in operating expense, where we see that investments will drive profitable growth and sustainable market positions. Looking forward, pacing for first quarter is now slightly up reflecting growth in digital and national, offsetting continued softness in local spot. Further out, we believe that the strategies that produce strong results in 2018 will continue to produce for us in the first quarter and throughout 2019.

So I'll now turn the call over to John for a deeper financial dive after which we will open the line for questions. John?

--------------------------------------------------------------------------------

John F. Abbot, Cumulus Media Inc. - Executive VP, Treasurer & CFO [4]

--------------------------------------------------------------------------------

Great. Thank you, Mary. To echo your opening comments, we're pleased with the results we delivered for the quarter and the full year and we are optimistic about the year ahead. Now to our fourth quarter 2018 results. As Mary noted, total revenue in the fourth quarter was $309.2 million, an increase of $15.8 million or 5.2% from Q4 2017. Q4 is our biggest quarter for political revenue, which accounts for much of the uplift. But even excluding political, we were up $5.7 million or 2% from Q4 2017. Total expenses declined $400,000 or 0.2% from Q4 2017. As a result, consolidated EBITDA for the quarter increased $15.8 million or 31.6% from Q4 last year. Adjusting for political, consolidated EBITDA grew by $7.1 million or 14.9% in the quarter.

Looking at the numbers by business unit and starting with the Cumulus Radio Station Group. We continue to experience the tough spot market environment particularly in local, albeit at a somewhat slower pace of decline than we saw in the first half of the year. But better market dynamics since national and digital did help offset that somewhat. Relative to the market, the Station Group continued to outperform, which resulted in a gain in CRSG's aggregate revenue share of more than 50 basis points in the quarter, representing the 10th straight quarter of revenue growth at the Station Group. As reported, total revenues for the Cumulus Radio Station Group increased just over 5% or $10.5 million to $212.4 million from fourth quarter last year. We certainly benefited in the quarter from political which provided a lift of about $9.6 million in revenue over last year. As you're all aware, most of our political revenue in election years hits in October and the beginning of November and this year, we beat expectations for both months, also exceeding 2016 levels by $2.9 million. Adjusted for political, Station Group revenue was still up year-over-year by just under $1 million or 0.5% for the quarter.

Moving to expenses. Station Group expenses were down approximately $800,000 or 0.5% in the quarter, primarily driven by continued cost savings that we've realized against contracts that were renegotiated or terminated over the last year and lower personnel-related expenses. These items are partially offset by increases in costs associated with our digital -- with our increased digital revenue. The combined impact of the revenue expense changes yielded the Station Group EBITDA, an increase of $11.3 million or 23% in the quarter and an increase of $2.6 million or 5.6% excluding digital, a strong performance overall.

Turning to Westwood One. The network business produced another solid quarter with revenue growing $4.8 million or 5.3% from fourth quarter last year. This increase was driven mostly by growth in podcasting and the core ad sales business. On the expense side, operating expenses increased at Westwood One by about $1 million, with the largest increases coming from variable content cost related to increased revenue, partially offset by the termination or favorable renegotiation of certain content contracts. Combined, the solid revenue growth and modest expense increases produced another quarter of terrific EBITDA growth at Westwood One, up $3.8 million or 41.6% year-over-year.

Switching to the full year results. Total revenues for 2018 came in just over $1.1 billion, an increase of $4.7 million or 0.4% from 2017, which is the first time in 4 years that we grew the top line on an as-reported basis. As discussed on our prior earnings calls, there were a few unusual factors influencing our results during the year that are worth walking through. Specifically, the financial troubles of the United States Traffic Network or USTN, the loss of our Chicago station, WLUP FM, and the rejection of the Chicago White Sox and Chicago Bulls sports contracts. Of course, this year was also a political year, which provided a sizable lift to revenue. Normalizing for all of these factors and excluding political, revenue came in just $300,000 over 2017. So essentially, flat year-over-year. By way of comparison, we estimate that the total market, including both the station side and network markets excluding political was down for the year about 2%.

On the expense side, total reported expenses declined $11.9 million or 1.3% from 2017. Adjusting for The Loop, the White Sox and Bulls and USTN, expenses were down $4 million or 0.4%. At the EBITDA level, no matter how you look at it, EBITDA for the year increased. As reported, the increase was $16.6 million or 7.6% from last year. Excluding the impact of political, EBITDA grew by $3.4 million or 1.6%. Excluding the impact of political, The Loop, USTN and the Sox and Bulls sports contracts, EBITDA grew by $5.8 million or 2.7%.

Looking at the business units individually and starting with the Cumulus Radio Station Group, we felt that impact of a tough local market environment all year and as I said, that was more in the first half than the second. As it has all year, the Station Group continued to outperform, gaining 20 basis points in total market share for the year. It's important to note that these markets and market share numbers are based on the Miller Kaplan reported numbers in 53 of the markets where we operate and where that reporting is available, though those markets do represent 80% of our Station Group revenue so they're a pretty good proxy for the performance of the platform as a whole. On an as-reported basis, total revenues for the full year for Cumulus Radio Station Group decreased 0.8% or $6.5 million to $780.4 million from 2017. Adjusting for political, Station Group revenue was down year-over-year by 2.7% for the year or $21.2 million. Adjusted for political, WLUP and Sox, Bulls, the Station Group revenue was down 1.7% or $13.3 million. Our ability to offset a good portion of the local radio market weakness with growth in national and digital has been critical to the Station Group's performance. The improvements in pricing and inventory management that are one of our key operational enhancement initiatives have been an important driver of our outperformance in national and of course, our investment in digital growth opportunities, in the case of CRSG, our C-Suite of products, has been driving our digital growth well above market levels.

Moving to expenses, the Station Group's expenses were down approximately $16.3 million or 2.8% for the year, primarily a result of cost savings from renegotiated and rejected contracts, certain programming decisions and personnel-related expenses. Adjusting those expenses for The Loop going away and the Sox and Bulls contract rejections, expenses were down $4.3 million or 0.7%. It's important to remember that with so many of our expenses containing annual escalators whether they're vendor contracts, leases, talent contracts or other content contracts, every year we have to find substantial cost savings just to hold expenses flat. The combined impact of the revenue expense changes yielded a Station Group EBITDA increase of $9.7 million or 4.9% in the year.

On an ex political basis, EBITDA decreased $3.5 million or 1.8%. And adjusted for the political, The Loop and White Sox, Bulls, the Station Group EBITDA decreased $7.6 million or 3.9%. Westwood One benefited from a better market environment than the Station Group and had another great year surpassing 2017 and helping to offset the weak local radio market dynamics at CRSG. Revenue for the year grew $11.3 million or 3.3%, driven mostly by growth in both podcasting and the core ad sales business. On the expense side, operating expenses increased at Westwood One by $6.6 million or 2.2% with the majority of the increase driven by podcasting content cost and other revenue growth related variable expenses. Combined, the revenue and expense increases produced EBITDA at Westwood One of $59 million for the full year, up $4.7 million or 8.7% from last year. Normalizing for the USTN issues, Westwood One's EBITDA would have been up $11.2 million or 20.6%.

Moving away from operations. I'll touch first on CapEx before moving to our cash flow, balance sheet and some other general items of interest. In 2018, we spent about $30 million on CapEx, reflecting a continued higher run rate to catch up on some historical underinvestment in the business and also reflecting delayed payments of approximately $2 million of CapEx from 2017 because of the bankruptcy. Going forward, we expect CapEx to be in the $20 million to $25 million range annually. We finished the year with $1,243,000,000 of total debt and net leverage of 5.2x, down from 5.8x when we emerged from bankruptcy. And in today's press release, we announced that we had completed a $25 million discounted debt prepayment at a 1.5% discount to further reduce our debt and we plan to continue voluntary debt prepayments with cash from operations throughout the year.

And lastly, with the proceeds, we expect to realize from our station sales to EMF, net leverage will be reduced by about a quarter of a turn. Since our last call, we've been asked a number of questions about the implications of the restructuring transaction on our future cash taxes. Ultimately, we were able to structure the transaction as a full asset sale, which allowed us to step up the tax basis of all of our assets across the platform. The practical result of all this is that our previously existing NOLs were fully utilized in the transaction, but our cash tax profile going forward will be much better. Our future operating results will obviously factor into determining what our cash taxes will be but in the near term, we estimate that our cash taxes will total just over $40 million in aggregate for the next 3 years 2019, 2020 and '21, with the payments this year a little higher than in the next 2 years. Another key item of interest since our last earnings call has been the status of the petition of declaratory ruling that we filed with the FCC. This is the filing we made to request that the FCC allow higher foreign ownership in our stock. Our current equity share structure, which consists of Class A and B shares and Series 1 and Series 2 warrants was created -- was crafted to comply with the rule. However, to allow certain changes to that structure, we filed the petition for declaratory ruling on July 19. Grant of our request involves not only the approval of the FCC but also the review of an ad hoc committee consisting of representatives of various departments and other offices within the executive branch. Given the FCC -- the recent FCC shut down, which, of course, delayed the process, we believe a reasonable expectation to hear a response to our request, we believe that the reasonable expectation is that we will hear response to our request by the end of 2019.

Finally, as it relates to the D.C. land sale there -- isn't really any new information to report since our last call. You may remember that development project for our buyer, Toll Brothers, continues to face opposition with community organizations regularly appealing any approvals Toll has received for its development project. That has continued and since our last call, Toll received another approval for its project, but as expected that was also appealed. As a result, we've been exploring a number of potential options to monetize this property efficiently and for the best value possible. We still view the property as a valuable asset that can be sold to raise cash and pay down debt and we'll continue to keep you updated on our progress as we have more to share.

With that, we'd like to open up the line for Q&A. Operator, can you please open up the line for our first question?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

So first question is coming from the line of Aaron Watts.

--------------------------------------------------------------------------------

Aaron Lee Watts, Deutsche Bank AG, Research Division - Research Analyst [2]

--------------------------------------------------------------------------------

I wanted to ask you just broadly about the advertising environment as you exit 2018 and you embark on 2019. Locals been a little bit weak not just for you but others. Is there anything you can do in the face of that to help bring it back towards neutral or even a positive place? And maybe you can also talk about what's been giving some of the strength, of late, on the national side as well?

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Sure, that's a great question. Thanks, Aaron. With regard to the market, it's been pretty consistently the local spot has been consistently weak and it's not driven by any one thing. In terms of the -- our strategic priorities are designed to continue to drive market share in our core business. And we have seen some shift, as you have seen, we had some strength in our national and network marketplace. And so we're certainly focused on that. I think probably the -- for us, I -- we can't control the market or the local markets but for us our pricing and inventory strategy has -- is key to mitigating that softness because we're able to take our inventory and sell advertising where it makes most sense in terms of high margin advertising. So what you saw was we were able to grow our national spot which offset some of the local softness and network advertising into our inventory pie.

--------------------------------------------------------------------------------

Aaron Lee Watts, Deutsche Bank AG, Research Division - Research Analyst [4]

--------------------------------------------------------------------------------

Okay, that's helpful. And Mary, maybe I can just ask you, maybe, a bigger picture question. You mentioned deregulation in your comments. How likely, based on what you're hearing, do you think that is as far as the 2019 event and to the extent, it doesn't happen in 2019, you feel that there are more swaps or opportunities to optimize the portfolio further ahead of that deregulation to help, kind of, bring down leverage on the balance sheet?

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [5]

--------------------------------------------------------------------------------

Yes, I mean, no question at the regulation on this industry is pretty outdated. And we don't have a crystal ball nor does anyone else. And we continue to track it very, very closely. But I think the general expectation is that the FCC will put forth some level of deregulation likely toward the end of the year, if not the beginning of 2020. I think what will happen, and certainly for us and I'm assuming for everyone else is, will be there a rationalization of market positions? And we'd expect certainly to participate in that.

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

Next question is from the line of Michael Kupinski.

--------------------------------------------------------------------------------

Michael A. Kupinski, NOBLE Capital Markets, Inc., Research Division - Director of Research and Senior Media & Entertainment Analyst [7]

--------------------------------------------------------------------------------

I'm going to touch back on the national versus local spot dynamic. Typically, national when it tended to be strong, tended to look forward in terms of the economy and local, kind of, lags a little bit. But in the case of 2018, it seems like, national was doing quite well and local just never got any traction. Do you think it's that local was tending to lag a little bit here? Or if that dynamic -- historic dynamic that has always been around it doesn't seem to apply anymore?

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [8]

--------------------------------------------------------------------------------

Yes, I think there has been -- there's certainly a local shift that in the retail market place for sure. I think it continues to, again, it's not one thing that we're seeing. And it really depends on the market. Where we see strength in what we're to expect where there's not much of an effect on the retail dynamics. So for example, we see strength in professional services, dentists, lawyers, hospitals, very, very local businesses. And weaker performance in areas where you starting to see a shift, automotive, for example. So again, I just have to emphasize that it's -- it is a different dynamic and certainly than the market seeing before, which is why our pricing and inventory and our ability to manage our inventory is so important. And with sell advertising from any of the channels where we have sales effort. And that's what you saw in terms of our performance is we're able to offset some of the local weakness with national spot advertising and network advertising.

--------------------------------------------------------------------------------

Michael A. Kupinski, NOBLE Capital Markets, Inc., Research Division - Director of Research and Senior Media & Entertainment Analyst [9]

--------------------------------------------------------------------------------

Can you talk a little bit about the ratings for the company whether it be through the PPM markets or the diary markets? And how they progressed through 2018 and just kind of, how the books -- the recent books have looked?

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [10]

--------------------------------------------------------------------------------

Yes, I mean, no, I think, at a high level, we've gained back most of the share that was lost from 2012 to 2015 timeframe. And now we're back -- nearly back to those levels. We experienced fluctuations quarter-to-quarter and also fluctuations between the PPM and the diary markets as you'd expect. But in general, we're continuing to see ratings share performance where it matters most. So in our PPM markets, we focus our efforts where the ratings will have the highest impact, which is our largest music stations. They have a much higher percentage of their business that's ratings dependent than is the case with spoken word. And those stations as a group gained ratings share in 2018. In the diary markets, we had a good fall book with growth and share that should help those smaller markets going into the first half of the year.

--------------------------------------------------------------------------------

Michael A. Kupinski, NOBLE Capital Markets, Inc., Research Division - Director of Research and Senior Media & Entertainment Analyst [11]

--------------------------------------------------------------------------------

And is there a way to, kind of, give us a framework about the opportunity with the C-Suite product services that you recently rolled out to, kind of, give us an idea of what the contribution? And also, what the kind of, contribution margin, given the fact that you indicated that they are profitable? What that might be at this point?

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [12]

--------------------------------------------------------------------------------

Well, we don't disclose the actual profit margin. But from day 1, from product 1, we have been profitable in all of our digital initiatives. And in order to help you frame it, we've said this publicly before the industry currently derives an estimated about 8% of its revenue -- net revenue from digital. At Cumulus, we're about 5%. So -- and as I said, we're growing very rapidly. So hopefully that helps you to peg it.

--------------------------------------------------------------------------------

Michael A. Kupinski, NOBLE Capital Markets, Inc., Research Division - Director of Research and Senior Media & Entertainment Analyst [13]

--------------------------------------------------------------------------------

And in terms of the advertising guarantee that you guys have been granting and it seems like you're rolling it out. Can you -- is there a way to quantify whether or not this program is actually -- how would -- it has performed? I don't know if there's a way to quantify that or not? But...

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [14]

--------------------------------------------------------------------------------

Yes, I mean, I would characterize it as early days. But we're encouraged. We launched, as I said, in November. We launched to 65 markets. We're now rolling it out to all markets. So to 88 markets. I'd -- hundreds of formal proposals, a number of sales. We started with certain categories, medical, legal, home services and now as I said in the prepared remarks, we're rolling it out to other categories. So it's early days. But I'd say we're encouraged. The one thing it does for us is in a market where local marketing services are largely ubiquitous, it gives us a unique selling proposition in the market for our sales reps. We're the only sales organization that could lead the conversation with -- we'll guarantee a minimum threshold of leads. And that in of itself has been very, very helpful to our sales effort.

--------------------------------------------------------------------------------

Michael A. Kupinski, NOBLE Capital Markets, Inc., Research Division - Director of Research and Senior Media & Entertainment Analyst [15]

--------------------------------------------------------------------------------

Last question. In terms of radio, what is -- can you identify what is the percentage of your NTRs at this point, your nontraditional revenue?

--------------------------------------------------------------------------------

John F. Abbot, Cumulus Media Inc. - Executive VP, Treasurer & CFO [16]

--------------------------------------------------------------------------------

We don't break that out.

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [17]

--------------------------------------------------------------------------------

Yes, we don't break that out.

--------------------------------------------------------------------------------

Michael A. Kupinski, NOBLE Capital Markets, Inc., Research Division - Director of Research and Senior Media & Entertainment Analyst [18]

--------------------------------------------------------------------------------

Okay. I assume it's been growing because you have -- digital would be in that component so forth, right?

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [19]

--------------------------------------------------------------------------------

No, digital's reported...

--------------------------------------------------------------------------------

John F. Abbot, Cumulus Media Inc. - Executive VP, Treasurer & CFO [20]

--------------------------------------------------------------------------------

We don't think of digital.

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [21]

--------------------------------------------------------------------------------

We don't think of it as NTR, we think of it as its own.

--------------------------------------------------------------------------------

Michael A. Kupinski, NOBLE Capital Markets, Inc., Research Division - Director of Research and Senior Media & Entertainment Analyst [22]

--------------------------------------------------------------------------------

Okay. Well, I'll see if I can take that one off-line.

--------------------------------------------------------------------------------

John F. Abbot, Cumulus Media Inc. - Executive VP, Treasurer & CFO [23]

--------------------------------------------------------------------------------

It doesn't look like anybody else is in the queue. I don't know, operator, do we have any other questions?

--------------------------------------------------------------------------------

Operator [24]

--------------------------------------------------------------------------------

Well, we don't have any questions. (Operator Instructions)

--------------------------------------------------------------------------------

John F. Abbot, Cumulus Media Inc. - Executive VP, Treasurer & CFO [25]

--------------------------------------------------------------------------------

Okay.

--------------------------------------------------------------------------------

Mary G. Berner, Cumulus Media Inc. - President, CEO & Director [26]

--------------------------------------------------------------------------------

All right. Well, thanks all, and thanks everyone, for joining today. And we will look forward to speaking with you again soon. So have a great evening.

--------------------------------------------------------------------------------

Operator [27]

--------------------------------------------------------------------------------

Thanks all participants for joining us today. We hope you find this webcast presentation informative. This concludes our webcast. You may now disconnect, have a good day.