Clear Channel Outdoor Holdings, Inc. (CCO) Q3 2013 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Clear Channel Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our Senior Vice President, Investor Relations, Greg Lundberg. Please go ahead.

Good morning, and thank you for joining our 2013 Third Quarter 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 third quarter 2013 financial and operating performances for CC Media Holdings, Clear Channel Communications and Clear Channel Outdoor Holdings. 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 review of the quarter, we'll open up the lines for questions. But before we begin, we'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 that actual results will not differ from expectations. 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 not familiar with pacing data, it reflects the 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'll provide certain performance measures that do not conform to Generally Accepted Accounting Principles. We've provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases, which can be found on the Investors section of our websites, clearchannel.com and clearchanneloutdoor.com. Please note that our 2 earnings releases provide a detailed breakdown of all foreign exchange and noncash compensation expense items, as well as segment revenues and OIBDAN for the quarter and 9 months. 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'll now turn the call over to Rich Bressler.

Thanks, Greg. Good morning, everybody. As you know, I've been working with Clear Channel as a board member for some time, but I've only been in my new position for 3 months, which may not seem like a lot of time but I have to tell you how excited I am about everything that's happened already. It makes me even more confident in the growth opportunities we have here. So let me start with just a few of the really big changes that I have seen across the company. First and most importantly, there are the great new people who have recently joined us. We already had amazing teams but they just got even better with hires like Tim Spengler who comes from Magna Global and Interpublic Group and is now President of Content Marketing and Revenue Strategy for Media and Entertainment. Tim is going to work with top-level marketers to create experiences around their brands for consumers and to promote radio's effectiveness and efficiency with advertisers, and we now have volumes of case studies proving how effective we can be. Unlike others who are just starting to increase their sales presence, we continue to invest in and grow our national and local sales platforms in radio because we're increasingly excited about what we can do to help advertisers. This is also true in outdoor, where we just hired Walker Jacobs from Time Warner's TBS to lead our revenue efforts at America's Outdoor as Chief Revenue Officer and President of Sales. Walker used to lead Turner digital and brings us the special skills and relationships we need to help marketers reach mobile consumers. I've also seen big changes in our products, which are key to bringing new advertising opportunities to the market. For example, adding Chicago to our Jingle Ball lineup, which now expands our tour to 12 major cities and, for the first time, we're branding it nationwide as the iHeartRadio Jingle Ball tour and televising it on the CW Network. Launching a new iHeartRadio theater Los Angeles with an album release party for Katy Perry, sponsored by Walmart that was also streamed on Yahoo! and carried on the CW. Creating unique content through new stations on iHeart like Nick radio in partnership with Nickelodeon and a new health care channel called ReachMD. We're rolling out innovative global digital billboard campaigns for Lady Gaga and Paul McCartney. And we're putting on -- when we put on September's iHeartRadio Music Festival, it was a huge success. We generated 2.3 billion social impressions over the festival weekend, more social impressions than the Super Bowl halftime show and double last year's level. And last but certainly not least, we're enhancing our content by bringing the New York Mets to Clear Channel's WOR 710 AM where we'll promote the Mets and create advertising opportunities across the entire range of our multi-platform assets. I've also seen change in the way we do business. At both outdoor and media entertainment, there's an extremely coordinated push to educate the market and bring advertising money to our sector that should be spent here. We're showing them new industry data that illustrates improved advertiser returns through increased allocations to radio and outdoor. We as a company recognize that our assets are in the sweet spot to reach consumers because we exist where people are now. They're mobile and they're out of home. And let me remind you that both outdoor and radio and generate significantly lower CPMs than media with comparable results like TV. For example, a 30-second spot on broadcast network TV has an average CPM of $13.16 compared to $5.23 for radio and $2.50 for Outdoor. We have a tremendous opportunity to significantly increase our revenue without adding one more listener or investing in any additional products or services. As I have been out telling Clear Channel's story with Bob Pittman, along with our salespeople, the point that resonates most with people is how unique Clear Channel is as a fully integrated multi-platform company. Before I turn to the quarter, I want to spend a moment on this because it has me feeling very good about what we're offering in the marketplace. In Outdoor, we have a unique global footprint that we hope carry creative ideas from one region of the world to another. Our U.K. team recently broke all the rules of digital. Instead of running loops from various advertisers, they're selling their best signage in London as a client-branded network that delivers unique customized solutions in extremely short time frames. The Sun newspaper just displayed a message about England's qualifications for World Cup on all key digital sites simultaneously even before the fans had left the stadium. And the message remained up through the next morning's rush hour. This is an extremely innovative use of technology, which is what's driving the already fantastic, un-skippable [ph] core premise of out-of-home that's great for the client, great for the consumers and great, of course, for us at Clear Channel. In Media and Entertainment, we're seeing the same kind of innovation from events to digital to radio. It's important to dig into that word radio a bit because there's a bit of confusion out there. What we are is real radio, with very unique content and unique distribution. By that, I mean we have strong franchises in each of our radio station brands backed by local personalities, guest artists talking to our listeners, 20,000 annual local events, local content and almost 3,000 local sellers engaged in their communities. It's a real relationship with our listeners who tune in for companionship and to find out what's going on in the world. They already expect advertising to be part of our content and they stay tuned in through commercials because they are informative and often entertaining themselves, especially if it involves one of our personalities endorsing a product. Real radio also has a unique distribution, broadcasting to the entire population of a market. This is true mass media, not delivery to a single user. Last but not least, radio listening is backed by accredited media metrics. Rather than internally generated statistics, we use third-party data. Advertisers know who is actually listening to our content. In a market like New York City, the monthly reach of just one of our stations broadcasting from the top of the Empire State building is 3x larger than a collection of every single Pandora stream in the market. AM/FM radio also dominates listening. the latest figures as reported last week in The Wall Street Journal show AM/FM radio at 92% of all radio listening. This means that 8% of all listening is digital. And of that 8%, it's estimated that Pandora is only 4% to 5% of that. And, of course, we are also a part of that digital 8% with iHeartRadio and local radio stations where franchises go nicely into digital as well. Radio is engagement. It's interactive and it's highly targetable. Clear Channel has the largest U.S. reach of Hispanics, African Americans and moms. And in every market, our psychographic targeting can deliver even narrower groups through our individual stations. Our iHeartRadio app delivers all of our radio station franchises plus expertly curated stations, the best talk radio and user-created playlists based on favorite artists and songs through our custom radio feature. We can use all of that to help advertisers create multi-platform solutions across radio, digital, events and outdoor. No radio broadcaster, outdoor company or streaming service can come close to anything like this. Again, these are the conversations we're having in the marketplace to show advertisers what we can do to help them even more. It's their excitement that should make you as happy as we are, and so I wanted to share it with you. Now let's review our performance in the quarter compared to the same period last year, as well as our pacing, starting with our overall results for CC Media Holdings. I'll continue with media -- with our Media and Entertainment business and then discuss Clear Channel Outdoor Holdings. Lastly, I'll wrap up with a few -- with a review of our capital spending and liquidity before taking your questions. CC Media Holdings' revenues totaled $1.6 billion, consistent with last year. We had 3% growth in our Media and Entertainment segment, which was 52% of our revenues, offset by a 1% decline in Outdoor. We'll get into the performance drivers of our segments in a minute, but I want to focus you on some expenses affecting overall CC Media Holdings' OIBDAN of $442 million for the quarter, which was a decrease of 8% or $37 million. OIBDAN included $19 million of expenses related to executive transition, legal and other costs, up $17 million from last year and also included $18 million of strategic revenue and cost initiatives, flat with last year's level. So when you look at the $37 million decrease in OIBDAN, $17 million of that or almost half is from an increase in these costs. This includes $8 million related to executive transition costs and $11 million of legal and other costs, which included stockholder derivative litigation and our Digital Outdoor litigation. Let's move now to our segments in more detail, beginning with the performance of Media and Entertainment. Overall, Media and Entertainment revenues increased $25 million or 3% driven by local, national and digital, and we continue to outperform the entire radio sector overall. Look at just the stations, and excluding premier and traffic, local revenues were up 4% and national was flat. And if we exclude the impact of political advertising in both quarters, local was up 5% and national sales rose 4%. Our strongest performing advertising categories included telecom, retail and auto. Digital sales continued to grow in the double digits as we continued to sell advertising across our station websites and iHeartRadio. In fact, iHeartRadio had a 30% increase in total listening hours during the quarter and reached 39 million users, up 114% from last year. Also in the quarter, we saw improvement at Total Traffic Network from improved sale strategies and from some news services like weather reports. Operating expenses increased $17 million or 3% from performance-based compensation, cost for the iHeartRadio Music Festival and increased digital listening hours offset by a decline in direct operating expenses from cost-savings initiatives. Media and Entertainment's OIBDAN rose $9 million or 3% to $317 million. As we look at the fourth quarter, we're excited about the iHeartRadio Jingle Ball tour, the season's biggest annual music event, which captures the holiday spirit of the iHeartRadio app and will be televised on the CW as a nationwide 2-hour broadcast special. The tour entered Chicago this year, as I mentioned earlier, bringing the total to 12 cities, and we look forward to the excitement we can also generate for advertisers on our stations. But the fourth quarter will also reflect the absence of last year's very strong political spending. Moving to our Outdoor results, I'm going to first discuss our Americas International segment and then Clear Channel Outdoor Holdings in total. Americas outdoor revenues declined $3 million or 1% to $332 million. Driving this decrease were lost contracts on our airport business from large national accounts last year that did not run Outdoor campaigns this year. It was also due to the absence of our digital boards in L.A., in Los Angeles. On the positive side, we saw higher occupancy and rate on traditional bolt-ins, as well as strong growth from rising rate, capacity and occupancy of digital bolt-ins. Across all of our products, the quarter's best performing advertising categories included health care and medical, business services and both media and retail. Americas operating expenses were down $2 million or 1%, driven by lower variable cost like site leases in connection with the decline in airport revenues, as well as savings from cost initiatives. Even with the outward pressure on legal cost, OIBDAN margins calculated as OIBDAN as a percentage of revenue remained constant year-over-year at 41% while OIBDAN in total decreased $1 million or 1% to $135 million. In terms of pacings, as of last week, revenues at our Americas segments are pacing down 3% for the fourth quarter compared to the year-ago period. This pacing reflects in part revenues from the 77 digital billboards in Los Angeles that contributed to our 2012 results that are now 0 revenues in our 2013 fourth quarter. As a reminder, the boards went dark in April 2013. That means our pacings will not normalize with 0 revenues until April of next year. So far in the fourth quarter, our strongest-performing top advertising categories include auto, food -- food and beverage, homebuilding, medical and retail. Now let's turn to our International results. International revenues declined $3 million or less than 1%, the best results of the last 4 quarters. We continue to see very strong growth in emerging markets like China and Latin America, offset by revenue declines in developed markets overall. But there are certain developed countries that are performing well such as the U.K., Australia and Norway. Operating expenses rose $3 million or 1% to $328 million. We saw a decline in expenses from strategic cost initiatives carried out in previous periods, offset by higher cost in certain emerging markets and from new contracts. Also included in the overall expense increase was $3 million of legal and other cost that did not occur last year. These higher costs, coupled with the revenue decline, led to an 8% decrease in OIBDAN to $62 million. Turning to our pacing data. As of last week, International revenues are pacing down 1% for the fourth quarter compared to the year-ago period. Overall, this pacing information continues the same story as the third quarter, strong growth in emerging markets offset by a decline in certain developed markets such as France. I'll now finish off the operations with a discussion of the consolidated results at Clear Channel Outdoor Holdings. Revenues decreased $6 million or less than 1% in the third quarter to $723 million. Americas was 46% of revenues and International was 54%. Segment expenses for Americas and International were up $1 million to $526 million, and corporate expenses rose $3 million to $28 million, driving a $10 million or 5% increase in OIBDAN to $169 million. This includes a $3 million increase in legal and other cost, as well as $9 million of strategic revenue and cost initiatives, down $1 million from last year. Now let me turn our attention to capital spending and the balance sheet. CC Media Holdings' capital spending for the quarter totaled $65 million, including $34 million in Outdoor and $22 million at Media and Entertainment. Within Outdoor, we spent $14 million in the Americas for new advertising structures including 26 new digital bolt-ins, bringing our total to 1,081, including the 77 turned off in Los Angeles. International's $20 million of capital expenditures went to new advertising structures, including billboards and street furniture. For the 9 months ended September 30, 2013, CC Media Holdings' capital expenditures totaled $197 million. Although we expect to invest in the fourth quarter, including more digital deployment in the Americas, we expected our total CapEx for 2013 will come in below the guidance of $350 million that we provided previously. As of September 30, CC Media Holdings' debt totaled $20.4 billion. Senior secured leverage, as defined under Clear Channel Communications' credit agreement at the end of the third quarter was 6.3x based on consolidated trailing 12-month EBITDA of $2 billion as of Q3 2013. This calculation of EBITDA is detailed in the press release for your information and makes certain adjustments pursuant to the credit agreements. Cash on the balance sheet amounted to $711 million as of September 30, 2013. Clear Channel Outdoor Holdings' debt was unchanged at $4.9 billion and leverage on those [ph] indentures was 6.3x on a total consolidated debt basis and 3.5x on a senior debt basis. Cash on the balance sheet totaled $419 million. Year-to-date, we've been extremely active in the debt capital markets and are very pleased with the progress we made gaining increased financial flexibility. Despite recent changes in the credit markets, we remain very focused on our next steps. These include improving our liquidity through both capital discipline and working capital improvements, which you saw us doing this quarter. In addition, we put a new $75 million revolver in place in Outdoor to support liquidity needs, as well as provide for the issuance of letters of credit. CCOH has already begun to transfer existing letters of credit from their old cash-secured bilateral facility to the new revolver, thus freeing up cash that had been previously used for security. We're also evaluating our portfolio of assets to determine what is non-core and could enhance our liquidity like the sale of our Sirius XM stock last quarter. And lastly, we're looking at additional tactics to address our upcoming maturities. But the biggest thing that's going to have an impact is operational improvement that drives OIBDAN growth. We're most confident that the investments we're making and which are showing up more on our core side right now are going to boost our future revenue performance. As I said at the beginning of this call, things are changing quickly here at Clear Channel. We're keeping up our momentum and I'm seeing both optimism and a sense of urgency across the entire company. Financially, our team has really transformed the balance sheet this year, giving us room to execute on our plan, and our third quarter results are a solid step forward in that transformation. We're making the investments that we need to do for top line growth, which we're already seeing in key areas like digital, and our core business remains very healthy. We look forward to providing you with future updates on our business at upcoming investor conferences and on our fourth quarter conference call in February. Thank you very much and, operator, please open the lines for questions.

[Operator Instructions] Our first question comes from the line of Marci Ryvicker with Wells Fargo.

I have a couple of questions. The first, in Media and Entertainment, what are you pacing for the fourth quarter? And what's the political impact?

Marci, it's Rich. Thanks. By the way, I got to say starting out, and those of you know me from my Time Warner Viacom, I do hate giving out pacings although we do it because it's such a snapshot in time, and I know you all know that, and it doesn't include everything we do as a company. And particularly because we're global, we can weather a lot of things as evidenced by where our results are compared to the guidance we gave before. And it also doesn't take into account other categories that we continue to get into now as a company and move forward and exploit our assets. But having said that, look, constant third quarter were just [indiscernible] fairly tough as a result of political, especially in radio. And the fourth quarter is even going to be tougher. And that's why people talk about political years and non-political years. In Q3, political revenues at our stations were $3 million compared to $13 million in 3Q '12. Political revenues continued into the fourth quarter of '12 through the November elections. But again to make -- reiterate the point, pacings really can change quickly. But just the radio stations, we're currently pacing down about 1%. But if you exclude political, we're pacing up 6%. And looking at CCM&E as a whole, which includes traffic, as a reminder, which includes and premier, we're pacing about flat. And again if you exclude political, we're pacing up about 5%. So political, in summary, I'd say political is definitely an impact. You can tell by the numbers. But the sales teams are working extremely hard to fill that gap. So that's really kind of a picture of how we think about CCME.

Great. And then turning to the outdoor side. Revenue came in better than expected, I think, both in the Americas and International. And I'm just -- I'm curious about the Americas, you're pacing down 5%, and you ended down 1%. So where did the acceleration in the quarter come from?

Really -- again, it came -- it really kind of came across-the-board. We had strong growth -- we just had strong growth across-the-board. And even when you exclude the loss of the digital billboards in L.A., which obviously we're working hard with the city on the long-term legislative solution to bring back, but it's going to be a lengthy process. But it was just, I think I gave the categories upfront that we added revenue to, really pretty broad-based, particularly in local, we had strong local during the quarter.

Excluding L.A., would it be fair to say you may have been up like 3% or 4% in the quarter?

I'm not going to -- I'm not going to comment on that but, as a reminder, we do have 77 digital billboards that are now turned off, and we're looking forward to resolving that again just working with the city and the industry on the long-term solution. But we do have a great -- just to remind everybody, just for a second, we do have a great L.A. presence outside of the 77 digital billboards. We've got 2,000 traditional bolt-ins and posters in the city of Los Angeles. We have another 2,800 in L.A. County. We've got another 3,200 in the L.A. DMA. So we are big in L.A. But yes, excluding the digital, we were up strong.

And our next question comes from the line of Jessica Reif Cohen with Bank of America Merrill Lynch.

Can you give us an update on the Nielsen [indiscernible] plan for radio measurement? What's in the pipeline and when might it become?

Great. Good question. It's interesting, I don't know if everybody -- I don't know. Over the last couple of weeks, Nielsen released their earnings and I was kind of reading through a bunch of stuff obviously as I got ready for this call in the last couple of days and just in the general nature of the business. And Calhoun had a quote that I pulled out and I think he said it better than I can, Dave Calhoun, I'm sorry, who's the CEO of Nielsen. And what he said, and I'm quoting him now is, "The big opportunity with respect to radio is really ROI, is to demonstrate that radio is more effective than the world thinks it is." And he said that, again, quoting him, "Radio can be a bit of a forgotten medium relative to digital TV, but the radio is a more vibrant medium than the way the world perceives it." Now obviously we agree with all that. He then added that Nielsen's job is to go out and demonstrate with what kind of -- with retailers, what kind of impact radio has on the consumers. And then with this data, we can begin to educate advertisers as to what the impact is so they can include in their media mix models and other forms of resource allocation models that they do. And the really important thing to understand in all that is, one, is at the top the house [ph] in Nielsen, they believe that radio is a misunderstood medium and then, two, is that Nielsen's in the middle of the media mix modeling world. There's been a lot of press on media mix modeling, especially recently. So they understand exactly how radio gets factored into the mix models for advertisers. And as Calhoun said, it's not as well represented as it should be. And Nielsen's job is to now develop metrics that will shed light on what that -- and then ultimately, let it play out in the mix modeling and resource allocation decisions that advertisers make. So again, bunch of words, bunch of quotes, but it's quotes not from us but from third-party that's going to be driving this.

Great. And then can you give us an update in your view -- well, give us your views on how you think the launch of iTunes Radio and maybe Pandora as well are impacting your business, if at all?

Sure. I covered a bunch of stuff in my opening remarks of Pandora, so let me just -- let me first state categorically starting out that we have not seen any impact on local ad sales from any digital service, whether it's Pandora, iTunes Radio. And again, I just want to take a second just maybe to reiterate a couple of points I made upfront, is, first and foremost, these guys are not radio. They're a convenient way to make a play list, which is a great service for the consumers, but can't overemphasize -- it's not even close to being real radio and we -- and look, we believe in playlists. We call that custom radio, when you hear Bob Arai [ph] talking about custom radio. And custom radio is a feature. But again, I think as evidenced by a lot of numbers you guys see -- all see out there too that we see, it's not a freestanding service. And we have custom radio in iHeart. We've got something called curate -- it's a curate service called Perfect For, F-O-R, stations. And remember, iTunes offers custom radio as an add-on to their iTunes download service. Spotter [ph] for us is custom radio as an add-on to their subscription service. But these are not, again, stand-alone services. And the other thing I think just to remind everybody that we -- just take Pandora for a second, being the biggest of these services, with all of their stations combined in the market, it is yet to penetrate even the top 10 in New York City. Can't overemphasize that. And then you take a Clear Channel station like WLTW has the #1 reach of 54% in New York compared to Pandora at under 18%. And lastly, I'll also mention, we do have 3,000 sellers across the country. We've had 3,000 sellers for a long time. We continue to add to that as I highlighted right upfront in my remarks. And we think that anybody that's willing to build an infrastructure like that, it's really, really, really hard. You build it from the bottoms up, and the sales lead time and process time to drive revenue locally is long lead times to do it. We've been doing it for a long time and I think we understand it better than anybody else. And finally, just one stat on iHeart, I did mention in the press release 39 million users at the end of the quarter. Just a quick update, we've actually passed 40 million by the end of October. So that's just -- it was 39 million at the end of the quarter, we're now over 40 million. So we continue to see very strong growth. Anyway, I hope that answers your question.

Yes. I'm sorry to make you repeat some of that. And then, again, if you said this already, I'm really sorry, but on L.A., what is the timing of getting through, like, a resolution on the digital billboards?

Look, we're working with the industry and the city on a long-term solution. It's just -- it's a lengthy process, and so I'm not going to comment specifically on the timing. But I am going to say it's a lengthy process. And in the meantime I think I gave some stats before. We got gigantic position in L.A. away from the 77 digital billboards that are now turned off. If you add up like I -- just quickly again in the city of L.A., we've got 2,000 traditional bolt-in billboards. L.A. County we've got another 2,800 I just previously mentioned. And in the greater DMA, Orange County, San Bernardino, Riverside, Ventura, we've got, another 3,200. So we've got a big presence. But having said that, we're working hard to get the digital billboards back up.

Our next question comes from the line of Jason Kim with Goldman Sachs.

I have 2 questions. The first question is on margins. You spent the past couple of years managing costs but also investing in growth areas like iHeartRadio and, historically, I think the radio business had around close to 80% income margin -- incremental margin profile. Is that type of operating leverage still achievable for this business and especially given some of the more recent deals you been making with publisher to share more revenues? And on the related note, how do you feel about the overall business infrastructure right now, whether it's technology-wise or iHeart or national sales force? Is there room for incremental investments in those areas with next year? Or is bulk of investments behind us?

I got guess a couple of things. First, on -- I absolutely believe on the margin point that we clearly do have and will get back to the margins we lapped [ph]. Remember, in this quarter and this year in particular, and again just to go back to focus back of the quarter, we had a couple of unusual things. We've got executive charges or severance charges for executives that are no longer with us. We do have some overall legal cost just in terms of the [indiscernible] business that are larger than we've had in the past. And we are making overall investments in the business. And these investments are important right now and I think you see even in terms of our revenue performance, compared to how we've done. Pretty much, I think, to the industry out there, we continue to outperform. And so we've made these investments. We're going to continue to make these investments as we go forward to build the company for long-term value. But what you don't see right now is you're not seeing the benefit yet. You're starting to see the benefit of all those revenue initiatives and we don't break out individual numbers, but we're trying to give you some sense of the impact that we are having when we talk about 2.3 billion social impressions, bigger than the halftime in the Super Bowl, double last year's numbers at iHeart. We're going to continue to try and give you indicative data that we're making progress out there.

Okay, great. And just one question on your balance sheet. You've done a lot in terms of pushing on maturities this year, and as you sit here today, in [indiscernible] group in near-term maturity, that can do [ph] 3 buckets for 2014 and '15 legacy notes which are small but they do come due earliest. And then the remaining term loan B, which is still just over $3 billion outstanding, and then in 2016 stub [ph] LBO notes, which come due after the term loan but obviously the risk profile is a little different for those notes compared to bank debt. So as we head into 2014, the market's feeling pretty strong right now. Can you talk about how you prioritize, addressing these 3 different buckets of debt maturities?

Sure, Jason. It's Brian. I like your 3-bucket analogy. I kind of use that internally as well. It really goes to, I think, how we view each of these first and then kind of talk a little bit about the strength of the market. I think our senior secured debt, the bank debt that's due in 2016 is imminently refinance-able. I think, when we did the $5 billion extension earlier in the year, there's a significant amount of oversubscription that we did not include in that deal. So I think a lot of what's left can be extended or exchanged into PGNs. And then I think any remaining amount can be refinanced through the issuance of cash PGNs. So I think the real focus is on the legacy note maturities and then the second bucket, the LBO notes. The LBO notes, we also were very successful at extending out approximately half of those earlier this year. So I think there is interest in that investor group. I think largely, as you've noted in your own writeups, we're generally aligned with our investor base. And so while we may not be able to extend all the LBO notes, I think that there's an opportunity to refinance some of those as well. The legacy notes are smaller but they -- the inside notes at least mature over the next couple of years and that is one where I think that we need to continue to do things that increase our liquidity buffers. And we talked about that, growing -- Richard talked about growing cash flow and EBITDA. You've seen us dispose of some non-core assets to generate liquidity. We've raised a liquidity facility at Outdoor. So we continue to do things to bolster liquidity, to increase that liquidity buffer and be prepared to repay those notes with cash at maturity. That's not to say that's the only solution. We look at the markets, the markets are strong. If there's an opportunity to push those out at an acceptable economic trade-off or to refinance them in an economic trade-off, we'd also look to do that. I think one of the big differences between where we've been in the past, where we've kind of attacked these different types of debt discreetly is that there's so little left, really. The runway and then -- it's funny, $3 billion is a little. But compared to where we were, it is. There's really so little left to attack. We may be looking at something that they're all related to each other. So that's what we have to think about. The markets are there. We're aware that the markets are very strong. That creates new opportunities, it makes existing opportunities more attractive. Whether it's -- our continued strategy of chipping away or something more comprehensive, we'll continue to look at it. And if it's right and it makes sense, then the company's been pretty aggressive at pursuing those opportunities.

Your next question comes from the line of Avi Steiner with JPMorgan. Avi Steiner - JP Morgan Chase & Co, Research Division: Rich, I want to take the margin question in little bit of a different direction because you've made some big hires and done the things you've discussed, in previous answers. But is there a sense of getting or sense you can give us of time frame to achieve some real revenue growth off the back of some of these investments? Is it 1 year out, 2 years out? How do we think about that?

Well, Avi, a couple of things. I'm not going to give you a specific time frame on that, but let me mention a couple of different things. One is, on the cost side, I just want to make sure -- I wanted to add one additional point to Jason's and your question, and I think even the theme, a bunch of people's questions is -- and again, those of you that know me historically, I am a ROI guy, return on invested capital. Whether it's capital or expense, to me that's just an accounting thing, it's cash out the door. I will tell you and promise you every investment and that investments include people looking at on a 4-wall basis, on a P&L basis, all the investments I'm looking are -- look at them on cash-on-cash do not assume residual value when I'm evaluating investments and looking at rates of return and hurdle rates backward [ph]. So I assure you that we are focused on expenses and driving flow-through and driving margin. And in terms of the revenue side of your thing, we are seeing investments starting to pay off. You saw our -- again, if you just look at our numbers, I tried to give you some numbers. You have the events numbers, don't break them out separately, but I'm just telling you, they're very strong and I tried to give you some indicative operating metrics. Again national sales, you look at the numbers, I have said x political also very strong. You add the political year and the same thing in terms of my comments on digital. So you're going to continue to see improvement as you go into 2014. I think you'll see strong improvement to your question in '14, but I can't tell you that's going to be all the improvement there. Avi Steiner - JP Morgan Chase & Co, Research Division: Okay. And then back to the balance sheet and I don't know, Brian, if you want to take this one. But to be direct here, would you consider using some amount of cash, small amount of cash perhaps to help in pushing out some of these front-end maturities?

Sure, I'll be happy to give Rich a break. Sure, I think we look at all opportunities. I think we've also expressed our sensitivity in using liquidity and so it would have to be the right balance of things to look at and review. But sure, I think we'd look at whatever combination made the most sense. Avi Steiner - JP Morgan Chase & Co, Research Division: Okay. And then just on the Outdoor revolver. Is this new and designed to free up liquidity at Outdoor or is it something that can potentially be bore [ph] against with cash sent up to parent. And if it's the latter, are there any prescribed uses of the cash? I know it's a small facility, but I just want to make sure I understand it.

Yes, it's the former, it's the first part. It provides liquidity Outdoor in 2 ways. One, it's is available for draws to the extent needed by operation. But secondly, and it's a process we've already put in place, and Rich alluded it to in his opening remarks, is Outdoor had a cash incurred letter of credit facility, and letters of credit are important to the business. And so by putting this in place, we're able to migrate those letters of credit into the bilateral program under the revolver and free up cash security at Outdoor. The decision to move money out of Outdoor and up to the parent is a separate and discrete decision and is not part of the revolver as it stands today. Avi Steiner - JP Morgan Chase & Co, Research Division: Okay. And then on the 14% notes that you own, can you just remind us on the registration timing on that? And is there any further thought perhaps to either using that as a liquidity lever through an outright sale or using it as exchange currency? And I have one more, and I promise I'm done.

Yes, so it is currency and it's something that we have in our back pocket now that -- the trading levels, even though they've improved, are still not particularly attractive. But it is something that we have and have available to us. I think the public-extended LBO notes need to be registered by mid-January, so we probably need to be up and moving through December. I think that makes it easier to the extent that we wanted to monetize that currency, the notes that are held by FinCo [ph] in that we could sell those and then they could participate in the registration program along with the public notes that are out there. And then also the fungibility issue, which the timing kind of is around the same time. So I think you have a 6-month window and there are certain calculations you have to go through. However, even if the public notes are registered, it doesn't mean we can't sell those notes, and we certainly could register them at a later point in time. The fungibility test would be a little different. But where they're trading today, they would still be fungible post-registration. So I think to answer your question, it's easier if we do it prior to the public notes being registered, but they remain at currency. And it's a little more administrative work and maybe a little more of an explanation. But we think they could be fungible and registered post the registration of the public notes as well. And operator, we have time for one more question.

And that last question will come from the line of Lance Vitanza with CRT Capital Group.

I'm going to start quickly with a housekeeping item or 2. I heard the International Outdoors pacing and the Media and Entertainment, but I didn't hear the Outdoor Americas pacing. Can I get that?

Sure. So on Outdoors America right now, we're pacing down about 3% to 4%.

Okay. And the $8 million of executive transition and $11 million of the legal and other charges, should I allocate that evenly between Media and Entertainment and Outdoor? Or some of that's specific to one segment or another?

It's just all -- it's hard to think about how to allocate that. I would just say it's all -- just think about all at corporate.

Got you. And then moving on from the housekeeping. So I'm hearing anecdotally that the developed markets in Europe have really turned it around. Are you sensing that as well? And I guess I'm wondering, you're still reporting some lingering weakness. Is it possible that that's share-related or is this just the typical lag for Outdoor as opposed to some other media?

Well, first of all, I'm not sure -- the word, the exact word you use that really turned around. I'm not sure [indiscernible] would be the adjective I would use. What I'd say is, look, we saw some nice strength in places like the U.K. and Australia and Norway and even France, which was not great year-over-year. We actually had a couple good weeks, I think, and within the quarter within France. So that's really what you're seeing kind of reflected in the numbers. But honestly, at the same point in time, there's still pressure. That's why International is pacing down 1, as I said earlier, and it's still tough out there. And the economies -- I think any of you that follow businesses in the "developed markets," and particularly in western Europe, I'd be surprised if you hear much else because I think what I'm saying kind of echoes what I hear in the other boards that I'm on also between [ph] advertisers in consumer-dependent businesses.

The Warner music deal, can you talk a little bit about that? Is the comparable in terms of the economics, just some of the deals that you did with smaller studios? And should I be thinking about that as essentially you give up a percentage of the revenue on terrestrial to get away from paper play and digital?

Well, look, I'm not going to go into any of the details of the deal because, as I'm sure you respect and appreciate, we've got confidentiality. But look, it's a great strategic and economic benefits for both of us, for both us and for WMG. What it really does is, just as a reminder, contractually defines one of our most strategic relationships and takes it from something that has been traditionally been operating on an ad hoc basis to make it a true partnership that now will become more predictable, so we can do a better job of running our business and at the same time allows us to really drive digital growth, break new music and create new marketing opportunities for established artists that are out there. So like I said, it's off to a great start and it builds on the success that we've already established with the independents on places with labels such like Big Machine and Glassnote, and we've got over 20 of those to date as a reminder, plus we also have a deal with Fleetwood Mac. So I think if you ask them, which is always the best test, they'll tell you that the direct licensing agreements we have with them have been great for their artists, their business and for their fans.

My last question involves the promotional activity that you have going on with the CW Network. Could you just discuss how you found them to be as a partner? And do you expect that, that will continue or do you think there is an opportunity with some of the big 4 networks and how do you think about that going forward?

Well, they have been a great partner, quite frankly. And again, if you go back to what I said in the opening remarks, the number of shows we have on the air with them is significant. I think in total we have about, not all with them but we have 17 broadcast shows in total. But we really are, they've been great partners, but look, at the end of the day, this is about driving results and driving revenue for our company. But right now, I'd say there's no reason to tell you about anything but a great partner. And we're going to explore. We're economic animals at the end of the day, and we're going to explore opportunities that are out there, and you're going to see us do a lot more in the TV space as you go forward, which is all part of taking advantage of this platform we have. And you're going to see us do a lot more events out there. And again, the last thing also -- and I know we've got to go. But I just do -- as you guys think about the potential opportunity here and value in future revenue streams, I couldn't help but think about when I watched earlier this morning The TODAY Show on the lead story like about Twitter and you talk about people raving about the reach of 230 million people, just as a reminder, our reach is 243 million people a month. So every time all the stuff I'm reading about social, we have the original social medium, and we had -- and we've got mobile. The radio is the original social medium and that's demonstrated by -- that's how we got 2.3 billion social impressions at the iHeart Festival weekend. We didn't get it by accident. We got it because radio is social and that it led to those impressions. Thank you, everyone.

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