Clear Channel Outdoor Holdings, Inc. (CCO) Q4 2013 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Clear Channel Fourth Quarter 2013 and Full Year Earnings 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.

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 CC Media Holdings, Clear Channel Communications and Clear Channel Outdoor Holdings. Please note, we've 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 our 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 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 this 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've provided schedules that reconcile 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 Investors section of our websites, clearchannel.com and clearchanneloutdoor.com. Please note that our 2 earnings 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 adjustment for divestitures in 2012, unless otherwise noted. With that, I will now turn over the call to Rich Bressler.

Thanks, Effie. Good -- and good morning, everybody. As Effie mentioned in the opening remarks, we did publish slides to accompany this call, and you can find those on our websites. Before jumping into our results, I'll start off by saying that 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 assets, and I am more confident than ever that we have the best leaders, and we are 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 iHeartRadio, our events business and our -- and in our continuing deployment of digital platform displays. Our focus is to be #1 multi-platform media company in revenue and earnings, in addition to reach. We also put together some key strategic partnerships by partnering with the CW Network to add 7 television shows that reach over 50 million viewers, and we recently announced a multiyear cross-platform partnership with Horizon Media, the first of its kind in the industry. With the retirement of John Hogan, Bob Pittman and I have taken over the direct management of Clear Channel's Media and Entertainment division. We also went through some organizational realignment to help strengthen our foundation for long-term success. For example, earlier this month, we created a new unified networks group at CCM+E headed by Clear Channel veteran Darren Davis to further integrate our Premiere Networks, Total Traffic and Weather Networks, 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 gear up for 2014. We started by having Nathan Daschle, a well-known political strategist, to head up our political strategy out of D.C. He is focused on working with political and issue advertisers and advertising agencies to develop custom strategies and campaigns that leverage the unique reach and power of Clear Channel. So as you can see, we are investing for growth, and I am excited by what we've 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 in spite of challenging economic conditions. Starting with the full year, CC Media Holding revenues totaled $6.2 billion, close to flat year-over-year but would have been up 2% excluding political. Media and Entertainment grew 2% or 4% x political, while our Outdoor business remained flat. It's also important to note that political revenue for our media representation business, which is included in our Other category, was down $40 million year-over-year. Our 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 divestiture of businesses. I will touch on some of the key drivers of this decline a little bit later. Going to the fourth quarter, we had some tough comps from last year both in terms of political spending and the loss of revenue from our Los Angeles digital boards. That said, revenue was flat year-over-year, around 4% excluding political. Performance was driven by 3% growth in Media and Entertainment, around 8% excluding political, as well 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 2 very successful transactions that we completed in the last few days, which generated over $420 million in net proceeds. Most recently was the sale of our 50% ownership stake in Australia and New Zealand radio assets for over $220 million in net proceeds. We also sold some of our 14% senior notes held by a subsidiary for over $200 million in net proceeds. Turning to Slide 5. I'll take you through some of our key highlights. We've done some really exciting stuff in the Media and Entertainment side of the house. From a partnership perspective, I've mentioned our deal with Horizon earlier. We also worked with Nielsen to deliver the first-ever single-source ROI measurement for radio. And of course, we also continue to work with the record labels and have signed 25 agreements to date on a direct basis, including our one with 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 bringing new music and creating new marketing opportunities for established artists. 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 its 20 million 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 went 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 continue 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've gotten. Social impressions for the iHeartRadio Music Festival grew to a record 2.3 billion while the Jingle Ball Tour nearly topped 4 billion social impressions. From a monetization perspective, we create both local and national sponsorships opportunities for advertisers to reach and engage with customers. Already for the coming year, we have announced the first-ever iHeartRadio Country Music Festival in Austin, Texas in March, featuring the best of the country's stars such as Carrie Underwood, and there's more to come. Now let's turn to Slide 6 and talk about Outdoor. I'm truly excited by some initiatives and innovation at Outdoor under CEO William Eccleshare's leadership. We continue to drive strong growth in many U.S. markets, as well as China, Brazil and other emerging markets and some developed markets such as Norway and the U.K. In the U.S., we continue to build our digital presence, ending the year with over 1,100 digital boards, including new boards at Penn Plaza across from Penn Station in New York, as well as Boston's South Station. Over to International. We ended 2013 with over 3,700 digital displays across 14 countries. That total will climb in 2014 with our exclusive contract for advertising space at Rome's 2 airports. Now let me spend a few minutes talking to our segment results, and then we'll wrap up with liquidity before opening up the line for questions. Turning to Slide 7. I'll review Media and Entertainment's financial results. Starting with the full year, revenue growth of 2% in 2013, up 4% excluding political, driven primarily by the increase in national advertising revenue across various markets and advertising categories, including telecom, retail and entertainment, as well as growth in digital sales. The iHeartRadio Music Festival, Jingle Ball, iHeartRadio Ultimate Pool Party and album release events drove higher promotional and sponsorship revenue. Our revenue growth is partially offset by reduced political spend compared to 2012, which was a presidential election year, as well as a decline on traffic business resulting from integration activities. Operating expenses increased $80 million year-over-year, driven mainly by continued investment on national sales and programming capabilities, special events, promotional costs, compensation and higher streaming and performance royalty expenses during 2013 due to increased listenership on iHeartRadio platform. Also note that 2012 included a onetime $21 million credit from one of our performance rights organizations. In addition, we also had higher legal fees and research expenses related to sales and programming activities in 2013. For the quarter, Media and Entertainment revenue rose 3% or 8% if you look at x political revenue due primarily to strong national digital advertising as well as promotional event sponsorships, the expense of the Jingle Ball Tour and album release events. Expenses were up $36 million due mainly to increased costs associated with our special events and higher streaming and performance royalty expenses. Let me cover our first quarter pacings before moving on to CCOA. 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 doesn't include everything we do as a company across the globe. Okay, with that out of the way, Q1 pacings in CCM+E are up 2.7%, with core stations up 3.2%. Turning to Slide 8. Americas Outdoor revenue increased 1% in 2013, driven primarily by higher occupancy and rates from bulletins and posters in connection with new contracts. On the digital front, increased revenues were due to higher occupancy and capacity. I want to point out that our revenue growth was affected by the absence of revenue from the 77 digital billboards in L.A. that were turned off in April of 2013. We also had declines 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 in strategic revenue and efficiency initiatives. We also had a decrease in variable expenses, such as site lease expenses that will relate to the decline in revenues and certain product lines that have lower margins. These declines were a result by higher legal costs related to the Los Angeles litigation. For the fourth quarter, Americas revenues decreased 2% resulting from lower revenue through the airports due to lost contracts and the absence of revenue from the L.A. digital boards. Operating expense declined 5% in the quarter, again, because of our strategic revenue efficiency initiatives as well as the decrease in variable expenses. Q1 pacings in CCOA are down 7.5%. We have a slighter and tough comp relative to last year, but just to remind you 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 its lowest financial performance in the first quarter of the calendar year. In terms of top categories, retail, business services and health care and medical are performing strongly in the first quarter. Turning to Slide 9. International Outdoor revenues increased less than 1% in 2013 after adjusting for divestitures during the third quarter of 2012 and a $5 million increase from movements in foreign currency -- foreign exchange rates. We had strong revenue growth in emerging markets, including China and Brazil, as well as in the U.K., and higher transit advertising sales resulting from new contracts in Norway. Some developed markets like France face 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 $27 million of legal and other expenses in Latin America that occurred in 2012 that did not reoccur in 2013, as well as core 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, revenue rose 2%, driven by growth in emerging markets like China and Brazil. Again, our revenue growth was partially offset by performance in our developed markets like France that face 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 typically experiences its lowest financial performance in the first quarter of the calendar year. On Slide 10, let me review again some items that are affecting comparability year-over-year because they 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 CCM+E more than Outdoor and was also a big driver of the reduction in revenues around media representation business, which is captured in the other line. Looking ahead to this year, a political but non-presidential year like 2010, I spoke early about our new -- earlier, excuse me, about our new political strategy unit. We are already doing some really innovative things around terrestrial and digital segmentation and targeting, and frankly, you can't compare digital-only players to our extensive reach and scale. So we are 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 L.A., but we are working with the city and the industry on a long-term legislative solution that creates value for the city and for the community. As we noted last year, this could be a lengthy process. On a related note, the litigation in L.A., among other things, has contributed to higher litigation expenses this year. Other items impacting our expense comparability are the $21 million -- is the $21 million credit in 2012 related to music license fees, as well as $7.8 million in executive transition costs in 2013. Turning to our capital expenditures on Slide 11. Capital expenditures for the year was $325 million, down 17% from 2012 and about $25 million less than the guidance we gave you in our fourth quarter 2012 earnings call. Of 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 $109 million on our International segment. We are 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 liquidity, both organically and through capital markets and strategic transactions. This past December, we refinanced $1.9 billion of debt maturities that will be due in 2016, further reducing the maturities due over the next 3 years. Our 2013 capital markets activities, including extending our maturities and selling our core assets, have given us the financial flexibility to continue to grow our businesses. As of December 31, total debt was $20.5 billion, and we have $708 million of cash on the balance sheet. Looking ahead, Clear Channel's 2014 maturities consisting of $461 million of 5.5% notes due in September, and maturities in 2015 consisting mainly of $250 million of 4.9% notes. Clear Channel Outdoor Holdings has no certificate maturities until 2020. Also, during 2013, Outdoor entered into a $75 million 5-year senior secured revolving credit facility for working capital to issue letters of credit and for other general corporate purposes. There are no amounts outstanding under revolving credit facilities at year end. Turning to Slide 13. I'll review the balance sheet and debt ratios. As I've just mentioned, cash on the balance sheet was $708 million at year end for CC Media Holdings, and our secured leverage ratio was 6.3x. At Clear Channel Outdoor, we have $315 million of cash, and our senior leverage ratio was 3.5x, and our consolidated leverage ratio was 6.3x. As I briefly mentioned at the beginning of the call, within the last 7 days, Clear Channel closed 2 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 deemed to be strategic. Also, our subsidiary sold a portion of the Clear Channel Communications' 14% senior notes it held due in 2021. In addition to the cash order on the balance sheet, we have a number of leverage we are examining in terms of enhancing future liquidity. To that end, we'll continue working to improve our operations and reduce our working capital needs and explore the sale of additional noncore assets. To sum it up, we are comfortable with our maturity schedules in medium term. We will continue to take disciplined proactive steps to address our capital structures and liquidity. Let me just finish up by saying that we have now put 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 customized 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 over multiple platforms. And we have now put in place a leadership team with the vision, skills and experience to execute and win in the marketplace and make us the #1 platform media company in revenue and earnings, in addition to reach. Thank you very much, and let's open up the line for questions.

[Operator Instructions] And our first question will come from the line of Jason Kim.

Okay, great. I'll start off with some business questions and maybe a capital structure question later. And can you talk about your outlook for margins in 2014? In the past couple of years, we have seen the company make a lot of investments in growth initiatives, some of which have impacted your profitability somewhat. And I'm hoping that you can share with us in broad terms how you think about the level of investments you'll be making in 2014 compared to last year, and if the historical incremental margin profile of -- somewhere along the lines of 70% to 80% on the radio side of the business can be had this year and to the extent to which you see some revenue uptick.

Jason, thanks. It's Rich. So I guess -- I think there's a lot in that question, so let me try and hit on a bunch at different levels. First of all, just straight from the market question, look, we've invested in the company, as everybody knows, particularly in Media and Entertainment, and particularly within Media and Entertainment, our national sales and programming capabilities in our digital platform and our events, with the expectation -- and I think you're going to [indiscernible] obviously that will continue to see that, that these investments will yield revenue growth. So if we look forward, as we look to this year and to next year moving forward, I expect that you're going to see us -- you're going to continue to see margin expansion. I think the second part there is that if you look at a lot of these investments and I think probably more focused on what we call iHeartRadio, 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 investments also support the growth and monetization of our core radio business. And as a reminder -- and again, I note, we'd all like to see more in the numbers, and we will continue to see the financial numbers accelerate as we move forward through this year and into next year. But some of the things I point you to that our investments are working, the fact that we were up -- I mentioned this in the opening remarks, we're up 29% over 2013 in total listening hours for iHeart with over -- nearly 300 million downloads and updates. And we're in the process of really focused on the monetization through our thousand stations and 84 million visitors on a monthly basis. So there's a lot of leverage here to pull in terms of the monetization, and one of the reasons give you the operating stats, it's so you guys could all benchmark that we're making progress, which is resulting in financial results and will continue to result in more accelerated financial results, which will continue to improve margins.

Okay. And then on the CCOA Americas pacing side -- and I know you typically do not talk about specific numbers in terms of the impact from the L.A. 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 2 items, are looking for 1Q maybe compared to the most recent couple of quarters?

Well, look, I'm not going to -- I'm really not going to, as I said on the call, I really do hate pacings, giving pacings. I understand it's a fact of life, but I do hate pacings. And I think with the -- when we get through the second quarter, after we get by the second quarter and midway through the second quarter, we won't have the tough comparisons anymore because we'll be done with the overall L.A. pacings. But look, our business continues to perform well. The first quarter is always the toughest quarter for us, as I said upfront. We're more excited than -- quite frankly, in the Outdoor business than we've ever been. I think if you look at all the recent data, Americans are spending 70% of their time out of the home. Quite frankly, some of the innovative stuff William and his team is doing, things like the virtual bookstore in Copenhagen, which we've talked about and you guys should go online and look at, stuff we did with Chiswick Towers in London, the rolling out of the digital displays in the U.S. where we're putting our capital to, you look at all those things. We are very, very bullish about Outdoor. But giving -- I'm not going to say anything more beyond the pacing information I gave.

Okay, fair enough. And just one question on the capital structure side, 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 some -- sale also of your proceeds of '21?

I'll let Brian -- Brian, do you want to handle that, please?

Sure, happy to. Yes, 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 and in 2015. So it's an indirect way of really refinancing this legacy debt with the issuance of the LBO notes with a 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 the '15 notes are expecting to get paid that cash at maturity. Now we have the liquidity, and we'll examine whether or not it's at maturity or sometime before, and that will be an economic decision, but I do think the actions we are taking do address, in an indirect way, the refinancing of those maturities.

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

So the negative 7.5% pace in Q1 is clearly a little surprising to people. And I'm curious if this has gotten worse throughout the quarter because I know it is 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-specific? So are you seeing weakness in the entire market or the industry, or is this just company-specific?

Yes. Sorry, it's Rich. So thanks for the questions. So a couple of things. So look, I'm not going to comment on the overall industry. The only thing I'll comment about is really on Clear Channel. Remember, you do have a couple of things. You do have -- again, I hate to keep reiterating this, but we do have the 77 digital billboards that were turned off on April 15. Where we are seeing some strength is we are 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 ex L.A. with the ones that we have up. So again, as I do say, we feel very, very good about the business, and I expect we'll continue to see strength as we go throughout the quarter. I'm not going to comment beyond that.

And then it's interesting that radios, the core stations are pacing up 3%. So is that something that's specifically Clear Channel as well, or are you feeling strength from overall advertising demand?

I think again, I don't want to talk a lot about in terms of the rest of the industry. You guys all have your own opinions. But as I said in -- I think, in 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 do in the company, whether that comes from iHeart. We're aggressively 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, allocating -- and capital being broadly defined in terms of working capital and dollars that -- where we're getting the return. And as I've mentioned previously, we're seeing strong growth particularly in telecom. We love telecom [indiscernible] financial services and health care. And so you can look across the board there.

And my last question is do you have a target number for digital boards for '14?

No. The only thing I would say is we're going to have more. [indiscernible]

Are you going to put up more boards than you did in '13?

I'm not going to comment on that now. I just can tell you we're going to have more absolute digital boards.

Our next question will come from the line of Avi Steiner. Avi Steiner - JP Morgan Chase & Co, Research Division: A few left here, pretty easy. Let's start with balance sheet. How do you think about monetizing the remaining 14% balance? Is it being cost of capital perspective value 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 and have time?

Yes, you know what I would tell you is we were pleasantly surprised at the demand. We got a lot of reverse 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 is -- it's a relatively expensive cost of 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, has become a little more attractive perhaps, but it's still, it's relatively expensive. What we like about this trade is it was immediately actionable, had a high degree of certainty, but the cost is such that we only did 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 feel like our maturities are covered for the next couple of years. Hopefully, operations will continue to perform and grow, but we have that currency in our back pocket if we need it in the future. Avi Steiner - JP Morgan Chase & Co, Research Division: Great. And then another easy one. After-tax proceeds on ARN, and can you just confirm not required to use those proceeds to pay down bank debt?

That's right. We intend to reinvest the proceeds from ARN in the business. And we'll 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 - JP Morgan Chase & Co, Research Division: Okay. And after tax, was it the $220 million and change that I converted?

I don't think there's any material tax effect on these proceeds, so I -- it should be pretty much the net proceeds of the sale. Avi Steiner - JP Morgan Chase & Co, Research Division: 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 making acquisitions, Internet valuations are what they are, digital. How do you think about what you have with iHeart and how you can -- the company can potentially take advantage of those?

Well, I -- it's like you want to thank Zuckerberg this morning for that deal because I'd 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 have and listening to both the press and a lot of you this morning talking 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 and -- for some period of time 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, we are -- about 90%, 92% of the American population listens to radio every week, same for the last -- since the early 1970s. And you couple that with the personalities that we have, that people love and that tune in daily and the local element, which is critical, and what real radio is all about, which is connecting listeners to the community. I keep emphasizing community and social and the world around them, and it's a social experience that -- because you're experiencing it at the same time the other listeners, then you're getting local news, weather information, traffic, if anything, I -- with WhatsApp -- and the market says WhatsApp is worth $19 billion. You tell me what the value of the fact that we have 243 million people that we reach on a regular basis, so -- on a monthly basis. And so that's kind of the first part. I think just looking stand-alone -- and don't even compare us to anybody. Just look, again, the market cap that you said that's on Pandora and even more recently what the markets put on the market cap or the free markets put on for WhatsApp this morning. I think when you turn specifically -- let me just turn specifically for a second to Pandora. I mean, I think what's really interesting is I don't know how many of you have 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% up between iHeart, 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's a playlist. What we have is called custom radio. We think it's a feature. We don't think it's a freestanding service. And probably the last thing I'll say, and then I'll pause and happy to answer any other questions on the Pandora side is that they claimed to be the #1 radio station in most markets. But it's really important just to do the math for a second. And less than 40% of all customers -- consumers today can even stream. And if Pandora remarkably got 100%, remarkably, would get 100% of all the people, of all the customers that stream, they still couldn't make it to the #1 in any market because the #1 station, like in New York where we have -- WLTW is close to 60%, like our -- and we have 90% of the cluster, it's mathematically impossible for them to be #1 in these markets. So I say, just do the math on what I just gave you on streaming, and we're #1. And quite frankly, if you add up all the Pandora streams in New York, they wouldn't even be in the top 10. I think they're like at 17% or 18%, and again, that's mostly self-reported data, or always third-party data. That's confirmed. Avi Steiner - JP Morgan Chase & Co, Research Division: That is great. One quick follow-up on that. Is iHeart a discrete separable asset and is a part of the restricted group?

It's -- well, 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 in answering some questions, you've got to look at digital and iHeart and everything within this company really as one. It's additive to our terrestrial opportunity, and you have to look at them as complementary. Avi Steiner - JP Morgan Chase & Co, Research Division: I'm sorry, you...

One thing I would say, obviously, we typically get that question in reverse, is it part of the unrestricted group? Those assets, as Rich said, are a part of the radio broadcasting group. They all are part of the restricted group. Avi Steiner - JP Morgan Chase & Co, Research Division: They are. That's what I wanted to clarify. They are part of the restricted group, yes?

Yes.

Yes. Avi Steiner - JP Morgan Chase & Co, Research Division: Perfect. Two more very quickly. I promise I'm done. Number one, you signed a, at least on the headline, $100 million cross-platform deal with Horizon. Can you give color on that, around deals with the SFX, really what, I guess, revenue opportunities are there that maybe we're not missing, just looking directly at the numbers?

Well, look, the -- I think the Horizon deal is extremely critical because it -- look, it's the first of -- it's a partnership that's the first of the kind not only for Clear Channel but for the industry, and we look forward to signing more strategic multi-platform arrangements for other clients. It's especially significant, again, for us because it's a major agency that we've now formally 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 result for the partners. You should think about it as this is really a deep integrated marketing partnership that enables Horizon and its 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, it improves the effectiveness and ROI -- and really prove the effectiveness, I'm sorry, of ROI, of broadcast and out-of-home. And so the Horizon deal -- again, SFX deal. We've known Bob Sillerman a long time. He's 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 people 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's perspective, SFX that I just went through, we continue to form these partnerships that are win-wins for both sides. Avi Steiner - JP Morgan Chase & Co, Research Division: Excellent. Very last question. You talked about other noncore assets. I don't know if you want to be specific, but is there an opportunity set there that's above $100 million?

So the answer to your last question is no, I'm not going to be specific. As you would be -- it's shocking that I'm not going to be specific. But look, this is something we do every day. I think when I did the first call, when I came in to work and partner with Bob 5 or 6 months ago, I said one of the things I thought we could do, because the team has done a great job here on the capital structure even long before I got here, I thought we could even step up our focus in our balance sheet being more effective and more efficient and more cost-efficient. And the 2 deals that you just saw are both -- Brian commented on the note deal, but on the APN deal, and they've 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 win with them with iHeart in Australia and New Zealand. So we can continue to be involved in those, and we can 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 see if we can do things to more efficiently run the company, which will be better for all of you and all of us as stakeholders.

And the next question will come from the line of Lance Vitanza.

I wanted to start with another iHeart question if I could. Listener hours up 29%, I'd imagine that, that mostly reflects new users. But do you have any sense for whether existing iHeart users are listening or using the service streaming more, less or about the same relative to what they were doing, say, 6 months ago?

More, and more mobile. We were up -- I think mobile was 52% of our listening hours last quarter. So I think that tells you that -- the direction that we're going, probably a bit more.

So do you think you're taking users away from Pandora and 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 of both?

The answer to that -- I don't know the answer to that question. I'm not sure anybody knows the answer to that question. And that's why I try to give you the stats on a little bit -- just to go back in terms of a little bit with Pandora. Remember, we've got digital. 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 look, we have feature. We have something called Perfect For, which is a feature on our application, which is -- I'm sorry, it's a feature on our iHeart offering out there. And Pandora's got a feature, and they've done a nice job with their feature. But if you look at iHeart, we've got almost 70% brand awareness in the last 2 or 3 or 4 -- for a period of time. I gave you the overall numbers that we've talked about. But we still believe that 90% of Americans say that they have both a music collection and a radio, and they 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 freestanding. And as I mentioned, we have Perfect For. And again, no different that we've seen really no impact on sales, which is a question that continues to be out there. Also, just to get on the table, since everybody's kind of to scratching at the edges here on Pandora, so I might as well add to that upfront because I am sure it's going to come in a couple of minutes. We haven't seen any of the impact on local digital sales. We've got 3,000 sellers across the country. We've been doing this for a long period of time. And so -- and I also mentioned the point about the reach, with Pandora having self-reported information versus ours, which is Arbitron/Nielsen.

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

Sorry, can you say that again?

Yes, wondering what the actual total number of listener hours on iHeart were for any recent period. You've given us the growth rates, and I'm wondering if you can give us the absolute amount of hours.

Yes, let me get back to you on that. I don't have that offhand, but let me get back on that.

And then just, Brian, maybe a question for you if I could, and I apologize if I missed this earlier. But could you give me a sense for where pro forma interest expense stands now with the issuance of the 14s of '21 and then maybe assuming you repay the 5 1/2s of '14?

Yes, I think we've given the general guidance on the deck that we attached that interest expense should be around the $1.6 billion level.

And our next question will come from the line of Davis Hebert.

I wanted to ask a question about the political. A lot of the TV guys are saying 2012 is going to be a tough comp, being -- 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?

Well, I -- look, '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 to really force and drive political revenue in '14, we've created a new political strategy unit, which is led by Nathan Daschle. For those of you that don't know Nathan's background, he's a well-known political strategist, former -- and a former Democratic Governors Association executive director, and he's really focused on ensuring that our campaigns know about our capabilities and know about the breadth across the country. And remember, because of who we are with -- 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 produce 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 extensive reach and scale, coupled with -- I just talked about in terms of our psychographic targeting capabilities that enable us to -- helping advertisers target the right people at the right time. So we expect a big year on political.

Okay, that's great. 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?

No, because -- this is why I hate giving -- did I say this, like, 3 times, I hate giving pacing? This is why I hate pacing data, because it's just a snapshot in a divvy of time. I mean, we have -- we are all -- Bob and I and the rest of the management team and Tim Castelli and Tom Schurr and Matt Martin, we're all -- we look at pacings, but we look at pipeline reports. We're in constant touch of what's out there, so I wouldn't read anything into that at all, so...

Okay, great. And you guys have made a lot of progress on the 2016 bank debt wall. I think you still have less than $2 billion left. Any thoughts about taking additional steps this year on that?

Brian, do you want to...

Yes, sure. I'm happy to talk about that. 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, like, $7 billion of that last year. So we feel pretty comfortable that, that can be refinanced, and we'll continue to watch the markets and be opportunistic. More than anything else, it's probably the repricing of that debt earlier than you have to, and additional cash interest you'd be generating. So I think you balance that against the market. I suspect sometime during 2014, we'll 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've taken are the non-senior debt. And so in 2016, we have $470-something million, I think, of junior debt that matures, and we'll continue to take the necessary measures to pay that off or refinance that as we get closer to maturities. But I think as far 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.

And the next question will come from the line of Tracy Young.

I've got 2 questions related to Outdoor. If you could 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, were you down? Could you just remind us if you were down in all of the quarters for 2013? And then the second question relates to your strategic investments. They were certainly lower in 4Q. Are there any expectations that we'll hear more about call-outs for 2014, or is that pretty much done?

So the first question, I think, yes, was on France, and you broke up a little bit after the second and the third. So maybe just on the first question on France, look, France, as I think everybody, all of us doing 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 U.K., 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 are about Outdoor, if you go back to the 2 examples I gave of the creative stuff that William and his team is doing is in Norway in terms of the bookstore capabilities and in the virtual bookstore and in London with the Chiswick Towers.

Okay, great. The 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 any expectations that we'll hear a call-out on 2014 for the Outdoor business, or are we pretty much done?

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 investments, we're always looking to be more efficient. And the only criteria lens 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 the Outdoor businesses, the CCM+E. So I don't think we're ever, ever done. Every single day, we look at that.

[Operator Instructions] And I show a question from the line of Paul Carpenter [ph].

I have 2 questions. The first is can you explain to us what the tax implications would be if you sold CCO equity to the public, just the fact that your additional paid-in capital is now at about 0 and any proceeds from that would be fully taxable? And then secondly, can you talk about what your expectations are for the intercompany notes during the quarter? You paid -- it's sort of down, and then it looks like you reborrowed most of what you paid back down.

Brian, do you want to take that?

Yes, I can take the second one. I don't think we've disclosed any information on tax impact. I'm sorry, can you hear me, Rich? I'm getting some feedback.

Yes. Yes, go ahead, Brian.

So I'll address the second question. The first one, I don't think we've given any public disclosure around the tax impact of selling CCO or CCO equity. With respect to the intercompany note, we have the demand. In Q4, $200 million was repaid and then dividended out by CCOH. I -- the question was about plans with respect to the note. I don't know that there's 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 by $200 million but by $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 normal operations. The Clear Media dividend was kind of a onetime event. This was a special dividend. But you should expect the note to continue to grow, reflecting the free cash flow generation by Outdoor. There's nothing special or planned with respect to the operation of the note. And so I think that answers the second question. I don't think we don't have anything on the first one.

No, we don't. Thank you, Brian, for taking that question. That's all the time we have today for Q&A. Thank you, everyone, for joining, and we really appreciate you being with us today.

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.