Audacy Inc (AUD) 2002 Q4 法說會逐字稿

Good morning and welcome to the Entercom fourth quarter earnings release conference call. All participants will be able to listen only until the question and answer session of the call. The conference is being recorded at the request of Entercom. I would like to turn the call over to Mr. Steven Fisher, Chief Financial Officer. You may begin.

Good morning and thank you for joining us for the quarter and 2002 earnings release. In a moment, David Field will talk you through the quarter and guidance and obviously answer your questions and answers.

But first before we begin, the part you all enjoy most, our required disclaimer. The matters discussed here today contain forward-looking statements that are based on current expectations and involve risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Additional information and key risks are described in the company's filings on forms 8-K, 10-Q and 10-K filed with the U.S. Securities & Exchange Commission. Listeners should note that these statements may be impacted by several factors including changes in the economic and regulatory climate and the business of radio broadcasting in general. Accordingly, the company's actual performance and results may differ materially from those stated or implied herein. Entercom assumes no obligation to publicly update or revise any forward-looking statements.

And with that housekeeping taken care of, I’ll turn it over to David Field, President and Chief Executive Officer.

Good morning and thank you for joining us for our fourth quarter earnings call. We are very pleased to report outstanding record breaking results for the fourth quarter and year 2002.

Net revenues for the quarter increased 22% to $101.9m while our broadcast cash flow grew 31% to a record $46.5m. After-tax cash flow for the quarter hit a record of 64 cents per basic share and free cash flow hit a record 63 cents. Same station revenues grew 13% and same station BCF was up 17%.

For the year, Entercom had record net revenues of $391.3m, an increase of 18% from last year. BCF climbed 26% to a record $165.3 million. Entercom's 2002 after-tax cash flow per share rose to a record $2.20 per basic share, and free cash flow increased to a record $2.15. Entercom's 2002 same station revenues climbed an industry-leading 10%. Outpacing our markets which grew at a rate of 6% for the year. 2002 same station BCF grew 14%.

We congratulate the entire Entercom team on delivering another outstanding Quarter, exceeding expectations, and completing a record year for the company. We continue to gain market share during fourth quarter, completing a year in which Entercom gained 50, that's five, zero basis points of market share from our radio competitors. And margin expanded during the quarter enabling us to improve our BCF margin from 40% last year to 42% for the entire 2002 year.

Here are a few highlights to provide some additional color on our performance. First, our growth during the quarter was very broad based with all markets registering at least mid single digit revenue growth. Our strongest markets were Boston, Norfolk, Buffalo and Kansas City. There has been some speculation that our performance has been fueled by resurgence in the Seattle and Portland markets. This speculation is invalid. While the Seattle and Portland markets have indeed become healthier and grew during the quarter, they continued to lag our overall market averages. We continue to hope for belated improvement in Seattle as a catalyst for future Entercom growth.

Q4 growth came from a broad base of categories, led financial, travel, television, automotive, political, and appliances. National revenues outpaced local, although both were healthy contributors to our performance.

Now as we noted on our last earnings call our Q4 same station growth rate actually understates our performance due to the rescheduling last year of several major league baseball games due to the 9-11 tragedy, which resulted in a significant increase in Q4 ’01 revenues. Adjusting for this shift and additional baseball playoff games last year, our same station revenue during Q4 would have increased 14%.

We continue to achieve great success in developing our brands as highlighted by the recently released fall [Arbitron]. WBKL in Norfolk, an urban adult contemporary station that we just launched in 2001 hit No. 1 with adults 25 to 54 for the first time, culminating in extraordinary run since its debut. WBKL may well be the most successful major market launch in the U.S. in recent years.

WEEI our sports station in Boston hit No. 1 with men 25 to 54, outside of baseball season. KOSI, one of our recent acquisitions in Denver, climbed to No. 1 with women 25-54 for the first time in years, and KISW is now back as the number one station with men 18-49 in Seattle.

Our most recently acquired market, Denver, continues to perform ahead of schedule. The station’s achieved strong performance in the fourth quarter, and a solid momentum as we enter 2003. As we near the one year anniversary of this acquisition, we have dramatically improved the competitive position of this cluster in every key respect. We have substantially enhanced the management team, the brands, and the sales and business practices. We anticipate a strong operating performance from Denver in 2003, and 2004.

Now turning to current market conditions across our markets, business remains strong and demand for radio advertising is healthy. Activity remains brisk, both locally and nationally. Entercom same station revenues in January were up high single digits, and February pacing is even stronger. We have witnessed many of the companies that cut back their marketing as economy slowed in 2000, step up their [inaudible] funding, to fight for market share to support their brands and drive store traffic. These companies simply cannot afford to be silent and seep market share to their competitors and ignore brands and their customers.

Of course we cannot look beyond the likelihood of war in Iraq, and it’s potential implications to our business. There is simply no way to predict how geopolitical events will unfold and how we will all be affected. But for now March pacings are quite healthy. Based on current market conditions we anticipate another excellent quarter with strong revenue and cash flow growth and Steve will give you more color on our guidance in his remarks.

Looking beyond the current crisis, the overall trends are very promising and we believe radio is well positioned to thrive in the future as it gains share from other media.

Once again I'd like to congratulate our team on another sensational quarter. We are now entering our fifth year as a public company and are proud of the track record we have achieved of consistently superior performance. During 2002 we enhanced our competitive position by adding new stations in Denver and Greensboro. We strengthened our balance sheet, we strengthened our brands, and we strengthened our operating team and we delivered industry leading growth.

Entercom competes with a position of great strength with the industry's strongest balance sheet, with market leading clusters in top markets, a portfolio of strong brands and an aggressive, talented team. We will continue to look for attractive opportunities to expand our radio portfolio and we will continue to hold ourselves accountable for outpacing the industry, gaining material revenue share, and delivering superior results to our shareholders.

And with that I'll turn the conversation over to Steven Fisher.

Gee, I kind of hate to follow that performance. That's great. I know many of you first want to talk about our guidance for the first quarter, I'll cover that first and give quick comments on the fourth quarter. First, before I give guidance, a note, a reminder on Regulation FD as mentioned at the beginning of this call where we do provide guidance, we accept no responsibility to update this guidance on a regular basis.

For the first quarter of 2003, we expect to report net revenues of approximately $82m and broadcast cash flow of approximately $30m. This would represent same station revenue growth of approximately 8%, and broadcast cash flow growth of around 11% for the quarter.

We would expect free cash flow of $15.5 million on that assumed operational forecast and that number includes approximately $3.5m of CAPEX for the first quarter as we complete some construction projects and consolidation of our Denver facilities. For the year we would anticipate CAPEX in the range of $9-11m. Earnings per share on this forecast I referred to earlier, would be approximately 17 cents per diluted share.

We currently have a time brokerage agreement with Tribune for one remaining station from our original acquisition. They recently announced a TV acquisition so we would expect to close on this remaining TBA by early in the second quarter. For purposes of your modeling you can extend the TBA through the first quarter, or through second quarter. Frankly it is fairly immaterial. We would use approximately $50m of the remaining proceeds from our existing cash balance to close.

Now, let me give you some highlights for the year 2003, while we're not yet providing full-year guidance, I know several of you would like to have 2002 pro forma by quarter, so get out your pen. Let me first give you the items that we'll be proforma’d for.

First, the full year of 2002, results in our Denver acquisitions. Second, we drop our joint selling agreement with King FM in Seattle in February of last year. Third, we sold KQAM in Wichita in July. Fourth, as you know we decided not to renew the Seattle Mariners baseball agreement upon the conclusion of this season just passed. And last we recently extended our Seattle Seahawks agreement which allows for us to begin selling broadcast time in the year 2003. So we will give you pro forma 2002 results.

So with those five qualifications, here are the numbers. As indicated on the press release, Q1 revenues, $75.9m, Q1 2002 pro forma, $75.9m, expenses $48.9m, broadcast cash flow $27m.

Q2, pro forma revenues, $104.1m, expense, $57.3m, BCF $46.8m.

Q3, $103.2m, expenses, $59.9m, broadcast cash flow $43.8m.

And Q4, pro forma revenues, $103.6m, $57.0m, $46.6m.

Total year 2002 pro forma operating results, $386.8m, $222.6m on expense and $164.2m BCF.

Now, for the fourth quarter, David gave you an excellent run down on the results so I'll not dwell with that. You'll note in our financial table and our earnings release we provided detail summary supporting the quarter’s and yearly ACTF calculations and we beginning this quarter, we’ve begun to include as well, calculations supporting the detail for free cash flow.

On the balance sheet year at year end our pro forma leverage, net of our available cash, on our senior and senior sub debt would have been 2.6, assuming the pro forma close of the remaining Denver transaction I just highlighted earlier.

So in summary, as David said, we're very proud of our team and the results. It was a great year of growth. A record year of financial performance, and we're ready for 2003. Operator, with that in mind we'll open up the phone line for any questions.

At this time we are ready to begin the question and answer session. If you would like to ask a question please press star 1. You will be announced prior to asking your question. If you would like to withdraw your question, press star 2. Once again to ask a question please press star 1. One moment, please.

Tim Wallace of Banc of America. You may ask a question.

Thank you very much. You've answered most of the questions. Good job. In terms of the ratings, can you --

Hello, operator?

One moment, please.

Don't ask those tough questions. We just cut you off. Operator, maybe we move to another questioner and then we can come back to Tim.

Okay, Drew Marcus (ph).

Thanks guys. Following up on Tim's brilliant question, just the type you like. Looking at your 8% pacing in the first quarter, can you give us a sense of how that is relative to how January, February came out?

And second, give us a sense of national versus local.

Well, as we indicated January was up high single digits and February a bit stronger. So I think you can surmise that the 8% number would be a little bit below what is currently on the books for January and February. As to national versus local, they're running both in line with each other, and both very healthy.

Okay. Then finally, on operating expenses, are there any unusual expenses in 2003 that we should be able to look for?

2003, in line with some -- a few format tweaks, we put some money into marketing but nothing substantial that I would anticipate. You'll hear the same noise level I think from all our peer group, which is our benefit costs are up significantly versus prior year. But outside of benefit costs and market, there’s no significant change to our business model.

Normalized 3, 4% growth?

I would say in line with the revenue guidance we're talking about perhaps a little higher.

I'm sorry some if you could restate that Steve.

Implied in our Q1 guidance we had 8% on the revenue side, right now for Q1 about 6% and I would imagine that would be the high water mark for the year that we'll see some of our expenditures that we've moved up to the front trend down as we get to the latter half of the year.

That makes more sense. Thanks a lot.

Our next question comes from Bishop Jean (ph) from Wachovia Securities.

You've done a very good job, is there any significant changes coming in the balance sheet? The coupons that you're shouldering don't seem to be onerous, and the tides, I guess you could debate whether they are dilutive or not dilutive. Is there anything you would like to accomplish in '03 with your balance sheet?

We're a growth company, so I would expect you would see us to deploy our balance to radio assets, number one. Beyond that, this is a great cash free engine and I think we and the board will continue to look outside of any expected growth whether we should or otherwise with our balance sheet to redeem that or pay down our senior debt.

Right. So that's pretty much stay tuned, depending on the situation?

A good summary.

Okay, thank you.

Tim Wallace of Bank of America Securities. You may ask your question.

Can you hear me now?

You’re there.

Drew took all of my questions.

Then we'll go to the next one.

No, no, no, not that easy. This is a question for you Steve just to clarify the NOLs, when would you expect to be a cash taxpayer?

As we indicated on last quarter's conference call we would expect to begin paying cash taxes by the third quarter of this year based on street estimates. Based on street estimates the amount for the year would be less than $10m.

Less than $10m for the year?

Correct.

Then in terms of your guidance in the first quarter which I think is pretty good guidance given that the comparison gets more difficult as we go through the year, how much of that is rate driven and how much of that is ratings performance?

It's predominantly based upon underlying health in the general economy, and our team's ability to execute on our platform to drive revenue market share gains across our market platform. There are a handful of cases where we do have developing and emerging brands, which are bolstering our results to some extent but I think you really should look more to the general execution and leadership of the team as the key reason for our performance growth both historically and in the future.

Okay. Then David, I think you described an acceleration. Did you say that February was stronger than January and March? I didn't get the part about March.

What I said was that March is quite healthy from where we sit today but of course there are world events playing out which could influence that. But we're pleased to report as of now March looks good.

Okay. And does it look as strong as February at this point?

I would say it's in line with our guidance.

Okay. Great, thanks.

Our next question comes from Marc Nabi of Merrill Lynch.

Hi, how you doing? Couple of questions, Steve, just looking at the D&A line, I noticed that between the third and fourth quarters it did drop about $1m. I just want to know what's the cause and what's the new run rate.

Sure, with the acquisition of Denver there were several short term assets that were identified that we amortized, that had a shorter life, advertiser lists, things like that. I would expect that a good base as we go into this year would be about $3.9-4m in depreciation and amortization. That would grow over time as we complete our major CAPEX projects primarily our studio relocation.

Just looking from an Olympic standpoint from '02 to '03 how much of a list do you think it gives if any for Entercom or for the radio industry?

I'm not sure I understand your question.

In other words, NBC obviously it is relatively easy comps from a year before, does it give you 100 basis points, 200 basis points of incremental growth, because you have easy comps in ’02, February of ’02 because advertising dollars went more towards NBC and the Olympics.

It's a small factor. But you know, beyond that I don't think it is a major factor, obviously yeah, our TV as a category is going to be up significantly in February but in the big picture for the overall quarter, it is not the principal driver of the growth rate.

I would note they were not there in January. So --

Exactly. Just wanted to hear maybe a little thoughts on the acquisition front with respect to just radio in general, large market radios and what you're still seeing, are you still seeing a spread between the sellers and buyers and has that maybe shrunk at all?

I don't think it's so much a question of spread between bid and ask, as much as it is a function of folks deciding they want to exit the industry. And that continues to be the challenge for us, is persuading owners and operators to exit. Having said that, we remain confident that over the next year or two as we've noted before, we will being able to make material acquisitions to continue to fuel our growth in the future.

Great, well thanks very much.

Our next question comes from Jason Helfstein from CIBC World Markets.

Thanks. Can we get an update on Denver, how are things going there, when do you expect it to meaningfully add to cash flow, revenue and cash flow growth, maybe let us know what the margin was at the end of '02?

And then can you review any sports contracts you've got coming up for renegotiation in '03 and '04? Thanks.

Well, first, we won't give specific margins by market, as we did indicate on earlier calls, Denver actually given the turnaround nature of the formats that we did and a lot of the changes was dilutive to our overall growth rate in Q2 and Q3. Denver matched our growth in Q4, and David indicated it will be accretive to our overall growth rate in 2003.

These sports contracts, Steve noted we have extended our Seahawks relationship. We have also extended our New Orleans Saints for the next five years, and we have a long term agreement with the Boston Red Sox. The only team that comes up in the near future would be the Kansas City Royals which will expire at the end of the upcoming baseball season.

One quick follow-up, you’d commented that Seattle and Portland hadn't turned and you said what the numbers would be in the quarter without baseball. If you backed out Seattle and Portland out of the full year numbers just to give us an item of how weak those numbers were during the year, did you have that?

The Seattle market of all the Entercom markets is the only market that has a market with negative for the year. Let me caveat, we talked about in the past Q1 for spot revenue only, not including NTR, but for spot revenue in Seattle it was down about 13%, Q2 about 10%, broke even, mid-single digits in Q3, it was mid-single digits in '04 which was less than the overall growth rate.

Thank you.

Kit Spring from Stifel Nicolaus.

Can you tell me whether there is difference between the pacings or the advertising sentiments on the top markets like Philly and Boston versus smaller West Coast markets? Thanks.

I don't think there is a differentiation between the larger and smaller markets per se. I think we're seeing a fairly good mix that's somewhat episodic by market, across the country. As we've already indicated, there is still a slower growth rate in the Pacific northwest markets than in the remainder of the country and, again, we think that in some ways that's a really good news about the Entercom story. Because if you look at the execution in our industry leading performance over the course of '02, and remember we had the Seattle market pulling us back essentially in terms of achieving those results. When in the future Seattle rebounds to a more normalized growth level or has its pop, so to speak, that will only bolster our results further.

Okay. And then do you expect -- there is an article in the Wall Street Journal about advertisers pulling back and TV. How would you speculate that they would pull back or not pull back in radio? You know, does radio make up TV, or do you expect a similar type of pull-back?

Well, you need to look at a couple of factoids to evaluate that. First of all, March pacings are very healthy so advertisers are making decisions today to step up and to grow their spending into March which I think is very positive. I think one of the other things that makes radio a very attractive medium is one we are more cost effective than television and print and some of the other competitors we have. That is attractive to advertisers, and we are a more nimble medium. Because of production time lines it is much easier to move in and out of radio more quickly. I think that also helps radio from a relative standpoint going forward, if we do enter a period of choppy geopolitical circumstances.

Thanks.

Paul Sweeney from Credit Suisse First Boston. You may ask your questions.

Thanks very much. Good morning. First David, on Seattle, you mentioned it was starting to turn a little bit, you mentioned but still not the big growth driver for you. What do you or more importantly what do your salespeople on the street, what are they looking at in Seattle as kind of drivers for that market? What are the signs that they're looking for to see that market coming back? Is it the old Boeing kind of business or is it just tech specific, what do you look for there in Seattle, or any signs right now?

And the second question, this is kind of on the auto category, generally continues to be strong across most media. What are you guys seeing on auto in your pacing data right now? Thanks.

Let me deal with your latter question first. The auto business remains healthy and a growing category for us and certainly has been strong. As we indicated it is one of many categories that is performing well. And you know, that we would expect to see as a continuing growing category into the future.

First, Seattle's concern, it is a tough question because there isn't any way to really pinpoint a point of inflection or any other key data point to indicate a market turn. As Steve noted earlier when he went through some of the data points, Seattle has turned. It is certainly a growing as opposed to shrinking, early part of this year and last couple of years. It is a very healthy, vibrant, diversion economy that is a very attractive place both to do business and to live and to travel to. And so we think it is inevitable that Seattle will rebound and put up some more vibrant market growth. And as to knowing exactly when that will occur, that's a very, very tough thing to predict. But you know, we're hopeful it happens during the year 2003.

Great, thanks very much.

I would just add a color note on automotive. While it is our largest category and I think radio’s overall, there hasn't been a significant change in the overall level of contribution that the growth of Entercom in radio and radio in particular has seen has really been fueled by growth across the category. There is a lot of focus on automotive on the street. I don't want that to cloud the fact that other categories are performing very well.

Thank you.

Michael Russell from Morgan Stanley. You may ask your question.

Thank you. I was wondering David, maybe could talk about NTR, the trends or the amounts that they represent for you? And specifically you had mentioned, maybe about a year ago, doing block time sales to music labels, how that progressed and wondering if that was a component to NTR.

NTR is a relatively small part of our business model, low single digits as a percentage of composition. It is an area that is important because oftentimes it is an area that we can control and influence and grow. As far as bulk sales to music labels, I'm not sure what you're referencing specifically Michael. Can you give me a little more clarification in your question?

Sure, remember the trade publications had covered some things regarding the fact that you might do deals with music labels, to maybe sell them a block of time late at night, that would be labeled as advertising but it was kind of an innovative thing that I believe you had even mentioned you were looking into to do more of.

Right. No, I just wanted to make sure I knew what you were asking. We do have a small program we run in overnights where the labels can buy advertising specifically related to their new releases. And it has been a growing business initiative for us. But it still remains a very small part of our advertising base, certainly well under 1% of our revenues.

And as that grows will that be part of NTR or part of time sales?

That's a good -- I don't remember where we put it. I think it's probably in the time sales.

Okay. And then is there a reason why you talked about Seattle excluding NTR when you talked about its quarterly pattern, is there something about it that makes that an interesting --

No, the only reason I did that Michael is -- good data point, I know there were a stuff in the press last week about Miller Kaplan]. Beginning January 1, 2002, the industry segmented in its Miller Kaplan reporting, or in its market share reporting, spot and nontraditional revenue. We tend to focus on spot because that's the category we can control. That's the category we compete with for advertisers in the marketplace. NTR tend to be binary, either you have a concert or you don’t have a concert. So generally when you talk internally and when we talk to you on the street we're talking about spot revenue. I'm not taking away from the fact that there's good NTR projects out there, but as you know, those can be binary and very difficult to predict when the patterns of those will occur.

Thanks very much.

Victor Miller from Bear, Stearns. You may ask your question.

Good morning. Sweeps dollars, can you talk about how forcefully they're coming back into the marketplace this February versus obviously the Olympics last year.

Secondly, the incremental margin for the year 2002 versus 2001 was about 57 cents. First quarter your guidance is about 49 cents. Not the top of the industry in terms of conversion. Does this spell upside or are there investments you're making in terms of promotion, programming, that we should know about? Is it the mix of NTR, I guess is not that significant but like to know about that.

And lastly just to get back to what you were talking about Steve, what's your opinion in the RAB's new effort to break out the advertising revenues versus non-advertising revenues? Why was that being done, and how will that make Entercom look?

Well, let me address the last question first since I just mentioned it. One, we as the industry collectively push to do that breakout of spot versus NTR. And I think the number one driver was, as more and more of our management teams or sales management teams and frankly as we look at business ourselves, we want to look at spot revenue.

NTR is binary, you do it or you don't. It also moves around, a concert which might have been May this might be July next year so it shifts between quarters. It's not a material part, it's not the material part of our driver, but again it can be somewhat confusing, and looking at individual share performance within a market. So that's why the industry push to as NTR was growing throughout the industry, to segment those two items. Did that answer your question?

Yes.

On that, good.

Let me take the first two parts of your question then Victor. The sweeps business is strong in February, and it is very healthy and obviously significantly ahead of where we were in the year-ago period, both because of the Olympics and also because of the economic circumstances affecting the television industry that last year at this time. Having said that, it is one month, and it is a relatively small component of our overall growth that we're seeing this quarter.

To the margin question, yes, we are making some operating investments in our business model. And you saw that in fourth quarter, where our marketing was up dramatically, and then you're seeing that again in our first quarter expense guidance where we're also increasing marketing fairly significantly. And we think that's a smart thing for us to do in our business model because if we can drive incremental ratings growth in our marketplaces and we can develop new brands and we can nurture existing brands we will get a high return on that investment.

Furthermore it is a spigot we can turn on or off based on our discretion and underlying business. So as you look at our expense numbers over the last couple of quarters, and looking ahead as Steve indicated, I think you'll see that expense growth diminishing as we get into the second half of this year, but I think that you should look at it as a positive because it is not based upon creeping let's say non strategic expenditures but rather, positive investments in our brands.

Thank you.

Richard Rosenstein from Goldman Sachs. You may ask your question.

Thank you. Is it fair to say that sweeps advertising or television advertising as a percent of total in the month of February is in the neighborhood of 4-5%.

And then second, in actually three questions, second is in March, just thinking about your visibility right now, would you say that you have more on the books in terms of inventory sold than in a normal environment or less?

And then finally, in your experience, what sort of margins have NTR revenues generated? Thanks.

I'll address the last two. For television, as a category, again, 2001 I think was an anomaly, because as you know with the Olympics, many TV stations did not advertise during February sweeps. But yes, 4% is a typical run rate for a quarter.

As to NTR margins, those are pretty much across the board. You might do a concert which is great branding event at very low margins or you could do a job fair where you're selling a lot of booths and tickets and stuff like that at high margins. So as indicated earlier, those can be sort of all over the lot. And we have to make a rational choice, is it worth our time and effort, is this a recurring event that we can brand and build into the future, issues like that. David?

As far as [March pacing] are concerned, I think it is a typical amount of inventory that we've utilized and typical amount of billings versus our ultimate forecast.

Perfect, thank you.

Bob Kricheck (ph) of Credit Suisse. You may ask your questions.

Good morning. With some of the newspaper guys starting to report better numbers on advertising also, seeing some of the local cable operators starting to make big roads into advertising, are are your guys in the streets starting to run into them a little more often?

And on a slightly different subject, when you are looking at acquisitions you are planning to be radio centric at this point?

Yes, we will be radio centric, it is what we do, it’s what we do well, And what we’re focused on.

As far as the first question is concerned, you know the cable guys have always been out there, the newspaper guys have always been out there, the television guys have always been out there. There is really nothing new. Without giving you the whole commercial on radio again, when you look at our product advantages vis-à-vis the people we compete with, we still think in the overall marketplace, we're going to see radio continue to gain share going forward.

There may be other categories of course as well, other competitors that gain share. But when you look at the erosion that you're going to see going forward in some of the larger pieces of the advertising pie, particularly newspapers, we do think that you know, we'll be a net gainer for the foreseeable future.

Great, thanks.

Vinton Vickers of J.P. Morgan. You may ask your question.

Good morning. First question, I know that you are not seeing, these are my words, any sort of pull back from advertisers in terms of your March pacings as it relates to the geopolitical world. But is it being manifested in any other way? I mean potentially with more flexible cancellation clauses? Can you just elaborate on that and then have I a couple of follow-ups.

No. Again, we all see the clippings in the newspapers and there's certainly the scuttlebutt we hear as we talk in our world. But our core business model we mains strong and we're not inducing people to advertise by putting any sort of special war packages or war programs in place. We are doing business in the normal way that we have always done business, and obviously, companies are stepping up and placing their business, and proceeding to conduct their business, and you know, life goes on. So I don't see any pull back at this point in time.

Okay. And then on the expense side, you guys have quite a few news talk stations. Any potential impact there in terms of higher expenses in the event of a war?

Well, a lot of the war coverage we would get would be from our network suppliers, whether it would be [Westwood 1] radio network, ABC radio network and the various brands within that. Apart from overtime and incremental staffing which I don't see is material, the quick answer is no. Unlike, say, if you're a television network you might have considerable expenses. You send your teams over to cover the war.

Okay. And then lastly, on the advertising share, I'm sorry, the market share gains, you said 50 basis points. Was that for the full year, David or was that for the quarter?

It was for the full year.

What was it for the quarter?

We were up in the majority of our markets. I don't have that in front of me. It was 50 basis points for the year.

I'll call you on that offline. Thank you.

Alissa Goldwasser.

You gave some pretty detailed guidance for operating expenses. Can you talk about corporate expenses in 2003, given what you mentioned before, higher benefits across the board in all industries, what you expect is a run rate there?

Can you talk a little bit about Seattle rating specifically [Cairo], the 12-plus drop sequentially in year-over-year, was that expected and if so can you remind us why.

And then finally, a question related to acquisitions, your stations right now are mostly in markets 1 through 100 concentrated in the top 70. Can you talk about where your interest is market sides going forward?

I apologize, it was hard to hear your first question. I got your second, if you could give me your first one first.

Run rate for corporate expenses in '03.

I'll do the last one first one, run rate for corporate expense modeling out for the Year, apart from any change once we get beyond here which we don't anticipate currently, would be in the range of $3.5-3.6m for the quarter. Roughly. I haven't refined it beyond that but I think that will get you pretty close.

And then as far as far as acquisitions are concerned, we remain focused on top 50 to top 75 markets. And that's what we're looking in.

And then [Cairo]?

That was the question I didn't hear.

I'm sorry, that was the second question. The 12-plus number was 7.0 in the fall book versus 9.9 in the summer and 9.1 in the previous fall. Did that have to do with Mariners?

Yeah, Remember last year the Mariners were in the playoff hunt all the way to the American league championship series. This year they fizzled and basically were eliminated in August, and that's the difference.

Got it, thank you.

David Bank of RBC. You may ask your question.

Dave and Steve, I was wondering, forgetting about advertiser behavior, from their side what they may or may not be doing, pulling back, from what you can control and from what your experience was maybe in the 91 gulf war, what do you think, and radio is different from TV, I'm imagining, what's going to happen in the event of an invasion. How much commercial air time do you think you'll have to pull in those first couple of days, in the event of an invasion?

Again, it depends upon the facts and circumstances as they present themselves and how much information is forthcoming and the nature of that information. And you know, our local markets are all going to make their local call, based upon what they deem to be appropriate, given their format and given world events.

It's really hard for us to speculate. I would tell you there's a general rule, while our news stations will of course be covering this thing very extensively, our music stations will probably after the initial, let's say, shock, if you will, of the first shots, we will be returning to more normalized programming on those radio stations. And even on our news talk stations I would suspect after the first day or two or what have you, we'll also be resuming somewhat normalized coverage, and making good some of the advertising that may have gotten spilled during the initial volley.

Is it fair to say, again, from your perspective, not so much the advertisers, but that it probably won't be that disruptive to the programming that you would be showing, say, after the first couple of days?

Well, certainly, our hope, and this is where we begin to evolve into, beyond the scope of this conversation, but our hope is that this is a war that goes well and we achieve our national goals, and that it happens in an expedient fashion. But again we don't know what's going to happen and therefore all we can do is put contingency plans in place to make sure we're prepared for any reasonable eventuality.

Thanks guys.

Next question from Bill Meyers (ph) from Lehman Brothers.

Few quick once, can you update us on the plan -- diversification plan. It looks like the 1 million share plan is about 90% complete.

That's correct.

That's confirmed. Moving right ahead in terms of the cash balance, aside from the $50 the million needed to close on the TBA, what kind of balance would you normally keep on hand?

Typically we would strive for zero. Unfortunately we keep accumulating cash. So not to be flip, we have banked that cash, you will see, in a revolving credit facility. We've paid that down and our term loan agreements we're amortizing that as well.

In the interim period, rather than pay off our term loan, we're trying to keep that fresh, if you will. So frankly, we would target ultimately a zero balance and have some degree of leverage to maximize equity returns. I think we're in an in-between period as we're seeking to close on the Denver transaction and contemplating other transactions that that we would hope would occur in 2003.

Just on the political side, how much political did you receive during quarter, would it be somewhere around 2% of total revenues, would that be a fair place to start?

For the quarter, we were about $1.7m, Bill, so your guess is pretty good.

Great, thanks very much.

Your next question comes from Jim Goss from Barrington Research.

I was wondering, Steve, if you could characterize your current station of the portfolio, in terms of the mix of mature properties versus properties that have margin improvement potential, to the extent -- and look at what the margins would be on mature properties versus the average you had last year of BCF margin of 42.2% and 42.5% pro forma?

It's a fair question, Jim and let me do this. In past conferences, we've given a little more of that, and we're not prepared to go that on this call today. But let me give a couple color points which I this might be helpful to you. I'm not trying to duck it.

First, we believe there is margin positions in all our stations and believe it strongly. As I look back over 2002, brand by brand, market by market we can say that. I will tell you that Sinclair, as we’ve indicated in the past, there was an acquisition done, what people thought was mature properties. We completed the acquisition of those at the beginning of the year 2000. And we indicated on earlier calls that in 2001, which was as you know a down year for the radio economy, Sinclair as a collective group of assets, had positive revenue on broadcast cash flow as we effected our changes and did what we do best.

I would note that in the year 2002, the Sinclair group of assets, if you just take that group of assets in the year 2002, outperformed the company as a whole. We indicated on Denver that it was dilutive to our growth rates in Q2 and Q3 but was pretty much in line with our overall Entercom growth rates in Q4 and we believe that will accelerate into next year. As well we talked about recent acquisitions in Wichita and Madison as those have performed following those acquisitions in year 2000.

While I'm not on this call I don't have all the data points that you specifically asked for, I think that gives you some color, that we can do an acquisition and where we believe we see significant value and have that fuel growth over a two and three-year period. Acquisition by acquisition, each one's different. But I think those data points show collectively for the 40 stations we acquired with Sinclair, the four stations we acquired in Denver, the Wichita Madison acquisitions, that's been what we've done.

And do you think the ultimate target will just depend on a market by market basis, where larger markets may be somewhat north of 50%, some of the smaller ones maybe not?

I would differ to the extent that some of our highest margin markets, are some of our smaller. A lot as opposed to market size might depend on format, with certain formats achieving certain targeted margin rates versus others. News, or news sports stations are by nature going to have a lower margin. Also depends on what your competitive situation is, what you have to spend on product and marketing. So I don't think I can answer that generically.

Fair enough, couple of other less detailed things. Regulatory relief, I'm not really expecting any in radio but I'm wondering what your viewpoints are on that.

And then what is the tax rate assumption for the year?

And do you have any general cash tax rate type of assumption that we might impute into a free cash flow model going forward?

I'll answer the last one first. As indicated we currently do not [play] taxes and I indicated earlier we would expect to begin paying taxes in Q3-Q4. The combined total combined for the two quarter would be less than $10 million. Our tax rate effectively, is less than 40%, we guide to that and that would be the GAAP tax rate that we would use.

On the regular regulatory front, you are familiar with the hearings held by senator McCain in Washington a week or two ago. We believe it was a healthy discourse in which some of the misunderstandings and some of the competitive issues were aired out and we do not foresee any meaningful changes going forward in the form of re-regulation of the industry.

Thank you.

Next question comes from Joe Garner (ph) from Emerald Asset Management.

Good morning, there was a good bit of discussion on Seattle, I was curious, currently what is Seattle's percentage of total revenues?

About 20%.

Approximately 20%. And Steve, do you have sort of the top two or three markets just to get a sense of what they account for as percentage of revenues?

We haven't given specifics beyond that, but if you look at BIA, I think you’ll see that beyond Seattle, Boston’s about 15% and then approximately at 10% according to BIA would be a group of clusters that would include Denver, Kansas City and Sacramento, each about 10%. But that gives you a rank order, Seattle, Boston and a grouping of Kansas City Denver and Sacramento. And Portland, correct.

How did Boston perform, what kind of trends have you been seeing there?

Boston consistently through the year, you've heard us say Boston as a radio market had chugged ahead. Was negative first quarter, positive second, third, fourth quarter pretty much in line with what I think would be the industry average.

I'd listed it as one of the markets which led performance for us in the quarter.

What I gave was overall radio market performance in Boston.

Okay. And you may have touched on this earlier but local versus national advertising how was that in fourth quarter and how do you see those two areas going forward?

The fourth quarter national -- they're both very strong let me say that. Fourth quarter national outpaced local. First quarter to date we're seeing them roughly in tandem.

Okay. Can you talk about pricing levels particularly as you look back to where you were in the dot-com era, 1999 and 2000, has the pricing got back to that level?

The difference is the variance within our pricing model. If you look back at 2000 and 1999, we had an anomalous situation, where our traditional advertisers were paying a certain number and we had this crowding out effect as the dot coms and similar companies were coming in and basically paying any price to clear. And so our business model had an unsustainable discrepancy within it.

Today, we're seeing a much healthier model where the variance between our top-paying customers and our average customers is considerably less, and the overall average prices are stronger than they were back in 2000.

And I would also point out that related to that, our 2002 performance as a company was better than 2000. We've already moved beyond the, you know the problems of the past as we noted earlier in record-breaking territory.

Right. The timing, you talked about pacings earlier, the timing of when the ad orders are coming in. Do you see it getting stronger or the same or what do you see there?

We've commented before that we've seen the advance times increasing over the last few quarters, as we've evolved from a buyer's market into a healthier marketplace. We have read reports that some are suggesting that that has tightened again. We have seen no evidence of that.

Okay. Steve, in the guidance for Q1, you reference free cash flow in the press release. Are you shifting over to free cash flow from ATCF, will you continue to report in ATCF?

I think for the foreseeable future we’ll report both, we will let the market decide, everyone is still grappling with this ATCF, EPS -- you tell me, and everyone different firms and different institutional holders have different -- we'll let the institution to decide. Do you have a preference?

Just for an apples to apples basis, ATCF, what would be your guidance for Q1?

Q1 ACTF would be around 41 cents per share diluted on the business model we articulated.

Okay. Final question you might have said this earlier but I may have missed it. What was, for the entire year the same station growth revenue in BCF?

We did announce that and that was 10% same station revenue growth for the entire year, and 14% cash flow growth for the same period.

Thank you.

Our next question comes from Leland Westerfield (ph) from UBS Warburg.

Three questions. One question pretty quick, why don't we wipe it away, CAPEX for 2003, any special projects we should keep in mind?

As I think it's been our history, we've done about $1.7 billion over the last [five] years. The majority of our CAPEX -- acquisitions.

$1.7 billion of acquisitions. Typically in acquisitions we move aggressively to consolidate under one facility. And as some of those where we've acquired properties they've been substandard so we're relocating a facility in Greenville. We are just completed for paying for locations in New Orleans, Rochester, more importantly in Denver we'll relocate to one new facility that we hope to be completed by the second quarter. So my point would be the majority of our guidance for 9-11 is project as opposed to quote unquote ongoing maintenance. If your they question is, what is the maintenance number, it’s something less than 9-11, which we have not tried to articulate, for the computers, broadcast equipment, transmitters, et cetera.

Cost management during 2003, to the extent that costs are rising across the landscape from controllable as well as some things beyond control, health care and benefits, to what extent are those rising and is there a way that we can quantify that in our modeling?

There is not a lot can do there, and frankly I think you've seen that across a wide range of companies, I've noted that over the last couple of quarters. We'll be up 25% in the first quarter. Some of that is cycling up to where a lot of our benefit plans come around for a new if you will rate cycle in the middle of the summer so Q1-Q2 will have if you will an extraordinarily negative impact from that cycling. Hopefully we make our bounces and do our research and marketing up a little bit from that. Events, do we do more events, less events, we may have a few more events in the first half, we'll just have to see and that would obviously impact both costs and revenues.

And finally Fisher, to the extent that Fisher were to change hands, how do you see the competitive landscape shifting in Seattle and Portland?

To the extent that Fisher were going to be selling radio assets in Seattle and Portland, obviously we would have interest in those and whether or not we would can work out a deal or not I guess we would have to see. But beyond that I don't think it is appropriate to speculate.

Quite fair, gentlemen, thank you very much.

Michael Weisburg (ph) from ING. You may ask your questions.

They have been answered. Thank you.

At this time I don't see any further questions.

Very well. Thank you for joining the call. I want to congratulate our team for a terrific quarter. Thanks for your interest this morning. We'll look forward to reporting to you again in another quarter.