Audacy Inc (AUD) 2003 Q4 法說會逐字稿

Good morning, and welcome to Entercom's fourth quarter earnings release conference call. All participants will be able to listen-only until the question and answer session of the call. This conference is being recorded. Joining us today will be David Field, President and Chief Executive Officer, Steve Fisher, Executive Vice President and Chief Financial Officer. Mr. Fisher, you may begin.

Thank you, operator and thank you, everybody, for joining us today, Monday morning for our quarterly conference call.

Before we begin and I turn it over to David Field, let me give you the obligatory headlines. The matters we will be discussing here today contain certain forward-looking statements that are based on current expectations and involve certain 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 form 8-K, 10-Q and 10-K with the U.S. Securities and Exchange Commission.

Listeners should note that these statements may be impacted by several factors including changes in the economic and regulatory climate and the general business of radio broadcasting. 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.

During this call, we may reference certain non-GAAP financial measures. We refer you to our company's website at www.entercom.com for a presentation of the most directly comparable GAAP financial measures and a reconciliation of GAAP to each of these non-GAAP financial measures. In addition, our website includes useful tables of prior period financial information adjusted for acquisitions and divestitures.

With that, I turn it over to David Field, President and Chief Executive Officer.

Thanks, Steve. Good morning and thank you, everyone, for joining us for Entercom's fourth quarter of 2003 annual earnings earnings call.

For Q4, Entercom posted record operating results in net revenues, EPS and free cash flow. The quarter's EPS increased by 14% to 42 cents per diluted share from 37 cents in the prior year, exceeding our earlier guidance. Our same station revenues were flattish, down by less than 1% with revenues for the quarter of $104.6 million and station operating income of $44.8 million. Our performance was led by strong growth in Boston, Buffalo, New Orleans and Sacramento.

For the full year 2003, we achieved record operating results across all metrics. Our revenue was up 3% for the year while operating income increased 2%. EPS was up by 24% to $1.39 and we grew our free cash flow by 10%. Clearly, it is impossible to be excited about a flat quarter and we are not happy about it. However, there is much to be pleased about when you peel back the onion.

First, there is a meaningful bifurcation between our local and national revenue performance. Local sales, which we control and which constitute about 80% of our revenues, performed fairly well. We achieved low single digit local revenue growth for the quarter on a same station basis. In addition, we achieved healthy gains in local market revenue share.

On the other hand, naturally, our political advertising was down substantially from the prior election year. What was disappointing, however, was our national sales performance. National revenues were down mid-single digits and we lost national revenue share. We are concerned about this development, but are pleased at steps being taken at Interep, our national rep firm, to address the problems and improve their performance.

In addition to our positive local sales performance, a second bright light during second quarter was our strong success with our station brand development efforts. We had excellent rating results in the recently released fall Arbitron and we also made substantial progress in developing the new brands we have launched over the past year. We had experienced a bit of flippage at certain stations in summer ratings but came roaring back in the fall.

Here are some ratings highlights: KOSI, our flagship station in Denver, posted one of its best books in many years, the station was number one with both adults and women, 25 to 54. In Norfolk, Entercom stations ranked first, second and third in the fall Arbitron with women, 25 to 54. WEEI in Boston continues to be America's highest rated sports station, ranking first among men 25 to 54. The station also surged to second among adults 25 to 54, an astonishing achievement in this male leaning format. In all, over 30 Entercom stations ranked first or second among 18 to 34 or 25 to 54 year old demographics in their markets.

Perhaps most gratifying, a few stations that have faced some recent ratings pressures came back strong. KYRO, our Seattle news talk franchise, had an outstanding ratings book, scoring first among all persons in the market and second among adults and men 25 to 54. This is the first ratings period after the baseball season and our decisive victory underscores the fact that the station remains the market leader.

In Portland, KGO-WEN has had a couple of off books after facing a new competitor, bounced back strongly with an outstanding performance landing first among both men and adults 25 to 54. We also achieved considerable success with some of our newer brands. WBKL, our urban AC station in Norfolk launched three years ago, finished first among both adults and women 25 to 54. KQMT, the Mountain in Denver, is now finishing in the top 4 in both adults and men 25 to 54 for three straight books. These are unequivocally two of the most successful format launches in America in recent years and both stations are now firmly entrenched as top tier stations in their markets, a considerable improvement over their tertiary positions when they were acquired.

Our new sports station in Kansas City launched in mid September and achieved an excellent fall book, debuting number 5 in the market with men, including a third place finish in mornings and second in afternoons. All despite the fact that half of our key sports talk hosts were not contractually available to join us until near the end of the ratings period. We were also quite pleased with the debut of our long time Kansas City AM country station, WGAF, as it moved to the FM band. We successfully transitioned the station's audience to its new location and have already begun to take additional share away from our FM country competitors

In Seattle, KTTH, our new talk station that debuted earlier in the year, continued to grow impressively. This is despite the fact that, as luck would have it, Rush Limbaugh joined our line up in the fall on the very day when he announced his extended leave for rehab. With Rush now back on the air and all the pieces in place, we expect to build on his loyal audience and make K TT H a solid contributor to our growth in 2004. All in all,a very good fall book ratings book for Entercom.

Another positive achievement during the quarter was our continuing enhancement of our competitive position to improvements in our management team and our best practices. We continue to add new A players to our team and believe that our new focused business development efforts will yield significant incremental revenues, particularly in Q2 and beyond.

Now, a final comment on Q4, it is important to note that the challenges that we face during the quarter and most of the year were due to the challenging advertising climate that affected all ad based media and not, of course, just radio. This was exacerbated by particular weakness in our largest market during the quarter. Seattle, Boston and Denver, our three largest markets, suffered mid to high single digit market revenue declines during fourth quarter, again, market revenue declines. This certainly made our challenge greater during the quarter and put our flattish revenue performance, I think in a truer and more accurate context.

In sum, I believe we did a very good job of competing under adverse circumstances, scoring gains in local sales and ratings, while keeping our eyes focused on continuous improvement essential to our future performance. Turning ahead, we anticipate revenue growth of between 3 and 5% for first quarter. Of course, first quarter is our toughest period of comparison with 2003, as Entercom achieved double digit organic revenue growth in January and February of 2003 in front of the Iraqi war. Nonetheless, I would be disingenuous if I didn't share a bit of disappointment that we were not experiencing a stronger quarter as an industry. Business conditions aren't bad for first quarter but they aren't terrific, either.

More encouraging are the underlying economics and political factors that give us considerable optimism about Q2 in the second half of 2004. Furthermore, our own independent conversations with advertisers indicate a more positive trend in expectations for advertising outlays for the remainder of this year.

Now, each of us on the call have spent a considerable amount of time attempting to forecast the point of inflection in industry performance. Sometimes this can be a frustrating exercise. I think the important point to be made is that business has improved since Q4 and we have every reason to believe that as long as the economy doesn't go backwards, we will see accelerating growth in radio in the near future.

The simple truth is that nothing fundamental has changed to negatively impact our business model. Therefore, we should expect the industry to thrive as general advertising improves. Radio is one of only two universal reach media in the United States and continues to be a low cost provider of audiences. We control roughly 40% of consumers media time and yet only 8% of ad dollars, our upside remains very attractive.

Historically, we have not done a terrific job as an industry in exploiting that untapped potential. Now, internal industry developments may well be a positive catalyst for future growth. The industry is beginning to take decisive and unprecedented steps to grow radio share of ad dollars. The RAB, the Radio Advertising Bureau, is refocusing its priorities and will be dramatically increasing its efforts to market the medium, an effort that has been glaringly under capitalized in the past. In addition, The Radio Advertising Effectiveness Lab, or R.A.E.L., which was launch a couple of years ago, is accelerating its work in providing targeted research, demonstrating the effectiveness of radio advertising.

At Entercom, we have taken steps to enhance our business development efforts, aimed at generating more ad dollars into radio from other media. Collectively, these efforts are broader, deeper and more substantive than any similar industry development efforts in the past. While they are still at an embryonic stage, they are an unambiguously positive trend for the industry's future.

In conclusion, we remain committed at Entercom to focusing on the things we do to provide superior results; recruiting and developing outstanding leaders, continuously improving our sales practices and creatively building and developing our brands. We are vigilantly committed to building sustainable competitive advantages and capabilities to enable us to outperform our peer group and take full advantage of the opportunities we believe exist to generate additional revenues at the expense of other ad media. We will continue to hold ourselves accountable for outpacing the industry and delivering superior results for our shareholders.

Thanks for your time and attention and now, I'll ask Steve to provide some additional guidance.

Okay, first, I'll address our guidance for the first quarter of 2004, then briefly summarize fourth quarter financial highlights. Again, a note 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 and I also refer you to our company website for GAAP reconciliation and a schedule outlining our 2003 same station results by quarter adjusted for all acquisitions and divestitures. As David indicated earlier, we are guiding first quarter revenues to increase on the same station basis between 3 and 5% and we're forecasting our expenses to be up about 3% for the first quarter. This should allow us to report station operating income of between 3 and 7% for the first quarter and for us to report earnings per share on a diluted basis between 21 and 23 cents for the first quarter.

Also, I would note for those of you doing models effective January 1, we're adjusting our effective book tax rate to 38%, that's 38.0, 38%. Now, you can expect to see some quarterly variability around this number, based on quarterly tax events but we believe for the year overall, 38% is the correct number. Our cap ex guidance for the year that we'll be reporting in our 10-K will be between 10 and $12 million for the year.

As indicated on prior conference calls, given the profitability of Entercom's business model, we did move to tax payer status in the fourth quarter as we covered with you earlier with cash payments of $2.8 million. For your models for the full year, 2004, you should expect to see us pay between 13 and 15% of our reported pretax income in cash taxes based on current street estimates. So on current street estimates for the full year 2004, this would represent between 18 and $20 million in cash tax payments for the year. Hopefully, that will give you a range to help on you your free cash flow models.

Now on the fourth quarter, again, it was a record quarter for Entercom. I just would like to highlight a couple things before we go to questions; on expense management, as we indicated at the first half of the year, we planned our expenses to be higher in the first half than the second half and indeed, in the second half of the year, our same station expenses were up by less than 1% and that included format changes demonstrating a continued superior expense management for the company.

We did have time brokerage fee of approximately $500,000 for the quarter with Fisher Broadcasting. These stations did not close until December 17th, which was later than what we guided to, you to earlier resulting in higher TBA fees for the quarter. At this point, we have no further time brokerage agreements outstanding.

Also, a note, in the fourth quarter we booked a gain of $2.3 million from the sale of an AM radio station in Portland, Oregon and the sale of excess land at one of our transmitter facilities. Cap ex for the quarter was $1.7 million, $13.7 million for the full year, much of which was facility projects related to acquisition integration.

Just a few headlines for the year, revenues up 3%, same station operating income up 2%, as David indicated earlier, free cash flow up 10%, and increased earnings per share by 24%.

On our balance sheet, again, industry leading, here's an example: We started the year with leverage of about 2.9 times. During the year, we paid cash for our acquisitions in Portland and Sacramento. We redeemed half our convertible preferred, converting the other half to equity and paid down debt so that at year end, we're less than 2.5 times. This is a very tangible demonstration of the free cash flow generation of our business model and why we're excited about Entercom.

With that, with those brief summaries, we'll go to your questions. Operator, if you can open up the phone lines, please.

Thank you, at this time we are ready to being the question and answer session. If you would like to ask a question, please press star one. You will be announced prior to asking your question. To withdraw your question, you may press star two. Once again, to ask a question, please press star one. Our first question comes from Victor Miller of Bear Stearns.

Good morning. Thanks for taking the question. I have two. Boston, Seattle and Denver are roughly 39% of your revenue. They have been markets that have not been that robust but it seems as though all three of them seem to have a little bit of better momentum, could you talk about what you're seeing there?

And secondly, the expense growth that you talked about, Steve, you said 3% for the first quarter, but you also mentioned that the first half was higher expense growth than the second half. Should we expect, then, that the expenses for the second half of the year of '04 should accelerate relative to that 3% number, is that pretty consistent for the year? Thanks.

Victor, point of clarification. The first half/second half was reference to 2003. The 3% guidance for Q1, that's probably, you know, as we look at it and planned out the year, we don't see any lumpy quarters, if you will. I would note that that 3% we're lapping our format changes in Kansas City, for instance, which will show higher there year over year. So 3% overall and we don't expect any lumpiness as we go through the quarters in 2004.

That 3% number is pretty good for the year?

I'm-- we're not giving guidance for the year, all I would say is that we don't see any lumpy quarters for the year, Victor.

Okay. Thanks.

Victor, turning to the first part of your question, yeah, when 40% of your business is markets down mid to high single digits, that's a pretty tough headwind and that's why are, under the circumstances, pretty pleased with what we posted in fourth quarter. I guess the good news is that in first quarter we're seeing Boston and Seattle improving significantly from the climate that existed in fourth quarter. I guess the unfortunate news is that Denver is still pretty much in the same soup.

Does Denver, we have seem some recent news saying March seems to be a lot better than January and February look pretty bad again but March and April seem to be turning there?

There's no question that as you look out to Q2 in March and so on, there does seem to be some momentum there. Clearly, January was the worst month in Denver, February a little better, March considerably better, so yes, the trend is positively better there as well.

Thank you for taking the question.

Paul Sweeney of Credit Swiss First Boston.

Thanks very much. Good morning. Two questions, first, just on, generally on first quarter pacings and just business trends. Given how the first quarter developed last year with some of the uncertainty leading up to the war, then the war itself, are you in your pacing seeing perhaps some acceleration in your February business as we kind of get towards the end of the month here and then secondarily, are you-- is March materially better than the first couple months of the quarter as I guess the comparisons would suggest?

And then just a follow-up to that, if you are seeing some accelerations throughout the quarter, David, you mentioned that things, first quarter looks better to you than the fourth quarter. What gives you confidence to say that and in the context of, are you really seeing some underlying improvement in your business or is it just the comparison? Thanks.

If you-- I think the best way to look at it is this: Right now, it's somewhat difficult to be talking about pacings because of the disruptive effects of the events of the prior year which, of course, will distort any comparison. As we look at our first quarter pacings, we're looking at January and February being the two months that will be-- let me refrain that. March will be the best month of the quarter for us and we have reasonable confidence on that based upon the comparison to the prior year, as I mentioned before. I don't think we're seeing accelerations in first quarter as much as we are seeing, as we will see here the benefit of comparisons with the prior year.

Okay. So as you think about some of your underlying trends, whether it be sell outs or pricing or visibility or advertisers coming back into the medium and perhaps spending a little bit more, is there anything underlying that once you perhaps get past some of these war comparisons that there is, in fact, underlying strength in the business?

Yeah, I mean, I think there's a lot of very good anecdotal evidence and I think when you step back and look big picture, I think there are a lot of positive indicators for the remainder of the year, we touched on some of those in the call and certainly others have focused on those in their calls and there's a lot of--there is good stuff in the general economic, in the general press that we are confident about for the remainder of the year. You look at where the economy's going in this country and I guess if you have any confidence that we are going to see continued growth, we expect for there to be acceleration going forward here in our underlying demand.

Great. Thank you.

Drew Marcus of Deutsche Bank. You may ask your question.

Yes, good morning. Two things. One, can you talk about categories as you mentioned, we've gone from national driving growth to now a more healthier trend of local driving growth. Can you talk about which categories have shifted along those lines, and then also, David, Entercom is an innovative efforted targeting newspaper advertisers. Can you give us an update on that?

Sure. Category wise, just a couple of categories that were particularly strong in fourth quarter were the insurance, home improvement, telecom, automotive, those are the first four that come to mind but if you look at our book of business, I think you find quite a few others that were strong as well. Drew, you mentioned our, our initiative, new business initiative. We have spent quite a bit of time putting together a program which we call "shred" to target large advertisers and bring greater shares of dollars into radio because candidly, it's an issue that we spend a lot of time jawboning as an industry over the years and it's not an issue that we have spent as much time on actually putting tools and practices into play that enable us to capitalize on that opportunity. We took it upon ourselves over the past few months to do just that and we're seeing the early benefit of that as we just roll this program out in the first quarter.

Okay. Thank you.

Jonathan Jacobi of Banc of America Securities. You may ask your question.

Hi. Good morning. Just following up on Drew's question, in the first quarter, what are you seeing in terms of local versus national trends and maybe a little bit deeper on what Paul was asking, are you seeing any pickup in pricing here in the first quarter or is it sort of flattish versus last year?

Local/national, we're seeing local a little bit stronger than national at this point in time and I think the trend lines show that local is doing better than national as we track it over some time. As far as pricing is concerned, I think it's a mixed bag. I think that particularly as we look at April and beyond, I think there is some acceleration in pricing but it's a little bit early, candidly, to begin to discuss that because of course we don't have a substantial chunk of business on the books for the rest of the year. I know that at Entercom, we have been fairly aggressive in pushing higher rates going forward and have been willing to stick our ground because of our confidence in where the year is going.

Do you think your competitors are doing the same thing?

I think it's too early to tell for the remainder of the year, again, because of the fact that there is a bulk of business has not been placed yet.

Thank you.

Tim Wallace of UBS, you may ask your question.

Thank you. Could you tell us, did you end January positive and do you think you'll end February positive? And then, can you remind us what the year over year comps will be for March and April? Thanks.

Yes, yes, and then the last question was?

What your comps for March and April will be?

Do we have those, Steve?

I believe-- hang on, Tim. Let me check. Prior year March last year, as David indicated, I think we were generally strong January-February, up double digits, March, we ended up 3, I think the industry was down 2 and that's in '03. I have April at 4% and, again, I'm talking April 2003

Right. Okay. And then I had heard from some operators that national, in February you had fallen off, you know, dramatically in the past couple of weeks, is that a trend that you've seen in any of your markets?

I am not sure I would use the term dramatically to characterize it but I would say certainly, there has been some slippage in national business from March but I would want to clarify that is not necessarily an indication that it is slowing down for second quarter. I think that we're seeing second quarter business just beginning to come out and I wouldn't draw any conclusions from the fact that March slowed down a bit nationally.

What were the categories, if you can remember that, were off?

Don't know.

Thanks a lot.

Mark Mabee of Merrill Lynch, you may ask your question.

Good morning. One question, could you talk a little David any about the acquisition landscape. I guess, you know, what, as Steve says, as you bring down your leverage ratio pretty substantially, just want to see what the market's like now and also, you know, with all this stuff that's going on with wireless, the acquisition landscape there heating up, how much does that represent of your revenue on a category basis?

We will deal with those in order. The M&A landscape right now I think is interesting as it always is. I think that it remains to be seen, you know, what, if anything, the sound bites coming out of the Comcast/Disney situation may do to the mindset of the various players in our industry if they perceive that there may be some forward progress there in terms of industry consolidation. We will have to see. I think that, you know, we will continue to remain optimistic that over the course of the next year or so we will be able to take meaningful steps forward to grow our platform and emerge as a strong number 3 player in the business but, as we said before and we said again, and frankly, I think our past practice demonstrates, we're going to do it in a prudent basis and if it doesn't make sense for us to reach to do acquisitions that are not in the best interest of our shareholders.

To the question of the wireless category, we, of course, know the AT&T wireless situation, there will be some consolidation there, you know, there's still five major players in that business. I still think it will be ruthlessly competitive and I still think we'll have a-- it will remain an important category for us as we continue to see important changes in the way telecommunication services are delivered to consumers.

Okay, just one follow-up question, I just want to make sure, did you say, is your national business, are you starting to take some share back very recently, or has it still been, obviously you're not happy with your performance, but are you starting to see a slight turn?

I think it's probably a little early to tell. I mean I think we're seeing positive changes in some practices. They have made a couple of important, one important staff addition which we think will help. I don't think it will get worse but I think, you know, we'll see I think some gradual improvement here and then I think, you know, as we get a little bit into the year I think we'll see much more dramatic turns.

David, one last thing, what was the cause of the, of your so-called national under performance, when you analyzed it?

I'm not sure I understand the question. Well, you said you lost share on a national advertising basis but what was the reason that that had occurred relative to some of your other competitors? I think just from an execution standpoint, you know, and I don't want to throw us too far under the bus, I probably have already done that here on this call, to some extent, but I think we're not happy with their execution in the fourth quarter and, you know, I think I've said all I want to say on that other than our expectation is and I think, to be fair, Interep is working closely with us at implementing change and positive steps that will, we think put us in a position to have great national performance here in the not too distant future.

Okay. Great. Thank you.

Bill Meyers of Lehman Brothers, you may ask your question.

Thanks. Just a couple quick questions. David, if you could remind us how much business was canceled in and around the war in the first quarter of last year and also, just what your fourth quarter political business was compare to last year? And also, just sort of, I am sorry, just the obligatory question in terms of the balance sheet, with leverage down to two and a half times, obviously going down lower, if you could just prioritize acquisitions vis-a-vis repurchase programs and dividends?

What was your second question again?

The second question relates to the political revenues you received in the fourth quarter of last year?

Yeah, okay, Steve will give you that. Let me give you the first, as far as cancellations were concerned, it wasn't so much that we had massive cancellations, it was more that just new business sort of dried up and advertisers basically said we're now on hold, we want to see what the world looks like and as you may recall, as we went into second quarter last year, there was a flurry of thought that GTV was actually gaining at the expense of radio but was really happening was that advertisers had made commitments in TV. They didn't necessarily pull them, but they decided to hold their radio powders dry as they waited for the war to play out and that's what ended up impacting our business negatively during that period. So, I think that's important to recall as we begin to enter that comparative time of the year.

As far as our leverage is concerned, you know, our first, second and third priorities are to grow our company through prudent acquisitions that we think add shareholder value. We won't rule out a share repurchase or a dividend at some point in the future if we think that's the best use of our shareholders, of our free cash flow for our shareholders but that's certainly not something we see on the horizon at this time.

And, Bill, on political, we had about 500,000 in political in the year 2003 fourth quarter.

Thank you.

Kit Spring of Stifel Nicolaus, you may ask your question.

Hi, guys. Can you give us what the proforma quarters revenues and cash flow were for '03 and if it's on your website, just let me know. Also, any update on competition from local cable or the internet? That's it.

As we have said on the call, all our quarterly financial information adjusted for same station is posted on the website, www.entercom.com, under the investor tab.

As far as competition from internet and cable, you know, internet, I've not heard anybody ever even whisper that there's any competition coming from the internet locally. As far as cable is concerned, they are a factor in the market just like newspaper and television and direct mail and all the other media that we compete with. You know, again, as we've said before, I think when you really step back and look at the landscape, you've got businesses like newspaper and TV that are in decline and control that the bulk of the dollars in the market, we think that cable probably-- we don't know enough about it to speak intelligently about it, but I would say that, you know, cable is likely to increase their share over time, but we don't see that being at the expense of radio in any way shape or form. We think our future is very bright.

As we discussed, when you look at us being a low cost provider and being only one of two medias with universal reach, plus all the other tangible benefits that come from marketing on radio, we think we will continue to be a share growth story for years to come, irregardless of whether cable also happens to be a share growth story.

Thank you.

Michael Russell of Morgan Stanley, you may ask your question.

Thank you. My first question is about sports, just wanted to drill down, I guess, on the lack of lumpiness that you see on the expense side for 2004, Steve. I think I recall Kansas City Royals contract expired in the second quarter of '03? Is that part of the lack of lumpiness, or what lumpiness would come from that and the Seattle Seahawks, we saw you announced, I guess, on February 13th, that you're going to be selling some additional advertising. Is there any impact there, how should we think about that as a revenue opportunity?

Two things, Mike. We sold revenue, we sold advertising time and had expenses, operating expenses for the Seattle Seahawks throughout 2003. When I refer to lumpiness, I'm referring to same station, so we proforma'd all our sports in there. So for purposes of a base for 2003, to help you on your models for 2004, we have excluded the Kansas City Royals, which we dropped this year and to go back, I would expect probably the second quarter would probably be the highest of the expenses for the quarter for the year but I don't see it at this point a material blip, if you will.

Okay and then second question, in January, Clear Channel came out with some pacing information that included a lot of markets, including some of your markets, just wondering what the advertiser reaction was, did that help the industry or hurt the industry, how did you view that and its impact on first quarter ad sales?

I think giving that level of granularity, I think is probably not the smartest thing we can do because it just provides the advertisers with another tool to negotiate with and therefore, you know, I'm hopeful that we will not have that degree of disclosure. I think it's perfectly fine and well to talk about industry pacings overall, and I think Clear Channel was demonstrating the positive trend to advertisers and, I think therefore, it was well intentioned I just think that you don't want to show too many of your cards at any given point in time.

Great. And then Bill's question was about political advertising in the fourth quarter, you said it was about 500,000. Correct me if I'm wrong, but it was about 3 million in 2002, is that's correct, is that a number that's perhaps reasonable, then, to think for 2004?

It was pretty close to 3 million, Mike, in 2002 for the total year. The comparable data point for the fourth quarter in 2002 would be about 1.7 to 1.8 million in the fourth quarter of 2002, declining this quarter, fourth quarter, to about half a million. So obviously we missed some political. As for this year, we've experienced very little political revenue from the early primary season, we would expect more in the second half from the general elections, both Presidential, Gunbernatorial, Senate and House. Frankly, I don't know that number but I don't think we have a bet yet on that number.

Great. Thanks very much, guys.

Richard Rosenstein of Goldman Sachs, you may ask your question.

Thank you, two questions. One is, how much of your growth in revenue over the past few years would you attribute to pricing versus inventory that may have been added in various markets? And then as you look at price, someone had asked earlier about what your pricing looks like today versus a year ago. Have you looked at it over the past couple years, in fact, because of all the volatility that you have had? Where is pricing today versus, say, two years ago? Thanks.

Well, it's a fairly easy framework for us because we've been pretty outspoken about the issue of inventory, as have some of our competitors and we don't add inventory and I think if you look at our inventory levels over the past several years, you would find that they would, for all intensive purposes, fixed. So therefore, the growth you're looking at is principally pricing, although there is an element, of course, in inventory utilization that that occurs, particularly during January or maybe during some of the softer weeks of the year.

We do not look at pricing over multiple years. One of the issues, of course, and I don't want to get too far in the week here, but it is a little difficult because we do sell so many different pricing products and so many different ways to skin the cat and so a lot of it goes to some of the individual packaging strategies and some to the individual properties, but I think it's safe to say overall, we have seen some pricing growth over a period of time, as you've seen our revenues increase.

Thank you.

Jason Helfstein of CIBC World Markets, you may ask your question.

Thanks, just one quick one. Looked like your cash in the quarter, the rate was under 5%, is that sustainable to '04 and any swaps you guys have put in place to manage that interest rates start going up?

Well, we're fixed on 150 million on our high yield debt at 7 5/8, the floating rate, we only have 30 million of it fixed with a swap, but the rest does float. So yes, to the extent that our approximately 200 million, a little over 200 million of floating rates, if rates go up, you would expect to see a small uptick in our overall effective rate.

Okay, but I mean is, if my math is right though, it kind of looks like early '04, weighted average kind of around 5%, maybe even less than that on the cash portion?

That's correct. Again, that's the blend of the high yield, the swap is fixed at 5.6 and the floating, which we're at LIBOR plus 75 on the balance of our bank debt.

Okay. Thank you.

Alissa Goldwasser of William Blair, you may ask your question.

Good morning. Given the loss in national share in the fourth quarter, I was wondering if you could detail overall local plus national how many markets you gained share versus last year?

We don't have that number to break out here today. I mean clearly, if you look at the numbers, you'll find that we performed stronger at more markets locally than we did nationally, but we don't have a breakout of that data point today.

Okay. Just curious about your use of 10-second inventory other than the inventory that gets pushed through your traffic providers, do you have any interest in that exceeding what you currently do?

It's an interesting question and one of the things that I think happens over time in the industry and I won't use the bully pulpit here, but I think over time, we're going to see shortening radio commercial length. If you think about every other media has shortened the amount of time to deliver advertising messages, radio still retains the 60-second commercial, which I think, to some extent, is dated. So I do think overtime we'll see more 10s, 15s, 30s in lieu of 60s, but it's somewhat of a key change and I don't see that happening at any time in the immediate future.

I do think 10s are very, very efficient and effective way for advertisers to communicate and as long as we can, to the extent that we can repackage our clocks to provide more of those shorter messages, reduce the number of longer messages and provide essentially the same entertainment product to listeners, I think it's something that we do look at from time to time.

Okay. Thank you.

David Bank of RBC Capital Markets, you may ask your question.

Thanks, guys. Good morning. Two questions. I guess, to follow up on something earlier, you gave us the March comp last year of about up 3%. I think-- I guess to give a sense of how the month's kind of eroded a year ago, could you kind of tell us how you think the pacings looked at around this time going into March would be the first question? The second question would be more of an industry perspective, David. I am not sure if you have seen the comments coming out of the FCC regarding Midor Report on low power radio. Could I sort of get your sort of sense on what you think is going on from regulatory perspective in terms of low power radio and how you see it impacting you?

We, at this point last year, were looking at double digit growth for March, as Steve already mentioned, we slowed to a low single digit number when the dust had settled. As far as low power radio is concerned, you know, candidly, it's something which the FCC remains vigilantly attuned to to make sure there are no encroachments on our, on the integrity of our signals which is, of course, critical and we have no reason to believe that the FCC would at any point in time encroach upon our signals. There's nothing out there today that, to suggest that they would but it's something that we need to continue to watch and at this point in time, there's no meaningful action at the FCC that has any threat to our broadcast integrity.

Thanks.

David Miller of Sanders Morris and Harris, you may ask your question.

Yeah, good morning. Steve, the depreciation expense in the fourth quarter of 3.7 million, would you say that's generally a proxy for the rest of the year on a quarterly basis? Also, if it doesn't sound too, or if it doesn't sound too forward-looking statement, could you possibly quantify political activity in Boston in February in tandem with the New Hampshire primary? Thanks.

I'll take the second one first., zero.

Okay.

To your first question, depreciation. With the late close on the Portland acquisition, we would expect, you would expect to see a bump up in depreciation and amortization for 2004. I think, let me approximate 4 million a quarter as being a better proxy for 2004 for D&A.

Okay and also, are you engineering any price cuts to juice up Seattle activity, or are you just maintaining price integrity in that market? Thanks.

We're maintaining price integrity. As far as your question on Boston political, I'm not-- I have not heard of any, any at all. It's certainly nothing meaningful in terms of February Boston ads. It's kind of an inefficient way to reach New Hampshire voters, as you're aware and so I don't think anybody tapped it.

Okay. Thanks very much.

Jeff Seeno of Jeffries & Company. You may ask your question.

Actually, it's Lee Westerfield. Good morning, gentlemen. Steve, one question, if I can better understand how the tax planning for this year will shape out? As you're planning your amortization and your intangibles for federal purposes, how does that-- what's that number this year, how did it compare with last year and, if it's not too far-forward reaching, does that number decline next year as any of your shields burn off?

Yeah, Lee, the number does not change year by year and that is the 15-year amortization we use of goodwill, so that is a fixed component. You will not see a meaningful roll off of that for over a decade, I believe. Each one is staggered as to year of acquisition, so in looking at the quarters, there will be some variabilities but it has less to do with the intangibles as it does other tax-related events, some items that are deductible, some that are not, option exercises, those type of things and as we pass certain periods of certain state tax, prior state tax positions, other positions that no longer would be challenged, then we'll true up our reserves.

And there is no roll off, as you say, for several years?

Correct.

Thank you very much.

Once again, to ask a question, please press star one. Victor Miller of Bear Stearns, you may ask your question.

Actually my follow-up was asked already. Thanks.

Okay. Well, thanks everybody for joining us today. We'll look forward to reporting back to you in three months.