Audacy Inc (AUD) 2006 Q1 法說會逐字稿

Welcome to the Entercom first quarter earnings release conference call. [OPERATOR INSTRUCTIONS] This conference is being recorded. I would like to introduce your first speaker for today's call, Mr. Steve Fisher, CFO and Executive Vice President. Sir, you may begin.

Thank you, operator. Before we begin the formal part of our earnings call this morning, first we would like to welcome and thank all of you for joining us on this Monday morning and to remind you that the matters we will be discussing here today contain certain forward-looking statements that are based upon current expectation 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 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.

During this call we may reference certain non-GAAP financial measures. We refer you to our website at www.entercom.com for a presentation of the most directly comparable GAAP financial measures and reconciliation to GAAP of each such non-GAAP financial measure used. In addition, our website includes useful tables of prior period pro forma information adjusted for acquisitions and divestitures. With that we now turn the call over to David Field, President and Chief Executive Officer.

Thanks, Steve, and good morning, everybody. Thanks for joining us. In addition to reviewing Q1 and providing color on current market conditions, we have a number of updates to share with you this morning and some exciting information. First, Q1 was a challenging quarter for Entercom as same-station net revenues decreased 4% during the quarter. Strong expense management enabled us to maintain same-station operating expense growth of just 1%. Same station operating income decreased 13%. National results eclipsed local for the quarter. Needless to say we are disappointed by Q1 results. There are several factors that contributed to the weakness.

Our Q1 performance was adversely affected by sluggish advertising conditions affecting all traditional media, not just radio. We had tough comps with 6% same station revenue growth for each of the three prior Q1's and we have not executed as well as we are capable in a small handful of our markets. The key factor was poor market conditions affecting a significant number of our core station clusters. Unfortunately, most of our larger markets performed considerably worse than industry averages. The Boston radio spot market was down 11% during Q1. Just to clarify this is not Entercom's performance but it is the overall market performance. The Denver spot market was down 8, Seattle down 7, and of course New Orleans which is 6% of our business was down 22%. As a result our markets collectively were down 5% during Q1 which I believe is considerably worse than industry averages for the quarter. As we already noted Entercom same-station revenues were down 4%. Our relative performance was actually not too terrible during the quarter.

There were several operating bright spots during the quarter led by strong performances in Portland, Providence, Rochester, Buffalo, and Gainesville. We also are experiencing strong results from our business development efforts. As we look ahead, the obvious question is whether radio was destined to continue to suffer an indefinite number of flattish quarters or it can accelerate its growth to more compelling levels. While current results are frustrating for all of us we are increasingly optimistic about longer-term industry trends. We believe that radio revenues will accelerate as advertisers take notice of the strength and the stability of radio listening levels and the medium's highly compelling value proposition versus competitive media. The recent Arbitron Edison Media study clearly shows local radio holding its own in the increasingly competitive universe. Furthermore, our investments as an industry in new brands, enhanced content, new platforms such as HD, and industry initiatives will drive value for our listeners and customers and enhance the industry's business model going forward.

At Entercom we are pursuing a few key strategies to accelerate our growth rate in the future. We are focusing on enhancing our brands and our content, building our business development efforts, and significantly improving and expanding our Internet capabilities. We firmly believe our future success is rooted in these three areas. Allergy season here in Philadelphia.

Yes.

Unfortunately we do not believe that we will see much of a turn if any in Q2 as market weakness persists in a few of our key markets. Having said that, we are increasingly confident in the pick up in the second half of the year based on a number of recent moves we have made and successes we have achieved. In addition we expect market conditions to improve in the second half of the year due to stronger political spending, accelerating economic growth in New Orleans and a bounceback in Boston, Seattle, and Denver to more typical growth rates for these excellent markets.

Finally, we have witnessed a business surge over the past two weeks across most of our markets which is promising albeit far too short lived to rely upon at this time. I would like to detail some of the other recent highlights and developments that bode well for performance later in the year. First and foremost, we are very pleased to announce that in just the past 24 hours we have entered into a new 10-year agreement to the Boston Red Sox to maintain the rights to broadcast their games throughout New England. Re-establishing our partnership with America's pre-eminent sports brand for the next decade will buttress our position in Boston and provide great new opportunities.

We plan to shift most although not all of the games in 2007 to WRKO our talk station. We have now added the Boston Celtics and the Boston Red Sox to the station and WRKO features afternoon host Howie Carr who is already a top three personality in the marketplace. With this foundation in place we expect great things from WRKO and believe its performance will surge in the near future. It has been a sleeping giant for us in the past. On the other hand, WEEI which currently runs the Sox games is America's number one rated sports station and most importantly has a lineup of extraordinary talent that consistently ranks at the very top of the market mornings, mid days, and afternoons, and does so both in and out of baseball season. WEEI will not miss a beat going forward, and we will also continue to be a considerable amount of Sox related programming on the station. We think it is a total win-win for us and are excited about where we're going in the future there.

In addition, we recently announced the signing of Ron Reagan to do a local daily show for KIRO, our new stock station in Seattle. Reagan lives in Seattle and will do his daily show for us in addition to his national work for MSNBC. The new Reagan show along with a few other lineup changes will dramatically enhance our product and position the station for future growth. We are also enjoying strong ratings books so far this winter. WEEI remains the dominant radio station in Boston but the real story there is WAAF, our active rock station that surged to number two with men 25-54 trailing only WEEI in that key demographic. In Seattle our active rock station KASW has emerged as the single strongest performer among all of the stations that formerly featured Howard Stern. KISW did not miss a beat as it scored number one among both men 18-34 and men 18-49 behind a strong new local morning show that we have been developing in Seattle to fill this critical position.

In addition, Entercom's momentum should accelerate during the year as we begin to capitalize on the large number of new formats that we launched during 2005. The Wolf in Seattle, the country station we just launched this past December has debuted with excellent numbers ranking third among adults 18-34. Our new eclectic hits or Jack station in Portland, which we call Charlie finished fourth among adults 25-54 helping Entercom post four of the top six stations in that key demographic. Finally, we achieved a terrific ratings back in Sacramento as Entercom nailed three of the top four positions among adults 25-54. These are unprecedented levels of success for us from a ratings standpoint and bode very well for the future. In sum we are committed to building new stations that drive significant ratings growth and to investing in great compelling content that will further drive our performance.

As I mentioned earlier we are also investing in our business development and Internet capabilities. Clearly radio is experiencing some share shift to the Internet as advertisers place additional dollars in interactive media at the expense of traditional media expenditures. We cannot expect this slow but steady trend to end any time soon. However, we have an even greater opportunity to attract significantly larger shares of business from advertisers who are more open than ever to pulling money from TV, print, yellow pages, direct mail, and other media. Radio offers a powerful alternative with near universal reach, ubiquity, mobility, local marketing capabilities, excellent ROI, and dramatically more efficient CPM's.

In addition, we believe that radio offers a uniquely powerful vehicle to drive listeners to the Internet and create compelling integrated marketing programs for customers. We intend to accelerate our efforts to pursue these opportunities by enhancing our Internet content, sales, and marketing capabilities. We expect integrated media sales to become one of our fastest growing areas. By focusing and investing in these three areas, brands and content, business development, and integrated media, we expect to meaningfully improve performance in the future.

In the meantime we continual to believe our stock remains undervalued and we repurchased 2.6 million shares during the past quarter. This morning we are also announcing that our Board has authorized an additional $100 million for share buyback's and in addition we commenced a quarterly dividend of $0.38 per share in March further awarding our shareholders. In conclusion we remain highly focused on creating shareholder value. We have solid expectations for the second half of the year based upon accelerating momentum for new and enhanced station brands, improving conditions in New Orleans, a political year, returns from our ongoing investments and proprietary sales and business development initiatives such as our shred program and the great upside of integrated marketing. Steve.

Thank you. Let me give you a few comments on the second quarter going forward, then we will turn it over to you for your questions. In the second quarter of 2006 Entercom expects to report revenues on a same-station basis to be down midsingle digits reflecting weakness in our mix of markets in which we operate. We would also though expect Q2 same-station operating expenses to be down about 1% from prior year. A note on our expense model for the year as we've stated in the past, we don't see any significant changes to our outgoing station operating expense business model and believe that we'll demonstrate once again solid expense management throughout this year as we have done throughout past years. Our prior year Q2 same-station information is 121.2 million in net revenues and 66.5 million in station operating expenses, again, that's all available on our website.

Our normalized corporate expenses excluding extraordinary and non-cash expenses has historically been around 4.6 million in the past trailing quarters. But as you know, we currently have several legal projects in process so at this point we would expect an incremental 4 to 500,000 in increased legal expenses for this quarter and perhaps even next taking our expected corporate G&A to about 5 to 5.1 million excluding non-cash charges. For interest expenses, without taking into consideration any future share buybacks beyond what we've accomplished today I would expect Q2 interest expense of approximately 10.8 million. Without any impact for any future buybacks, our Q2 weighted shares outstanding would be about 40 million shares. We may have a below the line charge or an asset write off of around $500,000 in this quarter as we write down an old facility as an abandonment and move to a new facility in Kansas City as part of that ongoing relocation.

Now a few comments on 123-R accounting for stock based compensation which we adopted on January 1, 2006. As a historical note, in December 2005 the Company's Board of Directors approved the acceleration of vesting for certain unvested and out of the money options which represented frankly the majority of the options that we had outstanding. The effect of this action in 2005 was to significantly reduce the required future expense recognition of those past out of the money and unvested past option grants. Yet, however, the Board had not taken action on any new non-cash compensation awards in the first quarter consequently our expense was minimal. However, in April the Board of Directors did make certain restricted share grants for which we will recognize expense into the future. We would expect that our non-cash compensation expense for the remaining three quarters of 2006 to be approximately 1.8 million per quarter, that is 1.8 million in each of the next three quarters and of course this would be subject to change for any grants of new or additional rewards. With that overview, operator, we'll turn it over to you for any questions.

[OPERATOR INSTRUCTIONS] Our first question comes from Victor Miller of Bear Stearns. You may ask your question.

Thanks for taking the question. First of all, I like your impressions on what happened this morning, the MS. If you look at your company and their company, it is remarkably similar. Your float at 34, theirs at 32. Your leverage at 3.5, theirs at 3.9, something around there. Maybe those numbers are reversed. But in terms of valuations and the frustrations just with the overall market value, how the market values radio, what did you think of what they did this morning? Secondly, what are you seeing in Boston and Seattle and Denver relative to the minus 11, minus 8, and minus 7 numbers you saw? Thanks.

Thanks, Victor. First, we wish Jeff a lot of luck and his company a lot of luck and hope all of that goes well. Look, we said all all along, we're frustrated with where our stocks are trading these days, and we indicated a strong desire to reward shareholders and we have been buying back our stock, and we have initiated a dividend, and we will continue to always be open to any and every possibility that we think makes sense for our shareholders. As far as the markets you refer to, again, yes, we had a tough head wind in Q1 based on performance in those markets, and it is too early to tell where they're going, but we do know this, Boston, Seattle, and Denver are three of America's greatest markets. There is nothing wrong with the economies in those markets, and we do not believe that the under performance of those markets is a sustainable phenomenon and we're very confident we'll see good growth in those markets in the future.

Marci Ryvicker of Wachovia Securities, you may ask your question.

I have two questions. We heard from several radio groups last week that they've been hurt a bit as Clear Channel regains some of the share that it lost last year as a result of less is more. Can you attribute any of your current weakness to this as well? Secondly, can you just update us on New Orleans? Are all of your stations up and running?

Yes, Marci. It is hard. We didn't, last year when we talked about less is more, we didn't claim that -- we didn't believe it had a big effect on our performance, and I don't believe it has a big impact on our performance this year either. I frankly tip my cap to Clear Channel. I think from their standpoint took a hit last year and did what they thought was right to improve their business model, and I think they're benefiting from it, and it illustrates the opportunities and the resilience of the industry. As far as New Orleans is concerned, we are at this point now back up as of earlier this quarter, we are back up with the one FM station that had been down, and so that is now back online for us going forward. It is not quite at full strength yet, but you should assume it is at pretty competitive levels of power.

Great. Thank you.

Jonathan Jacoby of Banc of America, you may ask your question.

Just want to flush out what's going on with the expenses. Great expense control. Do you feel as time goes on that there will be pressure to spend a little bit more in terms of programming initiatives, especially with HD radio, and then just following along with that, obviously, I may have missed this and I do apologize with the Boston Red Sox, just from reading press reports it seems like there was an increased expense level to bring back the Sox. How do you look at from a expense delta perspective? Thanks.

Let me start with the Sox and then Steve will comment on your broader question. We are not going to release any specifics on the Sox deal. You should assume that they are, as the pre-eminent sports franchise in America that we paid a fair price for that content, but having said that, it is the creativity of the structure we've deployed which we think will create great value for us by moving the content over to WRKO we believe we will catalyze what has been a sleeping giant. The radio station which has good ratings numbers but has never been a financial performer for us and has been cursed with what several of the older heritage AM talk stations in America have suffered with over the years through the infusion of the Celtics and the Red Sox we think we will be able to take that radio station and create great value in the future while WEEI continues to prosper, and that's what has us so excited there. Steve, you want to address--?

I would also just echo what David said. The rights expense will be going up but so will the revenue opportunities and other things. So it is not apples to apples. The bigger part of your question was going for, first let me address HD, Entercom, and the radio industry frankly for that matter you've seen us now being -- spending the capital to deploy transmitting equipment. That phase of HD is starting to wind down and will into early 2007.

The next phase is the part you mentioned where we are starting to spend some minor incremental expense to program those, and you've seen some announcements from us at the NAV and in recent weeks on programming. Jonathan, we're not seeing that being a significant dollar expenditure at this time. Keeping in mind that the number of radios out there that we're programming and the number of therefore listeners we're programming at is small. I think that could change more in the latter part of the decade, but keeping in mind the niche formats we've launched, we don't see any significant operating expense there.

The question you asked which is the bigger question was do we feel pressure to spend more on programming. I'll let David add a color comment to what I said at the end. We've been a very much a programming driven company for all the years we've been public. I don't think we feel any more or any less pressure today than we did before. Whether it is spending the money to reup with the Red Sox which we're pleased to announce today, the moves that we made in Seattle to sign up Ron Reagan which we announced last week. The moves we made in Seattle to reprogram Howard Stern and take that to a leading post Stern station. We've all done that in the context of the operating expense environment that we posted in the past and that we're guiding you to in the future.

Just to echo what Steve said, it is now thirteen quarters in a row that we have grown our expenses by 3% or less. Steve is absolutely right. Yes, we're going to -- it is fair to say that there are going to be certain -- there is certain content we're going to invest in where we are going to have a greater than inflationary increase in expenses. That should be offset by continued intelligent reengineering and rethinking of our business model to enable us to extract efficiencies at -- whether it is through the technology or just changing business circumstances we can extract without undermining our ability to generate revenue.

Thank you.

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

First, on potentially going private, wondered whether when you'd look at returns, if you include or exclude non-cash comp or how you think about non-cash compensation in your valuations? And then secondly, on HD radio, do you think that you might have to end up paying the music companies when you go to digital assuming that there will be people like radios that allow consumers to record without having to pay the record companies? Thanks.

I will take those two. First, I understand there is some move to revisit some of the copyright issues and licensing issues relative to HD technology and the delivery of digital that applies to satellite, Internet and et cetera. First let's start with we at this point have baked in nothing internally nor have we given you any guidances as to what is the business model going forward for HD. I would also remind listeners that it is beyond just audio. It could include data and other forms of transmission. It might be free at supported or on a subscription basis in the future. I think at this pointed anything is speculation.

Your other question was how do we look at non-cash compensation expense. That has nothing to do with models and all of that. It is the cost of doing business. It is non-cash, whether it was options or now restricted shares, it is as we simply look at it a change in the weighted average shares in terms of looking at valuation. We think it is a critical component to overall compensation structure and our incentives for our management team, so we recognize it does have some expense. We can all debate the merits or not of how that was expensed in the past, but as you've seen today, we're transparent in how we're going forward in the future.

How about as far as paying if you were considering going private you would consider it a real expense or not?

Again, you keep saying it with going private. I reject the premise of your question. It is an expense and if it is restricted shares, there are a number of shares. It is stock options, it's options on equity accompanied. That has -- that's an ongoing operating issue, not a going private or any other wrinkle.

Thanks.

David Miller of Sanders Morris Harris. You may ask your question.

Good morning. David, you had said in the last earnings call that you're generally at peace with the outcome of the Disney transaction. My question is, is CBS the next opportunity? Les Moonvis has been very vocal in saying to the Street that he would be open to selling off, call it smaller and/or middle market properties. Just forget about valuation for a second. Generally strategically do you see that as a fit with your overall model given your current FCC cap situations in your larger markets, and then also, Steve, if you can just remind me what your debt covenant is at this point. Thanks very much.

I'll do the latter first, David, our senior debt covenant currently in place is five times, and our subnotes are seven times.

Thank you.

As to your first question, yes, David, there has been some public comments from CBS that they might be willing to spin some of their mid-sized markets. There is a great deal of overlap as you can identify between their middle markets and ours, and so I think that that would largely preclude most of those markets from consideration. To the extent that there are other markets for sale whether by CBS or whether by other groups, we continue to be very interested in acquisitions if we can do so on a basis which makes sense for our shareholders. As you mentioned we're very much at peace with our decision on Disney because we felt that at the end of the day it was not in the best interest of our shareholders to pursue a transaction at the level it would have required, but obviously going forward, if we can find attractive deals we'd love to continue to grow in this business.

Thank you.

Jim Boyle, C.L. King & Associates. You may ask your question.

Good morning, in this radio advertising environment with domestic auto spending just not the normal level, is it plain difficult or is it almost impossible for the radio industry to grow 3 to 4% at this point?

Obviously, Jim, Entercom isn't getting that done today and the industry isn't growing at that level. On the other hand, we're seeing Clear Channel and others who are. I think that that speaks for itself in terms of the ability to achieve that. I think going forward as I mentioned in my earlier remarks I am increasingly optimistic about where things are going. We're seeing more and more success and the opportunity for greater success in business development efforts. Advertisers are much more agnostic than they have been historically in terms of their media choices. While that's a threat insofaras radio is concerned it is a huge opportunity insofar as the $230 billion of advertising that we don't get every year that formerly has gone to TV, print, and other media. We think that opportunity is great for business development. We think that the opportunities in integrated marketing are huge. Radio fits the Internet perhaps better than any other medium and that opens a lot of doors and a lot of revenue opportunities for us. I think the challenge for us is between those two areas and other things we can do to continue to enhance our business model through HD, electronic measurement, those sorts of areas, I think the opportunity is very much for us to get to a midsingle digit growth rate again as an industry. Will we do it, time will tell.

David, you're our next Wall Street guy, you're probably not surprised by Jeff's aim to go private, you're probably not surprised by the timing. Are you surprised by the mid-teen premium that was offered?

In fairness, I know about as much as I have seen from a headline on an e-mail. I think it is way premature for us to make any comments on that deal.

Thank you.

Bishop Cheen of Wachovia Securities, you may ask your question.

A question back on sports we knew that you had been working towards trying to ink a Red Sox solution. Are there any other, refresh my memory, any other markets where sports could possibly play a bigger role in your programming?

I think it is safe to say that it is hard to imagine any sports team playing a bigger role than the Boston Red Sox. I guess the answer is no.

Well, I don't mean bigger than Boston, just where sports might take on a higher profile than it has right now in your other markets?

Offhand I don't know the answer to that. We have several other sports stations around the country. We think the format is terrific, and we have done very well with it obviously in Boston and several other markets and we'll continue to look for opportunities to build content relationships with both college and professional sports teams where it makes sense.

Okay. Steven, just one quick update. I annoy you every time on your availability. Can you give us the summary again?

I haven't worked backwards. Let's put it this way. Our leverage is 3.9 times. We had about, it's on the release, 500 and change in debt,.

Right.

On the bank line and our revolver is 800 million.

Great. Thank you.

James Dix of Deutsche Bank. You may ask your question.

Good morning, gentlemen. A couple questions. First, just on the market weakness you're seeing in Boston, Seattle, and Denver. Are there any specific things, any specific items of local color you can give as to what's going on in those markets that might help us out in understanding just the growth that you're seeing there? And then Steve, I don't know whether you have just what your growth would have been excluding those markets? I know it is a lot of markets to exclude, but just for the sake of the math just understanding in Q1 what your growth would have been excluding Boston, Seattle, and Denver and then like how you're pacing in Q2 excluding those markets? And then secondly, David, you're talking about integrated marketing sales. If you could give just a little more color as to right now what does that encompass, how much of your revenue -- overall company revenue is encompassed by that and what type of investments are you going to need to make that grow and how fast is it growing right now?

On integrated marketing you're saying?

Yes. I guess what do you mean by that and how fast is it growing?

I'll deal with one and three and then Steve will come back to two. First, on local color, all I can tell you that in Boston when you talk to the guys newspaper business or in the magazine business and so forth, it is pretty common. It is not a radio issue. It is just Boston was in a slump for the first quarter, and there really is no other rhyme or reason for it.

James, just let's put it in context. I think on every call with every other company and now with Entercom you have always heard some mix of market. Radio is not homogenous around the country and our market mix obviously is lower than the average, and we never know those reasons. We can't figure it out. That's the blunt answer there.

And as far as integrated marketing is concerned, it really is in a very early stage. It is a -- we're seeing more and more opportunity to put together programs for advertisers who are excited about the opportunity to put together programs for radio and the Internet can be brought together in clever ways to drive value for them and their customers. We're at the top of the first inning there. We really are.

As to your other question, the guidance we gave you earlier in the quarter is New Orleans obviously clipped our overall company posted growth rate by about 1, 1.5. I frankly haven't done the math that you asked about which is well, if you exclude Boston, Denver, and some other markets, what it would have been. It is not a relevant operating statistic for us. The markets are what the markets are. As David indicated, the data point that's most relevant is our markets were down 5, we were down 4.

Sounds good. Thanks.

Laraine Mancini of Merrill Lynch, you may ask your question.

In terms of Q2, I know you said in the back half of the year you expected the market to firm. Do you see any differences as you get further into 2Q that suggest that maybe it is already starting or what gives you confidence that the back half firmed as an industry not your specific issues.

It is a fair question. Over the last two weeks we've seen some acceleration, but again I put a caveat on that two weeks does not make a trend. But it is encouraging. As far as the back half of the year, you have certain fundamental structural issues which we think bode well. We have Katrina comps, we have political spending, and beyond that again within Entercom as I mentioned, there are a series of enhancements whether they're ratings based or brand development based or what have you that also bode well for our performance later in the year.

If you could follow-up on that, how much was political of an impact last political season number one, and I know you had probably more in Pennsylvania than most other places. And number two, have you had any conversations with the auto advertisers that suggest that there may be a change in the back half of the year from that category?

Well, for political this is an off-presidential cycle so we really can't compare to the cycle two years ago. Typically in a presidential cycle we get around $5 million in advertising. In a non-presidential cycle, about 2 million. I think we had said earlier about 2 million is kind of our internal expectations for political, most of that to hit in the back half of the year.

I am sorry, your other question, Laraine, was?

Have you had any conversation with--?

Yes, yes.. The answer is we have a lot of anecdotal situations and conversations. There is some encouraging bubbling there I have heard but nothing that I would want to champion at this time other than encouraging signals.

Thank you very much.

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

Good morning. Was wondering if you could talk a little bit more about the Internet plan, if that was one of the key strategies you had for growth going forward and also could you detail a little bit more about the legal projects that you highlighted for expense growth on the corporate side?

On the interactive side I would only say that you're going to see us continue to make investments in improving the content of our websites and enhancing our capabilities in terms of selling and marketing, the various opportunities that are implicit in interactive technologies, and we'll be doing that incrementally over the course of this year. On the legal front I think it was well noted that we had filed a motion to dismiss in New York state against the civil complaint that had been brought by the New York State Attorney General, and I think that speaks volumes for our view of the case.

And in addition as I believe you all have seen the SCC commenced an inquiry against Clear Channel, CBS, Citadel, and Entercom. As part of that discovery process going through, that's the primary cause of the legal related expense for Q2 that we project.

One quick follow-up. In terms of interactive, a lot of what you said is it makes a lot of sense and we have heard some other operators speak in the same general terms. Is there anything more specific that you can talk about anything you guys think that you've come up with that is more compelling than what others might be doing out there, any other specific ideas?

Yes, but none that we're going to share, and the other thing I would say to you is the keyword here is appetite. The tone, the appetite from advertisers has changed. There is a marketplace there. If we can address it we can make a lot of money with it.

Thanks, guys.

Mark Wienkes of Goldman Sachs, you may ask your question.

Thanks. Was there a big difference in the local versus the national and the markets that were up versus those that were down? And then second, are you still seeing increased demand for shorter link spots?

Let me deal with the latter question and Steve will jump on the former. We'll give him the fun one. Mark, it really is accelerating, and we're hearing that from virtually all of our markets. It is both 30's and 10's and 15's. The growth rate is significant double digit across both of those product areas, and it is exciting. Clearly there has been a see change in the way advertisers are viewing radio spot lends and as I've stated many times before, I think that is a terrific development for the industry. It may have some disruptive effects in the short run. But in the long run it is a terrific win-win for advertisers, for the radio companies and soliciters.

Is tha being driven more by the agencies or is it also happening on the local side?

Both. It started in directs. Because you could -- a capable accounting executive could convince an advertiser that it made sense. Early resistance was more at the agency level, but now more and more agencies and their clients are seeing the wisdom of communicating a message in a more efficient time period, and it is great for everybody.

To answer your question on the mix, just a quick glance over and this is exactly a 30-second analysis, Mark. I don't see anything meaningful other than as you could probably guess, national is a larger component in some of the larger markets and the very, very small markets. We don't have that much small market exposure. It is really more of this variability of markets and whether it is local or national. When you get to the large markets it is often difficult to differentiate between what is truly local and national. As I said earlier on the call you always get this variability of markets. I believe we have seen a wider divergence over the past two quarters. We've commented on that publicly. The divergence of quarters happened to catch us in a down draft in a couple of larger markets. I don't see anything though that is significant and a quick glance at the data that says whether it is local or national.

Thank you.

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

Just one thing quick. Can you talk specifically what was New Orleans impact on the quarter? So in other words what would that growth rate, just if we take out of that one market?

Yes, Jason, when we gave our guidance we said we expected in the first quarter to account between 1 point and 1.5 point. I don't expect -- to be honest I don't have that analysis in front of me. We don't obsess over that. I would expect it to be about in that range. That's for Entercom performance. Obviously as David said earlier, the New Orleans marketplace, radio marketplace, not intercom off 22% in spot in Q1.

Being 6% of our company is just about right.

And then just quick, so the timing of that would basically be that you're impacted through like half of third quarter basically so fourth quarter is when we get apples to apples it will be out of your numbers?

Correct. If you recall the flooding post Katrina occurred basically August 30, of last year. It will be difficult to establish pure comps for a month or two after that. The fourth quarter will be comps. Again, Katrina and New Orleans is such a unique situation in our business that there is no rules of thumb here.

Thank you very much.

Michael Kupinski of AG Edwards, you you may ask your question.

Thank you for taking the question. Some broadcasters suggested the weakness they saw in the last quarter was largely attributable to the auto category. Just following up on James Dix question what did this category do in your larger markets and specifically in the the Boston, Seattle, and Denver in those markets in particular does auto account for more than, let's say, I think you mentioned on average 13% for the category if I am correct on that and if I am not if you can just correct me on that? I have a couple of quick follow-ups.

Again, our comments were for the category overall. I don't know how we did in those markets or we did with automotive, not what the industry did in Boston, Denver, et cetera. I don't want to obsess on that. I think, my overall comment, Michael, it is a good question. I understand why analysts have to ask it. But generally if auto is soft other things are soft, and that leads to the softening of pricing if you will. We have always seen variability by markets. You don't turn around and see a hot market and go that is driven by automotive. At the same time I don't think we can turn around and say soft market driven by automotive. It is a combination of reasons.

Is auto as a category about 13% of your total revenues?

Tire managed typically run about 16% of intercom revenues.

Would auto be greater in those markets and some of your larger markets.

The reasons for being greater or less than have to do more with our format and demographics than it would with anything else.

Okay. How much authorization remains on your previous stock repurchase authorization.

If you do the math, I think it is in the release. We had 200,000 remaining on the prior fourth authorization before the Board granting the new authorization that was announced this morning.

What percentage of nontraditional revenues are to your total revenues and what did they do in the quarter?

I think it was flat to up slightly. I don't think it would even make a percentage rounding effect, Michael, and the percentage, this is going to be off the top of my head just to keep pace on the question is probably in the 2 to 3% range of all non-spot revenues.

I want to be careful though to define terms. We say nontraditional revenues, we mean our events, we mean off air kind of stuff.

Off air kind of stuff and going to David's point earlier, we have seen a pick up both in Internet and integrated and a lot of that is how do you do the account and the allocation of revenues an integrated spot Internet buy, and there is some flexibility on how you allocate that.

Where are you allocating your Internet?

Each market does that on their own. We have a separate line item on that. We do track it. We will be putting more spotlight on it as that grows, and has grown, and will grow over time. But again, a lot of that, let's understand that a lot of that you're selling as a package to the advertiser.

Great. Thanks.

Eileen Furukawa with of Citigroup, you may ask your question.

Thanks for taking my question. Can you tell us exactly what percentage of your inventory sold is now coming from shorter length adds and also as shorter length adds become a bigger part of your mix would you consider developing a yield management technology system like Clear Channel uses? Or alternatively, if Clear Channel were to outsources theirs would you be interested? My final questions have really broad brush, but can you tell us again what you perceive are sort of the biggest advantages of continuing to operate as a public company versus a private? Thanks.

You mean apart from having these calls?

That's good, Steve. I guess first, it is all over the lot. As you can imagine, every marketer is a little bit different. But we're seeing representative numbers in the midteens or let's say FM music stations, I am sure they run commercials and we're seeing numbers that are a third or greater in some of the a.m. radio stations across the country. Yes, we're always looking for ways to to enhance technology and improve our system and yield management and any other for that matter facet our business where we think we can make value. Steve already has the line of the call. It is really kind of tough for me to come back from that and try to one up him. With a straight face I would say that there are a lot of benefits to being public and there are a lot of benefits to being private and they ebb and flow. How is that for a non answer for you.

That's a good non-answer. Thanks.

Our last question comes from Jim Goss of Barrington Research.

I applaud your decision to establish a meaningful dividend, and also in my discussions with the NAV, it seems like stellar expectations and properties might be getting somewhat more reasonable. I was wondering if you could prioritize your option for use of cash flow between any other dividend action, stock buyback, and acquisitions how it seems to be going in your view now. Secondly, I was wondering if you could also handicap the timing of your breaking on to the cash in a meaningful way with HD radio units.

Let me first address, Jim, we've been see consistent in the past. The number one focus of our balance sheet has always been articulated as growing the Company where we can find meaningful acquisitions at prices that we think enhance shareholder returns. That's what companies do if they do it well and in their space. We've talked about staying close to our knitting. We've done that in the past through now 6, 7 years of being public with over billions of dollars of acquisitions. Having said that as we've said in the past our leverage had gotten down too low where we didn't see meaningful acquisitions. We said we would take our leverage up through returning cash whether it is through buyback or dividends or combinations thereof. That has been our historical and remains our focus.

Steve, is the potential to make acquisitions getting better in your view because of more realistic stellar expectations.

Not to be flippant. I've never been one to buy " more realistic seller expectations" I think seller expectations and buyer expectations have all to do with their projected returns of what they see. We're no longer in the double digit revenue growth that we were in '99, 2000, and therefore expectations adjust. It is a great business and a great business model with free cash flows and that's always negotiated between buyer and seller.

As to HD, again, as I've said before the alliance is really changing the game on HD radio. It is giving us central focus to be able to work directly with auto manufacturers and with electronics manufacturers and with big box retailers and other types of retailers to drive their investments and focus in this area. We're having a significant number of successes in that area and we're using our own bully pulpit to drive nine figures worth of promotion to support those efforts both at a consumer level directly and also to support the efforts of our strategic partners in the manufacturing and retail area. I think we're going to see continued acceleration in HD particularly as these now formats roll out and consumers get excited about it.

Thank you very much.

With that we are going to end the call. Thank you, everybody for your attention this morning. We will look forward to reporting back to you again in another quarter. Thanks.