Audacy Inc (AUD) 2007 Q2 法說會逐字稿

Good morning and welcome to Entercom's Second 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.

I'd like to introduce your first speaker for today's call, Mr. Steve Fisher, Executive Vice President an CFO. Sir, you may begin.

Thank you, Operator. Good morning everybody, thank you for joining us and before I turn it over to David Field let me first make this note that today's call will contain forward-looking statements based upon current expectations that involve risks and uncertainties. The Company's actual results could differ materially from those projected. Additional information concerning factors that could cause actual results to differ materially is described in the Company's SEC filings on Forms 10-Q, 10-K, and 8-K. We assume no obligation to update any forward-looking statements. During this call, we may reference certain non-GAAP financial measures and we refer you to our website at Entercom.com for a reconciliation of such measures and other pro forma financial information. So, with that note, let me turn it over to David Field, President and Chief Executive Officer.

Thank you, Steve, and good morning, everyone. Thanks for joining us today. I am pleased to report Entercom's second quarter results and provide you with an update on recent developments. As we announced this morning, Entercom's same station revenues for the second quarter declined by 1%. Same station expenses grew 4% resulting in an 8% decline in same station operating income. Growth and expenses was principally caused by significantly higher expenses related to our new tenure agreement with the Boston Red Sox. Steve will delve into this bit deeper during his remarks, but it is very important to note that while we will show a similar increase in expenses in Q3, we anticipate a return to normal in Q4 with minimal expense growth.

Second quarter performance was led by strong results in Seattle, Milwaukee, Buffalo, Indianapolis and Denver. National revenues were up low single-digits, while local revenues were down low single-digits. Digital revenues nearly doubled from the year ago quarter and exceeded 1% of revenues for the quarter the first time we cleared that threshold. This was offset; however, by political revenues which declined by a nearly an equivalent amount. I'd also add that a 1% decline in revenues compares favorably with a 2% decline in our market revenues although we derived zero satisfaction from the modest relative success of our results. We do, however feel pretty good about a number of developments around the Company that should lead to improving results in the future. We remain highly focused on our companywide efforts to accelerate revenue growth through a number of core initiatives including digital, business development, and brands and content. We are achieving growing traction on these core initiatives and expect increasing revenue contributions from these efforts over the next few quarters.

On the digital front we continue to add organizational capacity and content development, sales, execution, and infrastructure. As I mentioned earlier our Q2 digital revenues almost doubled from the year ago quarter and exceeded 1% of revenue for the very first time. We are increasingly providing our customers with integrated media packages that include on-air, online and on-site components. It's great interest and enthusiasm for our customers and these integrated programs and we expect significant growth in the future. We also continue to add organizational capacity and business development, adding personnel with strong marketing skill sets to bolster our effectiveness in delivering compelling multi-faceted marketing programs. We are becoming increasingly successful in these efforts and I anticipate an acceleration of our business development revenues in the next few quarters. In fact, we just announced the multi-year agreement with Shaw's to sell the naming rights for the Boston Red Sox radio network along with a multi-platform marketing program that utilizing our on-air, online and on-site capability. While the Shaw's deal is unique in that it is the first example of which we are aware of sale of a naming rights for a sports radio network, it is one of a number of creative marketing programs that we're developing for our customers.

We also continue to experience success in our brand and content development efforts. The recently released spring ratings book provides the first glimpse of the Boston ratings now that we have relocated the Red Sox from WEEI to WRKO. And the results are terrific. Notwithstanding the fact that WEEI is no longer broadcasting the Sox games, that station took first place honors among all Boston stations, not only from men 25/54 but also for adults 25 /54. The ratings at WRKO, now that they have added the Red Sox scored over 30% in this very first book.

We also announced just yesterday a five year agreement to become the home of the Kansas City Royals. We will place the games on our sports station, KCSP and expect a significant enhancement of that stations performance with the addition of Royals Baseball that will start next season. Turning to our recent acquisitions we are awaiting FCC approval on numerous transactions which have been pending for months and hope to gain consent shortly. I also want to touch on current market conditions. Entercom is currently pacing up fractionally for Q3. We are seeing some encouraging momentum from our business development and digital initiatives but we remain cautious due to tepid market conditions. As a result we expect flat revenues for the quarter. We also continue to use our ample free cash flow to reward our shareholders by buying back our stock which we believe remain significantly under valued and continuing to pay one of the highest dividends among all media stocks. Steve?

Thanks, David. First I'll address third quarter guidance and then give you some input for your modeling and walk you through a few notes on the second quarter. The guidance we provide is based on same station comparison. The same station guidance for Q3 is pro forma for all transactions, acquisitions and divestitures we have announced to you with the exception of the Rochester, New York CBS acquisition where we have not yet assumed operations. At this point, we are not including Rochester transaction in our revenue expense and other line item guidance. As David mentioned earlier and as we note in the press release we expect same-station revenues in the third quarter of 2007 to be flat with prior year. On the expenses, I may remind you over the past couple earnings calls we've told you to expect second and third quarter operating increases to increase approximately 5%, and that the fourth quarter should be flattish. We did finish up Q2 up 4% in expenses and today we're guiding third quarter expenses to be up between 4 and 5%. But this important reminder, this bump in the second and third quarters is primarily related to a step up in year-over-year increase of our Red Sox sports rights resulting from our new long term contract. These rights are expensed over the baseball season in second and third quarter. This doesn't reflect any change to our business model and we will experience very moderate increases in this contract in the years ahead. You see in our strong history of expense management and that continues.

In fact, excluding the impact of the Red Sox and some earlier New Orleans expenses post-Katrina returning to normal, our normalized expense growth for this year will be less than 1%. As noted in the press release our prior year third quarter same-station information is 122.6 million in net revenue and 68.4 million in expenses for your model. This base excludes our non-cash compensation expense and a reconciliation of this information is posted on our website. A few other notes on 2007 third quarter line items to assist you in your modeling. Our corporate G&A in the third quarter should approximate 5.5 million, and our non-cash compensation expense for the third and fourth quarter each should be about 2.2 million. As to the timing of the closing of our various transactions, which are outlined in the press release and the impact on our balance sheet, clearly the FCC process has been slower than we expected on our last call. We do, however, expect approval in closing some time in the third quarter; however for purposes of your modeling I'll suggest that you model closing at the end of the quarter.

A reminder that when closing does happen, we sist our TBA fees and begin paying interest expense and recognizing D&A so there's minimal cash flow impact. It is just a geography issue of where expense is reported. Also of note that when the CBS closing does happen, we'll have some additional amortization of short lived intangible assets which will provide short-term spikes to the D&A line. At this time we're not yet able to calculate those items until the close. So with that pre ample, and again, the following guidance on the assumption that we do not close on our outstanding transactions before September 30, and assuming no further share buybacks, we would forecast the following for TBA fees, depreciation amortization and interest. TBA fees in the third quarter of approximately 3.9 million, D&A, depreciation and amortization of approximately 4.0 million, and net interest should approximate 13 million for the quarter. Additionally on the balance sheet upon closing of the acquisitions and divestitures outlined in our release, depending on the sale proceeds at the assumption of stations that we will be divesting, we would probably have incremental debt of approximately 210 to 200 million and depending on the timing of the closing then our our pro forma leverage would be in the mid five times range.

Our tax rate we've increased our GAAP tax assumption to approximately 43%. This is an updated model. Number for your models going forward and a reminder that there will be quarterly fluctuations. And a few notes on our second quarter operating results before we go to your questions. Each year, we value the intangible assets on our balance sheet primarily goodwill and FCC licenses in this quarter we took a $45 million non-cash goodwill write down related to our Denver market. This action follows several years of flattish market performance for the entire Denver radio market, followed by last years significant decline of 9% in the Denver radio market revenues and again that's total market. So our write down is not necessarily reflective of the entire economic value adjustment in this market, it's interesting to note that the recent revaluation increased the value of the FCC license from the value when we first bought it five years ago, and in essence, this caused a shift in value from one bucket goodwill to another bucket FCC that shift accounted for then a increased write down in the amount of goodwill we had to take. It's kind of bizarre but accounting rules don't allow you to recognize increases intangible values in each bucket, just the decrease.

Our corporate G&A expense in the quarter was slightly higher than we expected due to higher legal expenses and as we noted earlier, excluding the increase in sports rights in the second quarter, our normalized expenses would have increased only about 1%. In the second quarter we increased our balance sheet flexibility by putting in place a new senior credit facility of slightly over $1 billion. We did this to take advantage of the very strong Capital Markets at that time, obviously since our closing, those markets have changed. We probably couldn't duplicated that deal in today's marketplace but with that deal in place that we locked up earlier in the summer, we'll have slight reduction in interest rates and increase in capacity and slightly better covenants.

I think important to note that in the quarter we bought back 1.5 million shares of Entercom stock and with today's earnings announcement, the board of directors has also announced the authorization of our next dividend payment which will be payable to share holders on September 28. So with this upcoming dividend payment, we will have paid directly to shareholders $1.14 per share in just the first three quarters of the year, and we now have a yield that approaches 77% with an annualized dividend pay out of $1.52. So with those notes, Operator, we'll turn it over to you for questions.

Thank you. (OPERATOR INSTRUCTIONS). Our first question does come from Anthony Diclemente of Lehman Brothers.

Good morning. Thanks for taking the question. I have one quick one and that is in the category of Real Estate and housing which has been affecting some of the other media names, what's your exposure to that category as a percentage of your station revenues, roughly ballpark on an annual basis, and if you guys could just give us a little bit of color on what you're seeing in that category, if any of the weakness there in Real Estate is affecting your business? Thanks.

I mean, I think it's a pretty negligible portion of our business model. Steve is looking to see if we can give you an exact number for it but again it's de minimis.

Yes, Anthony, we lump it into other categories. I don't have one directly tied to housing and probably the implication is mortgages with the slowdown in house sales, you might have slowdown in mortgages and that is a category for us but neither of those categories are significant to our business model. I'm just looking through the data. I don't see those in the top tier of categories.

Great. Thanks.

Victor Miller of Bear Stearns. You may ask your question.

Good morning, thank you for taking the questions. In Boston specifically, have you seen any kind of revenue response yet to the stations, the changes there? How is WEEI holding in and have you seen any response to the new Sox stations and secondly, Denver is a market that was down almost double-digit last year. Are you seeing recovery in that market and lastly, the stock down almost 7% now yield North of 7% the multiple of of the 10.4 times. How do you look at the repurchase program, how much do you have left on that, how do you look at the effectiveness of having actually put in the $1.50, $2 dividend and how do you look at Lincoln Financial in response to the current stock price? Thanks.

Obviously a lot of good questions. Let me start with Boston. Again, I noted on the remarks that we're thrilled with the ratings and in essence we really haven't had the benefit of a ratings currency until really last week that we could begin to monetize the changes we've made so we're thrilled with that outcome. WEEI has held up very well in all respects. The fact that it could be the number one rated sport the station in the United States far and away even without the Red Sox I think speaks volumes to what we were trying to accomplish there and what we felt was the strength of that franchise and we think that yes, we're going to see significant growth in the EIN (inaudible) revenues going forward so we think that bodes very well for us. The Denver market as you noted yes, had been weak and as the market was off 9% last year, that market is considerably stronger this year. It is basically a market down low single-digits so improvement there and again no reason why you would expect to see long term significant decline in what is a very healthy general market economy.

And I might add some color, we're actually up in our broadcast cash flow in that market so we're performing nicely, but the market is kind of in line this year, not as it was last year.

And the question about how we look at repurchase versus M & A and let's not, I don't even want to focus on sort of where the stock is trading this morning because that will sort it out but I think that we speak our actions speak louder than words. Steve mentioned that we bought back about a million and a half shares in the second quarter. Obviously we think that our stock is highly under valued at these levels and viewing repurchasing to be very attractive. It is not to say we will not look at acquisitions but they have to stand the test of how do they stack up given finite capital availability against repurchase, and we'll run a silver analysis of that and make what we believe is a prudent decision in the best interest of shareholders as we've done historically and you should expect us to look at Lincoln in that regard. I'm perfectly comfortable walking away with nothing. On the other hand if a very attractive yield could be offered that made sense relative to repurchasing, we'll do that. You also touched on dividend effect and this I guess the market speaks for itself. The reality is again, our stocks extremely compelling at these values, I think compelling at higher values and I think it's a great opportunity for folks to take advantage of what is an extraordinary yield that is still extremely comfortable vis-a-vis our free cash flow and what our business expectations are.

Thank you.

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

Good morning. Thanks for taking the questions. A few here. One is when you look out in the third quarter do you suspect an acceleration in trends or do you see an acceleration in trends and sort of second to that question, is something that Anthony touched on, we are hearing sort of a local ad sluggishness more than just the structural issues than a lot of these industries are having from Yellow Pages, local TV. In your local revenues were down in Q2. Is that something that you're seeing so if you could sort of answer that in sort of two part question, and then as we looked to 2008, you've mentioned that a bunch of new initiatives and it seems like you're going to ramp on the personnel side. How should we think about expenses? And then lastly, it seem s like the San Francisco market which you just entered has become quite weak. Any changes or is there something specific in that marketplace? Thanks.

Yes. As far as the third quarter is concerned I would say business conditions in third quarter are very comparable to the business conditions we saw in the second quarter so we don't see any deceleration in the business at all and I want to be very clear about that. As to whether there's localized sluggishness, I think again it's very much consistent with what we saw over the last few months. On the expense side, I would not look at what we're doing on the digital and business development initiative side as being a warning signal vis-a-vis our expense growth for the future, Jonathan. In fact what I would be thinking about is we're very much focused on retooling and reallocating and redeploying our compensation to pursue areas we believe are going to be more rapidly growing and let's say pulling funds away from areas in which we think those investments would be less effective so if you look at our sales tax today for instance , we might invest in a more marketing oriented sales person as opposed to some who was a more traditional or transaction oriented person and that does not we believe lead to any material change in our business model going forward. Lastly you touch on the San Francisco market and yes, the San Francisco market has been as a market weak this year, good luck on our part I suppose but we don't again believe there's any reason why there should be any long-term trends in that market given the robust character of the Bay

Thank you so much.

Marci Ryvicker of Wachovia. You may ask your question.

Thanks. Question for Steve and one for David. How will the Kansas City Royals agreement impact your numbers particularly expenses next year, and then David, the sluggish industry conditions we continue to see and that you mentioned and we all know about, is there anything in particular that's causing this or is it just the same old stuff that's been going on for the past couple of years?

Let me actually take both if I can, Marci, because the Royals deal is a little unusual in that the Royals will continue to sell the play by play inventory so this is not a material payment from us to them for the right. I don't want to get too far into the deal because there are revenue opportunities for us and there are some payments to the Royals but I would put them in the range of de minimis, and we look at it more as an substantial enhancement of the content we'll be providing on our sports station there and we think that the value creation for us is the lift we get on that brand in the market due to the addition of not only the Royals but also Kansas Sports as well. The University of Kansas I should say or KU. Sluggishness, again, I don't think there's anything really new other than it's the general conditions that all traditional media or most traditional media companies are facing today, and again, no real new color to apply to it other than we are retooling and redeploying and refocusing on what we believe are the growth areas in our business model which are digital and business development and think that our client base is very receptive to us coming forward with marketing solutions that enable us to solve problems for them taking advantage of radios extraordinary reach and the very high ROI they get from the radio ads so again the fundamentals for us are strong but yeah, we're disappointed with where revenues are for the radio industry but believe that ultimately the fundamental strength of the business and the opportunities we see will enable us to accelerate our growth.

Great. Thank you.

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

Good morning, gentlemen. Got a couple questions. First, in terms of second quarter market growth, which were the markets which were weaker and are you seeing change or hearing of any change in trends? Is it just at the market level for the third quarter, in addressing that if you could talk about the Boston market in particular? And then secondly, what's your view of the potential for any change in the music royalty rates which the radio industry might be paying? There's obviously been some discussion about that in Washington and elsewhere and how would you dimension any potential impact of that on you?

Hi, James. As far as markets are concerned, again not our results but market results were fairly soft I'd say in San Francisco as we discussed before, and also Boston also saw some weakness in the Norfolk and Indianapolis markets. I want to put that in context, however. We also had very strong strengthen the Seattle market which was up significantly and there was great strengthen the Wilkes-Barre market and also the New Orleans market so there's a wide variance in performance market-by-market and perhaps greater variance than we have normally seen as to why and trying to model that out and figure out a reason, it's difficult because there really is no rational case to be made for why that would occur in one market and not the other. The royalty issue, we pay royalties. I think that sort of in all the noise out there, we're spending as an industry hundreds of millions of dollars every year to the artist community and to the record industry in royalties and we believe strongly that when the dust clears there will not be any change in the fundamental way that the radio and record industry have worked together synergistically for decades.

Any sense is it roughly how much of that is of your total revenue that royalty line?

I think it's approaching 3%?

Yes, a couple percent because it varies with the new stations.

Okay. Great. Thanks.

Eileen Furukawa of Citigroup. You may ask your question.

Hi, just a couple quick questions. You've continued to direct a large amount of your free cash flow towards buybacks and I'm just wondering, is there some minimum level of shares outstanding that you really don't want to go below in order to keep enough liquidity in your stock, and also, can you kind of just give us a quick update on the demand for shorter length ads and do you think Citadel's intent to increase inventory of shorter length ads on their network is going to dampen this effect? Thank a lot.

Your first question, Eileen, was basically on the flow. Yes, we are cognizant of that and we don't have a line yet. We recognize though as we've repurchased now about 27% of the outstanding shares to the Company. We need to begin to be more mindful of that so I think that's something that over the next year as we continue with buyback dividends and other uses of our free cash flow, we will be mindful of. Again, a reminder family controls over about 10 million shares the outstanding shares of the Company so when you look at flow you keep that in mind so we are not announcing publicly any board intentional where that line is. We are mindful of flow for all shareholders though.

To your question on short length spots, yes, the proportion of shorter length inventory and demand continues to grow and we are seeing that trend continue and it makes a ton of sense for advertisers. I would add that in the short run, I think it has had some modest negative impact on industry performance as advertisers have shifted out of 60s and into 30s. Some of them have taken those savings and taken them into their pockets or to other media. Having said that it is dramatically improving the ROI or the cost effectiveness depending on how you want to look at it of the radio business and that should enhance our appeal to advertisers in the future as they allocate budgets to various media and look for where they are going to get the best ROI so we think it's a very positive trend albeit modestly disruptive in the short run. Your last comment or question was on the Citadel inventory and candidly, we're not really aware of that and I don't really have any meaningful thoughts to give you on that.

Okay, thanks a lot.

Laraine Mancini. You may ask your question.

Two quick questions, political what are your expectations in the back part of the year, do you think it's going to move forward because of all of the early primaries and are you positioned to benefit from that and second your digital increase what was the largest driver there and how sustainable do you think those types of increases are?

Political, I think you're going to have a timing difference. I think we'll be a little weaker in October than last year for obvious reasons but by the same token as we look at the Presidential primary as being pushed forward and as we look at the recent Supreme Court decision on issue advertising, we would expect probably to see higher probably pretty confident we'll see higher political revenues in November and December and think we'll have a very robust political advertising season to come so again, as you all know, it is not nearly the same impact on radio business as it is in television but within our world we think we'll see healthy political climate again as we get later in the quarter. We're very optimistic on digital. We're seeing strong demand for streaming in spots. We're seeing strong demand for display ads. We're doing a lot of work in terms of micro-sites and other types of initiatives to take advantage of what the internet can do and frankly, the uniqueness of what radio and the internet can do together, there was a recent study by the radio ad effectiveness lab which showed the impact of a radio plus internet campaign was dramatically higher than a internet only campaign and it makes a ton of sense when you think about logically the promotional power of radio to drive listeners to the web and the way we can integrate our content and our personality in there, so while we just cleared 1% threshold this quarter I think we have a very very bright opportunity over the next few quarters and years to have that percentage grow significantly and look at it as a significant area of growth for us.

Okay, thank you.

Lee Westerfield of BMO Capital. You may ask your question.

David Steve. Good morning. Actually it's a good segue. I wanted to ask Steve if you could update us and give us your impressions about the future forthcoming details in the internet royalties and performance royalties across the web, I guess renegotiation with the CRB.

Yes, I don't think I have anything to add other than what you read in it. You've seen both the web only terrestrial operators question the wisdom of what's been proposed on the fees as to long-term health of this consumer product so I think this is something the courts, users and all the players will have to have that out.

Let me just add to that. As you know, there is significant momentum in Congress to push back against the CRB decision and furthermore, the NAB has proposed a compromise with RIAA that has been pending at RIAA now for a couple of months, so we'll see how it plays out.

Sorry to follow on that one but currently you guys would be accumulating accrued expenses that might be related to royalties?

I think you can assume that we're properly reflecting everything we know about what's anticipated to come.

Thank you very much.

Tom Blackledge of JP Morgan. You may ask your question.

It seems like there aren't really many catalysts for top line growth in the industry going forward. As such, you'd expect further margin and multiple compression over time kind of following trend over the past few years. So just wondering what the justification is for being on that buyer in this environment and then I just had a question, if you could cite a couple of examples of initiatives from business development and ex-digital that you guys are doing? I know you mentioned one earlier in call and lastly if you'd be a buyer on the internet radio side just of any pure plays that might make sense? Thanks.

Let me deal with those sort of in a different order. We have no current efforts to be making any acquisitions in the internet radio space. As far as catalysts are concerned and that's really the core part of your question I want to focus on, fundamentally I disagree with your premise. Certainly as we look over the last few quarters, it's difficult to argue that there's been a lot of growth in the business. That's a fair comment, but as we talk about catalyst and again I think we have to look at the basics here. We have a general advertising marketing economy that is growing in the United States. We've had the impact of the internet on all traditional media which has been a factor obviously in the slow growth condition, and essentially we will hit an equilibrium in that and we will see all of the solid media growing in the future. Radios value proposition relative to newspapers, television and most other traditional media extraordinarily compelling. We reach 96% of Americans every single week and we are the low cost provider to reach those individuals and we have an enormous opportunity to capitalize on our emerging digital platform, so I reject the premise that there are no catalyst s and no opportunities for growth, yes it's been frustrating , yes we would like to have seen it come quicker but we fundamentally believe in the value of the business. We think it again compares well with our competitors and are optimistic about where it's going and are tooling ourselves up to be more effective in what we believe are the more rapidly growing areas of the business. You also asked about other examples of business development and I really don't want to go chapter inverse here, rest assured that we have a number of local markets Which have put together significant agreements and that have a lot of business pending and we're seeing advertiser enthusiasm for programs that are both just pure radio and also for others who are able to apply creative Marketing solutions to their

Thank you.

Operator, I know that we've gone 35 minutes. We'll take two more questions just as a note we are on the road and we'll be flying later so we'll only have time for two more questions given we had so many multi-part questions earlier. Operator, Next two questions, please?

Mike Wienkes of Goldman Sachs.

Thanks, clearly Red Sox are marquise franchise on local and national level. Could you talk more about the strategy with respect to the Royal's contract in KC, how popular is the team and how it fits in your format et cetera, and second the national business being up in Q2 versus local being down, is that pacing similarly in Q3 and I guess were there any unique drivers just because if you look at cats results as you can kind of back into and MS and Westwood and some of the national players it seems to be pretty sharp out performance. That's it.

Mark, and this is Steve. Your questions on it is frustrating year after year after year to kind of track this local national as David mentioned , we're pacing up fractionally in the third quarter in this pace, local is significantly out pacing

Okay.

That could change in three weeks, but that's the data that and you ask about trends. It's really not as David said earlier, let's take the Denver market we talked about it being down last year. It's bounced back and other markets can slide off and it's why some markets are up and some markets are down, why local is up and national is down. I'd say in years of doing this and your years of following this, it's hard to draw correlations, so there's some data and then some speculation.

Understood.

Mark, on the Royals side, obviously, the Royal's are not the Boston Red Sox and having said that, we did a deal where the Royals are still obviously a strong franchise and it has a great following in that marketplace and very promising younger players. The fact is that we did a deal in which we believe we will be, we will at least cover our expenses of operating the stations but again, most importantly, we have this KCSB sports station in the marketplace which with the addition of the Kansas City Royals and on top of KU, we have a very strong content base which we think will enable the radio station to materially rise from being sort of where it is in the market today to where we believe it will be with this enhanced content. That's the value play for us.

Okay, so sort of following the WEEI playbook?

I'd say a little different. I think that again, it's a modest investment in the Royals and there will be modest revenues from the Royals because they have the bulk of the value, they get all of the play by play inventory. It's more just the content enhancement to the brand that we believe will elevate its stature in the marketplace and make it more appealing to advertisers.

Got it, thank you.

Operator then our last question for this morning?

Yes, John Klim of Credit Suisse. You may ask your question.

Hi, good morning, last but not least, right? Do you view the current revenue challenges within the auto category specifically as cyclical, secular, or combination of both? And then have you seen any dealer consolidation in any of your markets?

It's a tough question and it really begs sort of a macroeconomic view of the auto industry that I'm not sure I'm any better prepared to answer than you or anybody else on this telephone call. Steve has made the point often on these calls that our auto business is highly diversified and it may be more used cars one day, it may be more foreign name plates another day, it may be fuel efficient vehicles today, it may be trucks tomorrow. It's just there is a diverse category and maintenance parts and so fourth, so look, we're going to continue to sell out of cars in this country and there's going to continue to be hundreds of billions of dollars of revenue attached to that and people will figure out how to market their goods and services to get an edge on their competition, that much I know, and if radio can come to the table with an efficient edge on the platform with the various customers in that space I think we'll be fine, but to your point there may be ups and downs along the way. I wish I could give you a better answer but that's about as much as we can say.

Okay. Have you seen any --

I'm not aware of any meaningful consolidation in our market as a factor in our revenues.

Okay.

With that, we thank everybody for this morning. We will be traveling today, but in between planes we'll be able to call back for any who have any follow-up questions just leave on my voice mail. Again, thank you and good morning, everyone.

Thanks, all.