Clear Channel Outdoor Holdings Inc (CCO) 2011 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the Clear Channel's third quarter earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Mr. Randy Palmer. Please go ahead.

Good afternoon, and thank you for joining us for our third quarter 2011 earnings call.

On the call with me today are Bob Pittman, Chief Executive Officer of CC Media Holdings and Clear Channel Communications, Tom Casey, Executive Vice President and our Chief Financial Officer, and Brian Coleman, Senior Vice President and our Treasurer. Bob will be making a few opening remarks and then Tom will give you an overview of the third quarter financial and operating performances of CC Media Holdings, Clear Channel Communications and Clear Channel Outdoor Holdings.

For purposes of this call, when we would describe the financial and operating performance of CC Media Holdings, we are also describing the performance of its subsidiary, Clear Channel Communications. After Tom's comments, we will open up the lines for questions.

Before we begin, I would like to remind everyone that this conference call may include forward-looking statements that involve uncertainties and risks. There can be no assurance that management's expectations, beliefs and projections will result or be achieved, or that actual results will not differ from expectations. Please see our annual reports on Form 10-K and our quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission, for a discussion of important factors that could affect our actual results.

Pacing data or information may be mentioned during this call. For those not familiar with pacing data, it reflects revenues booked at a specific date versus the comparable date in the prior period, and may or may not reflect the actual revenue growth at the end of the period. The Company's revenue pacing information includes an adjustment to prior periods, include all acquisitions and exclude all divestitures in both periods presented for comparative purposes. It also excludes the effects of movements in foreign exchange rates.

During today's call, we will provide certain performance measures that do not conform to Generally Accepted Accounting Principles. We have provided schedules and reconciled these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases, which can be found on the Investor section of our websites.

A webcast of this call and the earnings press releases that were issued today can be found on the Investor section of our websites, at clearchannel.com, clearchanneloutdoor.com or ccmediaholdings.com. A replay of this conference call will be available for a period of 30 days.

With that, I will now turn the call over to Bob Pittman.

Thanks, Randy, and good afternoon, everybody.

Before Tom walks you through the details of the Company's solid financial performance in the third quarter, I'm going to take a few minutes to say hello, and to tell you how excited I am to be here to take on this new role. I had a chance that very few people get. I got to test drive the car before I bought it. Actually, I liked the car so much, I didn't want to get out of the seat. Usually, as a newcomer, the more you look at a company, the worse it looks. But in this case, the more I saw, the better Clear Channel looked to me.

So after working with John Hogan and his team on Clear Channel Radio for most of the past year, the idea of taking this job truly became irresistible. Here's why. I see real upside in a company that has incredible fundamentals and is capable of leveraging its infrastructure and capitalizing on its strengths to create new and incremental value.

The opportunities are great for both outdoor and radio. But let me talk about radio first, where I've spent most of my time so far. The big three in media used to be television, radio and newspapers. Now it's TV, radio and the Internet. Radio continues to be strong, even though that might not be its public perception. But when you look at the big three today, radio's advertising dollars are clearly not what they should be, given radio's reach and the amount of time people spend with it. People spend over 2 hours a day with the radio each day, second only to TV at just under 3.5 hours a day, and ahead of the nearly 2 hours people spend on the Internet per day.

Radio is America's companion, with a reach that's been remarkably consistent over time. In fact, the percentage of people who listen to the radio weekly has increased slightly since 1970 to 2010. Now the reach is 93% weekly. The consumer loves radio. And radio is built around big brands with great loyalty. Z-100, KISS-FM, and KFI are just some of the examples of those Clear Channel brands. With its incredible reach and time spent, radio is a great business with a big upside.

Although radio is doing very well with consumers, it is underutilized and undervalued by advertisers. The TV sector gets over $74 billion in ad revenue for the year, while Internet businesses do about $26 billion, but only $15 billion goes to radio. With less usage and a lower reach, the Internet is bringing in almost twice the advertising revenues of radio. And TV is getting slightly more ad dollars than it deserves, if you correlate revenue to usage.

So why hasn't radio gotten its share? It's probably because radio is not focused on getting money to the sector. The radio industry basically waits for radio to be allocated a share of a media budget, and then we all fight for our share of it. Or more, if we do it well. But the real upside is for the radio industry to do what the Internet has done, and that's bring revenue to the sector.

With media like newspapers, magazines and Yellow Pages probably getting more revenue than they deserve, there's a lot of revenue that could be brought to the radio sector without increasing the total media spend for any advertisers. Additionally, if advertisers substituted some radio for just some of their TV, they could maintain their reach, frequency and impact, and actually save money. During my time with MTV and AOL, we had to do the same thing, shift advertising dollars into what worked; in both cases, new sectors. But the idea is the same for underrepresented sectors like radio and, by the way, outdoor as well. And now, that's what we at Clear Channel intend to do for ourselves and, in the process, radio as well.

And in radio with our national platform, Clear Channel is unique. We're number one in the United States in terms of reach of all the media players. Our radio stations alone reach 158 million listeners a month. But that total increases to nearly 240 million a month when you add in all of our affiliates to our other broadcast radio properties. That nicely out paces any of the broadcast TV networks' reach, and is even ahead of the monthly reach of such power-houses as Google or Facebook and their audiences in the United States. Clear Channel, with its national reach, can also even substitute nicely and at a lower price for national reach network television. So I see a lot of growth potential for Clear Channel in just our broadcast radio segment alone.

But another big area of growth potential for us is digital. We see all our radio stations as brands, not just powers and transmitters, and our strategy is to be where our customers want to find us, including online and mobile, with the products and service they expect. As you probably know, we launched the iHeartRadio -- the new iHeartRadio -- in the quarter, to nothing but rave reviews, solidifying our rightful place as the leader in all things radio, whether broadcast or digital. But we are not planning to stop there. We're going to think and act like a nimble startup. That way we can maximize opportunities to serve all of our constituencies, from listeners to marketers and advertisers regardless of the device or platform. And we can be a leader, or at least a fast follower, with all these opportunities.

And we're also partnering like a startup. One of our major partners has been Facebook, and they've even featured our new iHeartRadio product as one of the 2 products at their annual F-8 developer conference's opening session.

We demonstrated the power of our reach and our multi-platform strengths with our record-setting promotion of the iHeartRadio Music Festival, which also instantly put the new iHeartRadio on the map. On July 11, our 850 radio stations from 150 cities across the country announced the iHeartRadio Music Festival at the exact same time, the first time we've ever road blocked all of our stations in all of our markets. With that roadblock announcement, plus all the teasers for it, we reached an estimated 100 million people with news about the biggest music festival in radio history, which then sold out in just 10 minutes.

Since we began promoting the new product and the festival, our Facebook fan base grew from fewer than 100,000 fans to more than 1.5 million for iHeartRadio alone, surpassing both Pandora and Spotify on Facebook in the process. For all of our products, the total is almost 12 million Facebook fans. We also now have nearly 44 million downloads of the iHeartRadio app and upgrades. And according to our internal measurements, last month we had about 33 million monthly uniques for all of our digital products and brands. So I'm excited about continuing to collaborate with John and his talented radio team. For the year I've been here, I've been very impressed with the way they've responded to the needs of the market, and have built innovative products and solutions to fill those needs.

The opportunities at our outdoor company are just as attractive. Of course, I'm new to the industry and I'm still getting to know our business, but what I'm seeing is very exciting. These are very stable franchises, especially with people spending more time in their cars and marketers more interested in reaching their consumers closer to the point of purchase, which is a core advantage of outdoor. With advertisers looking for efficiencies in today's economy, outdoor, like radio, is cost effective. Once again, we need to illustrate the efficiency of this sector and bring in more advertising dollars from outside the sector. Now of course, we would like to be with a little less cost effective over time. The stats show that radio and outdoor should command higher pricing, based on what they provide. In the meantime, the users of radio and outdoor are getting a great deal. And our challenge is to use that to bring in new revenue for us, specifically in both the outdoor and radio sectors.

In addition, as in radio, new technologies we don't think are a risk to growth in outdoor, but are instead an opportunity. Our digital boards, both here and internationally, have been clear successes for us. I look forward to spending more time with Ron Cooper and Willie Eccleshare, supporting them while doing a deep dive to learn more about their opportunities for growth.

Finally, the operating characteristics of Clear Channel are impressive. OIBDAN as a percent of revenue at radio is about 40% and outdoor at about 30%; and incremental margins on additional revenue are much higher. So if we can succeed in bringing new revenue to these sectors and using digital to create new growth opportunities, the returns will create meaningful new value for us.

As you can hear, I am very enthusiastic about the future of all the Clear Channel businesses. I never thought I'd be in this kind of chair again and working so hard, but this exciting opportunity was too compelling. And it's probably also useful that my past experience in radio, TV and the Internet will be useful here, which should make my job a tad easier as well. I've had experience as an operator, and as an investor, in media and Internet companies. And last year, I chose to invest $5 million into Clear Channel equity, because I was a believer. And I'm a bigger believer today.

In sum, I believe this is a company with tremendous assets and people,including John, Ron and William, as well as Tom and his corporate team. Before I turn the call over to Tom, let me just say that he has been doing a great job on these calls to report our earnings. So in the future, I'll be joining these calls only on special occasions. But I do look forward to getting to know each of you all in the industry events and analyst meetings in the months to come. And thanks for your support.

Tom?

Thanks, Bob.

Today I will focus on 3 areas. We will talk about Clear Channel Media Holdings and the radio results, then the results of Clear Channel Outdoor holdings, including the Americas and International, and finally, a review of our capital spending and liquidity profile.

In the quarter, Clear Channel Media Holdings' revenues were up 7% over the year-ago quarter, to $1.6 billion, marking the seventh straight quarter of revenue gains over the prior year periods. Excluding movements in foreign exchange rates for the quarter, our revenues rose 6%. Driving these top line results was revenue growth across all of our operations, particularly our digital assets, as well as the gradual advertising recovery in the US and around much of the world. Our OIBDAN totaled $479 million, an 8% increase over the third quarter of 2010.

Thanks to the strong operating leverage in our model, we have been able to convert a substantial portion of our revenues over the first 9 months of the year into strong cash flows from our business operations, with overall OIBDAN as a percent of revenue at 29% for the same period. These results show that we capitalized on our leadership position and global diversification of our assets, as well as our focus on building an efficient organization and managing our expenses.

At the same time, we continue to invest strategically in our digital assets, from our new iHeartRadio and digital board in the US, to the early stage of digital networks deployment internationally. Next month, for instance, we will be launching the UK's first roadside digital street furniture network in key locations across London. This is just one example. And over time, we are confident that these investments will drive our revenues and strengthen our strategic position.

Now, let me turn to our radio business. Despite a less than robust US economy, our radio revenues rose 7%, to $798 million for the quarter. That growth reflected the acquisition of Westwood One's traffic business, along with an increase in national advertising and digital revenues. Revenues were up 2%, excluding the Westwood One traffic revenues that were noted in the earnings release.

Our operating expenses rose during the quarter, mainly from an increase from the Company's acquisition of Westwood One's traffic business. Expenses increased 3%, excluding Westwood One traffic, expenses that were noted in the earnings release. Our expenses were also up due to higher spending related to the iHeartRadio player, iHeart Radio Music Festival and other digital initiatives. Radio OIBDAN reach $303 million for the quarter, compared to $301 million in the year-ago period. Restaurants, automotive, utilities, financial services and healthcare were among the quarter's best performing categories.

We continue to see improved ratings and out performance during the quarter. Driving that improvement were our market blueprint, our content, our yield management systems, and our digital platform and our national platform. We have also kept our focus on our listeners wherever they are, with the products and services they expect and want, especially in the digital arena. We continue to be encouraged by the results of our digital business, as we again generated an increase in revenues.

As we look at the environment going into the fourth quarter, bookings in our radio business have continued to be challenged and our visibility remains limited. One thing to keep in mind is that last year we benefited from political spend, which totaled approximately $32 million in the fourth quarter of 2010. At the end of last week, radio revenue pacing is flat for the fourth quarter as compared to the prior year period. But adjusting for the political revenues of last year, revenue pacings would be up around 4%.

Let's move on to our outdoor business. Clear Channel Outdoor Holdings reported revenues of $748 million in the quarter, up 8% from $695 million reported in the third quarter 2010. Excluding movements of foreign exchange rates, the revenue was 4%. As a result of higher revenues, CCOH OIBDAN grew 7% over the third quarter of 2010, OIBDAN totaled $189 million for the quarter, compared to $176 million for the third quarter of 2010.

During the quarter, Americas revenues increased 4%, to $347 million, reflecting growth across bulletin, airport, poster and shelter display types, in particular, our digital displays. We had solid performance across many of our markets, with a mix of both large and small markets performing well. Categories that were particularly strong in the quarter included telecommunications, media, healthcare and restaurants.

We continue to see great momentum in our digital display rollout, as we have deployed 768 digital displays in 37 US markets as of September 30, including 57 displays that were installed during this quarter. Over the past 12 months, we've installed over 200 digital displays. Moving forward, we will continue to assess our opportunities to grow our digital footprint. At this point, we expect to deploy 200 or more digital displays this year. That's up from our target of 160 that we gave you during our last earnings call. This increase is due to several recent approvals that we have received, including the new Dallas market opportunity.

In the fourth quarter, visibility continues to be limited with the current state of the US economy. As of the end of last week, the Americas revenues were pacing flat for the fourth quarter, as compared to the prior year period.

At our international operations, revenues for the quarter increased 11%. Excluding movements in FX, international revenues rose by 5%. Our International team continues to advance its strategic plan and delivered another great quarter. Driving these increased revenues was the growth in street furniture across most of our markets, including such countries as China and France. We also saw growth in Switzerland, driven by an increase in billboard revenues. As a result of our revenue growth and improved margins across a number of countries, International OIBDAN grew 16% in the quarter, as compared to the third quarter of 2010. And excluding FX exchange rates, International OIBDAN was up 10%.

Even after adjusting for the benefits of movements in FX, International continues to deliver strong financial performance, reaping the benefits from new contracts and restructuring efforts over the past few years. During the fourth quarter, our International businesses continue to attract demand from advertisers, with street furniture continuing to lead the way. In addition, by the end of the year, international digital out-of-home portfolio will have expanded to include several of our Belgian markets and London. While still relatively early in this deployment, we are excited about the opportunity to grow our digital platform internationally. With economic uncertainty persisting in some of our markets, however, our visibility does remain limited. But at the end of last week, International revenues were pacing up about 2% for the fourth quarter as compared to the year-ago period.

Looking at our total capital spending for the quarter, Clear Channel Media spent $79 million, compared to $66 million in the third quarter 2010. The outdoor business accounted for $60 million of the spend, and includes the continuing build out of our digital display footprint and various street furniture and transit contracts internationally.

On the capital side, Clear Channel Outdoor Holdings net debt totaled $1.92 billion, and leverage under its indentures stood at 3.3 times at the end of the quarter, compared to 3.6 times as of September 30, 2010. Clear Channel Media net debt stood at $19 billion at September 30. Clear Channel's senior secured leverage as defined under its credit agreement was 7.1 times at the end of the quarter, unchanged from the 7.1 times at September 30, 2010.

So we are pleased about where our liquidity and maturity profile ended in the quarter. We have about $1.2 billion in cash on the balance sheet. With very little debt maturing over the next 2 years, we remain focused on adjusting Clear Channel's future maturities, primarily in 2012 and 2016, while delivering strong OIBDAN and free cash flow at our businesses.

So I can conclude, our revenue growth has continued to reflect the gradual growth of the overall ad market, and we are encouraged by our performance across our diverse global portfolio. Going forward, while the economic recovery has been slower than expected, our businesses are well-positioned to continue to deliver strong OIBDAN and cash flow. Given our leadership position, continuing innovation, and commitment to managing cost, we believe that we can continue to drive solid returns across all of our businesses.

Operator, please open the lines for questions.

Thank you. (Operator Instructions)

The first question comes from the line of Marci Ryvicker.

Thank you.

Two questions focusing on domestic outdoor. Results for the third quarter did better than the pacing that you provided about 3 months ago, so when did you start to see better pacing data? And can you touch on national versus local and also auto, since you haven't mentioned that in your description?

And then the second question is on the expense side. Expenses I think were up 7% in the quarter. Can you just talk about what's driving this, and what we can think about in terms of Q4 and beyond?

Okay, Marci, a couple of questions there. Let me try to hit them as I can.

I think, from a pacing standpoint, we chatted with you in late July, early August when we gave you the pacing data. I thought we saw a continued improvement through August and September. So there's really nothing that stuck out there that I would say that we saw an additional spike from there. So clearly what we are seeing though is national is strong in outdoor, domestically. That is continued as trend and we're seeing that national outperform.

As far as sectors go, with regard to auto, actually it was actually down in the third quarter. It actually started out pretty good, but for the quarter it was down, mostly due to a pretty good prior year. So auto is a little bit softer than we would've expected.

Okay.

The last question you had I think was on expenses. A couple of things to keep in mind. As you know that we've been focused on expenses for quite some time. When you look at our year-to-date numbers, our margins are up 1 point for the whole company. Rest assured that all of our businesses are focused on expenses and managing that. What's particularly impacting the outdoor business though is 2 things. One, we significantly ramped up our digital displays, so we have some additional operating cost to ramp that up. And also, we saw pretty significant increases in revenue in our airports business, which has a higher cost of sales and is driving some of that additional expense increases.

Is that something that we should see continuing?

Well, to the extent we continue to see growth in our airports business, it will obviously be a higher cost of sales, but we continue to look at areas to keep our businesses efficient. And the outdoor business actually kept its margins pretty consistent year-over-year. So feel pretty good about their position.

Great. Thank you.

Thank you. We will move to the line of James Dix.

Good afternoon, gentlemen. I guess I have 2 questions.

I guess first concerns what you do think is driving the change in the pacing that you are seeing in the Americas in the fourth quarter relative to how you finished up the third? Just kind of that flat pacing versus the growth you saw in the third quarter, what do you think is driving that?

And then on the international side of things, do you have a sense, over the next 12 months, of kind of what the minimum revenue growth is that you'd need to get some positive operating leverage in that business? Thanks.

Let me kind of break it down.

On the fourth quarter -- we wish we had better visibility on the fourth quarter. But as I told you, the pacings are flat right now. They do move around week to week, so we are not concerned about obviously where we are, but clearly would like to see more strength there.

One thing that we do take comfort in that, keep in mind, is that last year we had a 9% revenue growth in outdoor. So clearly a more challenging comp, year-over-year, given the slowdown in the market that we are seeing right now. Also, while outdoor doesn't benefit that much from political, there is some overhang from that year-over-year as well.

Okay. And just on the international side of things, just the cost structure now that you've kind of restructured it, just any sense of what's kind of the minimum revenue growth you need to see some positive operating leverage?

We continue to see terrific operating leverage coming out of our International business. Their year-over-year, they are up about 80 basis points. So we're feeling pretty good about their performance. We'd like to continue to see that continue to expand, as they are winning more and more tenders. And now with their digital deployment, we think that's another growth opportunity for them. So we are quite encouraged.

I don't have a specific revenue number that we would disclose as far as our outlook. But that business continues to perform very, very well year-over-year. This quarter alone 11%, even adjusted after FX. A very, very strong performance for that business.

Okay. Great. Thanks very much.

Thank you. (Operator Instructions)

We do have a question from the line of Tim Daggett. Please go ahead.

Hello, guys. I see that you bought back some 2014 bonds this quarter. Do you have any additional capacity to buy back bonds in the open market? Thanks.

Hello. Tim. This is Brian.

We did. We bought back 80 million of the 2014 debt. We don't get into specifics on our baskets in our various credit agreements, but we will continue to look for opportunities to repurchase debt if it is attractive to do so, or invest in other ways.

I think to guide you toward the opportunities we have in repurchasing debt, you really would divide it in the junior debt buybacks, since 2008 we've bought back over $2 billion worth of junior debt, spent about $1 billion dollars, captured about $1 billion dollars at discount. So we've been very aggressive in repurchasing junior debt. And when we look at it right now, we don't have a whole lot in the 2012, 2013 area. And that trades pretty close to par, so there's not a lot of discount to capture. And that's why we focused on 2014.

With respect to other categories of debt buybacks, you could have the bank loans, but that would have to be compliant with the credit agreement, and so something that would be a little more complicated to look at. And then you'd have other senior debt, like the PGNs, which I don't think there are any restrictions on repurchasing debt.

So we kind of look at it as the 3 buckets. I'll kind of give you a little guidance on what various restrictions there are with respect to buying back the debt, how aggressive we have been on the junior debt buyback. This quarter we brought in $80 million. That's about 15% of the 2014 maturities, so we felt pretty good about that. And we will continue to keep our eyes open for future opportunities.

Thank you. Next we will go to the line of Bishop Cheen.

Hello. Thanks for the detailed summary.

The debt to the subsidiary, Clear Channel Outdoor, keeps growing. As we look forward, do we think it is going to grow at a similar pace, $75 million to $100 million annually? Or at some point is there anything in the structure that would cap the due to Clear Channel Outdoor?

Yes, Bishop. This is Brian again.

I think you can continue to expect to see the inter-company note grow at the same pace, on an annualized basis perhaps, because there's quarterly variations. But Clear Channel Outdoor is a cash flow generator, and we expect to see that continue.

Could something happen at Outdoor such as an acquisition, a ramped up investment in digital or international contracts? Sure. And to the extent that happens, that would use up cash and thus could slow the increase in the due to/due from note. But I think right now we don't have any plans in that area.

Right. And if I understand it, the cash that the holding company is paying to Outdoor is at the higher rate, at the 9.25% rate?

That's correct. In December, 2009, that inter-company note was amended, and so that the rate that Clear Channel would pay on amounts owing to Clear Channel Outdoor is 9.25%.

Thank you.

Thank you. One moment please. Next question comes from the line of Avi Steiner.

Hello, gentlemen. Thank you for taking the questions. I'm going to run through a couple quick ones here.

Just on the Q4 pacing for radio. I just want to be clear. Does that exclude the traffic division just acquired?

Yes it does.

Thank you. And then on the bonds you just bought back, can you confirm those remain outstanding? I don't know if I heard that in the last question.

You mean, did we retire them?

Yes.

We did not retire them.

Okay. A couple more here.

You recently changed your programming strategy just reading all the press reports on small- and medium-sized markets. Curious what the thought process was there, and then what, if any, cost savings may come from that?

Can I take that one, Tom?

Yes, Bob. I think this one is right down the middle.

I think in terms of the press, I'm not sure anybody got it exactly right. What we've done, and John Hogan has done this with his team in taking quite a bit of thought in, is really looking at our smaller markets that really don't have an economic structure that allows them to do the same quality of programming as the big markets, and looked at how we can use the assets of the big markets to help the small markets, therefore, obviously giving an advantage to a Clear Channel station, because we have more of the big markets we can call upon.

And I also think, just having been around both old media and new media, is that any company started before the Internet is almost by definition outmoded, in terms of its operational structures. So what we did was take a very hard look at the smaller markets and trying to figure out, okay, it's 2011, we have all the assets of Clear Channel, how can we make the product better and the product better? And that was really the driving force.

The horrible thing is that it means some people lose their jobs, and we got rid of some jobs. By the way, at the same time that we are getting rid of jobs there, we are adding jobs in national programming platforms, strategic partnerships and digital. So it is a reallocation of resources and a different way of doing business, realizing and understanding and acknowledging into that the world is different in 2011. It is -- the unfortunate side is the layoffs. The good side is that I think after this reorganization the businesses will be in great shape to operate better, to improve the quality of their performance, therefore hopefully attracting more listeners and generating more revenue.

It was not about cost savings, certainly there will be some there. But remember we also adding cost in digital, national programming platforms and strategic partnerships. So this was not one of the efforts to just reduce cost in the company, it was an effort to truly improve the quality that we offer those people.

And by the way, having been a local disc jockey, started out in Brookhaven, Mississippi at age 15, I know what you're up against in a small market in terms of the financial limitations. And I'm actually very excited about what John and his team have put together here.

That is helpful. And maybe while I have you, you talk about radio taking share, and this is somewhat big picture, but how do you convince advertisers today who seem more enamored with digital and what the digital world broadly can offer versus just traditional media and what you're try to sell with terrestrial radio?

It is interesting. I think with digital, we're in pretty good shape because we have a pretty good digital offering. So when we look at an Internet category, we actually -- if they just want Internet, we can sell them that.

But I think part of it is getting to the marketer about what they are trying to accomplish. The agencies are great and we work well with them, but by the time he gets to a media buyer, all they are doing is just negotiating price and who is going to get the buy. If you get back up to the media planner or even the people who are conceptualizing what the client needs or getting to the client at the CMO, CEO, COO level, what you really begin to understand is what are their plans. What are they trying to accomplish? And then we can look at our assets and say, what assets have we got here that we can put together for them to help them achieve the goals. And when I've run companies and spent money on marketing, I'm not really concerned about what my CPM is. I'm concerned about what return on investment I get. And I think that's true with every marketer. But right now the radio business basically waits until the media buyer has it, before they interact for the business. I think we will do a great job of just talking at different levels in the agency and the client to get in.

I also think that as you look at television -- and I love television, spent a lot of time in it, everyone is enamored of a picture and a moving picture. And as much as TV maybe seem to be under pressure, if you compare it to usage it actually gets more revenue than it would deserve on the usage and reach basis, adjusting for that. And also the agencies -- it is more profitable to have a TV client, because they also get a markup on television. Or if they are getting a flat fee, it's certainly reflected in the fee. It is also cooler.

I think what we have to convince them is that radio is as effective as a TV commercial, which it is. If you take a couple of the primetime shows and look at their cost and lay that against spending that same amount on Clear Channel on a national basis, what you find is you get about 3 times more for your money in Clear Channel than you would on one of those prime time network television spots. So what that says is therefore to make the TV decision, you have to believe that TV is 3 times more effective than radio; yet every study we look at shows it to be about the same as television. Maybe a little worse, maybe a little better, but in a very small band. So part of ours is getting that message out.

But it is also being creative. I think what we demonstrated at the iHeartRadio Music Festival is not just that we can promote a new product we have, but it was also a demonstration of what we can do as Clear Channel. Think about the announcement we made that reached, with the teasers and the announcement, 100 million people. That started off with us saying, well, is the press conference going to be in New York or LA? Which artists are we going to have on stage? And suddenly you have the eureka moment of going, wait a minute, it's 2011, what are we doing talking about those kinds of press conferences? We already talk to more people than any of the media outlets we were going to invite to come cover us. So ours was, let's do our own -- let's do a 2011 version of the press announcement, or the press release, and do it ourselves. And the Today Show then sort of covered it right after that. We grew to Jennifer Lopez being on the Today Show. And then the press wrote about us and spread the word beyond that. Then when you've got to the promotion of the iHeartRadio Music Festival, we were national. We just used Clear Channel to promote it. We used some of our outdoor and we used our radio. And I think everyone would say it was a success, with no reservations.

Again, it is a matter of sort of thinking a new way about our assets, and getting to people to talk to them in a creative way about what we are doing. And part of this is we set up a national partnerships group, whose job it is to really go out and talk to customers and partners about partnering with us. Sometimes it is to how we can partner to market something they have, sometimes it is how we can partner to use some of their technology for something we have. But a broader approach and not about rates, spots, and sort of the traditional media buy.

Long answer to a short question. I hope that helps.

Thank you. The next question comes from the line of Doug Arthur.

A couple of questions on the Outdoor business. Can you just elaborate on the national versus local trends in the US market, for starters?

As I said in our opening comments, we are seeing national continue to outperform our local. We don't give specific details, but it is quite strong, compared to local. I think that's consistent with what we are seeing in radio as well. So I think the national players are continuing to invest and try to take share where they can.

And again, we probably benefit more significantly because of our footprint as well as our assets that we have in the networks that we set up with our digital platforms to command more of that market. So that's what's differentiating us right now and is driving some of our performance.

Okay. And then I know it is always tough to guess, but any thoughts on what the currency impact could be for International in the fourth quarter?

No. We don't forecast FX. Obviously, as you know, it is a volatile time for a number of countries, and so we don't forecast FX.

Okay. Thank you.

Thank you. We will go to the line of Jamie Morris.

Hello. I was just wondering if you could talk about any changes that you might be seeing in digital in 3Q to 4Q? Is that contributing to the slowdown or has digital been just as strong?

Digital continues to be just as strong. There is absolutely no giving up in the growth of digital. We are accelerating, not slowing down our deployment. We expect to be over 200 new signs this year alone, which is up from the prior year. So we are continuing to see opportunities. We just won a number of opportunities in Dallas, which is expanding our footprint. But we are seeing that as a premium product that continues to have high demand. And one that we are continuing to develop as fast as we can.

Okay. Thank you.

Thank you. We will move to the line of Bishop Cheen. One moment please.

Bishop?

Mr. Cheen, your line is open.

Okay, hello.

You mentioned political when you were talking about domestic slowdown, and can you quantify what your political was in Q4, 2010 on the domestic side?

It was $32 million in radio, and we didn't break it out for outdoor. It 's not as significant as that obviously, but for radio it is about $32 million.

Right, that I got. I was more focused on the domestic side of outdoor because --

We don't -- obviously, it is not as large a piece of the pie. It probably is a broader media buy issue. But as far as how much revenue we get from political in outdoors, not significant.

Okay. Thank you.

Thank you. We will move to the line of Nadia Ludlow.

Hello. Thank you for taking the question.

In the International segment, how was performance among some of your other larger markets, like the UK and Italy? And were there any countries where you saw a slowdown or anything below your expectations? Any countries that stand out for -- on the upside or the downside -- based on your Q4 pacing?

As I commented, I think one of the things to keep in mind is that we are continuing to see great diversification across our International business. This quarter particularly, it was China and France driving that performance, clearly offsetting weaknesses we are seeing in Italy and the UK and Spain. But continue to see good strong performance in Sweden. So again, we are seeing the diversification of that business playing through. Those are some of the key markets that we are seeing good performance.

And then just one more question.

You mentioned that France was particularly strong in the quarter, I think that Paris accounts were a significant portion of your revenues there. Where are you on complying with the new Paris regulation on billboards?

I think we are continuing to evaluate the opportunity -- the risks here. The rules are going to come in over the next couple of years. We don't see any immediate impact, but we are working through the issues right now and trying to figure out what exactly the impact is for us in that market. But it is next couple of years.

Okay. Thank you.

Operator, we will take one more question.

Thank you. And that will come from the line of Lance Vitana.

Hello, guys. Thanks for taking the call.

I just wanted to focus on the radio side for a second. You mentioned the cash OpEx is running about 3% in the quarter, versus the organic revenue growth of about 2%. Is that 3% rate a good sort of run rate you think for the foreseeable future? And is the revenue environment in any way putting a lid on your investments in digital?

A couple of things. And Bob probably has some comments on this as well. Let me give you the numbers first.

From a 2% revenue and a 3% OpEx, keep in mind that our revenue is higher than our OpEx. So we are continuing to see pretty stable margins. That's notwithstanding the fact that we are continuing to invest in areas like digital, and we have the radio iHeart Festival this quarter, which obviously had increased costs that are not recurring.

We don't forecast exactly what the run rate are going to be. I would suffice it to say that the margins we're seeing in radio are stable and improving. The things that you're hearing from Bob earlier talking about some of the programming issues, as far as moving some of our investments around the business will accelerate our growth. And we would expect our margins to continue to expand as we deploy more and more efforts into higher margin areas of the Company.

Bob, do you have any comments as far as how you are thinking of investing?

Yes. I think when you look at digital as opposed to the talk we are doing about how we can bring revenue to the broadcast radio sector, digital is one in which you clearly have to spend upfront. And it is true in any new medium, and any new product. I painfully remember in the early days of MTV, Coca-Cola didn't come in for years, nor did McDonald's, which you would think is sort of crazy. But people take time to jump on new products.

I think in digital our expectation is our audience is going to be there before the revenue that we should have from that audience shows up. And so our priority right now is to make sure we get the audience, make sure we have products that mesh well with our radio product, because again we are not thinking of radio as terrestrial radio, we are thinking of radio as our brands. We should be wherever our listeners are, with the products and services they expect. If they're online, we need to be there. If they're on the mobile phone, we need to be there. So part of it is protect the franchise, be there early, don't open ourselves up for others to take our franchise.

The second is open up new revenue opportunities for absolutely new products and the custom radio feature of iHeartRadio is really a new feature. And the social stuff we're doing with iHeartRadio is again, new feature. And both of those, we do look over time to develop a new revenue. But I think we'd be kidding ourselves if we thought that was going to be an immediate response to new products. It almost never is.

Thank you. Just one last quick one. The political revenue, I know you called it out for Q4, but could you give it to us for Q3?

I don't have it off the top of my head, but it was not -- it wasn't significant enough for us to break it out. It was probably in the $15 million range, slightly lower than that. $1-5 million range? 1-5, yes.

Okay. Thanks very much.

Okay.

Okay. That completes today's conference call. We appreciate each of you joining us today. If you do have follow-up questions, please feel free to contact us.

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