Clear Channel Outdoor Holdings Inc (CCO) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Clear Channel first quarter earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time.

I would now like to turn the conference over to your host, Mr. Brian Coleman. Please go ahead.

Good morning, and thank you for joining our earnings call for the first quarter of 2012. On the call with me today is Tom Casey, Executive Vice President and Chief Financial Officer.

During today's call, we will provide an overview of the first-quarter financial and operating performances of CC Media Holdings, Clear Channel Communications, and Clear Channel Outdoor Holdings. For purposes of this call, when we describe 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 Exchange Commission for a discussion of important factors that could effect our actual results.

Pacing data 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, to 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 that reconcile 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 web cast of this call and the earnings press releases issued today can be found on the Investor sections of our websites at www.clearchannel.com, www.clearchanneloutdoor.com, or www.ccmediaholdings.com. A replay of this conference call will be available for a period of 30 days.

And with that, I will now turn the call over to Tom Casey.

Thank you, Brian, and good morning, everyone.

Over the past year and through the first quarter, we have continued to strengthen our business with a series of significant investments that we are confident will solidify our industry leadership and generate robust returns over time. Among these investments at Clear Channel Media and Entertainment, we rolled out our iHeartRadio platform last year with the groundbreaking iHeartRadio Music Festival. Highlighting its great success, the iHeartRadio app recently surpassed 75 million downloads and upgrades. In addition, last year we created national sales and strategic partnership groups to bring money to the sector with new innovative solutions for our customers and partners, while putting together a new integrated marketing and sales group to deliver multi-platform packages that lever our national reach and local engagement capabilities.

We also continue to make strategic investments in our outdoor business. Since the end of 2011's first quarter, we've installed more than 250 digital billboards here in the US, for an overall total of 914. Internationally, we expanded digital footprint in several markets including Sweden, Belgium, and the UK; as well as building out our network with new transit and Street Furniture contracts. And beyond the initiatives, we continue to make strategic acquisitions to expand and improve our existing operations, such as last year's acquisition of a traffic service to enhance our total traffic network; and Thumbplay, to accelerate the development of our iHeartRadio platform.

Quantifying this aggressive investment activity, CC Media Holdings spent a capital spending total of approximately $362 million in 2011, and we expect to deploy our capital at about the same rate or slightly higher in 2012. And, like last year, we plan for about 80% or so for that spend to go to our Outdoor operations, as we see significant opportunities to grow the business. We are pleased with the investments we are making to grow our business. It's an exciting time for the Company, and I am looking forward to sharing our progress in the future.

Before reviewing our financial results, I want to highlight two significant leadership appointments so far in 2012. As you know, William Eccleshare is now overseeing both our Americas and International Outdoor segments and taking advantage of the expertise of each to benefit the entire company. In another key executive appointment, John Hogan was promoted to Chairman and CEO of Clear Channel Media and Entertainment after the business' rebranding earlier this year, to better reflect our multi-platform focus. We look forward to them continuing to lead their businesses to new successes.

Let's move now to the Company's performance in the quarter. I will start with our results for CC Media Holdings and Clear Channel Outdoor Holdings, and then wrap it up with a review of our capital spending and liquidity before taking your questions.

Despite the still slow economic recovery that's limiting advertising growth, CC Media Holdings' revenues rose 3% to $1.36 billion in the quarter. Driving this increase was last year's Traffic acquisition and growth across our digital platforms and Street Furniture assets. The quarter's OIBDAN totaled $260 million, representing a 17% decline compared to the first quarter of 2011. Excluding an $18 million unfavorable impact from litigation associated with the Company's Latin American operations, our OIBDAN declined 11%, reflecting higher costs associated with new contracts and investments, as well as strategic initiatives to fuel growth and integrate the Company's businesses. During the quarter, we continued to actively realign our business operation, and we incurred approximately $16 million of expenses related to restructuring and integration actions. Over time we are confident that our strategic focus and improvements to our core businesses will continue to strengthen our revenues and competitive position.

Now let's talk about the performance at our Media and Entertainment operations. Our Media and Entertainment revenues increased 6% to $272 million in the quarter, again reflecting last year's Traffic acquisition as well as growth in digital revenues and national advertising. The quarter's political revenues totaled $9 million; however, we expect more significant political spending through the fall elections. Revenues grew 1%, excluding the Traffic acquisition, which generated $32 million of revenues during the quarter.

Our operating expenses rose 11% during the quarter, mainly from the Company's Traffic acquisition as well as the investments associated with our digital radio services, including Thumbplay acquisition the first quarter of 2011. This acquisition enabled the Company to accelerate the development and deployment of the next generation of iHeartRadio digital products, including the iHeartRadio player. During this period, the Traffic acquisition expenses totaled $35 million, including severance costs associated with the integration of the business. Excluding the Traffic acquisition, expenses grew 3%.

Among the quarter's best performing advertising categories were automotive, financial services, political and retail. For the quarter, core broadcasting OIBDAN was up slightly from prior year. As a whole, Media and Entertainment OIBDAN declined 3% to $215 million. Among the Entertainment's other highlights this quarter was premier of Madonna's new single and video globally across its full range of media platforms, helping to propel her new album to number one on the iTunes and record breaking advanced sales. In addition, Media and Entertainment helped lift NBC's The Voice to Number One show of its night at NBC's highest-rated regular telecast in nearly five years.

Key to these successes are the mobile investments we have made to continue to grow our ratings and extend our revenue out-performance compared to the industry. We plan to keep investing strategically to leverage effectively our diverse national local footprint, industry-leading content, effective yield management systems, our innovative digital platform, and our strategic relationship with our marketing and advertising peers. As for the second quarter of 2012, trends remain positive. But our visibility is still limited and, as of today, Media and Entertainment revenue is pacing up approximately 2% for the second quarter as compared to the prior year period, excluding the Traffic acquisition.

Now let's move to our Outdoor results. Clear Channel Outdoor Holdings reported revenue of $651 million in the quarter, a slight increase over the year-ago period of $650 million. Excluding the effects of movement in foreign exchanges rates, revenues rose 2%. Outdoor's OIBDAN declined 29% during the quarter, totaling $83 million, compared to $117 million in the first quarter of 2011. This increase was due primarily to $18 million litigation expense in Latin America, as well as the increased cost from strategic initiatives and last year's investments and new contracts.

I would like to point out a change we that we have made in reporting our Americas International segments. We have determined that our Latin American operations are more appropriately in line with our International operations, and, effective this quarter, the operations of Latin America are no longer reflected within the Americas segment. Instead, they are now included in the results of International. This adjustment did not change our total Outdoor results. Only the segment financials have been modified for this movement.

Now let's turn to our Americas segment. Americas Outdoor revenues increased 4%, or $10 million to $280 million in the quarter. Driving the growth in revenues were bulletins in airports, especially the digital displays that we continue to deploy, including more than 250 new billboards installed since the first quarter of 2011. Americas operating expenses rose 6% to $195 million, resulting from higher site lease expenses associated with the greater airport and bulletin revenues, as well as higher production costs related to new contracts and greater expenses related to the initial ramp up of our newly installed digital displays. Americas OIBDAN declined 1%, to $85 million.

The quarter's strong advertising categories included retail, healthcare and medical, amusements, and media. As I noted earlier, we are deploying our new digital displays aggressively. During the quarter we installed 57 new digital billboards in the US. Moving forward we will continue to pursue opportunities to expand our digital footprint and look to deploy 175 or more digital billboards in our US market in 2012. And that's an increase from the guidance we provided during our last quarterly call, of about 150. At this point, revenues at our Americas segment are pacing up approximately 1% for the second quarter as compared to the year-ago period.

Now let's go to our International results. During the quarter International revenues increased slightly, excluding foreign exchange rate effects. On a reported basis, revenues declined 2% to $371 million, led by $11 million impact from unfavorable movements in foreign exchange rates. Street Furniture drove our revenue growth in the quarter, particularly in China, France, and Australia. But this growth was offset by decreases in billboard revenues from various other countries, including the UK and Italy. We continue to see variations in performance across the European market, due to some of the macro economic factors. There have been slow downs in Spain and Italy. However, this weakness has been offset by continued growth in such countries as Switzerland and Belgium.

Operating expenses grew 10%, or $32 million excluding the effects of movement in foreign exchange rates. On a reported basis, expenses rose 6% to $21 million. Again, contributing to this increase in expense was the $18 million litigation expense and higher costs associated with new contracts gained during the prior year, reflecting $160 million of capital expenditures, investments during 2011; as well as spending on various strategic initiatives throughout the quarter. As a result of higher expenses, OIBDAN declined 58% to $22 million. And, excluding the impact of the Latin America litigation matters, OIBDAN declined 22%.

Despite the economic challenges that our International team continues to face in some European countries, they have strong leadership to execute their strategic plan and to capitalize on diverse geographic footprint spanning Europe, Asia, Australia, and now Latin America. As of today, International revenues are pacing down approximately 1% for the second quarter compared to the prior period.

Now turning to our discussion on capital spending and our balance sheets, CC Media Holdings' total capital spending for the quarter was approximately $73 million compared to $64 million in the first quarter of the prior year. Since the first quarter of 2011, our capital spending totaled $371 million, reflecting our increased investments in our business. As you can see, we are continuing to deploy capital to further strengthen both our Media and Entertainment and Outdoor platforms, including such initiatives as iHeartRadio and our outdoor digital displays, here and internationally. About $56 million of our first quarter spending occurred in the Outdoor business, including the build-out of our domestic digital footprint for the development of 57 digital billboards and various Street Furniture and transit contracts internationally.

In addition to capital deployment, we have remained proactive in managing capital structure. On March 15, a subsidiary of Clear Channel Outdoor Holdings issued a total of $2.2 billion aggregate principal amount of 7.625% senior subordinated notes due in 2020. Proceeds from the note issuance were used to pay a special cash dividend to Clear Channel Outdoor Holdings stockholders. Using primarily its share of dividends, Clear Channel Communication repaid approximately $2.1 billion of indebtedness. The majority of the debt repayments reduced our senior credit facility debt with a maturity date occurring in 2014, creating a more manageable capital structure and maturity profile for Clear Channel through 2014.

As of March 31, 2012, CC Media Holding total debt stood at $20.7 billion; Clear Channel's leverage as defined under its credit agreement at the end of the first quarter was 6.2 times compared to 7.2 times the year before. Cash on balance sheet at quarter end totaled $1.3 billion, an increase from year end.

At the end of the quarter, Clear Channel Outdoor Holdings' net debt totaled approximately $4.2 billion, and leverage under its indenture was 5.9 times on a total consolidated debt basis, and 3.2 times on a senior debt basis. Cash on the balance sheet was $535 million.

With very little Clear Channel debt maturing before 2014, we are very comfortable with our capital structure. We'll stay focused on proactively managing our balance sheet while delivering strong OIBDAN and cash flow at our businesses.

I will close by saying that are pleased with the progress of our business during the quarter. Our revenue growth reflected a gradual improvement of the overall ad market, and we are encouraged by our top line results across our diverse global portfolio. We feel good about the key investments we are making, such as organizing our new strategic partnerships, our national sales in the integrated marketing and sales groups, and high expectations for the opportunity that they create in the future. Looking ahead, while the economic recovery continues to be slower than expected, we are optimistic about the trends we are seeing the remainder of 2012. And we are confident that our businesses are well positioned to deliver growth and OIBDAN.

Thanks for your attention. Now, Operator, we are now opening the lines for questions.

(Operator Instructions) Our first question comes from the line of Marci Ryvicker

Thanks. Two questions. I'm trying to get my hands around Americas Outdoor both with revenue and expenses. You were up 4% revenue for Q1, now you've decelerated to 1% in Q2 with slightly easier comps. So can you give us color? Is it your taking boards down in New York City I believe, is that having an impact? Is it a category issue? Is demand going to Facebook? Anything you can talk about on the revenue side.

Couple of things, we did have a pretty good quarter -- about 4%. We did see some deceleration throughout the quarter. So, as we've said, our outlook is difficult to see at this time, but right now we are looking at 1%. As far as where we see it happening, I think that when we look across our businesses, for Q2, nothing really sticks out as a key driver. We continue to see retail auto and health care continuing to do pretty well -- media and financial services a little bit weaker including telecom. But nothing specifically comes out as a key driver. It's just overall slow down throughout the quarter.

Both National and Local?

No National and Local are up slightly. Again, I think that we are continuing to see some slow down, but right now we are trending just at about 1%.

All right. And then expenses -- it would be helpful if you can at least outline what you anticipate for the year, if you have a budget for both the Americas and International just so we can get a handle on where OIBDAN is going.

Yes. We don't give obviously outlook on our expenses. But couple of things I want to comment for the quarter -- this is for -- give you perspective. We did have a series of integration, restructuring activities throughout the quarter. That total was about $16 million, $6 million of that related to CCOH. So we did have some special items in the quarter. We don't give outlook for the year. We did take down some boards in the quarter -- about 300 boards. Obviously with a slower economic environment, you will continue to see us working on our expenses to keep them in line. Keep in mind that we are reflecting the significant investments we did last year. I would call your attention to the fact we had about $144 million of CapEx deployed in the fourth quarter versus about $73 million in the first quarter. You can see pretty significant investments, and that's really what you are seeing in the first quarter is a pretty dramatic ramp up.

Okay. Thank you.

Bishop [Sheen]

Let me follow up on Marcy's question. When we look at expenses going forward, and I understand you have said this was choppy, and this had to do with a lot of different things including enhancements. But, when we look out to the back half of the year, should we be thinking that these expenses are going to flow through the P&L for the whole year, or will this spike in volatility pare down a bit?

Well, I like to think that we can continue to maintain our margins, Bishop. Clearly for the first quarter we are seeing some acceleration from the investments we made in the US as well as in International. We continue to see significant growth in Belgian for example, a very large tender we did. So, there is some of that investment that's flowing in. As the buildup of our revenue from the new boards catches up -- as I think I've told you before, that's usually in the three to six month time frame -- we would see the revenue to start to kick in and keep our margins at the levels we've been performing at. Obviously it's something that we're going to continue to watch, the economic environment is slower than we expected, and so we will continue to monitor that.

Okay. Two quick housekeeping, the 2% pacing for CCME, did you say that's apples-to-apples with traffic or core without traffic.

That's without traffic. Okay. Remind us again you made the Traffic acquisition in which quarter of 2011? I believe it was the end of the first quarter.

That's what I thought.

Actually, it was just beginning of the second quarter like April.

April, okay.

Yes, keep in mind that we were delayed with the review that the DOJ was going on that business so our integration is a little bit behind where we normally would be accustomed to doing. But we are well on our way to integrating that business.

Okay. Then, last housekeeping -- the point you were making about taking down some 300 boards in Q1. Are you implying that, that is going to help cut the expenses going forward?

There is clearly a benefit on the expense side obviously reducing site leases. But by taking down 300 displays what we are doing is continuing to monitor the profitability of certain boards and continue to trim the portfolio as needed. As the economy continues to evolve, we will continue to look at that and take those actions for profitability as well as reduction in costs.

Good. Thank you.

Doug Arthur

Couple of questions -- I'm wondering if you can just amplify on international trends. You've got strength in certain parts like China furniture -- be curious as to your near term outlook to the extent you can talk about it in Europe. And then second question, on the capital structure, I guess net debt of $4.2 billion, obviously fixed, what kind of flexibility do you have there as free cash flow grows to lower that over time over the next 12 months or so, thanks?

Doug, just I will handle the international and then I'll pass it over to Brian. Clearly we are continuing to see a challenging environment in Europe, however, there are -- it's not everywhere for example, in Asia, we continue to see strong growth in China and Australia. Belgian and Switzerland continue to be doing well. And France has been stable as well. Clearly the challenges we've seen are most predominant in Spain and Italy and, at least in the beginning of the year, with the UK. Obviously the UK will benefit somewhat from the Olympics. Just to give you the idea the diversification of the portfolio -- when you take out the slow down in the UK, Italy and Spain, the revenue for the international group would be about 5%.

So the rest of the portfolio of Europe and our International business rather is doing quite well. But we are seeing some slow down in the other countries. Obviously, we are resizing the businesses for the environments that are there and will work our way through it. The rest of the business is quite healthy, and we are feeling pretty good. We obviously run that business on a portfolio basis, sometime business is -- some countries are up, some countries are down. Clearly, we are seeing some significant weaknesses in southern Europe, and we will continue to monitor that environment. Brian, do you want to cover the debt piece?

Sure. Doug, as you mentioned, the vast majority of Outdoor's debt is in the form of the two note issuance -- the senior and subordinated notes. So these are long term fixed rate notes. There is some flexibility with respect to fixed price calls that will kick in on the senior notes. Our subordinated notes are at what we feel are pretty attractive rates. The senior notes are probably higher than market. So this is something, I think we mentioned on our last conference call, that we are continuing to examine. The remaining debt is largely in our International operation, and there is not a lot of it.

I think the question that you are asking is, is there an opportunity to reduce debt going forward, and, certainly, we expect the Outdoor companies to generate free cash flow such that it could. But we will have to continue to look at the opportunities given that the note issuances are long-term. But we do have flexibility and call protection that have been built in to the senior notes, and we'll evaluate that throughout the reminder of the year.

Jason Kim.

If I could follow up on expense side from a different angle. When we think about expense base going forward, obviously you're investing for the future for greater revenue growth going forward. But, as we think about the comp, comparison versus 2011, does the comp get easier as the year progresses because presumably you had ramped up some of these investments throughout 2011. Therefore, as you get to the latter half of 2012, the expense comparisons become a little bit easier for you guys?

I think what we are seeing, Jason, is a little bit of the opposite, I think what most of our expense growth is coming from is from our development. So, it typically is the other way where it's coming in ahead of the revenues. What you will see on a comparable basis is a steady ramp up of expense base for new development. What we have to do is make sure that we are getting the revenue lift that is embedded in these contracts to make sure we are getting our margins. On the expense line itself, I wouldn't expect the comps to be necessarily the right way to think about it. I think we were trying to grow the business and invest in the business. What we are seeing right now is a little bit of a slower environment than we would have liked in our outlook for the second quarter. We do think that the second half will be better clearly with some additional political spending, should help the entire portfolio.

On the radio side you recently made a decision to continue go ahead with the ad free format for the custom stations and, given the investment you are making, just wanted to get your take on that decision. What are some of the parameters you are looking for before you try the monetize the product?

We continue to see terrific growth in our iHeartRadio platform, and we're very excited about the feed back we are getting from our customers as our total listening hours are up significantly and our total downloads are up nicely -- over 75 million. We are continuing to grow that business on the back of iHeart platform, and we see opportunities to engage in consumers like we have never seen before. We are being cautious on studying how to monetize that customer relationship, and we have delayed any kind of monetization efforts right now as we continue to study it and make sure that we -- how we do it is the least invasive as we can. And we're getting feed back that the loads on some of the streaming is disruptive so we have to be careful on how much we have to put in there, and we're evaluating all those options now.

Okay. And then I'll just ask a couple of capital structure questions. First of all, any thoughts on trying to extend the ABL facility? Obviously, there has a different sort of credit profile compared to some of your other credit facilities out there. So I just want to ask what are your thoughts on trying to extend the piece as a additional source of liquidity for you guys?

We are thinking about that as you pointed out, this is a little bit different characteristics with respect to this facility. It is largely at market. It is undrawn. Extending this beyond 2014, would provide additional liquidity since it is undrawn, and so it is something we are focused on. We think the ABL market is pretty attractive. And so it is something that we are considering currently.

Got it. And one more question and then will get back in to queue. Again on the balance sheet, on the fourth quarter earnings call you mentioned that the incremental senior debt basket was in the neighborhood of about $750 million under the LBO and the PGN indentures. And when you did the most recent CCO transactions and the subsequent revolver, draw down, and the pay down, you also made it a voluntary pro rata repayment of the bank debt in the tune of $170 million, if I remember correctly. I'm assuming that was done to kind of recharge the basket because you had to be able to draw on the additional revolver as well as the dividend leakage to the CCO minority shareholders.

That was sort of a long winded way of asking number one the incremental senior debt basket under the bond indentures are pretty minimal at this point, but we should see just be thinking about that as you're just replacing the basket with cash being able to sit on the balance sheet. And, number two, as you repay the bank debt with cash on hand going forward that incremental basket will be recharged.

That is all correct. I'm going to rephrase it just so hopefully it is clear to the audience. When we made the $170.5 million voluntary prepayment, it was to manage capacity under the incremental senior debt basket. We don't really disclose what is outstanding under the basket on an on-going basis, but we have periodically. And I think the calculation is out there. I know I have seen it in a couple of analyst's reports. I think people have a pretty good understanding and can do the math. We don't manage it to zero. We have a cushion. There are specific baskets that we don't include in there because it is a general incremental senior debt we can raise. I'm referring to attributable indebtedness -- I'm referring to foreign sub. These are specific senior debt that we can put in place.

On a general basis, we are fairly exhausted on the incremental senior debt baskets. As you pointed out, as we add amortization payments and other payments to senior secured debt from cash, that would recharge that basket. I think we have our amortization in our table on our 10-Q. You can see how that would happen on mandatory basis but also on a voluntary basis if we chose to use cash on our balance sheet of which we have. Around $1.3 billion to pay down secured debt. That would recharge that basket. So, hopefully between the way that you put it and the way that I put it, that fairly complicated explanation will resonate.

Okay. Thank you.

[James Dyck]

Just a couple of questions. First, on the revenue side of things, did you in the first quarter see any differences in growth between your top ten markets in the Americas and then your smaller markets. And then kind of the same question for your pacings -- are you seeing difference by market size?

It's hard to specifically break it out. I think in the Americas, I think we clearly are seeing our business pacing up 4% was a pretty good quarter. National was good. Local was good as well. Specifically by market it varies as advertisers move around the country. It's hard to get a specific trend by geography. In the radio business, our top ten businesses were probably a little bit lower than we had expected mostly due to Local. But the National business continues to do well, so it's hard to say that specific trends by markets for each one of those businesses. Where we see the most dramatic trends are in the countries in Europe where we talked earlier about UK, Spain and Italy being offset by Australia, China, Sweden, Switzerland.

Okay. And then In terms of your reclassification of segments, two things -- you gave out pacing data for the prior quarter, I think the Americas up 5, then International I believe was flat. Would those pacings have been materially different under the reclassified format?

No, we did them pro forma. So those are all consolidated in with Latin America in there comparing to the new International.

So it is apples-to-apples. The up 4% you posted in the first is apples-to-apples with the up 5% pacing that you had seen previously.

I'm sorry, say again.

On your last call you said you were pacing up 5% in the Americas and then you finished up 4%, but you also reclassified your results. I just wanted to know whether -- how you finished in the Americas in the first quarter in terms of that up 4%, was apples-to-apples or not materially different from the up 5% pacing.

Yes. Sorry. Just to be clear, James. I thought you were referring to the go-forward. For Q2, all the Latin America pacings are in the International segment. For Q1, they were in the Latin America segment, and they were in the actuals as well. But, given the size of our Latin America business, they are not materially different from -- they are going to drive the change really at all.

Okay. Are you, I didn't see it, are you providing reclassifications for the other quarters of 2011, or are you going to do that as you report each quarter.

We anticipate filing an 8K over the next couple of weeks to give you the pro formas as far as some other SEC filings we've got to do.

Okay great. And then just one last one on operating expense, you kind of outlined a little but of the investment you've made in terms of some of the street furniture contracts as well as your digital. Do you have any sense for the full year, 2012, how much impact on operating expense you are getting from kind of those new additions as opposed to just kind of the organic growth of the business and Outdoor? Is it adding another potential point of operating expense growth? The ramp up on street furniture and like contracts and the digital -- just trying to get a little bit better sense as to the organic growth of expenses in Outdoor versus the organic part related to growth initiatives. Thanks.

We haven't given any kind of guidance like that, James. I think we continue to see opportunities to grow both domestically and internationally in our outdoor business, we still have pretty significant expectations on CapEx, over $350 million, across the Company. Most of that is going to be in the outdoor business -- about 80%. So I think it's the operating expenses associated with that. Some of those obviously come in more in the front end as we are ramping them up. But hard to give you a specific percentage/ A lot of these are subject to winning of tenders and the actual deployment rate we do -- as I mentioned earlier, the fourth quarter was so significant with 90 digital boards and $144 million of total CapEx, a significant investment. We are seeing that in the first quarter.

Okay. Thanks very much.

Lance Vitanza

Couple of housekeeping items first, and then I'll want to get in to the Outdoor as well. At CCME the revenue ex-political was down -- I'm sorry could you repeat what that was ex-political in the quarter?

Political for the quarter was $9 million, I would have to go do the math, but it was $9 million. We can back it out. But --

Looks like revenue sort of on organic basis ex-political, kind of core if you will, was sort of flat to down a touch versus I think the recent -- the last call, the pacings at the time were sort of plus 2% if I remember correctly. So my question there is, it seems like there were a couple of quarters now -- and the same thing happened to CBS -- where results have been weaker than the pacings would suggest. Should we expect that dynamic to continue for the next few quarters?

I think, particularly in CCME, we gave 1% pacings in the first quarter now too, I think that we do expect some pick up in political as we approach the election. We are expecting some year-over-year improvement with the comps year-over-year not having political last year. I would expect the -- some improvement with regard to political. What I don't know is what the underlying economic environment is going to be, and how that's going to under -- drive the organic growth that you were referring to. But this is kind of where we sit right now. We are seeing the political activity start to pick up, and we will keep you informed as we move through it. That's how I at least I see the rest of the year playing out.

Okay. Did I hear you right? You had $16 million or so of integration and restructuring that took place at Outdoor, and that would be in addition the $18 million charges for the litigation in Latin America, is that right?

It was $16 million for the whole Company. About $6 million of it was related to the Outdoor businesses.

I got you. Okay. And then could you explain the relationship between the capital investments and the CapEx that you made last year and this year for that matter, and the investments that you are making now which are running through the P&L? When I think of investments, I think of assets capitalized, put up on the balance sheet and amortized over time. Is that what's going on here? What exactly are the nature of these investments in the Outdoor business that you are making?

Yes. They really come in a couple of different pieces, but they have a similar impact. Typically when you win a tender in an international business, new street furniture contract for example, you are going to have increasing cost, an operating cost to set up the network and start to build it out while you are waiting for the revenues to start coming in from the new sales. In the US on the digital side, similar activity where you've got increased -- typically increased site lease expense associated with the new board. Yet the revenue and the occupancy hasn't necessarily fully engaged. So you have just a mismatch between the revenues and expenses.

Okay, great. And then last but not least, the revolver -- could you just remind me the current size of the revolver facility and what your availability is under that facility at the moment?

We have two revolvers, the cash flow revolver is a 2014 maturity. And we fully drew it and repaid all but $10 million of it. Of that $10 million, we've drawn all of the $10 million. So there is no availability under the cash flow revolver. The other revolver that we have is -- the ABL, it's our receivables backed revolver. It's a $625 million in terms of availability, but it's also limited by borrowing base. That borrowing base is less than $625 million, but we haven't borrowed any under it. We do have some letters of credit outstanding backed by that facility because we moved those over from the cash flow facility. I think Jason asked earlier the question about our intent with the ABL. Our intent would be prior to maturity to extend that.

So what you have seen us do is maximize the repayment of 2014 indebtedness by drawing down and repaying permanently the revolver because we are able to do that and not have to apply the repayments pro rata across all of our term loans. But keep the ABL outstanding -- undrawn, and, potentially, we will be able to extend it. And that will become our liquidity facility in the future. We don't disclose the borrowing base, but we have borrowed under it in the past. It's somewhat seasonable. You can take a look at our historical statements, see what we borrowed in the past, and get a pretty good idea of what our borrowing capacity has been. Another way I've seen people do it, is they know that our 85% of our broadcast receivables are part of that borrowing base, and I think that provides a pretty good estimate of what is available at any reporting period.

Thanks.

David Miller

Just one question, one of the issues that's kind of plagued these Outdoor names, over the last year or so, is just this sort of conceptual notion that digital is cannibalizing static. There are certain advertisers that just love the flexibility of digital -- love that they can put their ad up in the morning or say evening drive evening drive by. I know that Ace Hardware puts a lot of their ads up on the weekend as schmucks like me are driving to the hardware store on Saturday morning, stuff like that. I mean, you guys are taking down static boards. Is this one of the reasons that you are taking down the static boards, and are you seeing the trend in the US business at all? Thanks.

David, I think a couple of things are happening. Clearly, where we can, we are taking some of our best locations and trying to put digital on them. That does put some pressure on the traditional business. Having said that, we think that the pay back is significantly higher than anything we get on the static board. So we will continue to do that. But it does puts some pressure on the traditional business as you take, A-class boards out of the market and replace them with digital. We, again, think that the capacity we get and the rates we are getting on those make that tradeoff pretty straight forward and pretty attractive. We will continue to do that. I think that trend will continue.

I think that internationally, that the trend is expanding quickly, particularly in street furniture. We've got a number of things going on throughout Europe to kind of digitize or put digital in to a number of street furniture applications as well as some of our mall business and transit. It's a terrific product, and our advertisers are excited. We are able to bring additional advertise to the medium as a result, and this is an exciting part of the growth of outdoor.

Thank you.

Jim Goss.

You might have started to allude to this in your last comment. I was wondering that traditionally the US markets tend to be more billboard and poster oriented. Internationally, it seems more street furniture oriented. I'm wondering over time as we see street furniture pop up in to the US, if you are also seeing more billboard and poster opportunities as people change and the nature of society changes, if it's also created some opportunities of that nature as well internationally.

I think the first and foremost, I think the technology has come a long way. And the applications we can put in place now are very, very attractive and are bringing new, again, new advertisers to the medium. What you can do now, particularly on indoor applications -- parts of transit as well as in malls, is significant and also selling them as a network is also an important part of our strategy. I think in the US the street furniture applications we have a couple of those in -- across the country, San Francisco and DC, for example, and we have digital applications in San Francisco and gotten some terrific feed back.

I think the consumers -- are attracted to it. You are seeing new technologies like InterActive capabilities that are changing the way people think about the advertising, and I think it's a new and innovative development for our medium that is exciting and we think will continue to grow. I think one thing I highlighted is the formats are very different in the US, most digital tends to be in the billboard area and in Europe it tends to be more in the street furniture, as you mentioned, malls and transit.

You are not seeing a lot of highway billboards sort of -- developments in Europe, for example or are there restrictions to putting those up as there are in the United States.

There are, there are restrictions by country. Obviously France probably being the largest with billboards and Spain as well. For the most part, it's mostly in the street furniture-poster type applications and then, as I mentioned, transit and malls.

Okay. Structurally, do you think there is any chance that you may have too many international markets, including a number that are smaller? And that it might be better at some point to do swaps or sales to focus in on fewer so that the operating cost structure would be more manageable?

I think, as we mentioned earlier, we do have on going process where we do take down boards. I think that's something that we continue to do. We did a significant amount back in the '08, '09 time frame for exactly that reason, particularly in areas like the UK and France. There clearly is capacity that needs to come down as you add capacity in some of the new digital areas. It is something that you need to continually monitor and trim the inventory in order to maximize your rate and occupancies.

The last thing, in a totally unrelated area, royalty rates have become more in the news lately involving all sorts of elements in radio and music services. I'm wondering if you could talk about what the royalty rate structure is for iHeartRadio and whether it varies depending on the customized version versus the collection of your stations. And also, if you are even getting the pressure at the broadcast level from sound exchange and ASCAP/BMI

Well obviously there is a lot of regulations that govern this area, and we are complying with all of them. We continue to develop out our iHeartRadio platform and pay the appropriate amounts due under those various agreements. We don't disclose specifics. It's obviously a very complicated area. Our results are reflecting the new streaming that we are doing. It's a new expense item obviously. We obviously think it's a terrific way to engage with our customers and something that we will continue to monitor and work through. But it's difficult to give you a specific answer on the phone. And, again, it's a complicated area and one that we are monitoring very closely.

Alright. Thank you.

Operator, can we take one more call? We are getting close to the end of the hour.

Sure. Brett [Harriss].

Could you just give us a quick reminder of how much is left of the buy back authorization for repurchases of CCO and any practical listing applications of reducing the flow below 10%?

I don't have the number in front of me, but I think, of the original $100 million authorization, we probably have $80 million -- $85 million. If that's way off, I'll let you know. That authorization was set up for the opportunistic repurchase of shares of Outdoor as well as shares of CCMO. We have not purchased any Outdoor shares this past quarter. As we think about it going forward, I think it would be under the same criteria as we have in the past, if it's opportunistic -- looks like a good price, we would look to do it. We are quite a ways away I think in terms of our historical purchases have been under a 10b18 safe harbor restriction. We are quite a ways away I think of hitting the 90% threshold. We started out at 90%, and we have recently IPO'd Outdoor, so I think we would be comfortable getting to there. The authorization indicates that a repurchase is not our intent to go private. I think there may be some liquidity issues we'd have to think through if we went above 90%. We are quite a ways away from it, so I don't know that we have given it a great deal of thought. Did I address most of the question, Brett?

That was great, thank you.

All right. I think that concludes the call for today. We appreciate all of you joining us today. And, if you have follow-up questions, please feel free to reach out and contact us. Thank you.

That does conclude our teleconference for today. Thank you for your participation and for using the AT&T executive teleconference service. You may now disconnect.