Cumulus Media Inc (CMLS) 2022 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to today's Cumulus Media Quarterly Earnings Conference Call. I will now turn over to Collin Jones, Executive Vice President of Strategy and Development. Sir, you may please go ahead.

Thank you, operator. Welcome, everyone, to our third quarter 2022 earnings conference call. I'm joined today by our President and CEO, Mary Berner; and our CFO, Frank Lopez-Balboa. Before we start, please note that certain statements in today's press release and discussed on this call may constitute forward-looking statements under federal securities laws. Actual results may differ materially from the results expressed or implied in forward-looking statements. These statements are based on management's current assessments and assumptions, and they are subject to a number of risks and uncertainties. In addition, we will also use certain non-GAAP financial measures. We believe the supplementary information is useful to investors, which should not be considered superior to the measures presented in accordance with GAAP. A full description of these risks as well as financial reconciliations to non-GAAP terms are in our press release and SEC filings. The press release can be found in the Investor Relations portion of our website, and our Form 10-Q was also filed with the SEC shortly before this call. We also posted a Q3 investor update to our website, which we encourage you to download if you have it already. A recording of today's call will be available for about a month via link on our website. And with that, I'll now turn it over to our President and CEO, Mary Berner. Mary?

Thanks, Collin, and good morning, everyone. Despite a challenging market environment, consistent execution of our strategic plan has put us in an enviable position that will allow us to not only effectively manage through the continuing headwinds but also take advantage of opportunities that may arise. And in the context of this environment, our third quarter results reflect the benefits of that execution. Although total revenue driven by macro weakness declined 2%, we increased EBITDA 2% with expanded margins. Digital revenue, a bright spot, grew 5%. We generated $24 million of cash from operations. We reduced net leverage to 3.7x and we returned additional capital to shareholders through open market share buybacks. Looking ahead, we are confident that we will maximize the impact of our multipronged capital allocation approach and as we continue to rigorously execute our business plan, drive shareholder value. To remind you, our plan consists of the evolution from a radio-first focus to a multi-platform audio-first content strategy, including the development and growth of multiple profitable digital businesses, significant and continuing reduction of our cost base, which enhances operating leverage, profitability and cash flow generation, high ROI internal investments, a disciplined approach to M&A and the generation of incremental cash through noncore asset monetization and the creation of a strong balance sheet with best-among-peers net leverage and liquidity to support a return of capital and debt strategy that maximizes shareholder returns. And as I said, Q3 is yet again another example of the value and impact of this plan. We highlighted on our last call that the market environment, particularly for national advertising, has been weak. As we mentioned, starting in late Q2, national advertisers reduced marketing to mitigate the headwinds they face from inflationary pressures, persistent supply chain issues, finance market turmoil and overall recession risk. That weakness in national advertising demand that we experienced affected all of our national channels, including network, national spot and podcasting throughout Q3. On a relative basis, our local businesses has held up better, outperforming national, though notably, we did see some of that gap start to narrow as local did not outperform national in Q3 to the extent that it did in Q2. Collectively, these macroeconomic pressures resulted in broadcast revenue declines of approximately 5% in the quarter, which was the major driver of the 2% decline in total revenue. That said, through the execution of our audio-first strategy, we are successfully expanding our presence in growth areas of the audio ecosystem, driving increases in both digital audiences and digital revenue. Organizationally, we've undertaken a number of efforts to support this strategy. In programming, we've restructured and aligned compensation to incent our team to grow audiences in aggregate. In sales, we've executed numerous compensation, training and recruitment tactics to both help and motivate our entire sales force to monetize our assets across platforms regardless of distribution channel. Collectively, these efforts resulted in 5% year-over-year revenue growth in the quarter across our 3 digital businesses, streaming, podcasting and digital marketing services, with that growth helping to offset lower broadcast revenue performance. In aggregate, digital revenue now represents approximately 15% of total revenue. We delivered streaming revenue growth of 11% year-over-year for the quarter as our focus on continuing to deepen and increase engagement with current listeners and bringing new listeners to our content to create sellable impressions that we monetize through local, national, network and programmatic ad channels is paying off. We do this through developing new products, increasing distribution outlets for existing content and expanding broadcast partnerships with digital extensions. From a new product perspective, we saw meaningful increases in audience engagement with the new sports apps that we were rolled out last quarter for iconic local radio brands like The Ticket in Dallas, KNBR in San Francisco and The Zone in Nashville. Downloads of these apps were up exponentially in Q3, driven by increased demand for our content as the NFL season kicked off. We also increased distribution of our streams through expanded renewals this quarter with TuneIn and iHeartRadio. And as we mentioned on our last call, we expanded our NFL broadcast partnership by securing the digital audio rights. And now with the NFL and Westwood One, we are truly able to serve NFL fans whenever and wherever they want to listen. With the availability of the NFL on the Westwood One stream, we've been able to create new exclusive opportunities for our advertising partners and our flagship streaming sponsor is seeing extraordinary levels of brand equity lift from its prominent pre-roll ad. We're looking forward to a strong second half of the season as we march toward the playoffs in Super Bowl. Moving to podcasting. We achieved strong download growth in the quarter, up 36% year-over-year, which puts us on a run rate to nearly 1.5 billion downloads annually. Our primary strategy is to serve as a monetization, distribution and promotional engine for large national personality-driven podcasts, mostly through partnership, and also to leverage our terrific local talent and brands to develop and monetize local podcasts. Through investments we've made, listeners are now able to hear our local talent on both a time-shifted basis, mostly through our owned apps and websites as well as on bespoke podcasts. On the national side, we've increased impressions through the growth of existing partnerships and by entering into new partnerships with established podcast content creators. A key focus has been the expansion into video companions to audio podcast, or vodcast. With YouTube now a top 3 platform for podcast consumption, expanding our video capabilities is a critical value-enhancing strategy to help podcast talent reach incremental and attractive audiences, and we're taking advantage of this opportunity with many of our partners. The massive download growth that we're seeing reflects the impact of those efforts. However, while our listenership is growing robustly, since nearly all of the advertisers currently in the space are national in nature, podcast revenues have not been immune to the pullback in national advertising. As a result, even though we saw strong revenue growth in our local podcasting business, it was off a small base and not sufficient to offset the market-driven softness in our national podcast. Aggregate podcasting revenue was down 4%, but we remain bullish on the prospects for the business given the strong underlying audience trends. And finally, in Q3, digital marketing services grew 12% year-over-year, driven by multi-market sales, new product additions and strong sales execution. Our multi-market sales strategy, which is tracking up over 40% year-over-year, facilitates the ability of larger clients to place coordinated digital and broadcast campaigns across cities and states. Additionally, this year, we launched our Cumulus Boost product, which is an integrated solution for SMBs that enhances their website performance, reputation management as well as overall productivity. We're seeing good traction in Boost customer sign-ups and look forward to speaking more about the growth of this recurring monthly revenue stream. Overall, our ability to execute as a one-stop shop provider at scale differentiates us from competitors in the very fragmented $15 billion total addressable market for digital marketing services. In Q3, as per our plan, we continue to reduce costs. Through continued permanent reductions in our fixed cost base, we are still on track to be more than $75 million below the 2019 baseline. We increased EBITDA by 2% and grew EBITDA margin by 70 basis points to 20%. As we monitor the increasingly tough market climate throughout the quarter, we implemented additional cost reductions with a keen focus on non-revenue impacting actions. As I've mentioned in the past, Cumulus has historically been a company that's been very lean on the cost side, but we have still been able to find ways to do business differently to drive cost reduction and more operating leverage. This year, for example, we've taken on 28 facility consolidations or reductions, which have yielded some cost benefit this year and will result in more in 2023. With regard to capital allocation, we have always been prudent stewards of our cash as we have focused primarily on investing in high ROI internal initiatives and partnerships as well as maintaining a disciplined approach to M&A. For instance, this year, we've invested with partners in the capabilities we needed to bring Cumulus Boost, which I just mentioned, to market. Additionally, for our podcast business, we've invested in the development and implementation of technology to enhance our sales effectiveness, yield management and access to programmatic podcast ad channels. And over time, our disciplined approach to M&A has resulted in a high success rate with acquisitions and swaps completed at highly attractive multiples. Lastly, we have aggressively monetized our noncore assets over the years, such as land and towers, and we continue to look for opportunities to generate value from remaining noncore assets. All of these items have helped bolster our already best-among-peers balance sheet. During the quarter, we reduced our net leverage to 3.7x, the lowest it's been in more than a decade, while still returning $3.9 million of capital to shareholders via share repurchases and retiring $2.7 million of senior notes at a discount. We ended the quarter with $118 million of cash and with our undrawn ABL facility. We had more than $200 million of liquidity, providing significant dry powder with which to support our multipronged capital allocation strategy. Looking ahead, simply put, we are in the enviable position where we have flexibility with respect to the choices that we can make to mitigate the impact of further economic slowdown, while still being strategic about the actions we take to accelerate longer-term growth. As I mentioned earlier, the macro headwinds have become more challenging than expected on our last call. As we sit here today and look at Q4 [port] pacing, the national advertising pressures we saw through Q3 have stabilized at or near those lower levels. Also similar to Q3, local spot and digital pacing continued to be better than national spot and network. In aggregate, we are currently pacing down low to mid-single digits, inclusive of political. Given the timing of this call, we don't have a full read on political spending since there's still more than a week left for political dollars to come in, and the prospect of runoffs remains unclear. However, so far in Q4, the prioritization of political spending has been more heavily weighted to demographics and population areas, which don't align as well with our portfolio as they have in the past. As such, we are trending toward a political finish slightly below 2018 levels for the year. We told you on our last call that based on our pace and visibility at that time, we are on trend to the low end of our original EBITDA guidance range of $175 million to $200 million. Our trailing 12-month EBITDA grew in Q3 to $166.5 million. But given the market backdrop, achieving the low end of that range is now aspirational. As such, we are revising full year EBITDA guidance to a range of $160 million to $170 million. This is, of course, wider than we would have normally provided with about 2 months left to go in the quarter. However, the macro pressures that all ad-based media companies are feeling have resulted in a lack of visibility that makes a more narrow range impractical at this time. With that, I will now turn the call over to Frank to go through the numbers in more detail. Frank?

Thank you, Mary. As Mary mentioned, revenue in Q3 was down 2%, driven primarily by ongoing weakness from national advertisers as well as lower activities from local advertisers, which, in aggregate, negatively impacted broadcast revenue, partially offset by continued growth in our digital businesses. For a little bit more color on the broadcast revenue lines, the drop in national advertising revenue began in late Q2 and continued through Q3. National advertising is reflected in our network revenue line with a smaller portion in our spot broadcast revenue line and also in our national podcasting business. Local spot revenue outperformed in Q3 versus national, but to a lesser extent than it did in Q2. During the quarter, we also had $4.5 million of political revenue, bringing year-to-date political revenue to $10.1 million versus year-to-date political revenue in 2018 of $8.7 million. As a reminder, the lion's share of political dollars occur in the fourth quarter. While we were ahead versus 2018 through September and despite strong political advertising environment and strong state overlap with the markets we operate in, much of the spending in the most hotly contested political races has been steered to demographics and population areas, which are less well matched with our station footprint. Having said that, we could still have some upside from political election spending if runoffs occur. Turning to digital. We continue to see strong growth in our digital marketing services and streaming businesses, which grew 12% and 11%, respectively. Our podcasting business experienced revenue declines of 4%, driven by pullback in national advertising. With respect to category performance, home products is our best-performing category on both a percentage and dollar growth basis, and we continue to see growth in entertainment, general services and professional services. Automotive, after declining 5% in Q2 year-over-year actually grew in Q3 year-over-year, while it is still down nearly 40% from 2019, that is off the lows down more than 50%. Financial was our weakest category from a dollar standpoint, driven by insurance and mortgage subcategories. From a percent standpoint, sports betting was the weakest category, driven by both overall reductions of spend by sports betting companies as well as the impact of the WynnBET comparison for us specifically. We also expect the WynnBET comparison to have a similar negative impact on our Q4 numbers. Moving to expenses. Total expenses in the quarter decreased by approximately $5 million year-over-year, driven by benefits from our continued cost reduction actions as well as lower variable costs and lower revenue. These cost reductions, which more than offset ongoing inflationary increases from items like personnel and insurance costs helped us drive growth in EBITDA for the quarter of 2% year-over-year to $46.6 million. Now to the balance sheet and cash flow. We generated $24 million of cash from operations during the quarter, bringing year-to-date cash from operations to $55 million and resulting in a cash balance of $118 million at quarter end. Year-to-date, spend on CapEx has been $18.6 million, and we continue to anticipate we will spend approximately $30 million for the full year 2022. During the quarter, we retired $2.7 million of senior notes at a discount, bringing year-to-date debt paydown to $65.1 million. This paydown results in $3.5 million of cash interest expense savings on a full year run rate basis. We ended the quarter with net leverage of 3.7x, down from 3.8x at the end of the previous quarter. As importantly, we have continued to delever the balance sheet while still returning capital to shareholders in the form of share repurchases of $3.9 million this past quarter. Year-to-date, we have spent $28.9 million on share repurchases against our $50 million board authorization. Since the beginning of our share repurchase program, we have retired approximately 2.1 million shares or approximately 10% of our shares outstanding as of December 31, 2021. Total liquidity, which consists of cash and availability under our undrawn ABL facility at the end of the quarter was $213 million. As Mary mentioned, revenue is currently pacing down low to mid-single digits, inclusive of political for Q4. For the full year, we are revising EBITDA guidance to $160 million to $170 million. With the new EBITDA guidance, we expect to finish the year slightly above 3.5x net leverage. However, our net leverage target of below 3.5x remains unchanged. With that, we can now open the line for questions. Operator?

Absolutely. If you would like to ask a question, please press * followed by 1 on your telephone keypad. If for any reason you would like to remove that question, please press * followed by 2. Again to ask a question, press *1. If you're screening today's call, please dial in and enter *1. As a reminder, if you're using a speaker phone, please remember to pick up your handset before asking your question. We will also briefly ask questions on register. The first question comes from the line of Michael Kupinski with NOBLE Capital Markets. You may proceed.

Thank you, thanks for taking my questions. As we look to the possibility of heading into an economic downturn, I'm just wondering if you can just talk a little bit about capital allocation. Do you plan to build cash instead of maybe buying back stock at current, even though the stock price at current levels is quite depressed? I was just wondering if you can give us a little bit of outlook on what your thoughts are about building cash as we kind of look at a recession coming.

Michael, good morning, it's Frank. I'll take that. First, we start off and the way we look at it is we have a terrific amount of liquidity on the balance sheet between cash and undrawn ABL availability. You remember, it's through Covid we actually generated positive cash from operations. So going into economic weakness, potential economic weakness in the recession, we're in a very good position. With regards to our capital allocation, what I can say at this point, we'll continue to monitor the markets, be opportunistic. We're also going through our budgeting for next year, and we'll have more to say as we get into the end of the year in our fourth quarter call in February.

And there are some other broadcasters out there that are struggling, and I was just wondering if there is any increased interest in M&A activity, anything that you're seeing out there that might be of interest to you?

Well, as Mary mentioned, given our liquidity and our strong balance sheet, we're really in an excellent position to be able to look at opportunities as they arise. Having said that, I do think what we're seeing right now, most companies are assessing not only the fourth quarter, but the impact of potential recession. And there's nothing on horizon, which is significant. But as I've said in the past, we'll look at everything that makes sense in the strategic perspective. And fortunately, we have the liquidity and availability to take advantage of those opportunities as they arise.

And then you were talking about weak national advertising. I was just wondering, is there any particular category that's causing weakness? Or is it just broad-based?

Yes, I can take that. It's pretty broad-based. It's across national spot, network podcast. But it seems to have hit a low and stabilized with podcasting, appears to be having a rebound in fourth quarter. So I mean we looked at a lot of category trends, and we looked at it every which way, and it's really it's just across the board.

Got you. If I could ask...

Let me add a little bit more color. Financials, as we mentioned in our prepared remarks, particularly weak, particularly when you think about the mortgage sector and insurance companies. We did mention this. But just as a reminder, last year, we did announce a partnership with WynnBET, which did generate nice dollars for us in the third quarter and the fourth quarter, which were national dollars, and that makes it a difficult comp. And again, as a reminder, we did unwind that partnership in the first quarter of this year. And as part of that settlement payment, in essence accelerated dollars than we would have otherwise earned this year through the partnership. So I just want to give that additional color.

Thanks Frank. And can you tell me what was the WynnBET contribution last year?

What we said in the first quarter earnings call was first quarter revenues on WynnBET was in the [low-to-mid single-digit dollars]. And then the settlement with a pull forward of roughly $5 million or so of revenues that we otherwise would have seen through the rest of the year.

Got you.

So in aggregate, pretty close to double-digit number.

Okay. Great. Thank you. I appreciate it.

Thank you. Our next question comes from the line of Aaron Watts with Deutsche Bank. Aaron, your line is now open.

Hi. Thanks for having me on. Just a couple of questions. One first, housekeeping. Can you remind me where we stand today with regards to what percentage national is of spot revenue versus what local is in spot revenue?

National is between 20% and 25% of our local spot line as per the press release. And obviously, it's 100% of our network, virtually 100% of our network advertising revenues.

Okay. And then on your guidance, I want to make sure I understand the underlying themes going into down to low to mid-single. Mary, when you say national has stabilized some in the fourth quarter, does that imply local softens comparatively more? And I guess if that's the case, can you just flesh out again, what areas of local are you feeling that pinch a bit more now?

Aaron, I'll take that. So the way to think about it is national declined fairly dramatically in the second quarter, accelerated in the third quarter and stabilizing at lower levels, but down very significantly from last year. The local spot business increased 8% in the second quarter, was slower in the third quarter and continues to be a little bit slower on pace as compared to the previous quarters. And that shouldn't be surprising because as you read about some of our larger companies in the media sector who are having softer advertising trends, there seems to be some pressure at least in the near term on small and local businesses. And so how that works through in the guidance is since a large component of our revenues comes from our local spot business instead of adding contribution versus last year, to the extent it stays flatter declines a little bit, that impacts the pacing for an overall company perspective, which, of course, is offset by the digital growth that we continue to have in our business. So hopefully, that clarifies it a bit.

Yes, that's good. And then lastly for me, with your podcast revenue down in the third quarter, can you highlight a bit more the areas of digital that are showing strength? And is that continuing in the fourth quarter? And then, Frank, maybe just what the margins are you are seeing on your digital revenues now and your latest kind of outlook on where those margins can trend over the near and medium term.

I can take the beginning of that question. So as we said in the prepared remarks, we continue to see growth in both the digital marketing services business as well as the streaming business, and we expect and are seeing continued growth there. In terms of podcasting, that was almost entirely national advertising business. So that was impacted very directly by the weak environment. And we saw cancellations in podcasting and just lower demand in general. But as we said, with that business, it seems to have stabilized from a revenue perspective. And there's been a lot of, as we mentioned, 36% download growth is good growth. So we're pretty bullish about that business going forward. But the digital marketing services, to give you more color, the new product Boost, which we'll talk about on subsequent calls is tracking pretty well. We launched it just a couple of months ago, and it's designed to complement the advertising campaign products that have already been central to our digital marketing services growth over the past few years. So it is a full suite of integrated presence products, and that ranges from listings to reputation management and website development. What makes that important is that it's a sticky product because it's a subscription-based product. So we'll report on that. And so I would say, yes, we're seeing growth,continue to see growth in digital and are bullish on that. And as I mentioned, 50% of our revenue, too, then growing.

With respect to margins, well, actually, before I talk about margins, anticipating a question that you may ask from our digital businesses are roughly 1/3, 1/3, 1/3 in terms of revenue contribution at this point. And that balance may change from quarter to quarter depending on the organic growth of each of the businesses. The contribution margins continue to be healthy for all these businesses and the highest contribution margin comes from our streaming business. And that contribution margin is very similar to our local stock terrestrial radio business. It's a little bit lower, but pretty similar. The digital marketing services contribution margins is roughly 50% plus or minus. And then on podcasting since our business model is really a rep share model that has a lower margin, that's in the range of 20% to 25% on a [year to contribution] basis.

Okay. Great. I appreciate it. Thank you.

The next question comes from the line of Dan Day with B. Riley. Dan, your line is now open.

Yes, morning guys, appreciate you taking the question. So first one for me, a higher-level question. Just looking at spot broadcast radio in the quarter, ex political, down about 25% versus 2019, network about 35% versus 2019. Understanding a lot of this is the macro challenges, the pullback in ad spend, especially on the national side. But just given the gap between where we are now, where we are then, I think there's a lot of skepticism among investors whether you back to 2019 levels on the broadcast radio. Maybe if you could just talk about where we sit today, your longer-term expectations in that regard to close that gap, whether you believe there's been some sort of permanent impairment in broadcast radio versus pre-pandemic levels, and if there has been, maybe possible to quantify that in any way.

I'll take that, Dan. That's a good question and a difficult one to answer, to come up with the long-term forecast of the business. I will say, though, earlier in this year, we were talking about, let's see where we get to the end of the year, in terms of from a performance perspective to compare the end of the year performance versus 2019 to answer that question. Unfortunately, we saw the economic weakness has started to hit us in the second quarter at a time that we had so many categories that never recovered from supply chain issues and labor issues. I did mention about automotive, which is still down 40% from 2019. And our belief is that it's not an issue with radio, it was a supply chain issue and it just didn't come back, and then we got into economic weakness. So it's too early to say whether or not there's been a permanent change. I don't think so. There are some organic challenges and the listenership in the top line of the business, as we all know, but that's being offset by our digital growth business. The key thing I would have you focus on is the improved operating leverage that we've been able to deliver for the company with our cost cuts. And so that will offset some of the decline in revenues versus 2019. I think it remains to be seen until we come out of the all clear economic weakness, what that comparison is to 2019, if there's been a permanent change or not, but we're still very bullish on the future. And again, focus on our digital growth in addition to our terrestrial radio business to get back to those type of EBITDA levels.

Great. Thanks Frank. And then one other one for me. You mentioned in the past and on the call today, you talked about the opportunity, disciplined M&A. So the cost of capital has come up dramatically in the last couple of quarters. Just given that the likelihood of M&A over the next year or so changed in your view. I'm sure if something came along that was a slam dunk, everyone would entertain it. But just wondering where you sit today versus where we were earlier this year, if M&A has moved down that list of priorities, just given where the cost of capital has moved to and where your stock and bonds are trading?

Right. We continue to be thinking about the business long term. And yes, the cost of capital is more expensive. We fortunately have a tremendous amount of liquidity on the balance sheet. Not surprising, multiples have come down a lot. We think that's probably more driven by, at this point, on what the economic activity is, as opposed to hopefully is a long-term issue with multiples. So to the extent, there are businesses that we can look at that we think we can buy at attractive multiples given our liquidity and if it helps us strategically, we will certainly look at that seriously. And as a reminder, we'll look at everything. Our principal focuses have been in the digital areas. But now, given what's happening in the radio market and multiples to the extent there are properties, whether it's on a swap basis, on a purchase basis, that can help our portfolio, we'll take a look at it. But I'll emphasize, and I think it's probably the fourth time I said this, with over $200 million of liquidity, low net leverage free cash flow generation that puts us in a pretty good position to look at everything.

Great. And then last thing for me, just on podcasting. Just in the industry generally, look, I've seen a lot of these podcast rep deals where the creator changes the rep firm, the company is talking about how the weak margins came at it and we just sort of mutually agreed to let them go to another rep. Can you just maybe talk about the mix in your podcast revenue between these rep deals that are sort of lower margin as you talk about, versus like one published content that might come with higher margins, whether there's any concern that some of the biggest clients on the rep side might look to go elsewhere and then obviously, it's low margin, but the revenue volume is big or... Yes, that's the question. Thanks.

Yes. I mean, our approach... I'll take that. That is a great question. Our approach is different than many, in that our big personality-driven talent that we represent, we have deals with them that stand beyond podcasting into broadcasting and other areas. So we look at our talent and our partnerships as, "how do we help you to attract and monetize listership regardless of platform?". And so for example, Dan Bongino's on radio, as are several of the others. So that is a strategy that has worked quite well for us. In terms of our owned-and-operated focus, that is the focus of local. And as you point out, our own stations can't leave us. So that's been a key focal area and has been growing nicely, obviously, albeit off a small base. So it's the nature of the beast, but we are the destination, becoming increasingly the destination for a certain kind of podcast. And it's something we watch, but the business is... We are, as I said before, bullish on the business.

Great, well, that's all I had, guys, appreciate the time.

Thank you.

Thank you. The next question comes from the line of Jim Goss with Barrington Research. Jim, you may proceed.

All right, thank you. I wanted to ask a little bit more about the national/local mix. Your network numbers indicated an 18% decline in the quarter, but if a rough 75/25 local/national split was true for spot advertising, it wouldn't indicate the same level of shift. So maybe that 75/25 is just a rough approximation that didn't really hold in the quarter. But you might talk about what happened in the national advertising within the core radio and whether it was different from what you experienced with Westwood One and whether there are things you can point out in terms of that mix that we can look for for the future.

That's a good question. The way to think about national is that we work with advertisers to provide them the flexibility across our network, and it does move around quarter-to-quarter. And some of those national dollars could have been placed depending on the inventory and the broadcast versus our local businesses. And so when you look at any particular quarter, it's hard to come up with the trend, our national advertising comments was a broad comment across our channels. It just happened this quarter that the network suffered more of a decline than our spot business, but that does jump around from quarter to quarter. And we actively work with the national advertisers to optimize inventory and value for them. But it does represent typically between 20% and 25% of our spot business, but it just moves around quarter-to-quarter.

And maybe the local... the spot national advertising in the local markets is a little stickier or managed better with the local reps than the national network, which might tend to bounce around a little more. Is that a true suggestion?

Somewhat, but I also think it's when we deal with agencies and national dollars, we take a holistic view as to where they can place their dollars, and there's better value in one channel versus another, we'll go that way. So it's more driven by the lumpiness of that and we could have had in the quarter, the network be down less than 18% and spot had performed worse, but the overarching theme of weak national dollars is something that just affects the entire business and geographically, just that's how it fell in this quarter.

Okay. And one of the trades reported that WTOP in DC, which is has been the nation's largest biller for a lot of years, had I think, some necessary cost cuts that they have been taking. And they're, obviously, news talk, you have a fair representation of news talk. And you did mention your improved leveraging with improved operating leverage as cost cuts. I wonder if you might talk about your own experience in that area, if that's one of the categories that has been targeted for the cost cuts?

Mary, you're on mute.

Yes, sorry. In general... Yes, yes, sorry. With regard to... The way we look at expense reduction is we look at it holistically. And as I said in the prepared remarks, we focused on where... We have a key focus on reducing expenses where it does not have an impact on revenue. Our news talk portfolio does generally very, very well for us. And so our cost reductions were mostly focused in nonrevenue areas. So as I mentioned, real estate reduction, some contractor negotiations that don't affect the programming, for example. So I don't think... Frank, do you have anything else to say? I don't think there's any, there certainly isn't any focus on one particular format or another. With regard to...

Okay. My last question might be FuboTV had plans to go into sports betting and sort of cut out those plans. And you indicated similarly backing away yourself. And I'm wondering if the bloom is off the rose on what seemed to be an emerging growth category where everybody has hoped for but maybe that won't be the next big thing.

Another good question. The category is a growing category, particularly as more states get legalized. I would say that based on what we've seen, is that the robust projections from last year in terms of the growth have been more tempered in terms of the business activity and that has occurred in the economics for the sports betting companies. But having said that, as they grow their business, it's important for them to get new customers and advertising is a key component of that. But the activity we've seen, it remains to be seen whether or not it's multiple on a macroeconomic perspective or the projections are coming down. But I agree with the frothiness that we saw in that category last year has abated somewhat, and that was driven also, and we saw that realised when WynnBET decided to unwind its partnership and that is just another example of that.

Okay. Well thanks very much, appreciate it.

Thank you. That concludes the questions for today. I'll now turn it back over to the company for any final remarks.

Thank you, everyone, for joining us today, and we look forward to speaking with you again early next year. Have a great day.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.