Salem Media Group Inc (SALM) 2014 Q4 法說會逐字稿

Good afternoon and welcome to the Salem Media Group fourth-quarter 2014 earnings conference call. All participants will be in listen-only mode.

(Operator Instructions)

After today's presentation, there will be an opportunity to ask questions.

(Operator Instructions)

Please note this event is being recorded. I would now like to turn the conference over to Evan Masyr. Please go ahead.

Thank you. Thank you all for joining us today for Salem Media Group's fourth-quarter 2014 earnings call. As a reminder, if you get disconnected at any time, you can dial into area code 719-325-2214, or listen from our website at www.salemmedia.com. As usual, I'm joined today by Edward Atsinger, Chief Executive Officer; David Santrella, President of Broadcast Media; and David Evans, President of Interactive and Publishing. We will begin in just a moment with our prepared remarks. Once we're done, the conference call operator will come back on the line to instruct you on how to submit questions.

Please be advised that statements made on this call that relate to future plans, events, financial results, prospects or performance are forward-looking statements, as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on currently available information. Actual results may differ materially from those anticipated and reported results should not be considered an indication of future performance. We do not intend and undertake no obligation to update our forward-looking statements, including forecasts of future performance, the potential for growth of existing markets, the opening of new markets, or the potential growth from future acquisitions.

More information on risks and uncertainties that may affect our business and financial results are included in our annual report on Form 10-K and other public filings we have made with the Securities and Exchange Commission. This conference call also contains non-GAAP financial measures within the meaning of Regulation G, specifically station operating income, EBITDA, adjusted EBITDA and free cash flow. In conformity with Regulation G, information required to accompany the disclosures of non-GAAP financial measures is available on the Investor Relations portion of our website at www.salemmedia.com.

I will now turn the call over to Edward Atsinger.

Thank you, Evan, and thanks to all of you for joining today's call. On today's call, I want to take a few minutes to discuss our recent name change and then we'll switch gears and look at fourth-quarter financial performance. I have a few comments on some M&A activity. And when I get through that, I'll hand it back to Evan to take a look at the performance in more detail.

Last month, we did officially change our corporate name from Salem Communications Corporation to Salem Media Group Incorporated. We believe this name more accurately reflects the diversity of our multimedia platform today. Despite the name change, however, one thing remains the same, that we will continue to focus on the two main audiences that we target -- those interested in Christian content and those interested in conservative content relating to public policy and politics.

Over time, we've become the preeminent trusted provider of audio, video, and text for Christian-themed content and conservative-themed news analysis and commentary. Our business model and media platform is unique in that our multimedia approach is integrated. That's the key word here, integrated, with all of our businesses serving or flowing from or to those two audiences.

With that comment, let me now take a look at Q4 results. For total revenues were up; 5.2% recurring operating expenses increased 11.7%, which resulted in a decline of 16.7% in adjusted EBITDA. If we take a look at the numbers in more detail starting with revenue, we would have to recognize that the fourth-quarter was particularly challenging for us and for the entire radio industry. According to the Radio Advertising Bureau, the industry for the fourth quarter was flat. In markets in which Salem does business, according to Miller Kaplan Data, our revenues in those cities were down 0.8% overall.

Our Broadcast revenue was flat, in line with the overall industry. We did see block programming business continue to hold up fairly well with an increase of 2.2%. Our spot advertising revenue, however, declined 2.6%, a little more on the national side; it was down 4.4%. A little less on the local side; it was down 2.2%.

We probably should focus right now at this point on political revenue and the slowdown that we saw in Q4. When we reported on our last call, we commented that 2014 political revenue was pacing with the last midterm election cycle of 2010. In fact, revenue was $2.4 million in both the nine months ended September 2014 and September 2010. In the fourth quarter of 2010, we had $1.4 million of political revenue. This fourth quarter was only $900,000, or a 39% decline.

In our opinion based upon the best evidence available to us, that much of this decline is due to greater competition for these dollars from Digital Media for advertising is pretty clear. Digital Media revenue, by the way, for the quarter was up 14.7%, driven by the acquisition of the website's Red State and Human Events and the Financial Publication Newsletter business in early 2014. Organically, Digital Media revenue was down 10.1%.

On our last quarterly call, we discussed a boost we received in the fourth quarter of 2013 due to a temporary Facebook algorithm change that lasted for about two months, and then very abruptly disappeared. But this caused a significant spike in page views during that -- during those two months and in revenue for some of our websites. The end result was we had an extra $800,000 in Digital revenue in Q4 2014. Obviously, it makes for a very bad comparison when you get a kiss like that and it doesn't repeat itself. So the biggest challenge, and if you exclude that spike, the organic performance was a revenue decline of 3.2%.

So there's still some decline. The biggest challenge faced by our New Media business is the ongoing evolution of website usage from desktop to mobile devices. Nothing new. All of our peers are experiencing the same kinds of challenges. We are continuing to work on ways to improve mobile modernization, and it is a primary focus for us today. In fact, over the medium and long-term, we see mobile as a growth opportunity, as we figure out how to monetize it at the same level as we've been able to monetize desktop in the past.

Finally, on the revenue side, our Publishing division was up 47%. Regnery Publishing, which we acquired in January 2014, had no big releases in the fourth quarter. Mark Steyn's -- The Undocumented, Mark Steyn, which was released in early September was our biggest release in the fourth quarter, but this was a compilation of previously published columns that wasn't new material although it performed in line with our budget.

Looking ahead, the history of Regnery shows that it performs better in election years than non-election years. That being said, we're still quite enthusiastic about the line-up of books that we have scheduled for 2015, Including books by such headliners as Kirsten Powers, Dennis Prager, Ann Coulter, Stacey Dash, Doug Klein, and David Limbaugh and maybe some others. And frankly, the political season seems to be stirring up a little earlier this time so maybe we'll get a little additional momentum out of an early political cycle.

A full year now has elapsed since the acquisition of Eagle Publishing. For 2014, Eagle generated approximately $24 million of revenue. And $2 million of profit on a purchase price -- $2 million of profit on a purchase price including the eliminated contingent -- including the estimated continued incentive payment. Recall that we provided the seller some additional motivations if we hit certain revenue benchmarks. So including that, the purchase size is $11.2 million that represents a 5.6 acquisition multiple in year one. This solid performance is consistent with the assumptions we have made about the synergies between the Salem assets, with its significant marketing platform and the Eagle businesses. In fact, nothing in our first year's experience invalidates the assumptions we made when we evaluated this acquisition opportunity.

First, our marketing platform, including our nationally syndicated network host, our local radio stations, 27 of which are in conservative News/Talk format and our conservative websites like Townhall, Hot Air and Red State, can take a great book and when it's a great book, make it even more successful. Second, past success helps, with the acquisition of future authors and books to grow revenues in the future and profits and we're seeing that trend gain momentum.

Let's take a quick look at expenses. Recurring operating expenses, including the impact of acquisitions were up 11.7% for the quarter. When evaluating this expense increase, it's important to exclude expenses related to the Eagle businesses. Organic expenses, excluding the impact of acquisitions, were up only 1.3%. This included a few one-time expenses, including the accrual of severance for our former President and Chief Operating Officer. Excluding those one-time items, our recurring expenses were up only 0.6%, so even less.

Even so, we are concerned about the fact that we have little organic revenue growth at this stage and that our EBITDA declined from 2013 to 2014. Accordingly, we've recently taken some steps to reduce our expenses on a going forward basis. On Thursday of last week, for example, we laid off a number of people across the Company. These layoffs, are combined with other actions taken during the fourth quarter of last year, will result in a savings of approximately $2.5 million annually. Clearly, revenue growth is fundamental to the health of the business.

Looking ahead, we continue to believe that we have meaningful revenue growth opportunities in our Digital businesses, both in our national websites and in our local radio station sites. This has been the fastest growing area of our business for a number of years and we see the current monetization challenge caused by the shift to mobile is a temporary situation, which we think we will overcome, particularly as we see page views -- mobile page views accelerating well beyond what they were with desktop. We also see a good upside potential from our recent radio station, digital and publishing acquisitions, most notably the publishing.

For the year, free cash flow increased 5.1% to $26.6 million. Even though we had a 4% decline for the year, for the entire year in adjusted EBITDA, we were able to grow free cash flow, which was encouraging. This improvement came from the combination of reduced expense -- interest expense as we continued to focus on paying down our debt and a reduction of capital expenditures by almost $1 million.

We have been quite busy and recently on M&A fronts. We still find interesting, strategically attractive tuck-in opportunities. We have entered into agreements to buy three stations from Disney. The first is WDZY-AM in Orlando, Florida, for $1.3 million. We expect to close that acquisition at the end of the first quarter and we'll program that station with our Spanish-language Christian Teach-Talk format. It's a great facility. It's probably as good as facility as exists in Orlando. Certainly it's as good or better than any of the three that we already possess.

In Pittsburgh, we are buying WDDZ-AM for $1 million and we'll program that station with our News/Talk format. I believe that Pittsburgh is market 24, 25 so it rounds out again another top 25 market with that particular format. Finally, we are buying WDWD-AM in Atlanta for $2.75 million. This station will feature our Christian Teaching-and-Talk format.

While we already have a station WNIV-AM in Atlanta in this format, this news station has far superior coverage and will allow our block programming industries to achieve far better results. We are very excited about these enhancements to our radio platform, particularly WDWD, with a much broader reach both day and night in what has been described as one of the most important Christian markets in all of America, Atlanta, often referred to as the heart of the Bible Belt. So we're finding great demand for that facility and it will work out as a very good tuck-in acquisition.

Let me make some final concluding remarks about a [brief discussion] about our quarterly cash distribution. Our policy has been to distribute approximately 20% of our expected free cash flow. Given that 2015 is not a political year, negatively impacting advertising revenue and Broadcasting Digital Media in addition to the fact that Regnery Publishing routinely has stronger results in election years, as I mentioned earlier, the Board has decided to keep the distribution flat for the first quarter. Accordingly, we will be making a distribution of $0.065 per share, or $1.6 million on March 31.

With that, I'll hand the call back over to Evan for additional details on the quarter and for an opportunity to provide guidance for the first quarter of 2015.

Thank you, Ed.

For the fourth quarter, our total revenue increased 5% to $65.9 million. Operating expenses on a recurring basis increased 12% to $54 million and adjusted EBITDA decreased 17% to $11.9 million. Net broadcast revenue remained flat at $48.8 million and broadcast operating expenses increased 5% to $35 million, resulting in station operating income of $13.8 million, or a 10% decline. On a same-station basis, net broadcast revenue decreased 1% and SOI decreased 10%. These same-station results include broadcast revenue from 99 of our radio stations and our network operations, representing 99% of our net broadcast revenue.

I'll now break down our broadcast revenue by format. 41 of our radio stations are programmed in our foundational Christian Teaching-and-Talk format. These stations contributed 44% of total broadcast revenue and remained flat for the quarter. And our 27 News/Talk stations had an increase of 10% in revenue for the quarter, in part due to an increase in political revenue. Overall, these stations contributed 18% of our total broadcast revenue. Revenue on our 12 CCM stations, Contemporary Christian Music stations contributed 22% of total broadcast revenue and decreased 6% for the quarter. The nine stations that we have programmed in Spanish-language Christian Teaching-and-Talk grew its revenue by 11% and this format comprises 2% of total broadcast revenue.

Finally, we have 10 stations in a business talk format. This format contributed 3% of total broadcast revenue and decreased 1% for the quarter. Our network revenue declined 8% for the quarter and represents 8% of total broadcast revenue; publishing revenue increased 47% to $5.4 million and represents 8% of total revenue. And finally, revenue from our Digital Media businesses increased 15% to $11.7 million and represents 18% of total revenue. During the quarter, we repaid $8 million on our term loan, leaving a balance of $276 million outstanding as of December 31.

As a recap for the year, we repaid $15.25 million, represents -- representing approximately 57% of our annual free cash flow for 2014. We also had $1.8 million drawn on our revolver at year end. Our leverage ratio increased from 5.42 as of last quarter to 5.45 versus a compliance covenant of 6.5. For the first quarter of 2015, we're projecting total revenue to decrease 1% to 3% over first quarter 2014 total revenue of $62.3 million. We are also projecting operating expenses before gains or losses on the disposal of assets impairment losses, depreciation and amortization of stock-based comp to be up 1% to 4% compared to first quarter 2014 operating expenses of $51.7 million.

And this concludes our prepared remarks and now we would like to answer any questions. Operator?

Thank you.

(Operator Instructions)

Michael Kupinski, Noble Financial.

Just a housekeeping question. The pro forma first-quarter publishing revenue for 2014, I think had about $900,000 from Eagle Publishing. I was just wondering if you can clarify just that for me?

I don't have that number in front of me but that sounds -- that's probably pretty reasonable. We didn't have any big book releases in Q1 of 2014.

Okay. And remind me, too, also, in terms of the book releases for 2015, are they pretty much evenly matched with those that were released in 2014? Or are you looking for more books than you currently have --?

Q1 will be about the same. Yes, pretty evenly matched. The strongest quarters in 2014 were Q2 and Q3. With a much lighter release schedule in Q1 and Q4. In 2015, Q1 is going to be about the same.

Q4 is going to be stronger than last year. Q2 and Q3 will probably end up being a little bit weaker. And for the year as a whole, we're budgeting revenues to be slightly -- revenues and profits to be slightly down from last year because last year was not an election year and this is a non-election year.

Okay. And in terms of the headcount, or FTEs, could you tell me what they were at the beginning of 2014 and what you anticipate they will be at the end of, let's say, this quarter?

Headcounts are right around 1,600 employees, total. I would say if I went back, I'd have to look at the K but probably 100 to 150 less last year but that was before we bought Eagle and a couple of other businesses.

And can you just outline for us, given the fact that you've gone through this cost cutting and headcount reduction and so forth, what is included in the operating expenses to be up 4%?

Well, we just recently took action on the layoffs. And also included in the expenses in the quarter is severance for those actions that we -- for those people we laid off in the last few days.

So the 4% increase in the first quarter, you're saying includes the severance?

Correct.

Okay. And in terms of the trends for the year, would you said they would certainly then would moderate from there, right?

We would expect them to; correct.

Okay. So in terms of acquisitions, then, the recent acquisitions can you talk about the multiple at which you purchased the stations at? Or with or without synergies? Can you give us some idea?

I know in the past, you thought you gave some parameters on the multiples. Did these stations fall in line with the parameters that you outlined for us in the past and maybe share a little color on what you anticipate how this would work for you in terms of the multiples?

With regards to the three stations I referred to, our goal is to hit about a 5 multiple, a cash flow is equal to a 5 multiple of the purchase price by year two. And that's a rough target for us. We feel pretty good about it on a pro forma with regard to the Atlanta acquisition. And Pittsburgh, we've got a little more due diligence to do in Orlando, but believe that we will get pretty close to that target as well.

Okay. That's all I have for now. I'll get back in the queue and see if there are other questions.

All right. Thanks, Mike.

Barry Lucas, Gabelli & Company.

Ed, maybe you could just talk a little bit to the extent you have some thoughts in terms of how to monetize the mobile traffic. And a lot of it is moving in that direction, but the change felt like it was a little bit more dramatic than we had seen in the past, particularly on the revenue front. So how do you make that digital business get back into the growth trajectory that you had, had previously?

I'm going to let David Evans, our President of that division, address it. I guess part of the backdrop, of course, is that the traffic, mobile traffic is growing very rapidly. The issue is the fact that you can't monetize it at the same value.

The old adage we used to say about analog dollars are digital pennies. You've got that, some of that same phenomenon going on where mobile pages can't carry the same value. But David, why don't you comment?

Yes. The big upside opportunity with mobile is people can visit our websites, wherever they are, whereas with desktop, you had to be next to a computer. So we expect more visits and therefore, more page views because mobile facilitates website usage. So that's a big area of upside, is sheer volume of traffic.

A slight negative is when people visit on a mobile device, compared to desktop, they don't spend as long on the site. They're on the go; they're doing a bunch of different things. So visits are typically a little bit shorter and they are therefore going to consume less advertisements, and that probably isn't going to change. That is what it is.

A couple of things we've been working on is the Internet industry has spent 15 years of figuring out which ad units performed best on desktop. The industry now has to do that same process with mobile. We have to figure out which ad units work for advertisers, advertisers that get noticed, that get clicks, that people respond to.

So we're going through a process of testing a number of different possible ad units to find those that work best for advertisers while, at the same time, are still a good user experience. So that's a big current project.

And then the final piece we have to work with our advertisers. Many advertisers that we work with, they continue -- their websites are desktop only. If you go to a desktop website on a mobile phone and try and use it, it's difficult.

So we're having to educate our advertisers on the need to have a mobile website, that it has to be easy to use, and as advertisers get more comfortable with mobile, and embrace it, and figure out how to get their ads to work, they'll be prepared to pay more. So we're not alone in that challenge.

The big boys, Google and Facebook, have exactly the same process going on with their advertisers with our advertisers. So those are the key things we need to work on, is what are the best ad units and working with our advertisers to make sure that they're set up to advertise effectively on mobile.

David, not to be a spoilsport here, but Google and Facebook do have a little bit more in the way of financial resources to throw at an issue like that. So how do you -- how do you -- what is there specific that Salem can do with more limited resources?

The good news is whatever developments of the industry as a whole come up with, they tend to get replicated throughout the entire world of the Internet. So as they learn, we learn. And we are able to follow through on the things where they lead.

Now on our Christian websites, in particular, almost all of our advertisers are Christian advertisers who -- for whom we are a primary advertising vehicle. We have very good relationships with those advertisers. They see us as Internet experts. And we work in very close partnership with them to make sure their advertising is effective.

And we are very well equipped to do that. It doesn't take that much in the way of financial resources. It's a process of our sales executives and our graphic designers and our marketing experts who are already on staff working with those advertisers to share best practices.

Great. Thank you.

(Operator Instructions)

Pete Enderlin, MAZ Partners.

Good to know that the organic expense trends in the fourth quarter weren't as bad as they looked on the surface. But I wonder, was there an issue of the timing with respect to the expense controls in the fourth quarter? I thought that you had begun to tighten up on the costs significantly around the middle of the fourth quarter.

But now we hear that you're making some layoffs and cost cuts recently last week? In other words, did you realize belatedly that the revenues were going to be less than expected and you couldn't react quickly enough? Or at what point did you kind of make the strategic decision to keep spending to support future growth?

Pete, we did have some cost control measures going in the fourth quarter and that's why you see the organic growth rate of expenses in 1.3% range. What we realized now is we just need to go a little bit deeper and a little further. And that's what these layoffs pertain to. We're getting as aggressive as we can on the expense side.

And then so strategically along the same line, when you look at the overall Company structure and the growth potential, is it a matter of running the broadcasting division primarily for cash flow to support acquisitions, either tuck-in acquisitions or broadcasting, or bigger acquisitions in the digital media and publishing area? Or do you think you can sustain above average organic growth in station operating income on a standalone basis?

Well, clearly, we are doing what we can to maintaining our free cash flow as much as possible on the radio side. And certainly, that is sort of how we are able to fund future acquisitions, be it radio or digital. We're not satisfied with just keeping flat station operating income.

We'd like to see that grow and that's why we're being aggressive on the cost cuts. We're doing things to round out our portfolio with adding additional stations and we'd like to see this free cash flow from the station operating income from the broadcast side grow, not decline.

I guess it's a question of the time horizon. Would you expect to continue ratcheting down the expenses in the station operations over a long period of time? Or is this a one-shot deal?

No, the answer is, time will tell. Frankly, we stepped up our efforts to tighten up on expenses a little bit more after earlier efforts in the fourth quarter just simply because some of these trends are hanging on a little longer and they appear they're going to be linger around a little bit longer than we thought. Particularly, the transition which may not affect radio as much directly but the transition from desktop to mobile; some of these trends that need an adjustment looks like the adjustment period is going to go on a little longer than we anticipated.

So we are trying anticipate them to be a little leaner and meaner during that period of time until we get on top of those problems. At the same time, we are still allocating; we mentioned acquisitions. We still are roughly allocating about 30% of our free cash flow for tuck-in acquisitions and other acquisitions that makes sense.

If an acquisition, in our opinion, is clearly accretive, clearly not going to exacerbate our leverage, we may get a little more aggressive. But as a general rule, we're trying to stick to the 30% of free cash flow. We're trying to continue to devote at least half of our free cash flow to debt retirement.

We were able to get 58%, nearly 58% of our free cash flow in 2014, committed to debt retirement so we want to continue to get the leverage down. With the leverage down, maybe we can be a little more aggressive in some of the acquisitions in the future.

Okay. I know you can't be specific obviously, but what are the prospects for a transformative acquisition in the digital area?

Well, it's one that I always have my antenna way up high, surveying the horizon to see if one such acquisition exists. But if we can find one and it was one of those game changers; it was one where we knew the marriage, the synergy would be such that you could stretch for it, well, we certainly would take a real hard long look at it.

It's much more likely you're going to see a number of tuck-in digital acquisitions, so rather than one transformative digital acquisition, it's more likely to be a series of smaller tuck-in acquisitions as we round out our digital portfolio. That's certainly been the pattern for the last several years. And I think that's what I expect to continue.

Okay. Thanks. And then just one more, back to the broadcasting side. When you do your long-term planning process, what do you assume for industry growth of radio broadcasting overall? And maybe then, specifically, your niche of radio broadcasting?

Well, I think we approach radio as a mature business. But the opportunities, the byword that we used, integration, is still the thing we focus on, so it's probably not a good idea to look at the radio revenue growth in isolation.

You've really got to couple it all up with digital, with print, with everything we're doing because it's all integrated. It's all working together and where we may see a very slow mature kind of pattern for the radio assets, at the same time, they may be driving very effectively some of the new media assets in ways that are quite satisfactory to us.

So again, I think you -- I think the key to the way we've got to look at the business model, particularly because we're niche broadcasters because we super serve very specific target audiences that our content is directed to and our platform is directed to, because that's the case you've got to keep an integrated model in mind and look at the total revenue picture. And that's hopefully where we're opportunistic.

Okay. Thank you very much.

Barry Lucas, Gabelli & Company.

Jump ball here, Ed, but looking at the trend in fuel prices and economy, which has been steadily improving albeit at a relatively slow pace, why, given your typical listener, what are you seeing in the, in at ground level? And what is -- I don't know, what's impeding the progress or what's stopping your advertisers from stepping up and maybe spending a little bit more?

Barry, it's Dave Santrella. We've seen really just in the last few weeks a pick-up in transactional business. So our radio stations that play for that larger transactional business, guys like Home Depot or the Car Dealer Association, things like that, we've seen a pick-up in that business. That may be a result of what they feel looks like an improvement in the economy.

We always play that cat-and-mouse game when transactional business is up, many times you're looking at that more direct business which is -- makes up a good portion of our business. Those guys can tend to put their hands back in their pockets for a little while until they're forced to advertise because they are starting to feel the effects of larger chains taking share from that.

At a bigger picture level, it's a turf war going on for the advertising dollar. And if you look at the massive growth in Facebook over the last few years, and then the massive growth in mobile, both of which are free to use our advertising-supported business models, you've got a couple of pretty large, new players going after advertising dollars.

And if the advertising pie is growing by the rate of inflation-ish, or GDP-ish, and there's a couple of new players in the mix, that kind of turf war is going to make it challenging to grow your advertising revenue. And I think that's the macro situation that the media world faces.

And I might add that we certainly saw this phenomenon in fourth quarter with regards to political advertising. We've got several election cycles going back for a number of years where we pretty much could predict what kind of bump we would get in political dollars. It didn't show up this time. The reason it didn't show up was the turf wars there.

There was a lot more micro-targeting of very narrow defined audiences that were using Big Data to drive it. And the fact that the broadcast business, both radio and TV, their audiences, all the numbers indicate their audiences are holding up very well, some of the dollars are not. The dollars are going to these new media and we're going to have to figure out how to adjust to that and that's part of, again, part of the ongoing process that we're going through to figure out where are our strengths that they can't really re-duplicate.

What are the unique strengths of the broadcast, the radio model, for example, and the way it connects with its communities is quite unique. And we're back to the drawing boards, working on proposals that play to those strengths and we hope that we can get some of that, some of those dollars back over.

So you are clearly suggesting that starting with political wars being more visible in political and probably stretching elsewhere is that there's an ongoing secular shift and definitely a more competitive environment from those in the digital space that are pulling dollars away from traditional legacy media?

A lot of the candidates, a lot of the campaigns have decided that if they can target certain key precincts, with women 25 to 54, that are single, for example, just a whole set of characteristics. If they can vary specifically narrow target that particular group and it's more productive for them than doing even a more narrowly defined broadcast on a digital website.

And we're encountering that and what I think will happen is they'll find out that, that's not the only way to win elections. That's one way to do it, but the old-fashioned way still is important if you do it on a cost effective basis so there is a turf war going on, as David said. We are at work trying to figure out how to play to our strengths in a unique way that delivers value for those advertisers so that they recognize we still have a very sizable audience with a very impressive reach.

None of that has changed. So how do we get into the battle in a way that gets back more of that revenue share? That's going to be the ongoing challenge. So in the meantime, we've tightened the belt. We are going to be leaner and meaner as we transition and figure some of those things out.

Thanks for that.

(Operator Instructions)

Seeing no further questions, I would like to turn the conference back over to Edward Atsinger for any closing remarks.

Thank you, operator, and thank you all of us for joining us on the call. We will look forward to visiting with you again in three months when we report on Q1 2015.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.