Q3 2020 Entercom Communications Corp Earnings Call

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Good morning, and welcome to Entercoms third quarter 2020, <unk> earnings release Conference call. All participants will be any listen only mode. This conference is being recorded.

I'd like to introduce your first speaker for todays call Mr., Richard Smiling, CFO and executive Vice President Sir you may begin.

Thank you Courtney.

Welcome to Entercom <unk> third quarter earnings conference call.

This call is being recorded.

A replay will be available on our company website. Shortly after the conclusion of todays call.

Available by telephone at the replay number noted in our release.

During this call the company May make forward looking statements, which are based upon the companys current expectations and involve risks and uncertainties. The companys actual results could differ materially from those projected in these forward looking statements additional information concerning factors that could cause actual results to differ materially.

We are described in the risk factor section of the Companys and report on form 10-K.

Such risks and uncertainties speedy updated from time to time in the Companys FCC filings we.

We assume no obligation to update any forward looking statements, except as maybe required by law during.

During this call we will make reference concerning.

Reference to certain non-GAAP financial measures, we refer you to the Investor page of our website at <unk> Dot com for reconciliations of such measures and other pro forma financial information.

I'll now hand, the call Rick Steves Shield, Patrick Holmes, Chief Executive Officer did it's yeah. Thank you rich good morning, everybody and thanks for joining Entercoms third quarter earnings call.

We don't know roughly eight months into the pandemic and its unprecedented impact on our nation.

While this has been a very difficult chapter in our country's history I'm pleased to report that Entercom is continued to make great progress in our work to drive significant organizational improvements to bolster our strategic position and capabilities accelerator growth potential and enhance our business model.

In fact, our work is meaningfully accelerated over the past several months and we're confident that we will emerge from the pandemic as meaningfully stronger and better positioned company.

Entercom is transforming into a leading multi platform audio content and entertainment company was scaled audience reach strong data analytics and attribution capabilities and a leadership position in virtually every segment, the dynamic and growing audio market, including broadcasting podcasting digital events.

Network music sports and news.

Today Entercom is the number one creator of original premium audio content and strategically well positioned with the scale and enhanced capabilities to expand our customer relationships and accelerate growth.

Third quarter net revenues were up 53% from second quarter, while our continuing work on enhancing our business model yielded an 18% reduction in operating expenses versus prior year, enabling us to deliver adjusted EBITDA of $31 million.

At sales continue to suffer from the deep impacted the pandemic, which has caused many of our advertisers in businesses such as concerts in live events tourism Gyms night clubs museums movies theme parks public transportation airlines restaurants, and others to temporarily cease or significantly curtailed their operations.

Advertising.

We look forward to welcoming them back once the country emerges from the pandemic.

Which will add some interesting additional color on what we are finding with regards to which industries and customers remain on the sidelines.

They also have noted that we have enhanced our reporting on revenue composition [noise].

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In our earnings release to provide additional detail the revenue by type and by format did.

Digital and podcasting led the way for us in second quarter growing 41% over prior year.

We announced a landmark partnership with Fanduel. This past week before speaking to that I want to first briefly review Entercom is unique and unrivaled leadership position in sports audio and.

Entercom owns and operates most of the nation's leading sports radio stations, including WSA into New York The score in Chicago W.I.P. in Philadelphia, the fan in D.C. the game in San Francisco, the fan in Dallas and many more.

We are also the radio home of 41 proteins and dozens of de one college collegiate programs and at most of the country's leading local sports tacos under various stages there.

There is no more deeply engaged audience than local sports radio listeners and that is great appeal to advertisers and sports gambling providers in particular as you are all aware sports gambling is an exploding new advertising category.

An entercom is uniquely well positioned to participate in that growth.

We're very excited about our new partnership with Fanduel the number one sportsbook in the U.S.

We believe the Entercom sandal partnership is the largest advertising deal in the history of the radio broadcasting industry.

Under the terms of the agreement Fanduel will become our official Sportsbook and capitalize on the power of our uniquely deep local fan relationships, while collaborating with us on in depth integrations and co produce content.

To be clear the deal is not exclusive and we will continue to do significant business with other sports books. In fact, we expect to see robust growth in this category as additional states legalized sports gambling in the years ahead.

One thing to consider Sandro made this long term commitment after two years of advertising with us and deeply evaluating their data to evaluate the effectiveness and ROI of their investments. This is a wonderful reaffirmation of the power of radio and the power of Entercom is uniquely influential personality driven.

Platform.

And we also had a highly successful quarter with their various content offerings in our broadcasting business, our leading brands continue to perform well with a healthy number of top rated stations in the largest markets.

For example, we currently have the number one rated station among adults 25 to 54 in Los Angeles and three of the top five.

We also have seen a big rebound ratings across our sports stations, reflecting the reemergence of live sports with a 33% increase in ratings at W.F. had in New York, a 24% increase it both W.I.P. in Philadelphia in the fan and Dallas among many others.

I also want to comment briefly on overall industry listening levels. The initial disruption of the early lock downs and deeply reduced mobility in March and April cost. Some initial decline in radio listening levels, albeit somewhat offset by a significant increase in video consumption over digital platforms in the home such as mobile and smart speakers since.

Then radio listening rapidly as rapidly recovered and has now returned to essentially pre covert levels.

Nielsen just reported this month that average quarter hour consumption of radio is now back to 95% and reaches back to 97% of their previous levels.

In addition, Nielsen reports the time driving has rebounded across the country with the average adult now spending one hour and five minutes daily in their cars and heavy listeners spending two hours in 11 minutes daily a full hour more than they spent in may.

One other contributor as reported by Nielsen is that 20% to 27% of Americans are using less public transportation and shifting to cars.

We also continue to post excellent growth at radio Dot com with our digital and streaming offerings during third quarter, a monthly average uniques jumped 36% over prior year led by double digit growth in mobile and connected devices, including smart speakers and connected Tvs.

Radio Dot Com total listening hours grew by 14%, marking our 14th straight months of double digit T. L. H growth the only digital publisher to do so according to Triton webcast metrics.

It is worth adding that our music station T. L. H increased by 22%, while smart Speaker T. L. H was up 90% as we continue to experience explosive growth on that platform.

We also had a great quarter, and our podcasting business with downloads up 27% year over year we.

We now have over 26 million monthly average users.

During the third quarter through our cadence 13, and Pineapple Street studio subsidiaries, we launched or announced a number of new podcasts, including projects with Lebron James Kevin Dread, we learned that L. Fanning, Jon Meacham, JJ Radek and tick Tock stars Charlie in Dixie plus three new titles in association with our partnership with H.B.O.

And two new titles in partnership with Netflix among many others.

We also launched the FIA with enough featuring the former co host of Barstools called her Daddy, which debuted at number one on the Apple podcast charts, we announced a new partnership with unsolved mysteries watching and 2021 and I've a significant number of other original series Underproduction <unk>.

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