Q3 2020 Urban One Inc Earnings Call
Ladies and gentlemen, thank you for standing by I've been asked to begin this call with the following safe Harbor statement.
During this conference call urban one will be sharing with you certain projections or other forward looking statements regarding future events or its future performance urban one cautions you that certain factors, including risks and uncertainties referred to in the 10-K's 10-Q's and other reports it periodically files with the security and Exchange Commission.
Gosh, the company's actual results to differ materially from those indicated by its projections or forward looking statements.
This call will present information as of November 12, 2020. Please note that urban one disclaims any duty to update any forward looking statements made in the presentation. In this call urban one may also discuss some non-GAAP financial.
Capital measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release, which can be found on its website at www dot urban one dot com.
A replay of this conference call will be available from one PM eastern time today until midnight.
At November 15th callers may access the replay by calling 8662 zero 710 for one or international callers may direct dial at four zero to 970 0847. The replay access code is 8586 903 X.
Access to live audio and a replay of the conference call will also be available on Urbans ones corporate website at Www Dot urban one dot com. The replay will be made available on the website for seven days after the call no other recordings or copies of this call are authorized or maybe relied upon I will now turn the call over.
Alfred C. Liggins, Chief Executive Officer of urban one who is joined by Peter D. Thompson Chief Financial Officer.
Thank you operator, and also joining us today as usual is our chief financial Officer for TV, One Jodi drew our chief administrative officer.
For urban one Karen.
I wish our general counsel, Chris Sampson.
Weve.
Released our third quarter results and I couldn't be happier.
About our performance in the midst of.
This awful environment in a raging pandemic.
Our team.
Team.
Has done an extraordinary job of pulling together man.
Managing.
Environment of layoffs, and furloughs and cost cuts, but also at the same time figure.
Figuring out ways to grow our revenue and our EBITDA.
The other piece of the pie.
In the midst of a significant downturn.
In Q3, we were able to actually.
Eke out some EBITDA growth.
When most companies have seen significant downdraft the hardest hit.
Piece of our business.
As the radio business.
We're starting to see that bounce back in a significant way, but our our TV and our digital business and our syndicated radio business reach media.
Formed exceptionally well.
Political average.
Tizing environment has been.
Nothing.
Short of extraordinary our target audience is in high demand if you.
Havent.
Seeing the.
The new stories about.
Black voter turnout where across our entire platform, we're scheduled to probably post north of $20 million of political revenue. The fact that we're able to.
Have such a large share than we traditionally get of.
Of political revenue.
The allowance.
Allowing us to also get more comfortable with putting out on EBITDA guidance number four for 2020, which.
Weve.
In the press release have noted is somewhere between 125 and $130 million of a full year EBITDA.
By comparison that.
That EBITDA number last year was about $133 million. So in the midst of a pandemic not off.
That much at all which also is going to allow us to at the end of the year have a lower leverage ratio.
Joe.
When we entered the year with there has been a lot of.
The pain and suffering that has allowed us to achieve this.
And I'm really proud of the team and all the employees.
That really banded together to get the company through a very tough time I'm going to let Peter.
Into the specifics on the numbers and then I'll come back.
Talk about the.
The swap that we did recently announced.
With Enercom.
And a few other things Peter.
Thanks, Oliver So net revenue was down 17.2% year over year for the quarter ended September.
32020.
Approximately $91.9 million and this is up 20.9% from second quarter revenue. The radio segment net revenue was down 31.9% year over year in the third quarter, but was up 54.3% from.
From the second quarter this.
This includes approximately $2.4 million of net political advertising revenue.
This is a significant sequential improvement to second quarter, which was down by 58.4%.
During the height of the COVID-19 shutdowns.
National had been.
Ties in sales for the third quarter was down 21.5% year over year, while local AD sales were down 36%.
On a same station basis, which excludes Detroit, our radio segment net revenue was down 29.7% and excluding political it was down.
By 34.5% year over year comps.
Compared to being down 57.1% in the second quarter.
Except for our Philadelphia cluster, which was particularly bolstered by political advertising in third quarter all of our radio clusters experienced net revenue declines year over year.
But all of that all of which were improvements from the second quarter declines.
While all categories, except for government were down year over year for Q3.
We experienced the.
The biggest declines in entertainment retail and auto followed by healthcare and food and beverage.
Fourth quarter radio Pacings are currently down only mid single digits on a same station basis.
Excluding political are down in the high 20% range.
And that's a sequential improvement of the year over year declines of over six points from second quarter.
About.
$10 million of gross political advertising revenues being booked in the fourth quarter.
Bringing the annual total to over $15.3 million for the radio stations alone.
This is about $6.25 million more or 70% more than the company's previous record high watermark.
The political which was in 2012 and across the whole platform, we've exceeded $20 million of.
Gross political revenue.
Net revenue for reach media was down by 29% in third quarter.
Expenses were down by 48.5% with adjusted EBITDA up.
By approximately $1.3 million or 68% year over year.
The majority of the revenue decline was from the absence of events that were canceled this year in light of the pandemic.
Mainly the family reunion event lower.
The lower operating costs are result of the retirement of the Tom Joyner morning.
And show at the end of last year, along with the absence of the events, notably the family reunion and also staff pay cuts and other cost savings measures.
Revenues for our digital segment increased by 3.4% in third quarter driven.
Driven by strength in direct advertising sales.
Juan digital.
This and staff salary reductions and other cost savings contributed to adjusted EBITDA growth of approximately $864000 or 121% increase year over year.
We recognized approximately $44.7 million of revenue from our cable television segment during.
The quarter, a decrease of 2.7% cable TV advertising revenue was down by only 1.8%.
Or 5.1% if you exclude political revenues.
Lower average unit rates were offset by higher delivery.
Cable TV affiliate revenue.
Revenue was down by 3.6% with rate increases of approximately $1.2 million offset by churn of approximately $2.1 million cable.
Cable subscribers as measured by Nielsen finished the third quarter at $51.8 million, which is up from 51.4.
<unk> million at the end of Q2.
We recorded approximately $1.6 million of cost method income less administrative expenses for our investment in the MGM National Harbor property.
For the quarter, which compares to $1.7 million last year down only 5.8%.
Casino revenue at the end of June with occupancy restrictions.
An enhanced health and safety protocols.
Which is actually now resulting in gaming revenue returning to very close to pre total bid levels. So thats. Good thats good news offer.
Operating expenses, excluding depreciation amortization and.
Payments and stock based compensation decreased by $19.9 million or 26.3% to approximately $55.6 million in Q3.
Due to COVID-19, all in person events scheduled to take place during the third quarter, why the cancelled or postponed.
Pay to date.
Reach media events expense was down $3.1 million and the radio station events expense was down approximately $1.5 million year over year.
We saved approximately $6.8 million and employee compensation and benefits expense through.
The elimination of layoffs fellows and temporary pay cuts.
We've also recognized savings of approximately $2.6 million in lower cable programming content amortization.
$1.6 million in contract labor and talent cost savings $1.4 million.
In reduced travel and office expenses.
And $1.0 million in reduced or delayed marketing spend.
In addition, there were lower variable expenses, such as commissions and wrap fees of approximately $1.8 million.
Radio operating expenses were down 31 point.
Calgary percent radio SGN, Amy the expense line that was down 37% from lower revenue variable expenses, such as sales Commission and national Rep fees cancellation of station events employee compensation and discretionary marketing and promotion reductions radio per.
Feminine technical expenses were down 20.6%, mainly from lower employee and talent compensation.
Reach media operating expenses were down 48.5% programming and technical expenses were down 32.2% driven by lower talent and employee compensation expenses as a result of the per.
Post Tom Joyner morning show programming restructure and temporary pay cuts.
Reach SGN, a expenses were down 71.2%, mainly due to the cancellation of family reunion and other events corporate SGN I expenses at reach were up $85000 due to the timing.
Moreover, bonus accrual reversal last year offset by it staff savings this year.
Operating expenses in the digital segment were down by 8.8% driven.
Driven by reduced AD operations product development and editorial content costs, which includes some salary salary reductions.
Cable.
TV expenses were down 23% year over year sales and marketing expenses were down by $1.4 million programming content expense decreased by approximately $2.6 million in compensation and benefits was down.
And $1 million up.
Operating expenses at corporate and eliminations segment was down by.
In a 1.4% lower employee comp compensation expense and lower t. any offset by higher outside professional fees and contract labor and that's partially due to the timing of insurance reimbursements that we received last year as a result of the consulting fees incurred.
Following their cyber security incident last year.
For the third quarter consolidated broadcast and digital operating income was approximately $44.2 million.
Up 1.3% consolidated adjusted EBITDA was $39.6 million in.
Volumes of 2.3% year to year.
Our reach media cable TV and digital segments, all posted double digit percentage growth or better and adjusted EBITDA for the quarter, which we think is exceptionally strong performance relative to our peers.
The non cash impairment expense of.
$29 million in the quarter was driven by COVID-19 impacted radio market revenue declines across the whole industry and this write down obviously did not affect our cash flow broadcast and digital operating income or adjusted EBITDA.
Interest expense was approximately $18.2 million for the.
Good quarter compared to approximately $20.2 million for the same period in 2019.
Which was a decrease of 9.9% company made cash interest payments of approximately $9.2 million on its outstanding debt in the quarter.
The senior secured MGM National Harbor term loan balance increased by pick.
Interest of approximately $571000.
Senior unsecured term loan was paid down by a total of $12.1 million and the term loan B was paid down by approximately $824000.
Benefit from income taxes was approximately $136000 in.
In the quarter.
And there were $509000 of cash taxes paid.
Net loss was approximately $12.8 million or 29 cents per share.
Compared to net income of approximately $5.4 million or 12 cents per share for the third quarter of 2019, and obviously that.
EPS figure is impacted by the non cash impairment charge.
Capital expenditures were approximately $526000 compared to $1.8 million last year.
Company executed star burst tax repurchase of 3195 shares of class.
Common stock in the amount of $6000.
In August the company issued 2 million 859276 shares of class a stock at an average price of $5.39 per share for approximately $14.8 million of net proceeds to the company.
Any after fees and expenses and this cash remains on the balance sheet.
For covenant purposes pro forma LTM EBITDA was approximately $130.7 million.
Our net senior leverage was 4.55 times against the covenant of 5.85.
Times.
Net debt was approximately $785.6 million compared to $123.9 million of LTM reported adjusted EBITDA for a total net leverage ratio of 6.34 times.
On November nine the.
The company completed a transaction to exchange, 99% of its seven and three eight senior secured notes for new eight and three quarter percent senior secured notes with a maturity of 12 15 22.
This transaction extends the maturity of both the C.
Senior secured notes and the senior unsecured term loan expanding the company's opportunity to access capital markets throughout 2021.
As part of the exchange agreement, we will also reduce our extent our outstanding debt by $25 million $15 million will go to pay down the new notes.
And $10 million will go to pay down the senior unsecured term loan using cash from the balance sheet.
We've increased our full year consolidated adjusted EBITDA guidance to $125 million to $130 million.
As a result of the record setting polar.
Political advertising and the steady underlying improvement in radio market conditions are.
Also stability in our network radio.
And the performance of our cable TV and digital advertising businesses businesses.
Which combined with the rigorous ongoing cost controls.
Makes us feel better about.
About where we're going to end the year.
While further potential economic shutdowns could adversely impact this guidance is healthy EBITDA and the company's efforts to de lever and position the company comfortably to clear covenants and maintain liquidity throughout the pandemic so as it.
All of the extension of the debt maturities and the increased guidance on EBITDA, we feel a whole lot better about.
Going concern reviews and that type of issue, which we took some calls on but we took some questions on the last call I think the company sales significantly more.
Results in and having made the moves we have and haven't had that political advertising and the improvement in.
Core business that we have and with that I'll hand back to Alfred Thank you Peter we reach.
Recently announced.
Radio asset swap with Entercom and.
Okay said is that I believe that the industry. The radio industry is due for another round of consolidation in any kind of mature business concern.
Consolidation, where you can create economies of scale expense savings.
Yes, advertiser sort of clout with.
With a broader offering that's good because were a.
A niche, yes, Rob broadcaster focusing on African Americans.
Yes.
Became clear to us that in order to continue to build scale in markets that we operate in we are gametech expand.
Beyond just our urban edge Charlotte is a market we've been in for quite some time, we had three Athens their focus on the African American audience.
Entercom had a.
The third largest cluster in terms of revenue there but.
But still considerably smaller than beasley our.
Our iheart in that market they were doing probably about a 2020 revenue share and we.
We worked out a deal.
To get their general market stations under our board. They have the legendary news talk stations have you BT and that market sports station W.
In the end.
It also a legendary well performing adult contemporary station W. Ell and K. They in 2019, those those stations probably did about $20 million of of of revenue cobot impacted they're probably going to do about 15.
And combined with ours.
Now looking at a cluster that will have we are approaching you.
$20 million of.
Revenue in that market once its normalized and we have the ability to offer a much broader spectrum of formats to the advertisers and become a significant player we.
Didnt.
Give up that much in our opinion because.
The stations that.
We.
Swapped with them we had.
Yes, we had singular positions so in St. Louis which was the most significant.
Cash.
We are low that we traded we only have two items in that market in no way.
To to get larger and so intercom will pick up one of those Fmbs W. HL.
And we're actually going to sell the second one to a religious broadcaster gateway creative for $8 million, which is a.
Cash very attractive price for us and Entercom will take the intellectual property of that second at them and put in on one of their their other radio stations and so in a market, where we couldn't get any larger work.
We're going to exit and then the other two markets Philadelphia, we had three items on and the one that we swapped to.
Beer calm W.P.H. I was not a.
Cash flow generator for us. It also we we kept our.
Our best stations in the market, our best signal in our station with the highest ratings still remaining in Philadelphia, and we think that we'll be able to have similar results and we've actually.
Experienced in the past with the two stations instead of three and then we swapped a sports am that we recently bought a few years ago.
That was breaking even for us are slightly loosen a little money. This.
This year and Entercom is consolidating.
Sports format and.
In the Washington market and.
And we believe that at a minimum the swaps are going to add.
Over a million dollars of.
EBITDA to 2020.
In addition to put $8 million more cash on our balance sheet. So we felt really good about it.
It's Mike.
Much.
Easier much more efficient and productive to operate larger clusters of radio stations and and we're going to look to continue to try to build out.
Our clusters in markets that we we operate in as we look for ways to rationalize.
The radio.
A portfolio and.
And create more EBITDA all in the effort to continue to de lever.
The company and I think that we've been making some significant strides.
Towards that as indicated by what we said earlier that our leverage ratio.
I show, we feel will end up being lower.
At the end of this year than where it was when we came in.
And having gone through and continuing to be in the middle of a pandemic I want to say a little bit about.
The stock price.
A.
Stock.
Prices are always hard to gauge and people have to determine what.
They think.
A company is worth and in the pandemic, it's really hard to to judge media companies because you've got these depressed levels of revenue and EBITDA.
Doing due to.
Yeah, just the current situation of shutdowns et cetera et cetera. However.
However, if you look at our company and we kind of looked at estimated year end debt level of about $790 million.
Net that.
Give or take.
Change.
Upper upper down a little bit and if you take the midpoint of the EBITDA guidance that we gave of 125 to 130 and take the midpoint of 127 and a half million dollars and if you use that.
Normal trading multiple that.
Radio companies.
I had been trade net.
In the past of about seven times, if you multiply that EBITDA by seven times and subtract our debt and we've got.
45.2 million shares outstanding if the class a shares which traded a premium just stay static don't.
It was either way those class D that you have in the K shares they should be just on normal trading multiples and the EBITDA and the debt that we forecast to have our share should be well over $2 I.
I don't know if the market is going to look at it that way the stock has been trading on.
A lot of news and and Black lives matter interest and and a lot of lot of retail trading but.
But the analysis that I just outlined is.
Basically a fundamental look at our EBITDA times, a traditional regular trading.
Double.
Seven times, which is not unreasonable less.
Less our debt and and the number of shares that we have outstanding the radio business continues to to get better. The fact that were only down mid single digits in Q4.
It's pretty extraordinary.
I expect that down next year in the radio business, probably won't get back to 2019 levels, but it will certainly be a heck of a lot better than than 2020 and.
And we expect our other units to continue to.
To do a great job.
In growing their their cash flow.
And so we will continue to de lever move forward the other thing happens.
Next year at the into 21 is our put.
Of our MGM.
Interest comes.
Two full value of seven times, whatever the EBITDA is going to be at.
At the end to 21 this year at six times whatever the year in EBITDA is going to be I can tell you that MGM. The have been closed for three months is back open and doing extraordinarily well in terms of.
Of gaming revenue, even at 50% capacity.
I haven't seen what their EBITDA numbers are are going to look like as of yet, but all of these casinos, particularly these regional casinos are controlling their expenses in a significant way such that a lot of them are actually haven't yet.
Higher EBITDA.
Levels than they did.
A year ago, so I suspect that the.
The property will continue to do exceptionally well also from an EBITDA standpoint so.
We we continue to do the job that shareholders and debt holders stakeholders.
At charged us.
To do and we are going to open up the line for questions from the audience. Operator, Thank you, ladies and gentlemen, if youd like to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command.
If you are using us.
On the phone please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one then zero at this time and one moment. Please for your first question.
Your first question comes from the line of Jay Lee from Hasten capital. Please go ahead.
Plus.
Just a few quick ones. So one on that on the radio station sale in Saint Louis can you give us an idea of what the multiple on that particular station lows on the kind of the PCF level.
Yes, Peter.
To that.
Communities.
Sure.
No.
[music].
No.
Okay.
Hang on sales.
Okay.
Okay.
16.8 times.
Okay great.
And then for the MGM National Harbor.
Put interest how much.
You guys, Oregon via the equity.
6.67%.
Okay.
And then final question on the color on the cargo tell them you guys did the bond exchange earlier.
Larry recently kind of ball you another eight months or so.
But how are you guys looking at and how are you guys thinking about the cap structure cap stack here.
Given kind of the near term maturities you have the.
The term loan B and 23 of the notes and 22 million pick.
Pick them 22 as well.
Yes, I think.
We.
Communicate on a consistent basis with.
Most of our large debt holders as evidenced by the exchange that we did and we had like 99% participation that was extraordinary and I think the general consensus the idea.
Is that we'll re rack will look to re rack the entire cap sac.
And 21 out of me.
Morse most likely once we get past.
The cobi quarters yeah.
So that you don't have to get it.
You don't you don't have to ask people to sort of.
Imagine that cold it didnt happen, if we can just get past those numbers on lap them.
Yes, then it just makes the sales job easier, but I think thats kind of the general consensus consensus is re rachael.
Whole thing and you try to create a security also that.
Got.
Yes, some significant size so we can get more pay.
Players into it our securities now are.
All kind of smallish $350 million tranche $300 million tranche, and then I guess, the sub notes or like a couple of hundred million dollars.
All of those are subscale.
And don't allow.
The full universe of investors to participate in.
So you're looking at more some more to the back half of 21.
Just to give you guidance few quarters of yes runways look thats my thought.
That you look into the back half of 21, but let me just say this also the.
The capital markets are funny like they could explode or they could be really hot and miss.
And people may be willing to go look past the coded numbers and.
Yes indeed.
Investors and bankers may say that they are willing to do something now at a at a regional level at reasonable level and we've we've got to be in a position to take advantage of that so.
Traditional thought process is telling me, it's the back half, but just.
You just never know I was I was always taught that you take.
Capital when it is available and if the markets are.
Our open at at a at a reasonable level, we'll we'll be opportunistic.
Yes.
I know you guys talked about I know you up and you mentioned that.
You are looking to do sort of a recapitalization or kind of rifai pre coded.
Is that kind of along the similar lines, where its deep big out branches.
Actually that was that was going to be a different approach.
Approach, we had been thinking about that but the capital markets pre covance where Ics.
Additionally, hot.
And if we go after are I think that was our year end release, we had been counseled.
By a number of banks that we could have refinanced.
That tranche that we just exchanged that $350 million tranche, we could refinance that at the time.
So.
Yes, they gave us a level of 8% and the tranche was seven and three ace and they thought that you might be able even to come inside of that so we were actually going to go and and at a minimum just refinanced that traunch, if the markets where they are so we could have done all.
Front end, we would have done that but just taken just refinancing that tranche would have pushed out that maturity and also bumped out the.
The term loans since it has a springing maturity feature and so we were going to do that we will.
Yes, we would have printed that that singular trots trade, but then coded happens.
So.
So now if you ask me how we're thinking about it we would re rack everything in and look to do.
One bigger tranche.
Or at least you know.
A larger singular tranche in the front end.
And.
And then figure out.
With Carlyle, who loads who owns the back end of our paper.
What we do.
With that with that maturity they've been a great partner.
And so.
That's the thinking today, I'm, not saying it wouldn't change but.
And.
When we were looking at pre co bid we were actually.
Thinking about doing something else and it was just purely a function that the market was there.
As a final question. So the reason why the the notes were exchanged for call it eight months or so.
But charges just to give you guys a little bit more flexible.
But going into revenue.
Give us give us more time to get a refinancing done and not have to be in the throes of Cove. It performance.
Okay.
Okay great. Thank.
Thank you.
Your next question comes from the line of Matt Swope from Baird.
Please go ahead.
Yeah. Good morning, guys I'm wondering could you talk about how you how you think about that EBITDA number Alford you walk through your sort of analysis of where the stock is in that mid point EBITDA of 127, and a half million, but obviously, that's an impact that number.
What would you what would you counsel investors.
To look at as a as a normalized EBITDA number.
Sort of you know absent yeah, that's that's hard right because I I.
I don't think 21 is going to be back to pre coded levels for the radio business right now and so yes, we got.
Got a.
Yes, I'm talking to other Ceos about what do you do about budgeting for next year, we've got a an assumption for what we think the market's going to do but it. It's just that it's an assumption I mean, I think we're really going to have to look at it quarter by quarter and so.
Hi.
I don't know what the normalized EBITDA.
We'll be.
For next year, because I don't think next year is going to be normalized try it.
I can also tell you that prior to coated.
[music].
People investors.
Were more.
Comfortable with I think the radio industry now than they were with the cable television cable television programming industry because of cord cutting et cetera.
Thank God, we are in the cable television business because.
That that.
Businesses.
Performed in an extraordinary level for us.
This year.
People sitting in the house had watched television ratings are up.
Significant level, yes.
Yes, theres still churn but.
In this last quarter.
Turn.
Slowed.
Rob.
Television distillate primary yes advertising vehicle bore for for folks and so.
Yes that business is pretty pretty resilient. So I don't want to go out on all of them and try to give.
Give folks.
What I think normalized EBITDA as we as a management team.
Yes.
We always try to make sure that we put ourselves in a position to survive now.
First and then we look for opportunities to drive and I think what.
The performance that you're seeing this year from.
From this team is how we think about every year so.
Next year won't won't be any different but I mean, it's no. It's the middle of November and we're just now given guidance now and.
So.
Yes, it would.
Yes, I'd just be sticking a finger in the air for for next year, if I try to give you. Some what I can tell you is that we are going to have a strategy to continue to de lever and to maintain.
Our EBITDA and.
And now.
I suspect that I can go out on a lemon said there are EBITDA wont be any worse than this year and and we're going to look for ways to grow it.
Yes, that's that's certainly fair and helpful. When we appreciate your giving guidance is very few of our companies that have given.
Given any guidance at all so.
Definitely grateful for that and I'm interested by your comments about sort of the change in perception for for radio versus cable.
Is there any is there any opportunity given that.
In terms of maybe you talked about consolidation and radio what about consolidation in.
Cable TV is there any opportunity for you to monetize sort of the recent strength in TV one.
I mean, I think we have monetized its you know its.
Cash flow that's coming in were used to pay down debt I mean, I don't count.
Yeah, I don't know what you mean by monetize whether you're asking would we consider.
Or selling the asset yes.
Yes, that's certainly a question that I would never actually openly debate on a on on on on a conference call, but I can tell you today, yes, I am grateful that we own that asset.
And and I think.
I think having a diversified strategy in a media business that is being this disruptive from a digital standpoint is is a winning strategy because I, just don't know which way it's going to go right now.
There was one time when everybody was really down on the radio business and then I want.
I watched fee.
Yes, big investors start to as you know.
Really be bullish on on on radio.
I've lived through that turnaround now.
Now if you look at the pure play radio companies there, they're all going to have like Dag on near double digit.
Leverage levels yeah.
And their stocks are still trading as if you know everything is going to bounce back to normal I mean, you know so but I got to worry about us and how people view us now and so I like I like the diversification strategy.
Outages so.
Hi.
Yes, hi.
I am not look into.
To try to divorce myself from any of the businesses that we currently own.
That's a helpful answer I appreciate that and then maybe on Peter could I got to go back to the EBITDA question and and you listed.
A number of the costs that were down in Q3 year over year. So.
Sort of back to that EBITDA question, how much of that stuff do you think is going to come back how much would how much should we.
Between things like sales commissions, and some of the incentive expenses and others.
How should we think about where expenses go as as hopefully we're in a happier place in 2021.
It's a difficult question, obviously I deliberately gave a fair amount of detail about where the savings came so that you can kind of looked at the different buckets I think difficult because.
You know TV one programming, obviously, it's going to be sub optimal for us to continue to save this kind of level that we've got to meet new programming. So you know at an appropriate time.
Spigot will have to be turned back on for one of the better phrase.
But.
So I'll first point, we've got to manage through this next couple of quarters and see where we're at so it's hard for me to give you a numerical answer to your question, even though I'd like to because I don't know, what we're going to be with TV. One programming, we want to do more obviously on the same on TV will Mark 10, which will follow the program.
I think what we what we can say is we have made a number of the.
The the furloughs permanent and obviously, we laid off unfortunately.
Some people so so there's a permanent there.
But even that is a little tricky to speak to numerically.
Men's because once events you know if if things start opening up again, then you're going to see our revenues go up as we start to have you know a big events again, and then we're going to need to bring people back in to manage those events and deal with promotions on the ground. So it's a it's a complicated.
Act and so yeah, we say.
We believe $20 million.
In third quarter.
As I look at our forecast in fourth quarter. This might be helpful to you I think the costs overall to be down about $8 million.
Kurt EBITDA will be up.
So uh huh.
I'm trying to sort of give you the best answer I can.
Obviously some of that variable at given those numbers, but it's hard.
To give you.
How much is permanent and how much isn't because theres just a lot of moving parts to that question.
Yeah, that's that's all helpful and just to be sure.
On an apples to apples basis for that 125 to 130 EBITDA guidance, what are we supposed to be comparing that to for 2019 that you said.
133.5.
Got it and so as we look ahead to 2021, maybe I'm trying again on what I was asking Alfred.
Can we.
And we think about 2021 being a better number than that 2019 number.
That is certainly how we're going to approach the budgeting process now.
That's what I will tell you.
Jan and look that that's going to be a tough that and when I say.
That's a tough back is because you know we took all these costs out in terms of you know.
Salary reductions headcount bonuses et cetera.
So next year is going to be you know it next year.
Should not be a crisis year right. So we'll load back in.
We've already restored salaries and things that are of that nature, you'll give people an opportunity.
To to earn their bonuses back.
And so so you got a bunch of costs that were unnatural. They got taken out. Some this year that youre load that and then we're going to have to you know then try.
Robert EBITDA on top of that but you're also not going to be dealing with.
The same kind of depressed revenue levels in the radio business. You know that you had in 2020 I just don't know how much it's going to bounce back yeah. We've got things like the swap that we just did in Charlotte.
That are going to give us either.
Got upside opportunity, we got to a number of other things that are happening, we're getting more and more distribution for our second cable television network.
Cleo.
We just finished.
Finished renewing our our horizon deal that's that's done.
And clearly is going to get launched as part of that were about to launch on direct T.V. for Cleo, Yeah, and and we announced that we were getting that.
That distribution, but it's about to launch in the near term.
Directv launch Directv did launch yeah, no so dumb so direct.
With what it wants to aid to the 11th or something like that last week billing, yes. It launched on the night, So thats up close.
Next year going to be.
Probably in the 30 million. So you know Oh arena. So now it's time to look at getting it rated which allow us to monetize so theres. This is.
Things that.
That are opportunities that we were going to have to go out and monetize so.
And.
So our goal will be in the face all those things. We just said there is to then go out and be this year.
As EBITDA number and that's without 20 million, a political right and that's without 20 million it probably because I as well yeah.
Data, but our goal is your guys base case include any events revenue and 2021.
We haven't even yes, we haven't <unk> the answer is no right now.
We haven't even.
Got into the budgeting process yet for radio.
We made a conscious decision not to really start to look at it in earnest until we get to into December and.
And realize how well December is doing versus.
Now last year, and yeah, and using that as a jump off point to that to start to forecast Q1.
That's great I really appreciate all the questions guys. Thanks very much.
[music].
Your next question comes from the line of Ryan Lawrenson Investor. Please go ahead.
Yes.
Hi, I was just wondering.
Is there any diversification happening like getting away from cruise ship.
And free some scope it doesn't look like could be abating anytime soon and getting worse.
And the casino business and other things like that and maybe advertising what some of these.
Sporting events with the B or my B.L.M. movement [laughter].
I'm I'm, sorry, I didn't hear the first part of that Doug.
Diversifying away from things like cruise ships casinos.
And so I think we are I think we are responding.
And to all of those things and obviously, our cruise business at the moment is above it.
Some appropriate point hopefully go wrong again.
Because those those have been some problems.
We also how big [laughter].
And pretty much all of our markets.
Not generating significant revenue.
And significant profit for us in a normal year, and we hope that that and we believe that that will come back.
What we've done in the meantime in terms of diversification as Alfred said, we just announced this deal with a radio swap where we're going to get bigger in Charlotte and exit some of them are.
So so that will.
That will help us.
I think your final point was about PLM and clearly there is a movement from from which we are benefitting I think thats one of the reasons.
The social justice issues.
That helped us with the amount of political dollars weve.
We've gotten this year and then focus on our audience.
If alpha has any specific thoughts on that but.
Thats really we are I wouldn't call it diversification efforts.
We are reacting in real time, the business conditions on the ground. So I would say that but my own personal view is there's going to be a vaccine they'll get control.
All of this and overtime like we'll go back to normal I mean, it did with the Spanish flu right now is that going to be yes.
Q1 of 22.
21, I don't think so I think it'll take most of next year for things to start to get back, but I do think that life will return.
To normal and people will gather and there will be concerts and there will be a band and there will be cruises now oh by the way our cruise business. It's a big revenue number, but it was $1.7 million of our 133 and a half million dollars a cash flow. It's not you know it's.
Not a gigantic piece of our profitability the casino.
You got to differentiate.
Regional casinos from Las Vegas, Las Vegas is hurting badly because so much of their revenue and profitability is also about tourism and convention.
It's the in room nights.
And less about gaming the regional casino business is about people within a 60 mile radius, showing up playing blackjack and slots and MGM National Harbor is killing it and so I don't want to diversify away from that that I'd, rather diversify more into that business.
Business now than than away from it. So yes, I think the other thing that people have to look at our business and the target because all of this BLM stuff and because were black focused company everybody is like Oh. This company is going to go to the Moon right well, we're in the middle of the pandemic most of our advertisers were shut down and so what yeah.
What what our position is a black media company has allowed us to do and our diversification is to perform at an extraordinary level compared to everybody else and what happened to them in.
In the pandemic and so being down from 133, and a half 225 to.
To 130.
When lots of other folks got.
Scott just wiped out altogether that thats, our strategy Thats, what our strategy has allowed us to do and what our focus is sought.
Oh, I see stuff, one chalkboards, where people think that our revenues are going to be up 50% because the black lives Matt.
Matter I mean, we're still a media company in businesses a spend advertising dollars hubs are still at limited capacity or closed.
Yes, there are also people on the chat board.
Same pulse things about naked short.
Pop and what's the.
Stream stock price movement with June 16th.
So I'm.
I'm wondering if anyone just to follow up is considering like getting more heavily involved with are seizing the opportunity as far as diversification or adapting to these new times, obviously the world.
Old will some how return I don't think it's ever going to return fully cover it looks like it's going to morph into all kinds of things, but I appreciate what you're saying, but theres people on these.
Boiler room, so putting out false information that you guys are heading towards bankruptcy, which I'm not hearing today at all.
So.
I commend you on what you guys. How you have adapted with Covance. So thank you for answering the question I appreciate it and good luck I do agree.
The casino diversification is a good move.
My my pleasure. Thank you.
And at this time there are no further questions.
Yes.
Great. Thanks.
Thank you everybody and I always say this at the end if the like I sound like a broken record, but Peter and I are always available offline to answer any additional questions. If you.
I think it's something that you didn't get to ask today. We appreciate your support talk you next quarter.
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