Q1 2021 Audacy Inc Earnings Call
[music].
Good morning, and welcome to Odysseys first quarter 2021 earnings release conference call. All participants will be in a listen only mode. This conference is being recorded I would like to introduce your first speaker for todays call Mr. Richard Schmeling, CFO and executive Vice President Sir you may begin.
Thank you Stacey and good morning, everyone.
This call is being recorded a replay will be available shortly after the conclusion of todays coal at the deep lately for members and our beliefs.
During this call the company May make forward looking statements, which are based upon the company's current expectations and involve risks and uncertainties.
Company's actual results to differ materially from those projected forward looking statements.
For information concerning factors that could cause actual results to differ materially.
Tribe and the risk factors section and the Companys annual report on form 10-K, as such risks and uncertainties may be updated from time to time and the company's SEC filings.
We assume no obligation to update any forward looking statements, except as may be required by law.
During this call we will be definitely for certain non-GAAP financial measures.
For you to the investors page of our website and what is he inc. Com for reconciliations of such measures and other pro forma financial information.
And now I'll turn the call for David Field.
President and CEO of losses.
Thank you rich and thanks to everybody for joining Odysseys first quarter earnings call and our first call since we rebranded the company at the end of March on.
Our last earnings call, we spoke of how we committed ourselves to not just navigating the pandemic effectively but to accelerating our transformation and emerging from the pandemic as a meaningfully stronger and better positioned company with significantly enhanced growth potential we are achieving that goal and have made excellent and forward progress on a number of fronts during the quarter.
Highlights from this quarter include our highly successful rebranding of the company to Odyssey and the acquisition of pod corn, the country's number one podcast influencer marketplace. The announcement of our new multi year partnership with Beth M. G M and strong progress on our growth initiatives across our multiple platforms.
Rebranding the company as Odyssey is a reflection of the deep and fundamental change that has already occurred across the organization as well as a sign of where we are headed Odyssey.
What I see today is a very different company than before and we needed a holistic brand that works for all of our audiences, both b to B and B to C and captures the full expanded breadth of all of that we now do.
We have been purposely transforming the organization into a leading multi platform audio content and entertainment company with scaled audience reach and and important leadership position across the full spectrum of the dynamic and growing audio market, including broadcasting podcast Ing Digital network events music news and sports.
The acquisitions of see 13, Pineapple Street studios, the QL gaming group and pod corn as well as the significant investments, we're making across various growth initiatives on our radio digital podcasts and sports betting platforms are fundamentally changing how we serve our listeners and customers and enhancing the growth profile.
All of the company.
We are in the midst of a strong, albeit uneven advertising recovery, reflecting the nature of our business mix.
First quarter digital revenues grew 17% and national revenues rebound.
Bounded to prior year levels, but local AD revenues remained well behind as many of our customers continue to be deeply impacted by the pandemic.
I noted on our prior call that a large portion of radio advertising is used to drive foot traffic and activate local audiences to go places and do things and reviewing various customer segments for the first quarter. It is clear how this has affected our business several of our advertiser categories were severely down including restaurants.
Retail travel and concerts and entertainment and sporting events movies theater recruitment transportation and theme parks.
On the other hand, less impacted categories perform well, including financial services insurance grocery home improvement and lawn and garden.
For the local radio Advertiser base and significantly weighted towards later stage recovery categories. We anticipate a strong recovery of local advertising across those businesses will occur during the third and fourth quarters.
And a positive sign of recovery our average local customer spending is now exceeding average 2019 levels.
Total local AD spending is down because of a decline and the number of customers with a substantial majority of those inactive accounts concentrated in the later stage recovery business categories.
In addition, smaller markets performed better than larger markets during the quarter, which hit us, particularly hard due to our high concentration in the country's largest markets, which substantially exceeds our peers.
Our events business was completely shut down during the quarter, while political spending was negligible.
<unk> and political AD spending combined for 5% of last year's Q1 revenues.
Based upon the improving state of the pandemic, we now expect to see a partial return of the events business later this year.
National Radio spot revenues continued to improve we gained revenue share and national revenues during the quarter, reflecting the numerous customer focused improvements we have made across our national sales organization to capitalize on our scale and expanded capabilities.
We believe we are well positioned to grow our national revenues and the future as our client development initiatives continue to take hold.
Turning to our digital business very strong growth and streaming audio and digital marketing solutions were somewhat offset by weaker results and podcast ing, which was soft due to a significant reduction and our Q1 product offerings with.
And we parted ways with Pushkin industries, our second largest podcasts relationship at the beginning of first quarter, which had a meaningful impact on our quarterly results in.
In addition, while we have and aggressive podcast show development calendar for 2021, we had a fairly light first quarter slate.
We expect to see significant acceleration and our podcast business in Q2, and the second half as our expanding pipeline of scheduled new product releases and partnerships kick in.
I'll share some additional color on that as it was a very active quarter for our podcast studios from a business development standpoint.
Cadence 13 studios entered into and exclusive podcasts partnership with global Superstar Demi Lovato and were announced singer actress and Actavis. We also expanded our partnership with Pulitzer Prize, winning historian and author Jon Meacham to launch Shining City audio and history focus podcast studio co venture.
One of our newest releases, we can do hard things with Glenn and Doyle debuted at number one on the Apple charts. This week, where it sits as of this morning.
See 13 features cadences pioneering scripted studio unveiled its first three feature length movies for your ear slated to launch within the next year with more to follows.
<unk> is working closely with endeavor content on a traditional <unk> 13 feature slate leveraging their relationships and working jointly to develop film and television projects based on the IP.
Our Pineapple Street Studios launched two original Darkey series, My fugitive and stay away from Matthew Mcgill with exclusive binge Windows on Odyssey and also created the new hit original Darkies series welcome to your fantasy.
We will also be launching new projects with HBO and Netflix this quarter, and we announced a distribution partnership with the riches and show and.
And lots more to come.
Our underlying digital metrics reflect strong fundamentals across all of our digital businesses digital streaming monthly average users and total listening hours on smart speakers and connected Tvs were all up solid double digits again. This quarter. We also achieved strong double digit growth and streaming RPM or revenue per thousand listening hours and we.
Posted solid double digit growth and our app installs and the period since our rebranding.
Italy, notwithstanding the impact of the later product offerings, the core fundamentals of our podcast and business performed well with double digit RPM growth.
All in our digital business, representing our combined digital audio podcasting and digital marketing solutions businesses accounted for 21% of first quarter revenues versus 10% and 2019.
And as we turn to second quarter, we expect our digital business growth rate to more than double our first quarter growth rate.
As I mentioned earlier in March we announced and completed the acquisition of popcorn and the country's number one podcast influenced your marketplace.
<unk> core and enables brands to find and collaborate with the most relevant podcasts yours to create native advertising and branded content at scale.
Corn drives higher ROI for brands and enhances how podcast creators monetize their content the.
Company solve the problem of how brands of all sizes tap into the hard to access micro Influencer community.
And the acquisition greatly expands <unk> product offering for advertisers and builds on our position as one of the country's three largest podcast publishers and the number one creator of original premium audio content.
Popcorn's marketplace now includes over 44000 creators representing 47% growth since the start of the year.
While the business is currently small it has experienced experiencing outstanding growth and we have high expectations for its performance and strategic impact and the future.
There were also a number of important developments across our radio business during the quarter. We continue to drive innovation, taking steps to enhance our market leading news brands with expanded digital offerings. We also continue to bolster the quality of our local sales capabilities and establish deeper cross platform integration across our radio broadcasting podcasting digital and sports betting platforms.
Notably Nielsen reported that aggregate broadcast radio ratings jumped 8% and March versus February this appears to be a reflection of and accelerated normalization of behavioral patterns as vaccinations become increasingly prevalent across the population.
Turning to sports betting we delivered very strong growth on our <unk> platform and both active subscribers and affiliate fees.
As a reminder, <unk> is a rapidly emerging sports betting data and predictive analytics platform generating value, creating insights for sports betters.
We are making solid progress and enhancing the platform with expanded content offerings and enhanced content integration across the other platforms.
While the business is still fairly negligible to our overall size. We are very excited about where we're headed particularly in light of the powerful complementary opportunities we have across our unrivaled number one sports radio business.
Also in March we announced a multiyear partnership with Beth M. G. M. One of the country's leading sports books, we had previously announced in Q4, the landmark multiyear partnership with Vandal, which is the single largest AD deal and the history of the radio industry.
We continue to expect sports sports betting to grow to a $100 million category for Odyssey over the next few years more than tripling, our 2021 levels.
It is truly an exciting time at Odyssey.
We achieved a number of important strategic enhancements during the quarter, including a rebranding the acquisition of popcorn and the new partnership with bet MGM.
Through our targeted acquisitions as well as the significant investments we are making across the business. We are positioning ourselves to compete effectively in these rapidly growing areas. While at the same time fully participating and the recovery of local advertising and some of the multiple segments of our economy reopened and the months ahead.
Our competitive offerings are differentiated by the premium nature of our exclusive content and.
And our unique combination of news and sports music podcasting and local gives us a powerful position to compete for and increasing share of digital listenership across our digital platforms and.
And we have announced our business sorry, we have enhanced our business model meaningfully by significantly reducing expenses, while at the same time, improving how we serve listeners and customers and enhancing our national sales organization to capitalize on our significant revenue development opportunities.
We are emerging from the pandemic as a meaningfully stronger and better positioned company with enhanced growth potential and are committed to and exciting strategic roadmap that will continue to unlock new growth opportunities and the months and years ahead.
In closing I am pleased to note that our second quarter pacings are up more than 60% over 2020, reflecting big improvements across all segments of our business from the depressed levels of the prior year and while our local results remain hampered by the high concentration of local radio advertisers and later stage recovery categories. We are looking forward to a strong recovery from those.
Customers in the months ahead, and with that I'll turn it over to rich.
Yeah.
Thanks, David for the first quarter on net revenues were down 19% year over year for them largely by spot advertising.
Which were down 24%.
In addition, our events business.
So that made up about 3% of our first quarter revenue.
To be significantly disrupted and for the quarter was down 98%.
After a slow start during the peak of COVID-19 and <unk>.
January.
Net.
Each month.
This quarter and as David mentioned on National revenue came in flat.
With Macquarie.
Local spot continues to be significantly disrupted many of our largest markets, which account for the majority of our local revenue.
Sure.
And Chicago remain locked down for the end of the first quarter and these have only started to meaningfully.
Restrictions over the last several weeks.
From an advertising category perspective, our top category auto dealers is still fairly disrupted due to new car supply shortages and two.
COVID-19 restrictions.
Other key categories that require people to get out there somewhere and amongst other people.
Concerts sporting events.
<unk> and casual dining and we also remain depressed.
And the first quarter.
And with local advertising was day.
And with more than one from.
The pandemic model and.
Those that were active spent more on average than prior to the pandemic, which you take a good sign for future.
Our markets are still going through reported increased level of sales activity and growth.
And on optimism.
We remain confident and I get that it's back to normal and local.
Welcome.
And you will see local spot advertising.
<unk> on them during the second half of this year.
Our digital revenues for the first quarter.
17% year over year, driven significantly by screening and marketing services and accounted for 21% up on total net debt.
For the second quarter based on our current Houston.
And we projected a total net revenues will come in between 303 hundred $10 million or on 71% to 76% year over year.
Our total operating expenses for the first quarter came in at $248 9 million.
And excluding onetime and unusual costs adjusting out noncash items like D&A.
Total cash operating expenses came in at 205.
5 million were down 32 million or 12% versus prior year.
Looking at the second quarter, we expected our total cash operating expenses will be up about one half the weight of our year over year revenue growth.
For the first half a day.
We expected our cash.
Cash operating expenses will be down versus 2019 pro forma expenses for our pre COVID-19 expense base.
Over $85 million.
And for the full year, we now expect our total cash operating expenses fixed plus variable to be down.
And 40 more were more versus 2019 pro forma of one one.
Nine.
Turning to our financial position liquidity in March we invested $14 6 million to acquire popcorn.
And as number one podcasts and pools.
And there's marketplace.
And this platform enables brands to connect with podcast creators from Nida advertising opportunities at scale.
The consideration for this acquisition also includes a performance based earn out over the next three years.
In March we also issued $540 million.
And three quarters senior secured second lien notes and.
Use the proceeds to retire our seven on one quarter senior unsecured notes and to pay down on the 171 of our first debt.
Net.
This transaction, we financed 40% of our scheduled 2020 for maturities and increased liquidity by about $30 million.
At the ended the quarter liquidity was 221 zone.
And from 160 day at the end of last year, almost comprised of $169 million available under our revolver and $52 million of cash on hand.
On net capital expenditures for the quarter totaled $7 3 million and our.
Tracking at the load on our full year guidance range of 70 to 75.
With that we'll now take your questions operator.
We will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate your line is and the question queue. You May Press Star two if you would like to remove your question and from the queue for <unk>.
Participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Our first question comes from Aaron Watts with Deutsche Bank. Please go ahead.
Hi, guys. Thanks for having me on this morning appreciate all the color and encouraged to hear that it seems like you are turning the corner on advertising day.
And I'm just curious as you sit today do you view it as a matter of kind of.
When not if you get back to pre pandemic, either revenue or EBITDA levels and if it is when a matter of time and any sense for when you might cross that are kind of threshold and and get us back above those prior levels.
Yeah. Thanks, Erin we spend a lot of time thinking about it and we evaluate a lot of information that's.
And that we have to access.
As I mentioned, we're looking at.
And as rich mentioned and increase in revenues of 70, plus percent and second quarter coming off of that.
Rough second quarter of last year, and we expect to see further recovery as we go through the year.
We see no reason why we shouldn't be back to 2019 EBITDA levels in 2022, and that's our best thinking as of this point and time.
Okay and that is helpful and then kind of.
Secondly on the digital side, maybe specifically with podcast thing you made some early moves into the space. You have continued to bolster your your assets. There and are you happy with kind of your mix in terms of like publishing versus distribution and are there any areas there that you'd you.
I think there is opportunity to continue to grow whether that's organically or inorganically.
Yeah.
We feel great about the progress we've made and.
Establishing a digital business pretty quickly and having to catch up to some others that.
We've been ahead of us by a few years, both inside and outside of our space right.
I think that we've created a.
Podcast studio between <unk>, 13, and Pineapple Street that stands tall with anybody and everybody in terms of their reputation the quality of work, we're doing the quality of partners and the pipeline that we're building. So we feel terrific about that.
On the distribution side, I think youre going to see us continue to take the Odyssey App.
And does it further and enhance that consumer experience and make it into an even more robust player, which we think is at a central part of the world, We live and today and that was part of the motivation for the rebranding was to give it and new.
Patina.
That we think will be compelling to all audiences going forward. So we're excited about that the.
And the addition of pod corn is it really.
Terrific.
Enhancement as well because we have differentiated ourselves by the quality of the premium content that we are.
And I have on our radio stations with our news and our sports and lot of our great personalities and the high caliber the intelligent caliber of the influencers across our network and so to be able to extend the platform into sort of the mid and longer tail of influencers.
And have now over 44000, there we think that creates lots of opportunities for us going forward to serve our advertisers and ways that are really important and were previously.
A problem in the marketplace to solve and all of that said.
We're still hard at work and we're still looking for opportunities to embellish and enhance our offering for listeners and customers and we're excited about how we're positioned going forward.
Okay, great and if I could squeeze one last question and maybe for rich and I apologize if I if I missed this earlier and your comments, but.
Putting my credit hat on as I think about your leverage obviously that will recover and EBITDA recovers, David and you just talked about that.
How should we think about your ability and focus on bringing down the leverage and where would you like to see that lift maybe one two or three years out and that's it for me. Thank you.
Yeah.
So look but we're focused first things first on the <unk>.
<unk> seen our total leverage and our first lien leverage.
We do expect to be comfortably can volume.
With our first lien covenant at the end of this year and that's.
And four times covenant and longer term.
We're targeting to be.
Inside four times.
Total net leverage.
And a little bit.
And we see a path to get there and a couple of years zone.
Okay. Thanks for the time guys.
Once again, if you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from Steven Cahall with Wells Fargo.
Please go ahead.
Steven you may be muted.
Sorry about that.
So I apologize I joined a little late and I apologize if you already answered. This I think digital decelerated a little bit sequentially. Just wondering if you could speak to some color. There is that timing and sports is that timing of new podcast deliveries and any sense. If you could give us maybe as to what the podcast growth was in the quarter.
And the non podcast that you all might be helpful.
So.
You did miss.
Some comments on that and we talked about the fact that our streaming audio and our digital marketing solutions business has performed really well and in fact ahead of our fourth quarter digital overall growth rate.
We got held back by softness and podcast and which was really about the.
Parting ways with pushing and our second largest.
Partner as well as the a slower podcast slate.
Our reduced slate of offerings and the first quarter, and we talked about how and second quarter and beyond.
We have a.
Accelerating schedule of new releases and partners and so forth. So we feel good about our podcast business and we feel good about our digital business recognizing that and first quarter. We were held back by the softness and podcasts for the reasons I mentioned.
And then we also said Steven we expect our our second quarters digital growth rate to be more than two times, our first quarter growth rate.
Great that's helpful and then.
And maybe either for.
Rich R. J D. Just wondering if you could talk about the line of sight that you get on content from on corn, but it sounds like.
Interesting area of Influencer opportunity. So as we just think through the podcast ecosystem what benefit do you feel like you'll get from that acquisition that and maybe you didn't have before and the push for an example is an interesting one do you feel like you can sort of locked into this content a little better with the popcorn acquisition.
Well you don't have J D on the call so you're stuck with Youre stuck with me.
I guess, what I'll say to you.
What I would say is that.
The put Pushkin was our lowest margin partner and we do feel that it is a.
Robust marketplace, we have a very active engine of original products that we are building, we have a great slate of new of new partners and new products that we discussed on the call and bunch that we haven't mentioned or that we haven't announced yet. So we feel we feel good about that and yes, there'll be a little bit of movement and the marketplaces, we've already.
And it will continue to see is some of the creators jumped from one partner to another.
And as far as the strategic importance of popcorn again, I think that it has great value as we integrated into our business to create a.
Differentiated and important.
Opportunity for brands to connect.
With Influencers.
With micro Influencers, who are providing terrific ROI, but.
For the marketplace <unk>.
Requires a technical solution, which these popcorn delivers before this solution and there really was no way to do native advertising at scale across 44000 and growing.
Participants so we think it's really important for that for our customer offering.
In the marketplace and will be and important part of our growth going forward.
And then last one for me I know you all have been maniacal on costs and the business is a little different today than it was in 2019 more digital more sports betting so.
And so as we think about sort of getting back par 19 level run rate.
EBITDA what else do you think we need to kind of get through or do you feel like that we're on pace to get there sometime this calendar year on a run rate basis, given the cost efforts that you've made.
Yes.
David.
<unk> said earlier debt debt.
Our our best guess is that we're going to get back to 2019 EBITDA levels.
In 2022, that's and it looks like to US now we do see.
Pretty significant rebound and vocal and the second half net we're seeing increased sales activity now and.
And so there is there's good signs and.
And we think that's a pretty reasonably possible scenario. In addition, Steve you may not have heard debt.
And we also said debt we now expect.
Our full year total operating cost cash operating cost.
And fixed plus variable.
The $140 million or more less than 2019 pro forma net.
And then all of that is permanent.
Most of this permit over $100 million of it is permanent and we will.
Provide more specificity about that later this year, but the company continues to work on additional.
Efforts to improve our productivity to northeast on pause.
Yes.
More good news and Nashville overtime.
Great. Thank you.
Thank you and good morning.
So a couple of questions here, one on and I apologize if some of this may be repetitive, but how do we think about the flow through of margin. This as revenue recovers and your mix of broadcast versus digital changes.
Yeah look at it.
The digital business on a marginal basis is profitable.
And as broad cast.
And I'll say I'll say more.
The legacy debt.
Business from the business ex podcast and podcast and right now for US is a single digit operating margin.
And practice and we do expect over time to get that margin up into the low twenty's.
Got it.
It's an effort to reshape the content mix and effort to do a number of things. It can take a little time, but the rest of the business the streaming business and marketing services business.
The margin will flow through rate is.
Low to mid twenties.
Broadcast business.
Still if you look at.
Spot revenues as day week the flow through on that day.
The upper <unk>.
So when we look at the back half of the year.
What does the facility.
As we hope and believe.
We should see on.
EBITDA margin and start to recover and extend.
And back to more like it looked like in 2019.
That's very helpful and and then just on the acquisition front you fin.
It's fairly acquisitive, albeit small tuck ins so I'd characterize it.
As you look at kind of your true core competency set and at <unk>.
<unk> been focused.
Are there any interest areas of further interest of either expansion or bolstering what you have.
And how should we think about that going forward.
Look I think that we had a strategic need to be in the podcast space and when you look at the price points that we've paid to enter that space and become a formidable player and it.
It really is a fraction of what.
Some of the others in the space have have paid and we.
We have been able to be strategic while at the same time.
Very disciplined and in that it is also worth noting that.
And the headline on the action network, having been sold for I want to say $240 million give or take.
Our recent purchase of QL gaming group, which is smaller and it and earlier stage, but acquired at approximately $30 million and we think with a path to get.
Pretty darn valuable here going forward as that gets built so we feel really good about our track record and what we've been able to do and create value.
While minimizing the impact on our balance sheet.
And I think that will continue to be prudent and disciplined.
And we're very mindful of our balance sheet and the.
<unk> of getting our leverage down quicker.
Quickly here as we see recovery.
So we will be very selective.
But we will keep our eyes open if we see anything that we think is really value, creating for our shareholders and and smart for us.
That's great and and maybe one last one and kind of a high level if I could.
How should we think about CPM or how do you see CPM evolving as maybe more of listenership happens on on smart speakers et cetera, where you've got better targeting capabilities and can deliver more.
Advertisers.
I'm sorry, you broke up can you repeat the question. Please.
I'm just curious how you get the go ahead.
Yes.
I'll take it David.
We're seeing a very significant increase now.
And our rpms.
And.
And we've seen increased demand for screening and inventory.
As.
Debt be increasingly becomes an important part of marketing Mark and marketers Arsenal.
We're seeing those EPS increased quite significantly and so we're optimistic.
Now on <unk>.
Continuing growth in our CPM and both.
Dreaming and in podcasting and.
And we're and we also expect.
And as demand.
And we see.
<unk> and the broadcast space increase also so.
The outlook on that front.
Is quite good.
I guess is it fair to say that keep you and it should be better than broadcast on a relative basis.
Longer term is as the industry moves more towards <unk>.
Targeting.
And.
Looks that way.
There is obviously.
Local CPM for broadcast can be quite high.
We'll look at it on an average we.
We do think that the digital CPM will eclipse.
And the broadcast CPM.
Okay.
I agree with that with the one the one caveat that one of the things that makes the broadcast.
And radio so valuable is the power of the Influencer and the endorsements and I do think that also justifies premium CPM that we will continue to garner and future.
Very much appreciate the thoughts thank you.
Thanks, everybody for again, please press star one if you would like to ask a question.
Our next question comes from Dan Day with B Riley. Please go ahead.
Yes. Good morning, guys. Thanks for taking my questions just wanted to ask a couple about the rebranded Odyssey App.
First any specific metrics and you guys are looking at sort of over the course of the year that maybe you think define success for the App, whether it's monthly active users et cetera, et cetera, and then.
It seems like you're kind of putting some content exclusively on the Odyssey App I guess to kind of drive engagement, there and drive downloads just I guess talk about the balance between continuing to put content exclusively on that app to get people and downloaded versus obviously people want its wider reach as possible with their podcast and so.
Just that and anything else you think is important with the new RT app.
Sure. Thanks, Dan.
Well look we are putting a lot of energy into the roadmap and I think youre going to see us continue to capitalize on our.
Our differentiated content slate and a great example, which you've cited as our first.
Effort at the.
The exclusive content and window and it's important to recognize and what we're doing there is allowing for a binge window. So these eight episode or so series are being rolled out on other platforms on a weekly basis, but for those hungry for the next episode the only way they convinced it is on our platform.
And I think youre going to see us doing similar types of innovative.
Product Rollouts to drive further adoption of the platform as we continue to incorporate other compelling features and continue to add more great content.
You know the Odyssey App has been a the fastest growing digital audio app and the country for the last couple of years, but we recognize it's much smaller than some of the peers and yet when you look at the content that we offer and you look at the bully pulpit.
Of our broadcast radio group, particularly in spoken word we think there is an opportunity for us to really accelerate that growth.
And make it into a really nice value driver for the company going forward and you'll see more announcements on that as we go through the year.
Awesome, Thank you and just any thoughts on.
No.
Paid music streaming offering like a spotify or would I heart media ads and there and then.
Apple and Spotify, and both obviously said that theyre going to rollout options to allow creators to monetize podcast subscription so any thoughts on throwing that in there as well.
Look you would expect us to look at everything and anything and we think it's just an exciting time to be and this hot space and.
As they explore new business models to enhance value.
We will continue to work hard to accelerate our growth and if we see opportunities there too.
Augment our model in ways, which work for listeners and shareholders.
That would be great, but right now we are.
We got work in front of Us and we'll see everything plays out.
Cool and just one more for me and any different from the rebound between sports first news for the music stations just.
Particularly interested and sports with the sports betting headwind or tailwind. There. So yeah. Just anything you can point to would be great.
Sure.
And so far as sports specific revenues are concerned meaning sports betting no question, there's been a disproportionate impact on our sports stations and our sports content.
Pretty much limited, though to the states where.
Mobile gaming has been legalized, obviously and we will see that evolve over time, I think our news and sports stations more broadly have done a little better the music, but I think the broader point here is it's less about the format then about the customer base and so if a local customer is.
And still in hibernation mode or not ready to get back on the air that's going to affect all of our stations and that's why you see.
Sort of a more a broader.
Slowness.
And in local advertising across all platforms.
Got it well thanks for taking my questions and I'll turn it over <unk> block bank debt.
Please press star one on your telephone keypad, if you would like to ask a question.
Our next question comes from Craig Huber with Huber Research. Please go ahead.
Thank you and I apologize if you've covered some of this was on.
Another conference call at the same time.
Could you explain if you would your network advertising why it was down so much of it obviously was very strong year over year, and the fourth quarter middle of pandemic, but what what happened and the first quarter what changed in the marketplace from your vantage point.
Yeah. The biggest driver for US was we reduced the amount of inventory that we work with.
With.
One of our.
Industry partners and that was the biggest driver as we recovered that inventory and I think going forward, you'll continue to see us do well and the network space as we concentrate to a greater extent on our own Odyssey audio networks.
So.
So you pulled it back.
To your own average your own sales force, you're saying that that inventory and then you're going to try and sell it yourself.
You might not necessarily sell it on network and what are you, suggesting I mean, what should we expect the rest of the yourself I guess on asking for that line right.
And that remains fluid and we will continue to.
Allocate inventory across our local sales force our national content, our national partnership team and our own networks as we see fits best given demand patterns and how things evolve going forward. So that is not locked in stone, but what is important is that we see and opportunity.
And thickets and our best strategic interest to have more control of our inventories than we have and the past.
And then on your spot advertising, if I could was there a material difference and that year over year percent change for local versus national.
Yeah, and we did touch on that and the remarks, our national business actually got back to last year's level local was significantly down for reasons discussed.
Okay I appreciate that and then.
Richard I'm curious.
And you could answer this.
How much net debt are you expecting to be able to pay down. This year, assuming you guys don't do any further small acquisitions.
And what kind of cut for chase here and then the story.
And.
No.
Less than a 100 million debt more than 75 like and that range.
Okay. That's helpful. Thank you.
What percent of your.
AD revenue is sports betting right now.
Sure.
Well nobody can give what you said.
Yes, we said previously that debt, we expect sports betting revenues this year to be down 30% to $33 million. So it's a small percentage of our total revenue today, but growing.
It to be up 50% for a more versus last year and.
And I think our outlook is.
Yeah.
On nine digit category for us.
For years.
And my last question guys on the cost front what is your latest thoughts on on the rebound of your cost are you expecting going for your assuming the virus keeps getting hopefully hopefully better here and how much.
What do you think the cost end up settling out versus pro forma cost number for say 2019.
Yes, so what we said we updated our outlook for this year, Greg that we think for costs will be down versus 2019 pro forma.
<unk> hundred $40 million or more debt.
And then with regard to debt.
And the outlook I mean more than $100 million and that is on it.
And.
And and we will give.
CAGR guidance about 2022 and beyond.
For this year.
Great. Thanks, guys.
Thank you I would like to turn the floor over to management for closing remarks.
Great well, thanks, everybody for joining us today, and we very much look forward to reporting back to you all next quarter take care now.
This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.
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