Q3 2021 Audacy Inc Earnings Call
Good morning, and welcome to Odyssey third 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 so much.
This call is being recorded a replay link will be available shortly after the conclusion of today's call at the replay link or number noted in our release.
Brian This is called the.
The company May make forward looking statements, which are based upon the company's current expectations and involve risks and uncertainties.
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.
And the risk factors section of the company's annual report on Form 10-K, as such risks and uncertainties may be updated from time to time in the Companys SEC filings, we assume no obligation to update any forward looking statements, except as may be required by law.
On this call.
Certain non-GAAP financial measures, we refer you to the investors page of our website at <unk> Dot com for reconciliation of such measures and other pro forma financial information.
And now I'll turn the call over to David Field, President and CEO. Thank.
Thank you rich good morning, everybody and thanks for joining <unk> third quarter earnings call.
I am pleased to report another strong quarter of progress at Odyssey as we continue to recover from the pandemic and drive forward with our strategic transformation is a scaled multi platform audio content and entertainment company with important leadership positions across the full spectrum of audio including broadcasting Podcasting digital.
Oh network live events music news and sports.
We continue to rapidly evolve and fundamentally elevate the organization through a series of strategic acquisitions organic growth initiatives structural improvements talent additions and premium content development.
As a result, we feel great about where the company is today and are well positioned to accelerate our growth and capitalize on the exciting opportunities across the dynamically growing audio market.
We have a lot to cover on the call today, including our recent announcement of our acquisition of White Orbitz digital audio streaming and AD Tech business, which will meaningfully accelerate our digital product roadmap and enhance our growth opportunities, but first let's start with our financial highlights revenues grew 23% over the prior year in the third quarter.
Our growth was led by a 30% increase in digital revenues and a 21% increase in spot radio.
Sequentially, our revenues grew 8% over the second quarter with our spot revenues up 9%.
EBITDA grew 58% over prior year in the third quarter on higher revenues and improved margins.
While the recovery continues third quarter revenues were negatively impacted by the Delta variant and supply chain and staffing issues, which continue to impact many of our local customers in businesses such as auto.
Probing deeper to the results reveal some interesting insights into the state of the recovery.
As you might expect a number of categories that have been hit hard by supply chain staffing your COVID-19 issues are down substantially including auto which is our number one category down about 40%.
Concerts are improving but still down substantially as our theme parks mattresses furniture stores casual dining gyms fairs and festivals et cetera. However at the same time. It is great to see that a significant number of categories are back above 2019, including banks mortgage lending beer.
Medical Hvac's weight control plants, tourism auto service and repair E Commerce, DTC software consumer products electronics real estate pet supplies OTT and of course sports betting plus many more.
A full recovery in so many categories reaffirms the power and appeal of broadcast radio which offers advertisers unparalleled reach engagement brand safety and most of all ROI.
Radio and audio remained highly undervalued and at a time of deep disruption to other AD platforms radio and audio are becoming increasingly compelling for larger shares of AD spending.
<unk> auto and other businesses returned to normal we expect to see their spending revert to 2019 levels as well.
One final point on the category data the declining auto AD spending accounted for a third of our third quarter revenue decrease versus 2019.
Another third was due to the combined impact of the cancellation of our Odyssey events plus the decline in advertising from third party concerts theme parks and festivals.
It is also revealing to look at the significant difference in the rate of recovery between larger and smaller markets. Our radio revenues are back to 78% of their 2019 levels ex events. However.
However, our smaller markets those ranked 50 and higher are back to 86% of 2019, and our market is 50% higher than the south and Midwest are back to 91%.
This sharp contrast in market recovery reflects a larger markets were slower to reopen and faced more disruption to their local economies and work practices and commuting.
For Odyssey. This differential has a meaningful impact on our performance as our portfolio is far and away. The most concentrated in the largest markets versus any of our peers, all of whom have substantially greater exposure to small and middle market radio.
As the World continues to normalize we are confident larger markets will catch up and level the scales.
During October we announced and completed the acquisition of wide Orbitz digital audio streaming and AD Tech business and relaunched it is tamper wave.
This is an important acquisition as it will give us control of our end to end product roadmap and accelerate our growth opportunities, while enabling us to deliver a robust portfolio of audio and digital marketing solutions to our partners and clients.
Rich will share some additional thoughts and ampere wave in a few minutes, but I want to take a moment to share some context on how <unk> fits into our broader strategic agenda.
Over the past couple of years, we have now made a number of important strategic acquisitions, including cadence 13, Pineapple Street studios and popcorn to establish a leadership position in the pockets of the business.
<unk> to accelerate our participation in the exploding sports betting space and now we have to wave to accelerate and enhance our technology, enabling us to better serve our listeners customers and partners.
We have been quite deliberate and disciplined across all of our acquisitions focusing strictly on highly strategic early stage modestly sized companies with excellent content technology and capabilities that will accelerate our transformation and enable us to build leadership positions in the fastest growing areas of audio.
We believe our disciplined approach has positioned us very well for the future. Because these businesses are all fairly early stage their value is not readily evident in the context of our quarterly profits, but as we look ahead. We are excited about how the pieces are coming together across the businesses, including the number of organic growth initiatives that these acquisitions are enabling.
In a nutshell Odyssey today is a fundamentally enhanced and stronger company than ever repositioned to capitalize on the emergence of audio advertising with an augmented product line.
To better serve our listeners and customers.
Now to that very point. This morning, we were very pleased to announce that Bryan Benedict formerly the global Chief revenue Officer of Spotify is joining odyssey in that same capacity.
Brian's move is a telling reflection of odyssey's emergence as a leading player in this space with an outsized opportunity to leapfrog forward and drive outstanding top and bottom line performance as audio continues to emerge as one of the hottest growth areas in advertising, Brian will help accelerate our revenue development as we become an increasingly attractive partner for customers large and.
Paul.
It should also be noted that Brian follows a number of other outstanding talented leaders, who have recently joined our growing team to help spearhead our growth and evolution.
I want to take a couple of minutes to share some thoughts on a few of our key business areas first digital we delivered strong increases in all three primary areas of our digital business, including podcasting digital audio and digital marketing solutions. As noted earlier total digital revenues grew 30% and is now 19% of our total revenues double what it is.
Delivered in 2019.
We are very excited about the progress we continue to make with our content platform and customer development at.
At the end of June we launched over 350 exclusive new digital stations on our Odyssey platform. The first for us notably many of these stations our hand curated by our leading personalities and programmers as well as a list stars, including Chris Martin tank imagine Dragons and many more.
During the third quarter, we added another 150 exclusive stations and content from artist, including Billy Irish Ed Sheeran, Shaquira and Dixie Damelio.
This new content is an important differentiating element on our platform and we have more in the works to enhance the user experience and drive our growth.
We also welcome New affiliate partners to the Odyssey platform with Cumulus Urban won an entre vision, adding their radio stations to our content mix.
The underlying digital metrics remained very healthy our digital audio listeners were up 22% during the quarter over prior year and streaming rpms increased 27%.
Smart speaker growth was 25%.
Importantly, I also want to add that we have increased our product development and engineering teams over the past several months to bolster and accelerate our work in enhancing the Odyssey digital platforms. We are excited about our product roadmap and look forward to an exciting year of platform improvements in 2022.
Before leaving digital a quick word on our digital marketing solutions business, which continues to thrive growing rapidly as we continue to expand the number of customers. We serve with our compelling set of digital marketing products, we have high expectations for the continued growth of this business in the future.
Turning to our podcast business, we had another strong quarter of growth and development during.
During the quarter, we launched our new three year strategic partnership with American public media, the creators of marketplace and other prestigious podcast programming. We also recently became the official podcasts and digital audio partner of Major League baseball, although the economic impact of that partnership doesn't meaningfully begin until 2022.
We also recently launched 2400 sports, which joins Pineapple Street and cadence 13, as our third major podcast in studio and aims to be the number one creator of sports related podcasts in the country building off of our strong leadership position in audio sports.
<unk> 2400 sports recently launched the first original series of MLB partnership the run chronicling the historic 2016 championship season of the Chicago Cubs.
This morning, we were pleased to announce a multiyear extension of our partnership with Glenn and Doyle, who launched short podcasts, we can do hard things with US earlier. This year for podcasts debuted at number one on the Apple charts and is quickly developed a strong deeply engaged fan base. In addition to our large existing slate of top shows other notable new releases during the quarter include.
New content from Carmelo, Anthony Ellen pump payout, Jon Meacham, and new seasons of hit podcasts like up and vanished with our partners at Tenderfoot.
We also released our first Steve 13 feature podcasts films through the years through our partnership with Endeavour content.
<unk> launched just before Halloween starting here in <unk> and immediately jumped to the number one fiction title on the Apple chart. Our second pod guests film for the years Ghostwriter, featuring Kate Mara and Adam Scott will be released next month.
As we have noted on prior earnings calls our podcast business is differentiated by the premium quality of the work we create based on the extraordinary talent of the outstanding team of senior creators producers journalists and writers on our team.
Quality of work is reflected in our expanding preferred relationships with Apple Amazon HBO, Max Nike Hulu and others. We continue to be the preferred companion podcast partner for these companies, creating and producing a number of titles. Most recently partnering with HBO Max on their succession companion podcast hosted by Kara Swisher during.
The quarter. We also sold first run Windows of New original series from Pineapple Street to both Amazon and Apple we can.
Continue to drive very strong growth across all facets of our podcast business and a rapidly expanding our original content development work. According to Triton podcasts metrics Odyssey's podcast network now reaches over 46 million monthly listeners globally and over 32 million monthly listeners in the U S, making us one of the leading podcast publishers in the country.
We do look forward to the day when there was a single source, providing good industry wide data on the podcast business and we no longer are people quoting services like contract that don't include Odyssey, Spotify, Stitcher and others and their data.
I also don't want to neglect to mention pod corn, which we acquired in the spring.
Corn is the country's leading double sided marketplace for native podcast advertising the.
The business is doing well and recently surpassed 50000 creators on its platform with growing listener and advertiser metrics. We were pleased to learn that popcorn was nominated for a digital Tech award for the best Native advertising platform.
While popcorn is fairly small today, we are very enthusiastic about where this business is headed as we further integrated into our organization.
Let's spend a moment talking about our sports business as a reminder, odyssey is far and away the leading player in radio sports and audio sports, reaching three times as many people as the number two competitor with an unparalleled lineup of leading sports stations in the largest markets, including WFAN in New York the score in Chicago Wip in Philadelphia.
The fan in DC and dozens more.
We also operate the CBS sports network across the country we.
We are the flagship play by play home for an unrivaled 47 proteins and dozens of college teams.
Our sports betting advertising continues to grow rapidly. We previously had indicated that our sports betting AD revenue would grow 50% in 2021.
I'm pleased to report that we cannot project that our growth will exceed 100% in 2021.
We also continue to expect sports betting to grow into a $100 million category for us in a few years as legalized sports betting continues to spread across the country.
Over the past year, we have made a number of significant innovative moves to build on our powerful sports Foundation and create new multiplatform growth opportunities. In addition to our recent launch of <unk> 'twenty 400 sports we entered the sports betting information business late last year with our acquisition of <unk> and then launch the <unk> network earlier this year, providing 24, 7%.
Audio and video sports betting content distributed our multiple platforms across the country.
One of our shows you better you bet is now the number one sports betting podcast in the United States. We are excited by the opportunities in this dynamic space in 'twenty two and beyond.
I wanted to share a couple of other quick updates before I turn it over to rich.
Our live events and important pillar of our business returned to life on September 11th with our stars and string event in New York featuring some of countries. Most notable stars, including Zac Brown, Darius Rucker and Chris Shaw.
Last month, we returned to the iconic Hollywood Bowl for our annual we can survive show, which featured co play Shawn Mendes Maroon five dose the black eyed peas and more.
We deliberately planned to late calendar this year due to Covid uncertainty, we look forward to a more active calendar 'twenty two.
And after hitting a bit of a lull over the summer Nielsen radio ratings grew nicely in October reaching their highest point since March of 2020, when the pandemic started.
Most notably morning drive time surged in October reflecting the trend toward normalization of our lives as the Delta wave abates and an increasing number of Americans returned to their workplaces morning ratings for adults 25, 54 grew 6% over the prior months and 8% over the prior year, while women 25, 54 grew 7% and 20%.
Respectively over the same periods.
Turning to current business conditions, we are continuing to make progress with the recovery in fourth quarter and are currently expecting revenue growth of mid single digits versus prior year.
Political we're expecting low teens revenue growth.
As we look ahead to next year. We continue to believe we are on a path back to a full return to our pre pandemic 2019 EBITDA in calendar 'twenty two assuming of course the recovery continues as expected.
In sum it was a strong quarter of strategic progress and recovery across our company. We are excited about what lies ahead I want to close with the thanks to the Odyssey team. We are deeply fortunate to have such an extraordinary talented and dedicated group of leaders who have done such outstanding work, leading our transformation through the unique challenges of the past 18 months there are truly special group.
And I want to express my deepest appreciation and with that I'll turn it over to rich. Thanks, David Good morning, our total net revenues for the third quarter came in at $329 4 million up 23% year over year and up 8% sequentially versus the second quarter. Our core spot revenues were strong up 12.
Three 1% year over year and up 9% sequentially.
As discussed by David we are seeing strength in.
In a growing number of our advertising categories and continued evidence of ongoing disruption due to the pandemic and others, including our top advertising categories automotive.
Our digital revenues were up 30% year over year. Despite some speed bumps associated with migrating to a new third party advertising server that nicked, our expected revenue growth for the quarter by about six points.
Though these technology the technology issues are now closer to being resolved. This issue will also dampened our fourth quarter digital revenue growth.
During the third quarter, we saw continued strength and recovery across the number of our other revenue lines and categories.
Network revenues were up 24%.
Our sponsorship and event revenues were up 38% and our sports getting advertising revenues were up by over 100% year over year.
And although the repeating of the rate of recovery and somewhat deeper into the third quarter as Delta Covid cases peaked we continue to see encouraging signs of ongoing recovery.
In the fourth quarter.
We are excited to be continuing to reactivate our live events business.
This business line historically has been strongest in the fourth quarter given holiday shows and contributed close to 7% of our fourth quarter revenues historically versus only about 4% on an annual basis. We expect that this fourth quarter that our events revenues will only be about one.
Third of normal.
But that's in comparison to about zero percent in the fourth quarter of last year and about 40% of normal in the third quarter we.
We expect that live events will be an important contributor to our growth in 2022.
Based on our current pacing, we expect that our fourth quarter total revenues will be up mid single digits and up low teens ex political.
Total operating expenses for the third quarter came in at $300 2 million and excluding onetime and unusual costs and adjusting out noncash items like DNA. Our total cash operating expenses came in at $2 $82 million were up 18% year over year.
Adjusted EBITDA for the third quarter was $49 3 million up 58% year over year, and our EBITDA margin was 15% up about two points from the second quarter looking.
Looking at the fourth quarter, we expect that our cash expenses will increase year over year by high single digits to low double digits and then our EBITDA margin will continue to improve sequentially by three to four points.
Turning to our financial position and liquidity, our first lien net leverage was three times as of September 30th computed on a compliance basis in accordance with our credit agreement and as compared to our covenant of four times.
Excluding the benefit of our 2020 Covid related credit agreement Amendment and using actual LTM EBITDA.
Our first lien net leverage on a compliance basis at September 30 was three seven.
Seven two times.
We continue to expect to be compliant with our first lien maintenance covenant at year end and we continue to expect to significantly further reduce our leverage during the course of next year.
At the end of the third quarter, our liquidity was 264 million up from $160 million at the end of last year.
Our net capital capital expenditures for the third quarter were $19 7 million and we now expect to fall slightly below the low end of our full year guidance range of $70 million due to the timing of payments.
Our capex initiatives are proceeding as expected and as David mentioned, we look forward to bringing to market innovative new capabilities that we believe will significantly enhance the consumer listening experience on the Odyssey platform and enable us to accelerate the growth of monthly active users during the course of two <unk>.
'twenty two.
To that end subsequent to September 30, we acquired for about $40 million and exclusive worldwide perpetual license to wider Orbitz cloud based live and on demand digital audio streaming and advertising technology, plus the related assets and operations of <unk> streaming.
Which we have renamed tamper with.
Why do we change the ownership of and the use of this technology for video streaming.
Existing revenue base of the <unk> business is less than $10 million and the business historically lost a little money.
Given our defined cost synergies, we expect the business will be profitable during our first full year of ownership.
More importantly, this technology, which we believe would have cost us more to build ourselves gives us much greater control over the consumer listening experience on the OTC platform than was possible using a third party streaming service.
It enables our engineers to focus on developing innovative features and functionality and it's significantly speeds our time to market.
This acquisition also gives us more direct control over the technology necessary to monetize our streaming advertising inventory that allows us to more rapidly bring advertising innovations to market.
We are thrilled to get this deal done and look forward to leveraging many of the investments we are making for ourselves for the benefit of our ample with clients with that we'll now go to your questions operator.
Thank you we will now be conducting a question and answer session.
We'd like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question Ben Thank you.
All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Moment, please while we poll for questions.
Thank you. Our first question comes from the line of Jason Kim with Goldman Sachs. Please proceed with your question.
Thank you and good morning.
Regarding the 2020 to EBITDA outlook I know you've talked about this before but I think it would be good to get any updates on.
What is embedded in spot revenue assumption for 2019 levels to reach your 2022 target.
And then how much does auto represents as a percentage of your revenue maybe give what percentage was auto as it was.
Relative to 2019 to get a picture of pre COVID-19 levels.
Sure well thanks, Jason first let's go in reverse order on auto it's about sort of mid teens as a share of our business and as you mentioned it was down about 40%.
Against 2019, 2019, so you can see the significant impact it had and as I mentioned earlier, it's about a third.
The gap between where we are today and where we were in in 2019.
As to the question of recovery back to 2022 EBITDA levels next year.
We're very specific in that that assumes right. The math on that is pretty simple we have to get back to about 85% of 2019 spot levels to achieve that goal and thats because of a couple of things. One the continued strong growth that we're experiencing and expect to continue.
<unk> experienced across all of our digital businesses and also the substantial amount of permanent business model enhancements, we made to take expenses out of the business that will of course pay off for us.
Continually as we go as we go forward.
Like to add to that Jason that we think.
<unk> is going to be down about mid teens, as David said versus 2019, and Thats not where we expect the landing spot is we do expect the auto category is going to take quite a bit of time further to recover many of our dealers are telling us they don't expect their stocks to normalize until.
Sometime in 2023 so.
That's an important category, it's going to take time and likely doesn't fully recover until 'twenty three but yet.
We expect still to be able to recover to about 2019 EBITDA levels next year, even with spot down about mid teens and to that point I think it's worth underlining the data we shared earlier, which we're pretty excited about where we cited quite a few categories that are now ahead of 2019 and I.
He can speak to that inherent group.
Robust appeal of radio and audio to advertisers today, when they look at their choices.
The opportunity for us to garner a larger share of that media mix and Youre hearing some other audio companies as well of course.
Is meaningful and so again to Richard's point, we don't think 85% is the end game.
I think from a modeling standpoint that gives us greater confidence as we look into next next year's numbers.
Thanks for that and David.
A longer term question talk about how the advertising market is changing as we come out of the pandemic, what's more important to advertisers now than before.
What capabilities does Odyssey have to meet those needs and what are you currently lack to make your value proposition even stronger.
Well look I think advertisers today like always looking for results and Fortunately, we deliver great results and more and more of course advertisers want to see that.
<unk> holistically and they want to see with data and attribution to drive that.
And Fortunately we are building.
I think really good tools and really good data to support that work and we think that positions us very well here going forward.
As we continue to.
Be able to present advertisers a complete spectrum of digital.
Broadcast solutions.
Capitalizing on our reach in the premium quality of the product to achieve their goals.
We need to continue to do to work to catch up in terms of our ability to deliver a strong data enhanced and attribution tool.
Tool, we have those but we need to continue to get better because obviously there are a lot of companies out there today that are.
Excellent delivering.
You know that.
It's really strong technology technology driven advertising.
I'd like to add Jason the one thing that is different today versus prior to the pandemic is a growing recognition that.
Other.
Local media like linear television.
Its ratings have declined quite significantly over the last number of years.
And if youre looking for broad and duplicate reach and managing your frequency different messaging too given audience target. It's now increasingly more important to buy radio in companion Wister television campaign, and we're hearing that.
Increasingly firm the largest.
Media buyers and a recognition of the growing importance of audio in the marketing mix.
Thank you very much.
As a reminder, if you would like to ask a question press star one on your telephone keypad.
Our next question comes from the line of Steven Kay Hall with Wells Fargo. Please proceed with your question.
Thank you and thanks for some of that commentary on the outlook. It looks like digital sequential growth slowed a little bit and rich you talked about the ERP problem. Just wondering if thats all situated or if we should expect sort of similar level of sequential digital growth in the fourth quarter.
As you fix some of those issues and if maybe that's part of what's dragging down your Q4 guide a little bit.
As Steven So we said in the in this third quarter that piece technology issues cost us about six points.
Versus what we expected going into the quarter to achieve.
And it's also dampened our.
Digital revenue growth.
In the fourth quarter.
Similarly downturn and we will see how it shakes out in the end things are getting better, but we're not out of the woods.
Great and then you talked about the largest market that is something that differentiates you off from some of your peers. This morning, one of the out of home advertisers said they are seeing.
Cities like L. A and Miami you are pretty much about 2019 levels and then they talked about a couple of big cities that were still down like San Francisco I'm, just wondering how your larger markets currently compare to two.
2019, and if youre seeing of any of the biggest data you're getting back to par.
If you aggregate the top 50 markets. They are substantially behind 2019 as you heard from our data trend lines are good right third quarter was definitely better than second quarter fourth quarter definitely better than third quarter and the tone and tenor of what we hear from our largest markets is quite good and within that pool.
All of the top 50 markets. Some are actually doing quite well. So it is it is somewhat of a mixed bag, which may allude back to your comment about out of home, where a San Francisco might be weaker and in New York might be stronger we're seeing some of those I would say relative.
Patterns as well.
Amen.
Overall, it's just curious if the sports betting licenses just announced in New York.
That's a meaningful contributor to what Youre expecting for 2020 revenue.
I think it's part of a.
But in aggregate package right, we're expecting more states to legalize here over the next couple of years, New York will be helpful.
For sure we will participate in that in New York City, as well as in Rochester and Buffalo.
Going forward. So yes, it's another step forward and then when we think about.
The slate of other states coming.
Behind New York.
We're hopeful that over the next.
Months years that California, legalize this mobile sports betting, Texas and Florida. So you think about New York, California, Texas and Florida.
Those four states.
We represent a significant portion of the U S population, but not yet in the mobile sports betting game I think it's coming soon.
Yes, and then maybe just last one for me congrats on bringing Brian on board.
How should we think about any changes that might make to your strategy our revenue outlook.
As he brings some new capabilities or new strategy into the fall.
Okay well. Thanks. Thank you for that Steven I think Luke Bryan joining us I think makes a big statement right.
Brian sized up the portfolio that we bring to the table on the composition of our scaled multi platform premium content and the work, we're doing around data and analytics and.
As we keep saying that we see where the puck is going we see how the pieces are coming together and we're excited about that and Bryan shares that confidence and Thats why he has chosen to jump jump on the team here and I think that.
We're just excited about adding his leadership to so many other great leaders and people doing such important work around the company.
Our next question comes from the line of Dan <unk> with B Riley. Please proceed with your question.
Yeah. Good morning, guys I appreciate that my questions just wanted to.
We're on the topic of the digital side so.
Notwithstanding sort of the technology issues you flagged in the near term here.
Shutting grow.
30% or so year over year, I mean with all the.
Investments you've made into kind of new content on the digital side should we be modeling.
Kind of a sharp inflection in 2022 in terms of that digital growth rates of something materially higher than you've had the last couple of quarters.
Yeah look I think I think that's exactly what we're working towards an IND.
And I don't know if I would use adjectives like sharp, but we do believe accelerated.
And Thats the key reason why.
<unk> joined joining us frankly is that.
We're <unk>.
<unk> over the next months to bring the.
New capabilities to market that we hope is going to meaningfully drive.
Monthly active user growth.
And increased consumption of our digital content.
So we've been working hard to get to this point and we're now poised.
To move into the next phase.
And we will all very excited about how it's likely to unfold.
Yeah, great. Thanks, and then one other for me.
We're halfway through NFL College football just.
An update on the maybe the <unk> app as far as.
Anything compared to what you had thought.
Just as far as the affiliate fees are subscriptions, all that sort of stuff.
No I mean look we like we love the thesis of what were what.
Attracted us to <unk> in the first place and think it is a very nice enhancement of our of our overall offering and we're seeing nice growth in subscribers and nice growth in affiliate fees.
It is still a small business.
And we've also done some innovative things around it as we mentioned launching a <unk> network, which is available not just across radio stations and digitally but also the videos available on Twitch. So we continue to see really great opportunities in that business going forward and it is such a nice fit with all the other things we're doing around <unk>.
Ports.
Great and then last one for me just how youre thinking about.
<unk> acquisitions or anything on the M&A front moving forward versus debt reduction.
And any updated timeline on.
When you sort of expect to get down to that four times.
Net debt to EBITDA target you've talked about.
So let me start and.
Answering your question, Dan and then rich will add to that.
Net reduction slash.
Our leverage target we're.
We're getting back to four times is first and foremost in terms of our priorities here going forward.
We're really happy with the fact that we've been able to.
Accomplished so much with the acquisitions, we've made so far by being very disciplined in making sure that everything we've touched is strategically focus earlier stage and really important to our roadmap going forward.
The good news is we do not see any seeing any other holes in our arsenal.
Where we feel we need to acquire anything else looking ahead.
We'll always keep our eye open if there is something there that's really strategic.
And modest, but we do not see anything else on the horizon at this point in time that would warrant further acquisition rich I don't know if you want to add to that look I think.
We've given the scenario of the outlook for 2022 that gets.
EBITDA back to about 2019 levels that scenario leads to us getting our total net leverage down to five or less by the end of next year and we expect to be at our target.
By the end of 2023.
Alright, guys. Thanks.
Thanks for taking my questions I'll turn it over.
Once again, if you would like to ask a question press star one on your telephone keypad.
Our next question comes from the line of Craig Huber with Huber Research Partners. Please proceed with your question.
Hi, Thank you first question.
Aside from auto is there any other supply chain issues, that's materially impacting your advertising on your platform.
Yes from the standpoint that there are other categories like furniture mattresses, and so forth that are probably equally affected no from the standpoint that none of them are in categories that are close to the size of auto it's really more of the aggregation of those categories and so many.
Various and sundry areas that cumulatively have a significant impact on our business.
You touched on this a little bit earlier the ratings.
Radio stations year over year, well, let's do it this way versus 2019 levels, what was that number again on average the ratings change.
Well, what I mentioned it wasn't just to be clear Greg It was not our stations this was Nielsen aggregate.
Rating information and what they are revealed in October, which we think is really interesting and important is that there was a really meaningful step up where total ratings I'm looking I'm looking for the data now with the total amount of ratings in morning drive.
We're up 6% over the prior months and 8% over the prior year.
A really meaningful number across the whole aggregation of the United States.
Women, even steeper and the fact that it occurred in morning drive may reveal are beginning to normalize traffic and commuting patterns as folks start returning more to work.
More to the office I should take is obviously large segments of the population have been working.
Meaning in the mornings, but it appears as though theres something going on there, which which augurs well for for our business.
You touched on this earlier a little bit.
Your core advertising, including network advertisers looked like it was down about 22% from three Q19 levels.
When we look at the public companies I'm not trying to be derogatory I'm just want to hear your opinion on this with the public television companies local TV down 5% to 6% versus two years ago on an organic basis for the core AD revenues that delta between those two you're trying to suggest is that the mix of your.
The local advertisers that still hasn't come back to the levels that you were expecting over time.
I think that's leading to play or anything like that.
I don't think so I mean look Telus TV ratings are radio ratings have both been somewhat disrupted by COVID-19.
Great television ratings have been more disrupted than radios over the last few years and so I don't think its a ratings issue.
It is a longer conversation as to what might be underlying that but I do think ultimately it's about the mix of advertisers in radio as we've talked about before tends to be more.
About <unk>.
Advertisers, who want people to get up and go places and do things and a lot of that has been sidelined over the last year and then the supply chain effects a lot of local businesses and we lean more into local businesses and TV does and I think that is at the heart of why you see a gap in those in those two numbers.
And you see in the data correct. When you look at the categories that David listed that are back to 2019 levels and the categories that are still quite disrupted when you look at those categories.
Or just still quite disrupted.
It makes sense.
It's pretty clear it's the pandemic.
No I don't think radiate I don't think local TV and this is exposed to a number of those categories. As we are there to advertiser base is larger more national customers compare to radio.
That leads to my next question guys.
Radio stations local versus national core AD revenue, what was that percent change year over year. Please. So in other words was there a material difference to the national part of it.
Mhm.
Yes, so national has.
Performed somewhat better than local I would say, though Craig you look over time local is consistently getting better quarter over quarter, where national when Delta cases spikes I'll call. This what we would call kind of national RFP business at <unk>.
Little bit so.
The national business gets throttled faster.
Then local and local which is broader lots of lots of advertisers participating it has been getting better consistently.
<unk> over quarter, and we see that trend continuing in.
In the fourth quarter, so lots of evidence from where we sit that.
Local is.
Continuing to recover and when we look at the outlook for 2022, we see significant headroom for further recovery.
And my last question guys I think Youre podcast revenues for the first two quarters. This year it was like $15 million to $16 million each was it similar to the third quarter.
Yeah.
Yes on the high end of that.
That range.
Great that is all I had thanks.
We have reached the end of the question and answer session. Mr. Bill that I would now like to turn the floor back over to you for closing remarks.
So much we appreciate everybody joining us today for our call and very much look forward to.
Our next call in three months. Thanks, so much.
But lady.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.