Q4 2021 Audacy Inc Earnings Call
Good morning, and welcome to the Odyssey ex fourth quarter 2021 earnings call all participants will be in a listen only mode. This conference is being recorded.
I'd like to introduce your first speaker for todays call, Mr. Richard Schmeling, CFO and executive Vice President Sir you may begin.
Thank you Stacey.
This call is being recorded a replay will be available shortly after the conclusion of today's call a.
A replay link or number noted in our release.
During this call the company May make forward looking statements, which are based upon the company's current expectations and involve risks and uncertainties.
The company's 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 are described in 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 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 may reference certain non-GAAP financial measures. We refer you to the investors page of our website and what is he a dot com for reconciliations of such measures and other pro forma financial information I will now turn the call over to David field.
Our president and CEO .
Thank you Richard and good morning, everyone. Thanks for joining odyssey's fourth quarter earnings call.
I'm pleased to report that 2021 ended on a very solid note as we completed a year of strategic transformation across the organization and positioned ourselves for strong growth in 2022 and beyond.
During the course of the year, we made great progress across all of our emerging and evolving businesses to enhance our competitive position, our organizational capabilities and our growth opportunities. We made a very important addition to our lineup in Q4 with the addition of ample wave formerly wide orbitz audio streaming and AD Tech business, which will mean.
Going to accelerate and secure our digital roadmap.
And operationally we ended the year with solid revenue growth and we are off to a very good start in 2022 with strong performances across our business lines.
Odyssey ended 2021, and our significantly enhanced position versus the start of the pandemic or even at the start of last year.
We are purposefully re imagined odyssey as a scaled multi platform audio content and entertainment company with outstanding leadership positions across the full spectrum of audio including the fastest growing areas of the business.
We believe we have a meaningful competitive advantage as the number one creator of original premium audio content through our unrivaled leadership position in local radio news and sports.
Mentored by our position as the most critically acclaimed creator of original podcast content.
We are working to build upon this position by continuing to build additional exclusive content offerings across our radio podcasting and digital platforms and working to develop significant listener experience enhancements on our Odyssey distribution platforms.
In 2020 , one we accelerated our organizational evolution through a number of important strategic acquisitions organic growth initiatives structural improvements and senior talent additions and we are well positioned to take advantage of the exciting growth opportunities within the dynamic and increasingly important audio market as we capitalize on our evolution.
From a leading radio broadcaster to a scaled first tier multi platform audio leader with deep digital marketing capabilities to meaningfully expand our customer relationships.
Turning to fourth quarter results revenue grew 8% over the prior year quarter, and 13% ex political led by double digit growth in both digital and spot radio.
Local spot revenues continued to recover up 13%, while digital revenues grew 16%.
We are back to live events, but with a much lighter schedule than before the pandemic as we ran at about 30% of our pre COVID-19 level of events.
Full year revenues grew 15% and were up 18% ex political with adjusted EBITDA up 48%.
We also had a terrific year in sports betting as their AD revenues in that category grew 130% to $45 million exceeding our expectations and rapidly pushing towards our $100 million target fitness category.
With several large states like New York recently legalizing mobile sports betting we expect continued strong growth in this category during 2022.
We continue to see an interesting evolution and the recovery of certain key advertising categories. During the fourth quarter auto remained highly impacted by supply chain issues as did a handful of other categories. At the same time, we experienced significant recoveries in several categories that had been hindered by the pandemic and in addition, a number of categories.
2019 sales levels as rich will share during his remarks.
The post pandemic recovery is also manifesting itself in rebounding AD rates on spot radio.
While total revenues have yet to recover to pre pandemic 2019 levels. It is useful to note that excluding political as well as what we believe is the transient impact of lower auto advertising and our curtailed event schedule.
Fourth quarter revenues were within 5% of pre pandemic levels.
2021 was a busy transformational year for Odyssey, we've rebranded the company at the end of March to reflect our evolution into a scaled multi platform content and entertainment company, establishing your consumer facing brand identity or.
Our 2021 acquisitions of popcorn enable wave plus back to al just prior to the start of the year are important additions to our capabilities that will fuel accelerated growth and enhance how we serve our listeners and customers. We're very excited.
Cited about each of these fast growing new components of Odyssey.
Thank you Earl and popcorn are growing at triple digit rates and while starting from a small base, we foresee meaningful contributions to our future growth as we continue to build on these exciting emerging platforms in the sports betting in podcast marketplace's.
Popcorn is now 32 66 zero thousand podcast creators on its platform no other influencer marketing platform for podcast yours approaches that scale and breadth.
Every wave was wide orbitz digital audio streaming and AD Tech business that we recently acquired in October and relaunched under its new name. This important acquisition will give us control of our end to end product roadmap and accelerated a number of growth opportunities. While also enabling us to provide streaming and AD tech products to customers, we are off to a great.
Start with Amber way, both in terms of product development and in growing their customer base.
We believe 2022 is setting up to be a strong year for Odyssey as we were able to capitalize on the many meaningful organizational enhancements that we've made across the organization in the form of acquisitions innovation of new talent and capabilities.
We increasingly benefit from these enhancements and integrate the various pieces across the company they will contribute to an acceleration of our top and bottom line growth.
At the same time, we are optimistic about the continued recovery and normalization of our radio business as the disruptive impact of the pandemic and ultimately supply chain issues Wayne.
And on a broader note we are very optimistic about the future of the audio business, which continues to gain momentum with advertisers as other primary forms of advertising suffer substantial disruption.
Audio in general and radio in particular remained highly undervalued with audio attracting just 9% of AD dollars. Despite garnering 31% of People's time with media. According to a 2021 work study.
Odyssey is well positioned to get a healthy larger share of the growing audio market as we continue to elevate our presence in the national advertising community around our scale enhanced increasingly digital premium quality platforms.
In 2022, we are focused on five key performance drivers that are integral to our success number one expanding our offering a differentiated premium audio content to accelerate audience growth across all platforms.
To bolstering our customer marketing partnerships around our holistic multi platform data enhanced product line.
Number three elevating our digital distribution platforms to provide an enhanced listening experience.
Number four driving meaningful innovation across our business and number five continuously building audios talent and culture to ensure a best in class team.
We are feeling very good about the state of our digital business across all three primary areas, including podcasting streaming audio and digital marketing solutions streaming audio had a strong 2021 with revenues growing over 35% for the year and we continue to see strong underlying fundamentals with DLH up double digits in Q4 and RP.
<unk> is at an all time high.
With significant improvements on tap for our Odyssey digital platform later in 2022, and the addition of our exclusive representation of Major League Baseball digital audio inventory this season, including both podcast been screaming, we expect strong growth in this important market segment over the next couple of years and beyond.
And our podcast business had a solid 2021 and is well positioned for a terrific 2022 and beyond.
It's one of the three largest podcast publishers, reaching over 40 million monthly listeners. According to Triton, we have scale, but what truly differentiates us in the marketplace as the premium quality of our work, which is second to none.
Does these podcasts were featured in early in nearly every year and best of the west, including several number ones or best podcast in the year honors. The we are incredibly proud of the team's work.
Our work figured prominently on best of lists from the likes of the New York Times, Apple Fortune, The Atlantic Amazon Entertainment Weekly Vogue, Esquire, the New Yorker time, the financial times and more.
Our new original show 912 was the year's number one most critically acclaimed show, while our partner Glenn and Doyle as we can do hard things with apples number one top new show of the year.
We rolled out our first to see 13 feature podcasts movies Ghost rider and treat and created several other big hits, including gone South and fallen Angels from cadence 13, and the official succession podcasts from Pineapple Street Studios in partnership with HBO.
All in six of our shows crack the Apple top 10 during the fourth quarter.
In addition, we are continuing to progress on our plans to drive higher margins from our podcast business by adding more local podcast to the product mix and driving more audience based addressable campaigns for brand advertisers. We are off to a great start with our podcast business in 'twenty two led by a string of new releases, including the new hit podcast fly on the wall with the drip.
Storytelling on Saturday Night live hosted by David Spade, and Dana Carvey, featuring guest the likes of Chris Rock, Tom Hanks, Tina Fey, Conan O'brien them anymore.
Turning to business conditions, we are off to a very good start in 2022, where.
We were experiencing strong growth in essentially every segment of our business with signs of some acceleration in spot radio across both local and national.
Despite the fact that we are still experiencing significant challenges with auto advertising due to the lingering impact of supply chain issues.
Overall based on current pacings, we are expecting first quarter revenue growth in the mid teens versus prior year.
And as we look at the remainder of the year. We are cautiously optimistic as we anticipate strong growth across digital podcasts doing events and political and the near normalization of our radio business as the pandemic waned and supply chain issues or hopefully resolved by Q3.
This all presume is of course that we don't see a significant macroeconomic where pandemic disruption, but right now we're on a solid trajectory.
As such we continue to expect 2022 EBITDA to be at about the same level as our 2019 pre pandemic results.
In sum we are excited about where the company is today and all the enhancements and additions we have made to elevate and transform Odyssey capitalize on the emerging opportunities in audio better serve listeners and customers than ever before and deliver strong results for our shareholders and with that I'll turn it over to Richard.
Thanks, David our.
Our total net revenues for the fourth quarter came in at $3 $44 7 million up 8% year over year and up 13% ex political.
Our core spot revenues were up 10% in the fourth quarter, driven by local which accounts for about 70% of our total core NIM was up 13%.
Corresponding revenues were up a strong 24% in the second half of 2021 versus the first half, reflecting the ongoing recovery and the improving performance of many of our top advertising categories, including hospitals and clinics casual dining.
Treatment sports sporting events and furniture.
The auto category as David mentioned, our largest remains disrupted and there are still a number of other important advertising categories like concerts fast food and travel that are getting meaningfully better but still have a ways to go to get back to pre pandemic levels.
And I think it's also important to note that as mentioned by David is that there is an increasing growing number of categories that are now ahead of pre pandemic levels, including mortgage lenders tourism casinos software H P. A C and other home improvement categories like.
Plumbers.
We are excited to see an increasing number of states lifting their COVID-19 restrictions and we believe this bodes well for the accelerated strengthening of our spot revenues this year.
Our digital revenues in the fourth quarter were up 16% year over year and as expected.
Somewhat negatively impacted by the now resolved technology issues, we encountered in migrating to a new third party Air AD server.
Our sponsorship and event revenues were up 111% year over year in the fourth quarter due significantly to the restart of our live events business.
Our event revenues came in at about $9 million in the fourth quarter as compared to $27 million in the fourth quarter of 2019 for the full year, our event revenues totaled about $11 million.
We expect that our event revenues will more than double during 2022, but we don't expect them to fully recover to pre pandemic levels. This year.
Turning to the outlook for the first quarter based on our current pacing we project that our total revenues will be up mid teens year over year, driven by the accelerating course core spot growth and improving digital performance.
Our total operating expenses for the fourth quarter came in at $2 $96 6 million.
And excluding one time and unusual costs and adjusting out noncash items. Our total operating expenses were $2 $78 5 million are up 10% year over year.
Our adjusted EBITA margin for the fourth quarter was 19% up four points from the third quarter for.
For 2022, we continue to expect that we are on track to get back to about 2019 levels of adjusted EBITDA. This year and we projected our cash expenses will increase at about one half the rate of our revenue growth driven by variable expenses tied to revenue growth invest.
<unk> in our key strategic initiatives, including our new streaming platform, which we expect to launch during the latter half of this year.
And as a result of the impact of accelerated inflation on wages and other operating costs like power, which we estimate will account for close to one point of our expense growth this year.
Turning to our financial position.
Our first lien net leverage was $3 seven at the end of the fourth quarter computed on a compliance basis in accordance with our credit agreement and as compared to our covenant of four times the.
The benefit of our of our Covid related credit agreement agreement Amendment on our compliance base leverage calculation concluded as of September 30th and in accordance with its terms the amendment provisions subsequently sunset it.
As a result, the margin on our revolver has decreased by 25 basis points and all other amended terms reverted back to what they were prior to the pandemic.
Moving forward, we expect to rapidly build first lien covenant cushion during the course of this year and to cut our total net leverage by about one half by the end of this year.
Our net capital expenditures for the fourth quarter with $37 3 million and totaled $76 6 million for the full year.
Our capex for the quarter was somewhat greater than we expected because our software engineering team now combined with the team we acquired from wide orbit got more work done on our new platform than we expected.
This platform is now in Alpha testing and we expect to move to beta during the first half of this year.
We expected our 2022 capital expenditures will be about $75 million.
With that we'll now go to your questions operator.
Thank you 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, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Our first question comes from Steven Cahall with Wells Fargo.
Thanks, Good morning, Thanks for that commentary on the first quarter and getting back to 2019 EBITDA. This year last year. He couch that with I think an 85% level a spot revenue just wondering if you could update us on how your current outlook kind of compares to that 85% number.
<unk>.
Yeah. So.
When we.
[noise] gave our guidance scenario for 2022 last year, we explained that that scenario assumed that our spot revenues would still be down about the mid.
Mid teens compared to 2019.
And that really was.
Based on the assumption and our continued belief that the automotive category is not likely to fully recover to pre pandemic levels. This year.
We see signs of life, we face, we see things getting better, but we think the supply chain issues are likely to persist until the latter part of this year and we do expect to see sequential improvement, but we think when we think about the full year at least our scenario was.
That you know are spot revenues could be down mid teens versus 2019, yet we could still get back to 2019 levels of EBITDA given the significant growth. Since then of our digital business, our cost reductions et cetera, So right now the our spot.
As Steve mentioned, our spot revenues in the first quarter are somewhat.
Accelerating versus where we were in <unk>.
We think that the relaxation of COVID-19 restrictions across the company across the country is a great sign.
And hopefully leads to accelerated consumer spending and just more economic activity, but we'll you know for now we'll wait and see and we think that the guidance scenario. We gave previously is still a pretty good view of what likely happen.
It happens this year.
Great and then maybe just second rich I was wondering if you could update us on what your free cash flow outlook for the year you gave us.
Went on cash expenses, there's a few things that fall below the line. So if we just think about deleveraging how do we think about converting adjusted EBITDA to free cash flow.
Right. So I think taking a look at it and you think okay.
Our interest expense or cash interest payments will be you know a little bit over $90 million I, just given your capex guidance of about 75.
Our cash taxes this year will be inside $10 million, we're still waiting patiently.
For our federal government to return to us or N O. One NOL refund claim that we made at the end.
<unk>.
Well I guess the slowing in the second quarter of 2021, we hope to receive that this year that's $15 million.
And we have no further mandatory term loan b amortization that was satisfied.
As part of our.
Capital markets transactions last year.
So you know if you look at that that math suggests that you know our free cash flow. If we get back to about 2019 levels of EBITDA or free cash flow will be north of $100 million.
Tend to use that primarily to pay down debt and if you look at where we are total net leverage was at the end of 2021 and look at that projection given that commentary on free cash flow and paying down debt. We do expect to cut our total net leverage and half about <unk>.
In half by the end of 2022 and for our first lien leverage to be you know inside two times.
Yeah.
That's helpful. And then maybe just lastly, the streaming product I mean, it sounds like you believe there's a big market and you're willing to kind of take the the EBITDA and the cost pain to invest in that how have you thought about sizing that market you know audio both paid and free it's pretty crowded and Theres a lot of options out there. So what made you decide that the best use.
Use of your assets what have your own service and compete head to head with with others.
So maybe putting your content into other People's services.
Yes, Stephen it's.
We believe and I think the facts support that we are as good as anybody genera.
<unk> generated and developing outstanding premium differentiated content and it manifests itself in everything from the fact that we have you know far and away the strongest position in local sports and rabid fans all across the country to our leadership in local news and local personalities. So we have that.
<unk> content under our control and we are also cultivated a strong differentiated position in the podcast space as noted from everything from our.
The awards that we've that I cited in my remarks.
And in a lot of the other things that we've been doing as well in addition to the exclusive stations and other things that we've developed where natural competitors in that space and as we look at the audio market writ large.
We are a scaled player with over 200 million folks.
Engaging with our brands and our products each month, and we don't look at the distribution business as a winner take all situation. We think that is audio continues to.
Elevate in the importance in our.
Our business ecosystem, our advertising ecosystem, we think that having the ability to create a cultivated this differentiated listener experience to engage with all of our unique content as well as the other pieces that we will bring to bear them gives us a position to be a meaningful player in that space.
We don't need to be the only player we don't need to be the number one player, but we can create a very attractive business with great value based on all the competitive elements.
Elements that we already bring to the table and so it's a natural for us to continue to play this out and we're excited about where we're headed and look I think it's important to note that our so our capex relative to revenue has been high over the last several years.
Compared to historical standards.
We see our capex relative to revenue falling over time as revenues fully recover and grow past, where they were in 2019 and prior to the pandemic and we think our capex.
You know, maybe a point or so in excess relative to revenue or what it's been historically, but we've always been a significant investor in technology.
It's now we're just pivoting to investing more in a different technology and digital technology.
And so yeah, we're we're investing a lot now.
We do expect to get to the general release of our new platform. The latter half of this year.
Thank you.
Thank you.
Next question comes from Jason Kim with Goldman Sachs.
Thank you and good morning, great two tiered the momentum youre seeing in the business right now and as we think about the EBITDA goal of getting back to 2019 levels.
Has your confidence levels increased today relative to last quarter and if so what's giving you that increased confidence despite what we read about the inflation picture.
Well, it's what we're seeing in the business right Jason it's.
We're seeing it in our in.
Not only are the business, we're writing we're hearing it and seeing it in the conversations we're having with advertisers.
So it's.
Yeah. It's it's it's what we're experiencing right now which is giving us that are growing confidence and again you know.
We don't live in an uncertain world and we will read the headlines from eastern Europe , and we're cognizant of the fact that there can be a shock into the system. So it ain't over till it's over but as I said earlier, we feel good about the trajectory we're on.
In the past you talked about the performance diversions between large markets and a small has it continuing or are you seeing more of a reversal of the trend between your large markets small markets.
So there still remains a the larger markets are still growing smaller than the smaller markets, but the divergence has narrowed in the fourth quarter and so we expect that over time Youll see some degree of catching up in the larger markets.
Play out and we haven't seen that yet in the data, but we're encouraged by the fact that those lines or are narrow the gap is narrowing and I think it's important to note. When you think about the recent.
Actions by governors to reduce their COVID-19 restrictions in many of the top urban areas of our country, New York, Illinois.
Aliform, Yeah, and munis are where our top markets are New York Chicago L. A I mean that that is our big three and and so you know those restrictions.
No doubt.
Had a somewhat.
<unk>.
Negative impact on the economic activity.
Just.
The environment.
So we're.
Very pleased to see those starting before fall away and we think that that bodes well for the spring.
Yeah.
Thank you and then.
Final question for me is how are you feeling about your technology platform and product offerings do you see opportunities to add through some <unk>.
M&A in the future or are you satisfied in terms of your current asset base.
Let me start and then Richard Rich loves other thoughts as well as we've talked about we have been investing in our own technology organically and we thought that the <unk> acquisition was a perfect fit in terms of giving us a central technology to complement the roadmap that we are embarking.
Upon that said, we feel very good about the composition of our technology and we continue to work extensively with third party partners and in a number of areas, where we see diverse competitive.
Market based solutions and so at the moment, we don't see any real need for us to augment through acquisitions, our technology platform and feel really good about the perfect fit the neighbor wave is is proving to be too.
To our to our model.
And I do think that when we think about our capex investment over time.
<unk>.
We just gave guidance is about $75 million. This year I don't expect that number to fall back marching in 2023 or 2024.
We'll continue to invest at that level or more it will fall as a percentage of revenue over time.
And there's work to be done Minneapolis with platform is both streaming and on demand.
And there are some capabilities that are.
Being enhanced.
Better enable.
Our on demand offering for example, and we will continue to make investments in that technology, but we have all of the fundamental components, we need to complete our tech stack. We just have some more work to do to fully develop it.
And so you know.
We have what we need is just a question of execution.
Thanks for the thoughts.
Thank you.
Once again, if you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from Dan <unk> with B Riley. Please go ahead.
Yeah morning, guys. Appreciate you taking my questions just a quick one is in the network.
Revenue line item here.
I see.
Seasonally stronger for Q that was slightly down quarter over quarter. Just wondering if there's anything in there that sort of one time a year, maybe interested in how you're bucking the spot national versus network or something like that.
He says about network.
No so.
If you look at the network line.
It is down sequentially in terms of the it is down year over year and the growth.
The growth trajectory.
And we see that picking up as we progress through 2000.
And 'twenty two.
And so there is just no more color to add to that Dan accept.
We do see growth.
Resuming this year and for the network.
Actually our expanded network offering.
To be an important component of growth overtime.
Great. Thanks.
One other one I wanted to ask just on sort of hiring in your sales force moving forward I mean, obviously, the digital contests, and all that sort of stuff as well.
Where the growth is do you is your approach here to sort of hire more.
More say digital only salespeople are primarily digital focused sales or do you see the better approaches equipping your traditional radio sales force to sell everything.
Well I don't I don't think you can be in sales today, certainly in our company and let alone any media without having a certain degree of digital acumen right and so it's probably a combination of both Dan where we obviously want to continue to.
Train and develop our talent and believe me a lot of our traditional radio folks are outstanding.
At digital sales.
And of course, we're also bringing in lots of talent.
At the most senior levels, you know and I think the addition of Bryan Benedict Benedek as ours as our Chief revenue officer with his former position as the CRO at Spotify think also speak Directionally, though.
Or how we're.
How we're evolving.
But I'd also tell you that very much our product line evolves to right and if you think about what we deliver to customers. It is now about a holistic multi platform proposition, where we're making impressions on <unk>.
Tens of millions of.
Listeners, whether they are engaging with our products digitally or other broadcasters to podcast or events or what have you and so it really is a convergence of all of those elements and every seller who needs to be capable of delivering on that with good data and we continue to develop that as well.
Awesome and then just one more for me I mean, you guys have talked about order enough. So if we put that aside for a second and kind of think about some of the other categories that were really impacted you know in the back half of 2021 restaurants with the labor issues and all those sorts of things.
Or are you starting to see some of that subside in the early goings of a 2022 and.
Any sort of cadence.
Better or worse than you had expected since the last call.
Yeah look I think I think so when we talked about.
Where we're seeing improving.
Improving performance of our top categories, we mentioned hospitals and clinics, which is our number two category.
You can imagine hospitals and clinics was significantly disrupted as a result of Covid I see we see that performed significantly better.
Fourth quarter.
We think it's got and get stronger we see a lot of order flow from <unk>.
Hospitals and clinics in the first quarter, we mentioned casual dining has gotten significantly better categories like recruiting you could imagine.
Is really strong and is punching above where it was previously.
Also made point that there is a number and growing number of categories that are above pre pandemic levels.
Tourism Interestingly casinos software.
And a bunch of home improvement categories like HVA Sea lice plumbers. So I don't know we see we made on the call that that's about 70% of our core spot revenues are local.
And we are seeing.
Local strengthening in fact local grew more strongly in the fourth quarter. The national It was up 13%, while all core spot was up 10% and we're seeing as we mentioned some sequential improvement <unk> versus four Q. So look I think the signs are good.
Local is strengthening in fact, if you go back and look at when we go back and look at the 2021 local improved every quarter sequentially. In 2021, we think there's a lot of headroom for local to recover and some.
Still disrupted by the pandemic like auto we suspect gets meaningfully better during the course of 2022.
Great I appreciate you guys, taking my questions and I'll turn it over.
Thank you Dan.
Next question Aaron Watts Deutsche Bank.
Hi, Thanks for having me on.
David I'm, just curious how CPM had been have recovered and are trending and relatedly with linear TV audience has continued to be under pressure and I'm the decline really.
Do you see that accruing to radios benefit as we move through this year and going forward.
So to your first question Erinn Cpm's moving up nicely and we're also seeing nice progress with yield per minute as.
As the recovery continues and as demand increases.
You are seeing what you might expect in terms of supply and demand curves and the impact on pricing which is great.
Not to say we are back yet will be where we were but we're making good progress.
And yes, I do believe and we talk about this a lot internally that with the disruption in TV advertising and other traditional media.
<unk> and radio are.
Our highly undervalued and ecosystem and we are seeing.
More and more advertisers.
I'm interested in shifting their media mix to optimize it in a world in which we can offer much better rois.
And.
We certainly are hopeful and certainly working hard at that and.
Things don't change immediately as much as we would like the economics to drive those decisions.
On a on a dime, but we are making progress there and do you think that's an important and fundamental trend going forward. It plays to our advantage.
I think Gary it's one of those really interesting things that you're thinking about.
Radio has been extremely resilient compared to other so called legacy media.
And the growing scarcity of local rating points.
<unk>.
Radios audience compared to linear TV, we're much stronger in younger demos for example than TV is one of those.
Key drivers that give me confidence that radio remains resilient over time.
David mentioned earlier, one of the important things that we can see happening overtime.
And as you watch them happen in the video ecosystem is that we are increasingly packaging our audience across platform and providing ways for advertisers to target of given audience across linear radio or digital platform and podcasting.
And to give them greater.
Scale for their bonds and Thats, an interesting thing and we're wrapping data around it increasingly that.
Yeah.
It gives us some confidence about the future and the ongoing resilience of radio.
That's helpful. Thanks, Rich I appreciate the time.
Thanks Darren.
Next question, Craig Huber with Huber research.
Hi, there I think you've got a few questions if I could.
Can we talk a little about in more detail about the auto category, how much was that.
Down in the fourth quarter year over year and more importantly, what percent of your revenues is at right now.
Yeah, Greg. So we gave that we became the exact number in the third quarter.
It was down.
In the fourth quarter is auto when you look at it in total.
When you look at the.
The three tiers of auto.
<unk>.
What our advertising by the brands themselves.
The dealer associations plus the dealers themselves in the aggregate it remains our largest category.
And it still is our largest category and we see it improving.
In the first quarter.
Local dealers all say in particular.
And we do think over time.
It's going to recover in one of the things that we see in one of the things that was highlighted to us by audio executives is that they expect over the next.
Three plus years.
Very significant stream.
Stream of introduction of new models by the largest manufacturers a whole lot of new EV models coming to market over that horizon, and we think that bodes well for the category to recover and for advertising in the space to be quite favorable.
Maybe asked differently do you have a sense how much does your auto advertising down versus the pre pandemic levels.
Like I always think about that number at this point.
Yeah, I'll refer you back to what we said in the third quarter.
And we said in our in our prepared remarks.
In the fourth quarter auto remained disruptive it is getting better.
In the first quarter will.
We'll be curious to see how it shakes out for the full quarter.
Okay. My other question if I could ask you guys.
The pending the baseball strike or walk out whatever you want to call. It a note here on your press release, you had $251 million of sports related revenues roughly how much of that is baseball.
And more importantly, if these.
Guys don't have the games postponed what have you how big of an impact is that if you have to fill in that time with other content. What do you think it does to your advertising during that time period, if we come to that stage.
Yeah, well I, certainly hope that doesn't happen and we have reason to be encouraged that.
Parties will resolve this in due course here.
But that said we have all of our essentially all of our baseball deals.
Our protected so that to the extent that games are canceled.
We received pro rata.
Refunds.
On our on our fees and so if there was an extended delay.
Delay in the major League baseball season that were to lead to a reduction in games played.
We would see some reduction in revenue, but we'd see an offsetting decrease in expense and it would have.
No negative impact on our on our EBITDA.
Okay. That's good to hear and then.
The gaming category you guys touched on that he said 45 million of revenue for the year long term outlook, there get to $100 million category, maybe just talk a little bit further about that I'm curious like in the markets where you.
Have those sports.
Bedding has been legal for say six plus months, how significant of a category is in those markets for you guys as a top five top three advertising categories.
Just talking about that long term please.
Please.
Yes, so when we look at the markets that have legalized it is.
In the top tier of our advertising categories.
We see them.
Continued robust.
Robust growth.
And as we as we said.
New York is just legalized mobile sports betting.
Other states, Illinois, Illinois coming online here.
Illinois coming online in Chicago is a very important market for us. So look we think that it's progressing as we thought and and that over the next several years, we'll get to hopefully eclipsed $100 million and Thats just advertising revenue.
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And my last question guys is much higher inflation rates out there and it looks like a much higher interest rates are coming down the pike.
How do you view that in terms of the overall impact to your advertising revenues positive negative or neutral if these trends continue.
What are you hearing from your advertisers on that front I'm curious.
Not much right now I think I don't think it's really permeated.
The.
The at the psyche of advertisers right now and obviously it would be very much dependent upon which category right and where their ability to pass through.
Higher cost et cetera, et cetera, but at the end of the day candidly I don't really see that having any.
Being a being a significant issue for us because you know should there be significant ramps up and inflation I would expect that we would follow in due course.
That's all I had thank you guys.
Thank you Craig.
We've come to the end of our Q&A session I would like to turn the floor over to David for closing remarks.
Well. Thanks, so much we appreciate everybody's time here. This morning, and look forward to reporting back to you all at the end of Q1. Thanks. So much bye Bye. This concludes today's teleconference. You may disconnect. Your lines at this time and thank you for your participation.
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