Q3 2023 Townsquare Media Inc Earnings Call
Okay.
Good morning, and welcome to town Square Media's third quarter 2023 Conference call. As a reminder, today's call is being recorded and your participation implies consent to such recording.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
With that I would like to introduce the first speaker for today's call Claire <unk> Executive Vice President.
Thank you operator, and good morning to everyone. Thank you for joining us today for cans glass third quarter financial Apple with me on the call today are Bill Wilson, our CEO and Stuart Rosenstein, our CFO and executive Vice President. Please note that during this call. We may make statements that provide information other than historical information, including statements relating to the company's future.
Ah patients plans and prospects.
These statements are considered forward looking statements under the safe Harbor provision of the private Securities Litigation Reform Act of 95 and are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These statements.
Just like the company's beliefs based on current conditions, but are subject to certain risks and uncertainties, including those that are detailed in the company's annual report on Form 10-K filed with the SEC.
We may also discuss certain non-GAAP financial measures, including adjusted EBITDA adjusted net income and adjusted operating income, which we may refer to as profit in our remarks, such non-GAAP financial measures should be used in conjunction with all the information contained in our quarterly yearend and current reports available on our website.
Also encourage all participants to go to our corporate website and download our investor presentation as bill referenced some of those slides during our discussion. This morning at this time I would like to turn the call over to Bill Wilson.
Thank you Claire and thank you all for joining us. This morning, it's great to reconnect with everyone today.
We're very pleased to share with you that our third quarter results met our previously issued revenue and profit guidance, despite the challenging macro environment.
After July is promising start to the third quarter as you are aware the U S advertising industry experienced a slowdown.
According to standard media indexes U S AD tracker the U S AD market Rose plus six 3% in July however, in August that growth slowed to plus one 2% and in September was up only plus 0.1% in essence flattened September.
Our performance through the first nine months of this year has helped to demonstrate the efficacy of our digital first local media strategy and validated our focus on local markets outside of the top 50 U S cities.
A particular note is how our business model allowed for an industry, leading digital advertising revenue and profit growth for the first nine months of the year, while also generating consistent meaningful cash flow.
Town squares digital platform sets us apart from others in local media.
As highlighted on slide 11, 52% of our total revenue was digital revenue in the first nine months of 2023 more than two times the industry average.
Even more impressive is that 57% of our total profit was digital profit in the same period, which represents a healthy 30% profit margin.
As anticipated third quarter revenue for town square interactive our subscription digital marketing solutions offering outlined on slide 13 declined negative 13% year over year.
As I previously shared with you 2023 is a reset year a town square interactive town square interact as target clients generally the smallest of the smbs with less than 20 employees or less than 5 million of annual revenue continue to struggle with inflationary wage pressures labor shortages and higher interest rates.
All of these factors have contributed to elevated churn rates, among our clients subscriber base and moderately slower sales velocity.
And while there is no clear end in sight for these hurdles we are confident that town square interactively returned to growth in 2024.
We have already begun to see churn begins to moderate from its peak in Q2, and that's why you will note that subscribers lost in Q3 versus Q2.
Which we expect will translate to improved revenue and subscriber metrics in 2024.
At town square, we always look for the silver lining when faced with challenges in our quest to achieve our internal company motto, how high is high.
2023 represents the first growth challenge, we have encountered a task or interactive and as such it presented us with an opportunity to step back and truly examine our operations attack ourselves and evaluate all of our processes and procedures.
As we mentioned on our last call. We made a number of important changes to optimize and improve our customer service platform, including moving from a one to one customer service model to a pull model and implementing an interactive voice response system as the initial point of contact on customer inbound calls.
These changes led to a meaningful increase in call answer rates enhanced visibility to customer request and concerns and improve response times.
Those changes as well as other improvements we have made recently resulted in town square interacted Google business review ranking increasing to over four stars.
We believe we are positioned sounds great interacted to efficiently scale in 2024 and beyond.
And we remain incredibly excited about the growth potential for this business.
With an addressable market of nearly 9 million target customers as outlined on slide 14.
Superior product offerings, our customer service team and model built for future growth and a significant market opportunity I am very confident that tells where interactive is geared for long term profitable growth and success.
Although revenue hotels grew interactive as expected declined negative 13% in the third quarter and we expect a similar rate of decline in the fourth quarter through careful expense management and thoughtful investment. We are very pleased to share that we were able to maintain a very strong 28% profit margin in Q3 in.
In line with Q2's profit margin as well as Q3 2020 twos profit margin.
Our digital advertising solutions segment ignite as outlined on slide 12, it has been a key driver of growth.
In the third quarter digital advertising revenue increased approximately plus five 5% year over year and through the first nine months of the year revenue increased plus 10%.
Our growth in this segment has been due to our differentiated digital solutions, which are often the best and most sophisticated digital advertising products and solutions available in our size markets as well as our focus on local advertisers.
Although year over year growth rates have slowed from the start of the year. We believe our performance in this segment has held up better than many of our peers because of our limited life.
On national advertising, which has been particularly weak during the advertising slowdown.
Third quarter digital advertising profit growth increased in line with revenue growth.
6% year over year with third quarter profit margins in line with prior year margins at approximately 30%.
As radio share of AD spend in the United States continues to decline along with that of other traditional media such as TV and print as noted by S&P Global research.
Highlights are need to maximize our broadcast share while simultaneously driving digital advertising growth through both share gain in share shift and that's exactly what we're doing through.
Through the first nine months of the year, our broadcast revenue declined negative 5% year over year, excluding political.
Yet according to Miller Kaplan, our total broadcast here in the markets in which we are measured by Miller Kaplan increased by 50 basis points over the same period driven by gains in our local broadcast share.
Our local broadcast revenue once again meaningfully outperformed our national broadcast revenue in the third quarter as National broadcast radio advertising was down in the anticipated negative 19% year over year.
Due to our focus on local with only 8% of our total company revenue comprised of national advertising and therefore, the national advertising steep decline has had less of an impact on our total results.
At the same time that we are gaining broadcast year. We are also experiencing market share gains in our digital business of.
Of course, what truly matters is gaining total market share from our local media competition, including TV and cable and we are keenly focused on that in fact, one of the largest areas of growth in the digital advertising industry today is streaming or connected TV, which also happens to be a strong growth driver of our digital programmatic revenue stream.
What is perhaps most encouraging is that we still have a long way to go.
According to Burrell associates, although town square is steadily increasing our digital market share each year, we are still only capturing roughly 14% of the total obtainable digital revenue in our local markets.
Signifying meaningful upside that we are very confident we can capture.
Although in the back half of 2023 advertising overall in the U S has slowed down compared to the started the year.
While early it does appear that advertisers are gearing up for a stronger and better 2024.
Our annual customer appreciation sale, which we hold in October and which largely involves placing advertising buys for the year ahead set an all time record with orders increasing by plus 10% over 2022 cell.
That combined with our confidence that Telcel interact will return to growth in 2024, and the current outlook on strong political spending.
Solidifies, our belief that the pressure to our top and bottom line will be temporary and short term in nature.
One very important characteristic of our business model that we like to highlight as often as possible is our significant cash flow generation.
Though we have experienced revenue and adjusted EBIT declines in the first nine months of 2023, we have generated $39 million of cash flow from operations up and up an impressive plus 21% year over year.
We ended the third quarter with $38 million of cash on hand, having utilize our cash in the third quarter to repurchase and retire $14 million of bonds at a price below par.
We purchased an additional 94000 shares.
As well as making $18 million interest payment and pay $3 million of dividends to our shareholders.
I'm glad to share that our board of directors approved our next dividend of <unk> 18, and three quarter cents per share payable on February 1st, which equates to 75 cents per share on an annual basis, which today would be approximately an 8% yield.
We remain very confident with our current capitalization and the strength of our balance sheet with.
With $38 million of cash on hand at quarter end, our fixed interest rate of 6.8, 75%.
No maturities until 2026 and net leverage of four five times at the end of the third quarter and.
And we are pleased that we can deliver attractive current cash returns for our equity shareholders and.
And now I'd like to turn the call over to Stu who go over our results in even more detail as well as provide you our fourth quarter guidance stoop taken away. Thank you Bill and good morning, everyone. It's great to speak to you. Today. We are pleased to report that a third quarter results met our revenue and profit guidance supported by the continued growth in our digital.
Advertising revenue.
We're also very pleased that we continued to effectively deploy capital in the third quarter by repurchasing shares and debt in the open market and announcing our next dividend payment.
Third quarter net revenue declined four 6% year over year to $115 $1 million, which was within our guidance range of $115 million to $117 million.
Excluding political third quarter net revenue declined three 8%.
Third quarter, adjusted EBITDA declined 12, 1% year over year to $27 $2 million, which was within our guidance range of $27 million to $28 million.
Third quarter broadcast advertising net revenue decreased in line with expectations with a decline of eight 6% year over year and seven 2% excluding political.
Third quarter broadcast profit margins sequentially improved to 31% as compared to 27% in the second quarter.
As Bill shared 2023 is a reset year for town square interactive our subscription digital marketing solution segment, and we expect topline and Bottomline growth to return in 2024.
In the third quarter net revenue decreased 12, 6% as compared to the prior year and profit decreased 10, 6% year over year.
Margins were strong at approximately 28% in the third quarter and in line with the third quarter 2022 margins.
As we shared previously we expect margins at town square interactive to be suppressed in the second half of 2023, as we continued to invest for future growth given our confidence in our long term growth prospects and while we ramp the newly opened Phoenix location.
Councillor ignite digital advertising secondly was again a growth driver for the company with net revenue, increasing five 5% year over year in the third quarter and digital advertising profit, increasing six 3% year over year.
Segment profit margin was approximately 30% in the third quarter.
Our other category, which is comprised of live events activity generated $1 $7 million of revenue in the third quarter, an increase of 42, 4% year over year and had a small loss of approximately $400000 a decrease of approximately $150000 year over year.
As a reminder, a live events activity should not be viewed as a growth driver or revenue side of the town square, but rather a marketing arm for the company.
In the third quarter of 2023, we had noncash impairment charges of $31 million of which $23 6 million were related to our FCC licenses.
On previous calls given the way that these noncash impairment charges of mathematically calculated we expect the value of our FCC licenses to continue to be written down regularly overtime.
The third quarter impairment charge was caused by rising interest rates, which caused the discount rate and our calculations to increase by approximately 60 basis points from Q2.
As well as decreases in the third party broadcast revenue forecast and higher initial capital cost due to rising prices all of which are inputs and these valuations.
Write downs of a decade old purchase price calculations had no bearing on the company's cash position, our operating revenue operating expenses profitability or the company's future prospects.
More than noncash accounting charges affecting only the historically recorded purchase price allocations made when we bought a radio station assets roughly 10 years ago.
Our third quarter net income declined from $2 $8 million in 2022, two to a net loss of $36 $5 million or $2 27 per share to.
The decline was largely due to the noncash impairment charges and a meaningful increase in the income tax provision related to the noncash impairment charges and the impact on the valuation of our deferred tax assets as well as our calculated effective tax rate third.
Third quarter, adjusted net income, which adds back certain items, including the noncash impairments and adjust for normalized tax rate was approximately flat year over year.
We'd like to remind you that any benefit or provision for income taxes included on the face of our income statement.
Our GAAP financial statement purposes, only we maintain significant tax attributes, including more than $100 million of federal NOL carryforwards, and other substantial tax shields related to the tax amortization of our intangible assets we.
We continue to believe that we will not be a material cash taxpayer until approximately 2026.
As Bill highlighted I would again like to emphasize we consistently have strong cash flow generation.
We generated $39 million of cash flow from operations in the first nine months of 2023, that's up 21% year over year or $7 million and we ended the quarter with $38 million of cash.
At the end of the third quarter, our net leverage was four five times.
Down slightly year over year, we repurchased 14 $2 million of bonds below par during the third quarter at an average price of 96, bringing our year to date total bond repurchases to $27 $1 million. In addition, we repurchased approximately 94000 shares in the open market during the third.
Third quarter, bringing our year to date total share repurchases to one 7 million shares or $16 $6 million at an average price of $9.88 per share.
As always our number one priority is to invest in our local businesses to organic internal investments that support our revenue and profit growth, particularly in our digital growth engine with.
We plan to continue to invest in our digital product technology sales content and support teams specifically in our town square interactive and town square at night businesses in order to maintain a strong competitive advantage in markets outside the top 50 cities.
In addition, we are focused on our balance sheet as we begin to prepare for a likely refinancing in late 2024 or early 2025.
As Bill mentioned earlier, our board has approved a dividend payable on February 1st to shareholders of record as of January 2nd.
Dividend of $18 75 per share, which equates to 75 cents per share on an annualized basis implies an annual payment of approximately $12 million based on our current share count and a dividend yield of approximately 8% based on our current share price.
We believe our strong cash flow characteristics will allow us to continue to invest in our business.
Honestly support on your dividend and give us flexibility to opportunistically pursue debt and share repurchases in the open market.
For fourth quarter outlook, we expect fourth quarter net revenue to be between $110 6 million and $112 $6 million, we expect fourth quarter adjusted EBITDA to be between $24 8 million and $25 $8 million different.
This implies the town squares 2023 full year revenue will be between $450 million and $452 million and our adjusted EBITDA will be between $100 million and $101 million both within our original guidance ranges, we issued in the beginning of the year.
And with that I will now turn the call back over to Bill.
Thank you Sue and thank you to everyone who joined US. This morning, we greatly appreciate it.
I'm Gonna close todays call by highlighting what our business model has delivered this year.
Despite a challenging backdrop of rising interest rates and inflation.
In extreme and persistent national advertising weakness.
I am proud that despite these challenges our differentiated digital advertising platform delivered double digit revenue.
And profit growth through the first nine months of 2023.
Our mature cash cow broadcast advertising platform has and continues to generate a solid profit contributing to our strong cash generation.
Our net leverage remains below prior year levels.
And we have efficiently repurchase both debt and equity this year, while maintaining our high yielding dividend delivering attractive current returns to our shareholders.
Our performance this year has reinforced our confidence in our digital first local media strategy and our deliberate focus on markets outside the top 50 cities in the United States and the long term profitable growth potential of our digital platforms.
And again, thanks to each of you for taking the time to be updated on town squares Q3 results. This morning, we greatly appreciate it.
Operator at this time, please open the line for any and all questions.
If you would like to ask a question. Please press star one on your telephone keypad now and will be placed into the queue. In the order received please be prepared to ask your question when prompted.
Once again, if you would like that for a question. Please press star one on your phone now.
And our first question comes from Michael.
Capital markets. Please go ahead Michael.
And good morning, I'm, sorry for that if there was any background noise I. A couple of questions can you talk about the tone of the market for your interactive services. In Q4 I was just wondering are you still discounting at this point.
Hey, good morning, Michael Great to hear from you I'd say the tone of the market in Q4 for town square Interactive our digital marketing solutions business is very consistent with Q3 as we shared on the call as well as previous calls two.
<unk> 2023 is definitely a reset year for Tesco interactive we've made a tremendous amount of improvement I think to our processes and procedures as well as added some incremental tools that we believe and are confident we will return us to growth in 2024, but as it relates to Q4 I don't see any difference quite honestly from an overall company perspective.
When you look at the guidance. That's due provided Q4 net revenue down ex political negative five to negative six Q3 was negative four so we expect pretty much the same type of results in Q4 as an overall tone in the marketplace as we experienced in Q3.
And are you still discounting and interactive at this point because I know that you were earlier in the year.
We are we've really cut that back dramatically so to your point, particularly in 'twenty 'twenty 2021 when these businesses are under different scenarios. We're suffering we did discount and part of the logic there was to bridge them to success.
We're also receiving PPE money from the government multiple times throughout that two year period right now the environment is much different I think we touched on it.
You know on the last call you know our interest rates overall in Q3 were actually higher than Q2. So I think the risk of a recession from the experts has come down but in terms of the operating environment for the small businesses as you know Michael we target businesses for town square active with less than 20 employees less than $5 million of revenue. So they are the smallest of the smaller.
S. N B's, we also mentioned that we didn't know what the impact of the student loan payback coming back online after being suspended for so long and we have definitely heard that particularly in the last five to six weeks from our client base. Some of the people who are coming and calling us with concerns are as it relates to their cash flow so going back to your original question.
Definitely discounting less now because the businesses that are suffering or quite honestly going out of business. So it's not like giving them a discount is going to bridge the gap for them given the inflationary pressures the wage pressures the higher interest rates.
The impact on capital their business are really suffering and that's why we're seeing an ink.
In an elevation in churn historically I think as I mentioned on the prepared remarks, Thankfully I believe Q2 hit the peak of our churn we're seeing it starting to recede in Q3, we cut our subscriber loss, which was 3000 in Q2 to 16 50 in Q3, which I expect will be roughly the same.
In Q4 going back to your point about tone in the market, but discounting has really been suspended we do some one offs, where we believe it's the right thing but I.
I think you'll see our average price point creep up over the next several quarters as a result of that.
And just one more question and I'll get back in the queue.
Terms of Phoenix can you just kind of give us where you are in terms of staffing. There is it fully staffed now are you up and running.
In terms of the business on the West Coast that you were anticipating or you are or is that prospects still seem in line with what you were expecting just add a little color on what's going on in Phoenix.
No really pleased with Phoenix I think last time, we talked about that we were approaching <unk>.
25% to 30 employees, we're now over 30 employees, we're onboarding new salespeople out there that you know the talent pool was one of the major reasons that we opened a second location was we felt the ability to recruit and hire while we continue to do that in Charlotte, but to add the Phoenix location would be beneficial so it's still a small.
<unk> you know call it roughly 30 low 30, but in terms of why we opened the market our prospects for the market are all proving out to be very beneficial and we think that is one of the reasons that the business will return to growth in later in 2024, and really set us up for not only 2024 by 'twenty five 'twenty six 'twenty seven.
Very pleased with Phoenix Michael.
Great I'll get back in queue. Thank you.
Thank you Michael.
And our next question comes from Jim Goss from Barrington Research. Please go ahead Jim.
Hey, I might tag on a couple of things Oh, Let me go ahead as Mike was asking.
One with regard to Phoenix is it providing an offset right now too.
The issues that the.
That TSA is facing or are there startup costs that are caused it to try to delay the beneficial impact.
Hey, Jim good to hear from you. This morning as it relates to financials as we've always shared it takes a new salesperson around a year 12 months to actually break even so given the ramp of hiring and we're primarily right now been hiring salespeople out there there are some incremental other people on the service side, but primarily.
It is sales focus.
It is.
Not really it's actually suppressing our profit margins and we said that would happen when we announced the rollout of Phoenix at the beginning of the year I expect that probably to roll off sometime in the back half of next year, because we did some hiring in the first half we did a good bunch of hiring in Q3. So I think we'll be hitting that 12 month breakeven point.
And you'll see the benefit in the back half of 2024 for that.
In general sales velocity is suppressed in town square interactive because of the environment that I, just talked Michael through including student loans coming back in and often higher interest rates and all of those things. So that's kind of where Phoenix sits and as I shared with Michael just really pleased with the team there and the prospects as we go forward.
And when you're talking about a return to growth in 'twenty four.
I know, it's not going to flip the switch, but what what sort of things.
Things do you think need to happen.
Aside from a couple of items, you've just mentioned.
Debt to create that better environments in two sort of relaunch.
Like the new business establishment or you know.
The the sort of things that are going to drive.
Creation of the market you can reach out to with TSA.
Yeah, No no great Great question, Jim and.
I expect it to return to growth from a subscriber basis from a revenue and profit basis in the back half of 2024 I'm not sure. If that's Q3 or Q4, but that's that's my general timeframe in my perspective, right now as you know Jim with a subscription business a lot of what transpires over the next six months and is predicated on what's happened over the last three to six months. So.
I think the timeframe is Q3 Q4, I think theres a number of things that we've done internally that I've outlined on this call as well as previous calls we've also.
Increase.
Product features in terms of like we're now offering a CRM, we're now offering things like invoicing for our client email marketing is enhanced so we continue to make product improvements. Most importantly, I think our service model is being improved and continues to improve we're building certain tools. Some of those are helping us.
Leveraging AI to be smarter when when people are calling in and we have more information at our fingertips to handle their needs things like that so you know my hope is that obviously, we're not in a recession next year and that interest rates start to come down in the back half of next year, but at a minimum don't continue to increase at the pace. They do.
So far this year I think outside of one other time in the last 50 years interest rates raise the most in the last 12 month period than any other period and the good news I think is inflation. It looks like it's starting to come down and if that continues and that is correct. I think that has a dramatic impact on these smaller businesses that have been so hurt in this environment.
I'll turn it back to you Jim.
Okay. Just a couple of other things one is a political issue.
Is a small but important and meaningful category for you.
I'm wondering if you think the extent there are more options.
And alone digital lines, if that potentially eats away at some of the political revenues were used to having you generate.
You know which has been enough to.
Tilt the balance a little bit in your revenue line, especially in the third and fourth quarters.
Youre exactly right Great question, and we're obviously very much looking forward to next year in political you know I think we shared in 2020. The last presidential election that was an all time high in terms of political revenue. There was obviously a lot of competition from digital and other things out there for any media like there is every day, but it set an all time high so I think.
Particular, obviously TV benefit tremendously, but when you look at Radio's reach and we don't talk a lot about this on these calls because it's for US we treat radio as a mature cash cow business, but we love radio and it is the number one reach medium in the United States, reaching 93% of Americans on a weekly basis, when I tell people more people listen to am FM radio today.
Then 10 years ago 20 years ago. They cant believe it so I think as it relates to the reach and impact for political.
They know and political issues. So I expect if not matching the $16 million, our expectation is $14 million to $16 million of political next year and that's coming off of this year being under 3 million. So going back to your main point. Jim you know next year I think is a great opportunity for us in terms of political revenue the task.
We're rebuild coming back on and growing in the back half of the year and then obviously our digital advertising has and continues to be differentiated in driving or propelling our growth for the last several years.
Okay. One last one just sort of a general thought.
FCC now has the chair and a full complement is there anything on the docket that might have any impact.
For Comscore.
Oh yeah.
I'm very glad that transpired.
As you know there was also a ruling recently where they have had they have to do the quadrennial review, which they didn't do so in general I think people on this call know from prioritize I believe we should be deregulating and the fact that we are a caps in general to for F. N two items in our size markets when.
We're facing competition that uncapped beat a spotify or others and in the zone I. Just don't think is appropriate and fair. So my expectation is that I don't know when but I think it's a when question not an if question when the FCC starts to recognize the media landscape is tremendously changed in the last.
20 years.
Dramatically every few years so to keep the same archaic rules that were in place 20 years ago. I personally believe does not make sense and I'm glad the FCC is now at a full quorum and I expect as they review this overtime things will benefits how square like deregulation I don't know when that will happen, but I believe it will have.
Jim.
Alright, well, thank you very much for taking my questions.
As always thank you Jim.
And we do a follow up question from Michal Krupinski from Noble capital markets. Please go ahead Michael.
Thank you just a couple of quick ones you mentioned connected TV is one of the key categories in ignite and I was just wondering if you can.
Talk a little bit about what's driving that performance.
And then also is it just more fast channels more connect connected Tvs or just that we're seeing more support more volume and then also how much is connected TV related advertising as a percent of total ignite advertising.
Thank you Michael Yeah, we're tremendously excited for the first time really in our company's history, we're able to compete head to head with TV.
We couldn't do that even five six years ago and today are getting to your second part of your question seems like it's the fastest growing part of our programmatic offering obviously, we're competing with great local television providers in our markets, who have owned and operated and as well as programmatic and we see a great.
Advantage, because we're not favoring anything we're focused on the audience and the results and we don't need to look at okay. How do we how are we managing our own cable inventory or our TV spots because we don't have it. So I think it's been very beneficial for us a big part of ignite, but in particular, Michael connected TV and now creating commercial.
Spots TV spots for our clients, we've really beefed up our creative service offering because obviously historically, we didn't need to create television spots and now we do we're starting to use artificial intelligence in that creation as well obviously creative is tremendously important in any marketing and advertising that we do but for.
For us the connected TV and producing you see responses is somewhat new I think as you noted for US ignite is so differentiated we've got this full funnel from reach with radio all the way now down to activation and the fact that we can marry this programmatic side of our our our ignite our digital advertising with a huge large at scale owned it.
Operator websites and mobile apps that give it incredibly valuable first party data, which gives us audio insights and allows us to audience target I think more effectively than anybody in our size markets really is the reason I think that our digital advertising not only in Q3 year to date, but for the last several years has outperformed the industry and that's why when you.
Look at digital overall being 52% of our revenue, which is two times the average in the industry and 57% of our profit. We're tremendously excited and I think connected TV will continue to grow and grow and you see more and more AD supported you've seen Netflix you see I don't know you may have heard that Amazon Prime is talking about introducing.
Advertising into their video platform, so, particularly in our size markets as more and more people cord cut and more and more streaming inventory opens up I cannot emphasize what a tremendous tailwind and opportunity for us at town square with connected TV, but that said, we're having tremendous success with social and.
Other targeting vehicles, including just standard display. So we're excited by connected television. It is the fastest growing part of programmatic currently it is for us as well we're tremendously excited about our digital advertising business overall, Michael So I'll turn it back to you.
Yeah, just one last question on the broadcast side I know that Nashville is a small component, which you mentioned that national has been down and it's been affecting you and I was just wondering some broadcasters have indicated that national advertising seems to be improving especially as they look into 2024. We're just wondering if you can kind of give us a tone of what you're seeing in terms.
A national in the fourth quarter, and then are you seeing pacings for national improve as you go into the first quarter.
Great question, Michael and I again, I appreciate you being with US. This morning, So just as a recap for everyone on the call.
Michael is asking about national Q1 National broadcast advertising was down 28% Q2 moderated to 21% moderated as generous that's obviously down quite a bit Q3 was still down negative 19%. It actually got a little bit worse in the quarter part of that is the AD tracking that we shared where the U S Air Tran.
And it was plus six in July plus one in August and flat in September.
So we saw the quarter.
That activity throughout the quarter to your question Michael about Q4.
We definitely see national getting better we see national getting better we see local getting better probably most importantly, we mentioned our customer appreciation sale, which the team did a tremendous job on 10% more orders that I mentioned in the prepared remarks as it relates to Q Q1 pacing, we don't spend.
A lot of time, usually talking about our pacing because we'd rather talk about the results versus what we expect to come because it can change quite a bit so I'm a little hesitant to share. This but since you asked I will tell you that at this point last year for Q1.
As it relates specifically to broadcast we've got about 2% more business booked for Q1, specifically for broadcast than this time last year and when you look on the broadcast decline we've experienced in Q3.
That's a material change so hopefully that holds but in our view that as a very very very positive sign for Q1. We're seeing also an uptick in Q1 on the digital advertising side too and you've probably heard from others, which you alluded to that.
To be pacing better for I think the industry, a large broadcast as well as digital advertising and we're seeing the same thing for Q4 as I shared earlier, we gave the guide which I think is net revenue pretty much in line with where we ended Q3 ex political so maybe a point or two below that but in.
General inline, but obviously excited for 2024 for all the reasons, we just talked about improved pacings and broadcast digital advertising bounce back year in the back half of the year for Tsi and what I. Just mentioned was broadcast having more in books with Q1 at this point to last year, which as you know if that holds that's a very positive.
Development, so like well hopefully that gives you some color for 2024 as we are.
And through the holidays here yeah.
Yep. Thanks, Bill that was perfect. That's all I have thank you.
Thank you again for dialing in Michael.
And at this time there are no further questions I'd like to turn the call back over to Bill for closing remarks.
Thank you operator I appreciate your help this morning I just wanted to give a shout out to all the town square it seem like the results we talk about the differentiation of the transformation of the culture is all the results of their hard work passion and commitment not only for town square, but quite honestly their communities and their clients and their audiences. So can't thank them enough and I appreciate everybody die.
This morning, we obviously look forward to updating you on our year end results in 2024, but we're also excited to share how Q1 is shaping up when we report at the beginning of March So wishing everybody a great Thanksgiving and thank you again for dialing in this morning take care.
This concludes today's conference call. Thank you for attending.
The House has ended this call goodbye.