CCO Q3 2017 Earnings Call

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the 2017 Third Quarter Earnings Conference Call for iHeartMedia and Clear Channel Outdoor Holdings, Incorporated. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I'll now turn the conference over to your host, Eileen Mclaughlin, Vice President of Investor Relations. Please go ahead.

Eileen Mclaughlin: Good morning and thank you for joining our third quarter 2017 earnings call. On the call today are Rich Bressler, President, Chief Operating Officer and Chief Financial Officer; and Brian Coleman, Senior Vice President and Treasurer. We'll provide an overview of the third quarter of 2017 financial and operating performances of iHeartMedia, Inc., and its subsidiaries, iHeartMedia Capital I, LLC, iHeart Communications, Inc., Clear Channel Outdoor Holdings, Inc. and Clear Channel International, B.V. For purposes of this call, when we describe the financial and operating performance of iHeartMedia Inc., that also describes the performance of its subsidiaries, iHeartMedia Capital I, LLC, iHeart Communications, Inc., and Clear Channel Outdoor Holdings, Inc. After an introduction and a review of the quarter, we'll open up the line for questions. Before we begin, I'd like to remind everyone that this conference call includes forward-looking statements. These statements include management's expectations, beliefs and projections about performance and represents management's current beliefs. There can be no assurance that management's expectations, beliefs or projections will be achieved or that the actual results will not differ from expectations. Please review the statements of risks contained in our earnings press releases and filings with the SEC. Pacing data will also be mentioned during the call. For those of you not familiar with pacing data, it reflects the orders booked at a specific date versus the comparable date in the prior period and may or may not reflect the actual revenue growth rate at the end of the period. During today's call, we will provide certain performance measures that do not conform to generally accepted accounting principles. We provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases and the earnings conference call presentation, which can be found on the Investors section of our website, iheartmedia.com and clearchanneloutdoor.com. Please note that our two earnings releases and the slide presentation are available on our website, www.iheartmedia.com and www.clearchanneloutdoor.com, and are integral to our earnings conference call. They provide a detailed breakdown of foreign exchange and non-cash compensation expense items as well as segment revenues, operating income and OIBDAN, among other important information. For that reason, we ask that you view each slide as Rich comments on it. Also, please note that the information provided on this call speaks only to management's views as of today, November 8, and may no longer be accurate at the time of a replay. With that, I will now turn the call over to Rich Bressler.

Richard Bressler: Thank you, Eileen, and good morning, everyone. Thanks for joining us for our third quarter earnings conference call. Our consolidated revenues declined in the quarter. However, revenues were flat after adjusting for the sales certain outdoor businesses and the impact of foreign exchange. We generated revenue growth of both the iHeartMedia and International Outdoor segments offset by decline in Americas outdoor. To date, the iHeartMedia segment has delivered 18 consecutive quarters of year-over-year revenue growth. Consolidated operating income decline this quarter, due in large part to a one-time expense benefit in 2016 as well as the impact of the sale of certain Outdoor business. Before discussing our third quarter financial performance in detail, let me review with you the fundamentals that drive our businesses and highlight our new initiatives. So first, the recent hurricanes in Texas, Florida and Puerto Rico, as well as the earthquake in Mexico and wildfires in California affected the communities that we reserve as well as our employees. We are enormously proud of the important work that our teams did in the impacted areas. When people desperately needed help, our people very literally voices for their communities. They slept in their studios and often put their own safety second to there mission of helping your listeners, providing vital information, encouragement and close personal connections and even coordinating life-saving rescues, while the item sales in their family for personally dealing with the devastation. And now they continue to do all they can to help those people on local businesses we cover from these disasters. We expressed our appreciation at our most recent [indiscernible] event; the iHeartRadio Fiesta Latina, where we recognized the communities impacted by disaster and honored the first responders in support of their communities in times of need. Now on to our iHeartMedia segment. iHeartMedia is a national leader not only in radio and audio, but in video overall. We continue to be the undisputed leader in audience reach, for example even with the heavy focus on the top 50 markets by Entercom following their CBS radio acquisition. In those top 50 markets, we still reached 93% of listeners 12 plus and they reached only 67% according to Nielsen. In addition, we are seven times their size in digital reach. iHeartMedia is built on the scale and strength about more than 850 broadcast radio stations and our additional platforms built off that base creating a powerful national network with unparalleled local reach. Last week, we announced our plans to exchange our Richmond and Chattanooga markets for Entercom and CBS Radio Stations in Boston and Seattle, two of the few markets where we did not have a full complement of stations. The exchange will allow us to expand our presence in these strategic markets, further strengthening our position in Boston and Seattle. Our broadcast radio assets alone reached over a quarter billion consumers monthly more than Google and Facebook in the U.S. One of the keys are overall success is our industry best personals who are our listeners loyal and trusty companions as evidenced by the commitment and support they provided their audience is during the recent disasters. Highlighting their continuing bond with their listeners, [the code is ratings] for Bobby Bones, Breakfast Club, Big Boy, Steve Harvey, Sean Hannity and Rush Limbaugh who are all of double-digits compared to the prior year. In addition, Sean Hannity, Bobby Bones and Bill Handel were inducting to the National Radio Hall of Fame last week, and iHeartMedia’s The Bobby Bones show recently won the CMA Award in the National Broadcast Personality of the Year category. With their connections to their listeners, our talent is a powerful influencer network that connects the audiences and build strong engagement relationships that our advertisers and marking partners can use. We are also continuing our transformation into a company fueled by data. The recent earnings reports from the big digital players those very clearly while removing as fast as we can to transform our advertising to be data lead, so offerings more closely resembled both the what and how of traditional digital offerings. With the industry leading data and analytics capabilities of SmartAudio, a product of our groundbreaking Sound Point programmatic platform, we're able to combine the massive scale of our broadcast radio reach with the power of digital data and informed audience targeting. With SmartAudio, we can create the advertising solutions that advertisers expect today and with Sound Point we are changing how our ad inventory is bought and sold. By continually reinventing how we do business with our partners, we are becoming more interracial to today’s digital centric advertising world offering data rich ad buying solutions including attribution there were once available only for digital only products. That said, we believe radio is still undermonetized especially since radio provides a superior ROI for advertisers all as measured by Nielsen with whom we recently signed a multi-year renewal deal for audience measurement and key analytics. However, many advertisers and marketers still view radio as traditional media, so we are continuing to educate them about broadcast radio leadership as Americas number one mass market reach medium reaching 93% of people over 18 years old every week. By comparison, the weekly reach of TV and smartphones is 89% and 83% respectively. Millennials are the toughest demographic groups for advertisers and marketers to engage and radio reaches 92% millennials aged 18 to 34 every week. This reach is greater than smartphones at 90% and TV at 80% and for teens ages 12 to 17 a leading indicator for the future of any product radio's reach is even higher at 95% monthly basically unchanged over the past 40 years, with live TV at 86%. Radio also continues to be the most mobile of mass reach media. About two-thirds of broadcast radio use is out-of-home, while 60% of smartphone use is in the home. With people spending more and more time out-of-home, broadcast radios unmatched out-of-home reach enhances its value as the last point of contact before shopping. In addition to radios enduring engagement reach, new technologies and devices that observing the decline traditional media have instead delivered positive benefits radio, simply put instead of being heard by these new platforms, we've been helped by them and they provide you have more listening to our content, and don't forget that there are 1 billion AM/FM radios in the United States today, compared to just about 240 million smartphones, so broadcast radio still an amazingly strong device platform for us. Beyond our presence across AM/FM, HD digital and satellite radio, television, online, live events, mobile, social media, and iHeartRadio mobile app, we continue to seek at emerging platforms to deliver our content across multiple platforms, including podcast, voice control devices, enhanced auto dashes, wearables, smartphones and gaming consoles. That's why we continue to actively look for partners that can help us extend the iHeartMedia brand to multiple channels. Just last month, we announced that iHeartMedia and Fox TV, a teaming up for a new music competition series called “The Four: Battle for Stardom”. As part of the grand prize, the winner will join iHeartMedia’s coveted “On the Verge” artist development program providing airplay for the new talent of course iHeartMedia radio stations nationwide. In the past, On the Verge helped launch the careers of Sam Smith, Fifth Harmony, Nick Jonas and many other artists. Our iHeartRadio app continues to reach user milestones at a rate faster than any other digital music service, now totally more than a 100 million registered users, up double-digits over the prior year quarter. Cumulative downloads and upgrades of the iHeartRadio app are nearly 1.6 billion in the quarter. We also continue building out our podcasting platform, a new area of growth and innovation for us. A year into our podcast strategy, iHeartMedia has already become one of the largest podcast networks in the space and is the standalone podcast leader among commercial broadcast radio companies. As you may have read recently, Nielsen reports that 50% of U.S. households totaling about 60 million people are fans of podcast. Although the listening to podcasts in general still small, we like them because they extend the close relationships between our talent and fans as well as our advertising and marketing partners. Podcast also persuade to [indiscernible] the depth of passion, with the mass reach of radio, something only iHeartMedia can deliver. In the quarter, iHeartRadio launched Bobby Bones national podcast network, a portfolio of seven separate podcast focus on the national music and lifestyle themes. Bobby’s own podcast “Bobby Cast” hit of the network launch with behind-the-scenes interview with Blake Shelton and a first look at his new video "I'll Name The Dogs" presented by Nissan. And in September, we're at NPRs biggest podcast iHeartRadio, including Fresh Air, How I Built This, Up First, Planet Money and Radiolab, and partnering on podcast with Disney and [indiscernible]. Altogether, we have increased the catalog of podcast available on iHeartRadio almost 10,000 requests 18 different categories including virtually all from the top 200 podcast by audiences. And listening is also increasing for our established podcast with significant quarter-over-quarter growth and listening from The Breakfast Club, Sean Hannity and FOX Sports Radio. Also in the quarter, we continue to expand our presence on voice control systems, through additional integrations with Amazon, Alexa and Google Assistant, something we start nearly two years ago to further expand the reach of iHeartRadio. Our strong positioning within the Alexa enabled device family already integration with Amazon Echo, Amazon Fire Tablets and Amazon Fire TV. In the third quarter, iHeartRadio launched an additional Alexa enabled devices such as Amazon's new Echo Plus, Spot and Show as well as on various third-party OEM devices. iHeartRadio firstly we support for Google Assistant, beginning of 2017 from Google Home and in the third quarter, iHeartRadio became available on Google Home Mini, Google Home Max and Google Pixel bucks. In iHeartRadio, which was the first partners on the Apple Watch is now integrated on the Android smartwatch. Another exciting example of how our personalities reach their listeners of course a variety of platforms is iHeartRadio after Elvis. With our own Elvis Duran, the nationally syndicated radio and digital personality who hosts the top rated Elvis Duran, the Morning Show on C100 here in New York. It’s a new entertainment show reaching Elvis every afternoon on watch. Facebook’s new video hub ecosystem that provides exclusive video content from major partners like iHeartMedia. Everyday, Elvis leads off-the-cuff conversations with popular celebrities and iHeartRadio talent from around the country about the latest pop culture, entertainment news and the hottest trends. Moving to our signature live events, they are the key to our sales strategy giving us tremendous promotion, brand building and activation opportunities for advertising and marketing partners as well as many of our most critical audience promotions with our broadcast station in iHeartRadio. In fact, we are the leading creator of live events of all the audio players with 20,000 events annually and unparalleled national events. In September, we hosted our seventh annual two-day iHeartRadio music festival celebrating the best in music with today’s top artist from all [indiscernible] sharing the same stage hosted by Ryan Seacrest. This year's line up featured Coldplay, P!NK, The Weekend, Miley Cyrus, Lorde, Kings of Leon, Chris Stapleton, DJ Khaled, Thirty Seconds to Mars and more. The event also included the iHeartRadio Daytime Village presented by Capital One which featured performances by new and emerging artists like Migos, Halsey, French Montana and Bleachers. The CW Network exclusively live-streamed both days of performances and will air it as a two-night TV special later this month. Just last week, the fourth annual iHeartRadio Fiesta Latina celebrated the best in light music in Miami. Before our event co-hosted by our own Enrique Santos aired live on iHeartMedia Spanish-Pop, Tropical, regional Mexican and Spanish-Adult Hit radio stations nationwide and on Telemundo TV. Both events highlighted our extensive footprint on social media giving listeners the opportunity to fully engage with these experiences. The iHeartRadio music festival delivered 16% more social impressions than last year with over 12 billion social impressions throughout the weekend and it was trending on Twitter both in the U.S. and world-wide. And the iHeartRadio Fiesta Latina generate 32% more social impressions on last year's event with almost 5 billion social impressions. The value of our live events and sponsorship vehicle is further underscored by the return of the iHeartRadio Jingle Ball Tour presented by Capital One which has turned out to be the holiday seasons most anticipated special event. For the third straight year, Capital One will be the national presenting sponsor of the multi-city iHeartRadio Jingle Ball Tour headlined by some of the year's biggest recording artists, in addition to the sponsorship role they played at the iHeartRadio Music Festival Daytime Village. And another example of our multi-platform collaboration with advertising partners, iHeartRadio Macy's partnered for the sixth straight year of the Macy's iHeartRadio Rising Star contest with the winner performing at the iHeartRadio Music Festival. This year's Rising Star winner James Maslow wild the crowd at the iHeartRadio Music Festival and will be part of the line up at Jingle Ball events. Macy's iHeartRadio Rising Star campaign was featured on hundreds of iHeartRadio broadcast radio stations as well as the digital, social and events platform. The newest addition to our line up of world-class iHeartRadio event is iHeartRadio ALTer EGO celebrating the best of alternative rock with many of the John Lewis biggest superstars. The shows take place on January 19, in Los Angeles and features Mumford & Sons, Cage the Elephant and Beck among others. And the contra will be aired live across 60 Alternative and Rock broadcast radio stations as well as on iHeartRadio nationwide. Moving to Outdoor. As more people are spending an increasing amount of time out-of-home around the world, we are seeing growing advantages for our Americas Outdoor and International Outdoor businesses as well as the iHeartMedia segment we just discussed. And Magna has now projected that digital out-of-home be the fastest growing medium over the next five years. To make sure, we make the most of this opportunity. We are continuing to build out our digital footprint providing the flexibility and creativity to our advertising and marketing partners. During the quarter, we installed more than 450 new digital displays in our North American and International Outdoor markets. As of September 30, that gives us a total of 1,180 digital billboards in Americas Outdoor markets and more than 13,300 digital displays across International Outdoor markets. At the same time, we are transforming our buying process to better monetize our out-of-home inventory in both the U.S. and International. Building on our experience in iHeartMedia, we are continuing to enhance our innovative data analytics and programmatic automated air buying offerings extending our leadership to maximize the value of our inventory worldwide. And Americans Outdoor for example, we continue to expand and enhance RADAR’s, out-of-home advanced advertising platform. RADAR’s research, high-quality, audience driven data and newly upgraded attribution analytics tools enable brands and agencies to more accurately plan and buy our inventory and both reach their target audiences and measured the impact of their campaigns. By leveraging our aggregated and anonymized mobile location data, we can identify audiences that can see our printed and digital billboards more precisely than ever, providing our advertising and marketing partners with the insights that they want. Since we launched RADAR more than a year-ago, a growing number of national local brands and verticals like retail, entertainment, travel have used the tool to generate double and triple-digit increases in their business campaigns including increased visits among the audience target. In fact Americas Outdoor won a North American Smarties award, the location-based services or targeting first campaign called 24 Hour Fitness, out-of-home advertising and mobile work better together, which used mobile location capabilities to enhance out-of-home consumer attribution for our 24 Hour Fitness. During the quarter, we continued to enhance our nationwide programmatic platform by partnering with Adelphic and Vistar to further integrating buying our inventory into broader programmatic media marketplaces providing marketers with the same dashboards that brands used by other media programmatic. And signaling the next level of innovation, we joined alphabets ways to launch informational campaign in September about a joint study showing brands and agencies, how out-of-home and mobile advertising work together, they amplify each other's impact on the road to purchase. At International Outdoor, digital technology are totally transforming our business model and strategic focus. Now we've launched automated buying in the UK and Belgium is now simpler than ever for brands and agencies to plan, buy, and optimize our out-of-home media buyers. For example, they're now able to place ads to the exact days and times they want to reach their targeted audiences. I'm pleased to report that more and more advertising partners are capitalizing on the flexibility is automated ad-buying offerings. Also in the quarter, we are very focused on building on our digital presence in number of key markets including the UK, France and Spain among others. We recently announced a new deal with Amscreen to extend their digital displays into 16 of our International Outdoor country markets including France, Spain and the Nordic nation. This will be an addition to the 2,500 plus Amscreen displays in UK with total digital out-of-home revenue now represents over 50% of all of our Clear Channel UK revenues. In Spain, our new digital street furniture network in Madrid is attracting both existing customers such as Coca-Cola and Samsung as well as new advertisers including Amazon and Netflix. And we expand our reach in the Nordic countries with the installation in Finland of the region's largest LCD digital out-of-home swing. Over time, we believe that our technology driven strategy reinforces our industry leadership and will offer the flexibility, creativity and measurability, our advertising and marketing partners need to make our out-of-home inventory to their campaigns. And now it will enable us to compete more broadly across the evolving media landscape. In other outdoor business during the quarter, Americas Outdoor finalizes the interest in the Clear Channel Canada joint venture, which partnered branded cities network. We believe that we are continuing to position both our iHeartMedia and Clear Channel Outdoor businesses with a sustainable success into the future. Now let's turn to Slide 4 and review our key financial results. Before we begin, I'd like to remind you that as part of our GAAP results discussion, I will also talk about our results after adjusting for foreign exchange and excluding the impact of the Outdoor businesses we sold. In 2016, we sold our International Outdoor business in Australia. As I just noted this quarter result our Americas Outdoor business in Canada. We believe these adjustments improves the comparability of our results to the prior year. I'll refer to these results as adjusted revenues and adjusted OIBDAN, and I'll talk about both direct operating and SG&A expenses as expenses. As I mentioned in my introductory remarks, consolidated revenues decreased 1.9%. However, adjusted consolidated revenue was flat in the quarter with the increase at iHeartMedia and International Outdoor offset by the decline in Americas Outdoor. Operating income decreased 23.7% due primarily to $33.8 million prior year benefit resulting from the renegotiation of certain contracts and the $12.1 million loss on the sale of our Canadian Outdoor market this quarter. Adjusted OIBDAN declined 12.9%. Excluding the one-time benefit of $33.8 million in 2016, adjusted OIBDAN is down 5.6% I'll provide some additional detail on these results in the following review of our business segment results, starting with iHeartMedia on Slide 5. In the third quarter, iHeartMedia's reported revenues were up slightly. As I mentioned earlier, iHeartMedia’s reported revenues have increased in each of the last 18 consecutive quarters. The growth in revenues is attributed to increases in national and digital revenue, partially offset by lower, local and political revenue. National revenue was up due to an increase in national trade and barter, largely from the iHeartRadio Music Festival, as well as high spot revenues including programmatic buying. This growth was partially offset by a low national traffic and weather revenue. Local revenue declined as a result of lower spot revenue, partially offset by an increase in local trade and barter. And once again, we outperformed the radio industry in revenue as measured by Miller Kaplan. We believe our continued outperformance is driven the scale and strength of our broadcast radio stations and our industry-leading on-air personalities, combined with the investments we have made in developing our data and analytics capabilities that deliver the kind of advertising solutions at our advertising and marketing partners expected to that. Expenses were up 11.1% the quarter as compared to last year's third quarter, primarily driven by a $33.8 million prior year benefit resulting from the renegotiation of certain contracts. Additionally, trade and barter increased in the quarter. Due to these higher expenses, operating income declined 16.8%, and adjusted OIBDAN was down 14.7%. As we said earlier this year, we had anticipated a more robust advertising market in 2017 and made investments in future growth inline with how we thought the ad market and our revenue would be growing. Given the slower-than-expected advertising market, we’ve been actively managing our cost base this year. Excluding the one-time benefit in 2016 I covered earlier, OIBDAN is down 5.8% this quarter, an improvement of the 10.5% decline in the first half of the year. Now let's review our third quarter pacings for 2017, which include all of our markets. As you've heard me say before, these pacing are just a snapshot in time and certainly don't include everything we do as a Company. iHeartMedia's fourth quarter pacings through the end of last week are up 0.2%, excluding political. Now on to Slide 6, Americas Outdoor financials, Americas Outdoor reported revenues declined 2% in the third quarter, due in large part to the sale of our Canadian Outdoor business. Adjusted revenues were down 1%, due to prior year’s revenues in Brazil, benefiting from the summer Olympics. This was partially offset by increased digital revenue from new and existing airport contracts. Reported expenses decreased 0.6% and adjusted expenses increase 1.4% in the quarter. The increase in expenses is due to higher site lease expenses, partially offset by lower variable expenses through the Olympics in Brazil in 2016. Operating income was down 6.4% and our adjusted OIBDAN declined 4.6%. Our fourth quarter pacings, which have been adjusted for foreign exchange in the sale of our outdoor business in Canada, are down 1.1%. Again as a reminder, pacing data reflects a point in time. Turning to Slide 7 and our International Outdoor financials, in the quarter, our reported revenues were down 5.1% as a result of selling our businesses in Australia. Excluding the impact of the sales of businesses and foreign exchange rate fluctuations, adjusted revenues grew 2.6%. The increase in adjusted revenues is due primarily to growth across several markets, including China, Spain, Switzerland, and the UK mainly from new contracts in digital expansion. Expenses during the quarter were down just under 1% on a reported basis and up 5.7% on an adjusted basis. The increase in expenses is due primarily with the higher site lease expenses in countries experiencing revenue growth as well as an increase in bad debt expense in employee related expenses. Operating income decreased 59.4% in the quarter, while adjusted OIBDAN declined 14.6%. Our fourth quarter pacings for International Outdoor were down 3.8% from last week. Once again, pacings are a point-in-time metric. The pacing data has been adjusted to exclude the impact of the 2016 sales of our businesses in Australia as well as the foreign exchange rate fluctuations. Before we go on to the rest of the slides, I would like to make a few comments on CCIBV's results. For the third quarter, CCIBV's consolidated revenue totaled to $257.2 million, a $23.6 million decline from the prior year. Excluding the impact of movements in foreign exchange rates of $9.3 million and $35.2 million decline resulting from the sale of our Australian business in 2016, CCIBV revenues increased $2.3 million during the third quarter. CCIBV's operating loss in the quarter was $22.6 million, as compared to $13.5 million in the prior year's quarter. On to Slide 8. This slide highlights the items affecting comparability of our results. I won't read through all the numbers on this slide, but as you can see, our International Outdoor operations were affected by foreign exchange rate fluctuations of about 3% both revenues and expenses in the quarter. And the Outdoor results were impacted by the sale of the businesses in Australia in 2016 and the sale of our business in Canada this quarter. Lastly, as expected, political revenues were down in the quarter at both iHeartMedia and Katz Media. Turning to Slide 9. Capital expenditures totaled $184.9 million in the nine months ended September 30, including $48.3 million in the third quarter. The iHeartMedia segment's capital expenditures were primarily for IT infrastructure to reflecting our focus on data, programmatic and digital. At Americas Outdoor, the majority of capital expenditures related to the construction of new advertising structures such as digital displays. And Internationals Outdoor capital expenditures were mainly the street furniture and transit advertising structures including digital displays. For the full-year we expect capital expenditures to be in the range of $275 million to $300 million. Moving to debt on Slide 10. As of September 30, iHeartMedia's debt was $20.6 billion, basically flat with year-end 2016. iHeartMedia's consolidated weighted average cost of debt was 8.7% as of September 30. Cash interest expense through the first nine months of the year was $1.4 billion, and we expect cash interest expense through total $1.8 billion in 2017, including $344.6 million in the fourth quarter. Now we'll turn to our balance sheet information and the debt ratios on Slide 11. iHeartMedia's consolidated cash totaled approximately $286.4 million as of September 30. Our secured leverage ratio was 7.8 times with total leverage at 12.7 times. Clear Channel Outdoor ended the quarter with $222.4 million in cash, with its senior leverage ratio of 4.6 times and it’s consolidated leverage ratio at 9.0 times. The largest use of cash for iHeartMedia in the nine months ended September 30 was for interest payments, which totaled $1.4 million. During the nine months ended September 30, Clear Channel Outdoor used $270.1 million in cash for interest and paid dividends totaling $282.5 million, including $254 million received by iHeartMedia. Before taking your questions, I want to thank you again for joining us this morning. We are building the true 21st century multi-platform media and entertainment company that we believe we will continue to compete successfully in a world increasingly driven by data. In our iHeartMedia segment we are investing to widen the gap between us in our traditional competitors across multiple platforms and devices and to better compete against very strong digital players and we continue to work to bring new advertising revenue into our sector benefiting the entire radio industry. Our assets are significantly on monetize especially in light of radio's enduring reach strong engagement with all audiences significant ROI and the new platforms building in iHeartMedia. As I said we are continuing to educate our advertising and marketing partners about everything we can offer them. As we do we’ll keep expanding the platforms and devices and which we deliver industry leading content to be where ever people want to find us, including AM/FM, HD digital and satellite radio, television, online, live events, mobile, social media, and the iHeartRadio mobile app as well as podcast, voice control devices, enhanced audio dashes, tablets, wearable, smartphones and gaming consoles. Data will continue to be everywhere our consumers and our advertising marketing point want us today. And our Outdoor businesses we both expanding our digital reach with it’s flexibility and creativity as well as developing programmatic solutions few buy the best available data from our partners. And our iHeartMedia and Outdoor businesses we continue to build for the future while maximizing our media opportunity. Before we open the line for questions, I would like to remind you that as we have disclosed in our SEC filings the Notes Exchange Offers and term loan offers at iHeart commands in March of 2017 continue to be open and as has also been disclosed iHeart’s engaged in discussions with certain lenders regard a potential global structuring of it’s that and such discussions remain on go. For us to see regulations we are unable to comment on these transactions and therefore will not be able to answer any questions related to our capital structure and as that you limit your questions are in the Q&A portion of this call the questions about our operations. If you have any questions regarding our capital structure please refer to be disclosure made in our filing with the SEC. Now let’s open the line for questions.

Operator: [Operator Instructions] Your first question comes from the line of David Farber from Credit Suisse. Please go ahead.

David Farber: Good morning, guys. How are you?

Richard Bressler: Good morning, David.

David Farber: Good morning. I had a couple questions, just first on the topline, it continues to outperform some of the competitors, and we heard you talk about that in the prepared remarks. I guess I would be curious where you're seeing that improvement perhaps you can talk about the digital revenues and the year-over-year performance there that would be helpful and then I had some follow-ups. Thanks.

Richard Bressler: Sure. Appreciate that one. I'm not going to talk about digitally specifically because again that’s not – you heard me says before that’s not the way we think about our company. And just to take the step back and maybe reiterate as I said in the prepared remarks, with the [indiscernible] market continues to be very competitive, continues to be structured and we like just as a backdrop and also advertising continues to replace closer and closer and closer to the airing day. I think we are doing and the team is doing really a great job. We continue to outperform, I think if you look year-to-date the industry is flat – were down over 2% and we are delayed by couple hundred basis points, that's great. From our standpoint and this also gets to the investments that we're making as a company and we use this word 21 Century capabilities multi-platform. And that's really what sets us apart and if you look at all the earnings for the big digital players they have been out recently, I think in terms of reinforces why we've got to move as fast as we can and continue to transform, which we started doing, which is why you're seeing us outperform the industry and have 18 consecutive revenue growth quarter. Transform our advertising via data led and automated, so we're offering more closely resembles both what and how traditional offering are out there and also the way advertisers and advertising agencies are all of our partners expect our staff to upgrade. You've heard me talk a little bit about this in the past. We have industry leading capabilities with SmartAudio. We’ve got groundbreaking Sound Point programmatic platform and we're able to provide the massive scale that we have over 271 million users that we reach on a monthly basis able to provide their massive scale in broadcast radio with the power of digital and informed audio targeting. And that’s – we’ve talked about SmartAudio that we can create ad solution to the advertiser expect today and with SoundPoint were changing the way of advertising inventories important. So a lot of words, but it just says we have to continue to reinvent ourselves and I think all the data point out there both in terms of our results and the reporting results from a lot of good digital players reinforce and confirm that the direction that we're taking this company. And that’s giving us the outperformance on the topline growth.

David Farber: Understood. Okay. On the cost side, excluding the contract adjustments OpEx continues to move higher, I guess I'd be curious to hear what’s driving that and what your expectations are for OpEx for the balance of the year? And then I had one final question for Brian and that's it. Thanks.

Richard Bressler: Great. So look I’ll tell you couple things. If you exclude the one-time benefit we had in 2016, expenses were up slightly due to our spending on everything I just articulate really our digital initiatives. Again, I pointed back if you go back to four or five years ago when we spent and we have – period of time a number of quarters our earnings were down and then I think that spending on the return on that investment go through and again that’s why I pointed to backdrop. We have done historically Bob and myself and the rest of the management team from a credibility standpoint and point you today are not just about that reference points, but against what the big digital players are doing, and I think confirming we're in the right direction, I think it's evidenced by our revenue. But the one comment I would make on the margins, what I did say in the beginning of the year as we did expect the advertising environment to pick up, we expected more robust environment that has still not happened and still continues to be our more sluggish than we would like. And what I've said is that we're going to continue to make margin improvement since the first quarter. And I think if you look at the margins in the first quarter of 2017 versus the second quarter of 2017 versus the third quarter of 2017, our margins in terms compared to where they were last year, quarter-over-quarter, quarter-over-quarter, quarter-over-quarter we made very significant improvement and we continue to make that improvement as we go into the fourth quarter of this year. So Brian – you had a question for Brian?

David Farber: Yes. I just wanted to know what the current liquidity position is sitting here in November, and that’s it for me. Thanks.

Brian Coleman: Yes. I'm not sure we can comment beyond the third quarter, David. So I think we've got the third quarter information in front of us. There hasn’t been any material things that it wouldn’t be public. But I don't think I can give you cash balances as of the current time. So unfortunately, I can't be very responsive to that question.

David Farber: Okay. Just talk about the end of the third quarter then perhaps? And then that's it.

Brian Coleman: The end of the third quarter, it's all in our disclosures. Is there something specific that you're asking about?

David Farber: Just between the ABL and the cash, I guess I was trying to make sure I understood the ABL line in particular, as well as what kind of cash [indiscernible] in the system? Thanks.

Brian Coleman: Yes. We had cash of about $286.4 million for our financial statements at the end of the quarter and had $224 million that was at outdoor and $64 million of that was at iHeart. The ABL was I think at $360 million to $365 million drawn, so it had some availability remaining under that.

Richard Bressler: And I think that’s all disclosed within the…

David Farber: Thank you.

Operator: Your next question comes from the line of Stefan Beson from Wells Fargo. Please go ahead.

Stefan Beson: Good Morning. I had a couple questions on Outdoor. First, Americas seem to decelerate during the quarter. Could you give us a little bit of color as to what happen as the quarter went on maybe local versus national?

Richard Bressler: If you setback to the question, if you tell that’s decelerating, I'm not sure what you comparing it to, again [indiscernible] in terms of pacings at a given point in time, I said it three times in my prepared remarks and I’ll repeat it again, it’s something that we've continue to give out because we've historically give it out. But if you go back to the comment – just a question – just answering the previous question, about advertising being placed closer and closer that was a statement that went both for our audio business at iHeartRadio business along with our Outdoor business. So again there's no – so that’s referenced, it's hard to really comment on. In terms of the business, overall the local business was a bit softer with the national business strengthening this quarter. We feel great about the topline fundamentals which are promising. We’re doing more and more with advertisers on audio insights. We've done a great job and continuing to improve our speed of execution here in the U.S., with Scott Wells and Bob. The team here has really done outstanding job by picking up the pace there. So the American Outdoor remain encouraged by all of the stuff, our strategic ongoing investments, speed to market, version technologies, taking more advantage of mobile data analytics, so we feel very good about that. And I comment that again in my opening remarks, about RADAR. Our data analytics tool that we launched in 2016 early, and this fall we launched the industry’s first private marketplace programmatic out-of-home buying solution and we also expanded RADAR in the second quarter of this year with the addition of two best location intelligence and attribution solution. So again, a lot of fancy words, but what it really means is that we can see evolving change not just the iHeart part of the business, but also the U.S. and international part of the outdoor business to keep up with what our advertising and marketing partners demand and expect of us.

Stefan Beson: Great. And then was there any impact from any of the storms or fires that in California regarding revenue EBITDA or possibly repairs?

Richard Bressler: No significant impact, I mean I do want to reiterate again just how proud Bob and myself and the rest of management team, the important work that all our teams did across the company and the impacted areas including lifesaving, rescues, probably worth noted again. We had our Fiesta Latina this last weekendin Miami at the American Airlines Arena and we paid tribute to the first responders and those of you that have got a chance to see it, we really in between the chat, thanks to people that really made a difference in the first responders, in addition to our employees, but no we awards of anything significant. We have a small part of our business in several airports in the Caribbean on the Outdoor side. There were substantial devastation and everybody on the calls [indiscernible]. And so given the approximately guidance to cover from the extensive damage just a little bit day lives, our business in those locations won't be back to normal currently some time next year, but from a financial standpoint it's not material to the company.

Stefan Beson: Thank you so much.

Operator: Your next question comes from the line of Avi Steiner from JPMorgan. Please go ahead.

Avi Steiner: Thank you. Just a quick follow-up to last question, on the radio side, any impact in either Houston and/or Miami last ad-dollars?

Richard Bressler: No nothing significant, Avi, obviously, again our reiterated about our teams, which I want to continue emphasizing the great job and we are proud of them. From a financial standpoint, we saw some pick up in Houston quite frankly because of the devastation has chose the number of close, our people left in that market obviously have to replace cars and homes and home improvements. And things like Southern Florida they had enough time to evacuate, so there was really no real material impact out there and we all know what happened with the storm. It did not hit, but no – overall no real significant impacts for the Company's financial.

Avi Steiner: Okay. And then on the liquidity front, working capital has been negative, the mix that I look at it really first nine months of the year. Any reasons that won’t reverse in the fourth quarter and help you generate positive free cash flow in the quarter?

Richard Bressler: Well, look I don't think we want to provide guidance to any operating metric in the fourth quarter, I mean historically you can see what has happened with respect to working capital and it has been generated, but don't want to make any speculative assumption on fourth quarter of this year Avi.

Avi Steiner: Okay. Fair enough. And just sticking on the liquidity theme. If I assume that the ABL gets extended or otherwise turned now and you continue to chip away the 10s, in your estimation, the company still has to raise incremental liquidity to make it through the first quarter of next year.

Brian Coleman: I don't know Avi. It sounds a whole lot like a cash flow forecast for the first quarter. I do think and as we disclose the advance negotiations on the ABL, so I think we’ll continue to work through that, you understand historically how cash flow works in the fourth quarter. You have chipped away a lot of 10 there's only a little more than 50 in January. So I don't want to get into a backward forecast to put free cash flow between now and then, it looks like I'll let you make those assumptions on your model based on the information that’s out there.

Avi Steiner: Okay. Fair enough. Maybe another one on liquidity. I’ll try to avoid forecast, but I think the company wanted to feel with respect to the move – broader media, has there been any consideration given to trying – and trying to unlock that value maybe to help liquidity in the near-term or is it fair here to say you're maybe focused elsewhere and not on that.

Brian Coleman: Yes. I think we're going to be three year, Avi because I don’t want to speculate on potential transactions using our unrestricted subsidiaries. You’ve seen us [indiscernible] exchange transactions, but forward looking what we may or may not do is, is not something I want to speculate on the call. So apologies, [indiscernible] giving the answer that I can.

Avi Steiner: Understood. And maybe I'll try this quoting capital structure per say. Would it be possible I'm guessing no, but I'll try to update us on sponsor’s current debt holding?

Brian Coleman: That’s provided publicly when we required to provide it and we have to obtain that from the sponsors themselves. So I don't think we provide interim updates because we don't have them.

Richard Bressler: I mean Avi that’s related question for the sponsors. End of Q&A

Richard Bressler: I really thank everybody. Appreciate everybody for the time. Appreciate the questions. And our team with Eileen and Brian around to answer any follow ups. Thank you everybody.

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