Lewis W. Dickey - Chairman, Chief Executive Officer and President Joseph Patrick Hannan - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer.

David Bank - RBC Capital Markets, LLC, Research Division James M. Marsh - Piper Jaffray Companies, Research Division Avi Steiner - JP Morgan Chase & Co, Research Division Michael A. Kupinski - Noble Financial Group, Inc., Research Division Lance W. Vitanza - CRT Capital Group LLC, Research Division Andrew DeGasperi - Macquarie Research Marla S.

Backer - Ascendiant Capital Markets LLC, Research Division.

Hello, and welcome to the Cumulus Media quarterly earnings release conference call. Please note that certain statements in today's press release and discussed on this call may constitute forward-looking statements under federal security laws.

These statements are based on management's current assessments and assumptions and are subject to a number of risks and uncertainties. Actual results may differ materially from the results expressed or implied in the forward-looking statements due to the various risks and uncertainties or other factors. I would now like to introduce Mr.

Lew Dickey, Chairman and CEO of Cumulus Media. Sir, you may proceed..

Thank you, operator, and good morning, everyone. We appreciate you taking the time today to participate in our call to discuss our first quarter results. And joining me today is our Chief Financial Officer, JP Hannan. Q1 was marked by management's strong focus on the successful integration of WestwoodOne.

After closing shortly before the holidays, we quickly set out to assimilate the personnel, all of the profitable third-party producers and more than 6,000 affiliates, while simultaneously integrating a number of enterprise systems and then as well as integrating the functional areas, including content production, marketing, distribution, sales and of course, the financial systems.

Additionally, we terminated several third-party agreements, which generated revenue without profits, as we begin to -- as we begin the process to rationalize our product line in order to improve contribution margins for the network. The integration has gone extremely well and we now expect it to be complete by the end of Q1 next year.

Originally, when we bought the business, we said it would be 2 full years. So we're about 3 quarters ahead of schedule on that. And moreover, the roughly $41 million of synergies that we announced, we expect to exceed that now by 5% to 10% and do so by the end of Q1 in 2015.

Now as you recall, we guided during our fourth quarter to expect flat revenue on a year-over-year basis. The quarter was marked by solid execution across our local, national, network and digital sales channels, where we, in fact, took share in each of them.

In fact, we finished Q1 ahead of guidance and pro forma revenue was up about 2.9%, which includes the effects of the comparison of the Chicago FMs that we LMA-ed during the quarter.

Also, in an effort to provide greater transparency to investors, this quarter, we've reorganized our financial reporting to report specifically where the revenue growth is in our base.

Our core x political broadcasting revenue grew by 1.1% overall, principally through organic growth in our national sales effort, which was up almost 4%, our sports verticals and our Right Now Traffic business.

Our digital advertising revenue grew by quite a bit, by 90% in the quarter as our investments in RDO, streaming and mobile commerce, as well as our enhanced monetization efforts to, in essence, streamline all of those various digital assets and bring them to market at scale are really starting to produce significant results for the company.

Our political advertising for the midterm elections is also building nicely, although pacing off very small year-over-year comps. Finally, our license fees and other revenue category grew by 19%. This last category consists of all of our non-advertising-based revenue streams that are largely recurring in nature.

These include cash-based network affiliate fees, management fees, spectrum and tower leasing revenue and licensing of intellectual property. Now as the business diversifies its revenue streams, we would continue to expect accelerated growth in this category, albeit off of a small base.

As you can now see, Cumulus has evolved its revenue strategy over the past 2.5 years since we closed on our Citadel acquisition, beyond the traditional local spot radio. We've now become a very diverse national audio advertising and content platform.

Our base is fueled by our strong core broadcast advertising category, anchored by our 460 owned-and-operated stations and again, amplified by now more than 10,000 broadcast radio affiliates throughout the U.S.

Moreover, we are developing an emerging growth stream in digital advertising that is gaining real traction to our audio through our audio -- excuse me, through our RDO digital audio platform.

Licensing also provides the company with a significant second stream of non-advertising-based revenue and should continue to grow nicely as we develop NASH and other original content into multimedia brands with multiple revenue streams.

Additionally, our content initiatives will provide us with new revenue streams originating from monetizing the consumer, as opposed to just the advertiser, through subscription services. Now moving down the income statement. Adjusted EBITDA for the quarter finished just above flat as we've previously guided at $58.7 million.

Operating margins compressed slightly due to initial -- due to, excuse me, additional investments in people and infrastructure necessary to ramp NASH into a true content creation engine, as well as due to the costs related to accelerating the integration of WestwoodOne, which really did a great deal of the heavy lifting in the first quarter.

Now to give investors more transparency into the growth and return on our content investments, this quarter, we've also broken out content cost from other direct operating expenses in our financial statements.

What you will see is an extremely efficient operating platform with total content cost at just 37% of net revenue, up only slightly from 36.2% in Q1 of the prior year.

And further, while we are increasing the investments in these future revenue drivers, declines in fixed operating costs and corporate expenses resulting from the merger synergies of WestwoodOne will more than offset the content investments through the balance of the year.

As I mentioned earlier, the integration has gone better than planned and we've very pleased with the progression we're saying as we merge these 2 legacy network businesses into a very dynamic content-creation company with tremendous potential. All of this activity continues to generate a significant amount of free cash for the company.

Despite Q1 being seasonally the lowest sales period of the year, our $58.7 million of adjusted EBITDA yielded $25.2 million of free cash flow due to our significant lower borrowing costs, resulting from the refinance of our term loans at the end of last year.

This enhanced free cash flow enabled us to pay down $31 million of debt in the quarter, as we continue to focus on improving the balance sheet. Now before we go on to Q2 guidance, I'd like to spend a few minutes digging a little deeper into each of our major initiatives, as we are making tremendous progress across the board that I'm happy to share.

The momentum around NASH is really building as we grow NASH into a proxy brand for country music fans across the country. And as we've talked about before, it's a 90-plus million person segment in the United States, multi-generational.

As we said this year -- as we've said in the past, this will be the year of putting the assets together with the goal of monetizing this platform beginning in 2015, beginning this fall, I should say, with the 2015 upfront, particularly on the network side. A few key highlights worth mentioning. We are -- a few key highlights worth mentioning.

We are well on our way to successfully rebranding the majority of our owned-and-operated NASH platform as NASH FM. By the end of this year, we expect over 50 fully branded NASH FM affiliates and will begin offering full affiliations to non-owned stations starting in January of 2015.

The NASH long-form syndicated radio shows are also gaining traction across the country with significant ratings improvements in key markets, particularly our evening show with Shawn Parr. Our multi-platform asset approach is really developing nicely.

We're in active discussions to create our partner for extensions and video, digital and live events and expect to announce new developments -- key developments shortly.

The revenue model for NASH will consist of a platform sponsorship for broadcast, cable, digital, print and event, as well as content licensing fees, a B2C subscription package and then ticketing, as well as merchandising revenue.

We're focused on executing our plan around NASH and look forward to announcing a second content vertical sometime next year. As an update on our 2013 growth initiatives, CBS Sports Radio, Right Now Traffic are -- both CBS Sports Radio and Right Now Traffic are hitting their strides as national content brands.

The CBS Sports Network has benefited tremendously from being enveloped into the larger stable of WestwoodOne sports assets, which also contains the NBC Sports Network and marquee play-by-play assets such as the NFL, the NCAA, NASCAR, Masters and the Olympics.

Our scale in sports now enables us to package this content efficiently for advertisers and drive both growth and share. Our Right Now Traffic partnership continues to exceed expectations for 2014 as we take share in the short-form advertising marketplace, which is growing nicely.

Our scale allows us to be an effective outlet for advertisers looking to deliver very pointed messages adjacent to audio content, such as traffic reads. We continue to be encouraged by the level of interest by both advertisers and affiliates and look forward to the benefit of the growth of this business for the remainder of 2014.

Now turning to our digital assets, which I mentioned earlier, drove significant revenue growth in the quarter, from $5 million to $9.5 million. This is a result of a focused effort to coordinate all of our digital assets across our platform to leverage our scale and get into more opportunities. I'd like to update you also on our partnership with RDO.

For those of you who are somewhat new to our story, in September last year, we forged a partnership with RDO, which is a digital music app, whereby we became the exclusive ad sales agent for all inventory in the U.S. We also provide RDO with our content through WestwoodOne and expertise in content curation.

And we have a promotional obligation over the next 5 years. In exchange, we own 15% to 20% of the business with a potentially large growth opportunity. As we at Cumulus are very focused on being a leader in audio content, we understand the necessity of delivering this content wherever and whenever the consumer wants to receive it.

Over time, we expect RDO will become the digital audio distribution extension of all of our local brands and nationally syndicated content. Through our ad sales relationship, Cumulus will benefit as we create integrated, digital and mobile ad networks that allow advertisers to seamlessly buy across our platform at scale.

Now while operating in over 50 countries today, RDO is still relatively new to the United States. A new product launch is coming this summer that will focus on providing a free ad-supported option for consumers to enjoy the platform. This will put it on -- this will make it a level playing field in terms of the offering of Spotify or Pandora.

This is a necessity to be competitive in the U.S. market. Given that RDO -- given that the RDO platform is generally deemed to have one of the best user experiences in the industry, we are excited about this opportunity for the business and we look forward to providing more detail in the future.

Now looking ahead to the second quarter, expect more of the same performance on revenue as in the first with EBITDA growth accelerating. We expect it to be up 1% to 3% in the second quarter. All of the revenue streams in the second quarter are currently pacing positive, with the exception of national spot.

And as I just mentioned earlier, we anticipate sequential growth throughout each quarter of 2014, with growth in the back half of the year accelerating from increased political ad spend and expansion of our growth initiatives.

Now we expect the bottom line to grow at a faster pace in the second half of the year due to the realization of expense synergies that we pulled -- that we moved forward, I should say, that we accelerated the heavy lift of that in the first quarter. So we expect second half to be a greater realization of expense synergies in WestwoodOne.

Now with that, I'll turn it over to JP, for a detailed explanation on the financials and then we'll it open up for questions.

JP?.

Great. Well, thanks, Lew. It was a very quiet, almost uncharacteristic quarter for our balance sheet activity for Cumulus in Q1. So I'm going to be exceptionally brief here. Our main focus in the quarter, on the financial side, was the integration of WestwoodOne. And that's largely complete now.

It's been a very smooth integration, both operationally and from accounting perspective and our teams did a really fantastic job. The only other 2 areas of significance that I would point out are the ongoing conversion of the legacy Citadel warrants and the additional transparency in revenue and expense that we're providing that Lew commented on.

As you recall, we issued about 91 penny -- 91 million penny warrants to many of the shareholders of Citadel back in late 2011. Over time, we've seen a steady progression of those warrants convert into Class A stock. This adds to the overall common share count and the public floated company.

Now as we disclosed in the 10-K last month, we saw a surge of more than 20 million warrants convert prior to year end as former Citadel shareholders sought to realize healthy gains in the shares.

Now please keep in mind that most of these Citadel shareholders were distressed debt investors and inherited Citadel stock through that bankruptcy process and in our view, were natural long-term equity holders for the company.

With much of that newly issued common stock year end selling immediately into the open market in Q1, it's put a lot of pressure on the share price and created a lot of temporary volatility, in my view.

With only 14 million of those original 91 million warrants now still outstanding, we see this overhang on the shares finally largely out of the picture. We've also seen a significant influx of long-term value and growth during investors joined the company since the end of last year.

Now the most common request that I've heard from these new investors was the desire for more transparency and detail around both revenue and the investments that we've been making in these content assets and as such, the genesis and catalysts for these changes.

Given that Cumulus operates all of these assets as one integrated ad platform, rather than an amalgamation of a bunch of individual business units and the fact that we're rapidly expanding into exciting new revenue streams, the conventional view of a radio company P&L just simply no longer applies.

As such, we've broken out our revenue now by product type rather than where ad inventories traditionally monetized. We feel this treatment will provide our investors with a consistent comparable revenue metric over the long period, despite being a very fluid and dynamic company. And so with those brief thoughts, we can turn it over to questions.

Operator?.

[Operator Instructions] Your first question comes from the line of David Bank with RBC Capital Markets..

I have a couple of questions.

I guess, the first one, backward looking, Lew, can you -- and JP, can you guys talk about the $13 million of reduced produced revenue share at Westwood? Can you give a little color on that? And is that a -- is that kind of a recurring reduction that we expect to see throughout the next several quarters, or was that kind of a one-timer? The second question is, I'm trying to also parse that language in the press release, also the decline in -- there was a $10 million -- $9.9 million decline in network spot sales.

So does that -- is that -- I'm getting a little confused in my own terminology, but does that apply to network only as opposed to traditional station sales? And what were -- what was the kind of trend in station sales, if that's the case? And lastly, I guess, Lew, on your forward commentary, just a lot of data there.

What exactly is going on at the station business? I just -- I'm trying to get a sense of like -- you gave national ad sales as opposed to the core station business itself.

Could you maybe parse that a little bit for us?.

All right, David, I'll take the first 2 and, I guess, part of the third. So the second question about network spot, that's simply just the core business at WestwoodOne and our legacy Cumulus Media networks business.

We had talked about that in the last quarter and guided that, that would be down, resulting from just some broader economic trends, but then also just integration noise. Now the way a lot of those contracts, historically, have worked at the network is, there's content produced by third parties to which they get, in many cases, a share of the revenue.

So over time, lot -- some of those contracts have canceled, some of them renegotiated. And so they're just cycled out. And the total number for this quarter compared to last quarter a year ago was $13 million. Now that number will replicate, but it will not be the exact number..

Okay.

But it's kind of a generally -- a recurring for the next couple of quarters concept, though?.

Yes. Throughout the year, as we [indiscernible] the contracts that Westwood and legacy Cumulus had..

Okay. And core station sales were not declining, right, in the....

Those were roughly flat..

Great. I'm sorry.

And the question on sort of the forward-pacing stuff?.

On the -- what we mentioned was that national spot, which is just at the station level, David, is the only revenue stream we have right now that is pacing negatively. And in political, it's not yet been dropped. We haven't seen virtually any political for 2Q yet and so we expect some of that to start to place in May.

So obviously, that's against a very light comp and so that should help to mitigate that. Local is -- local standalone is positive and digital obviously is. And then, on a network side, the business is positive..

Okay.

And given that more than 80% of your station business tends to come from the local side, I would think that would imply some kind of trends you're feeling good about the stations?.

Yes, absolutely. And remember, as JP mentioned, the network business is a series of contracts. And so the movement and the noise around that on the integration and I mentioned this in my remarks, there were a number of contracts that were dropped going into the year.

And some of them, revenue-wise, totaling up to $10 million a quarter that we didn't advance into this year that were in the books from last year. And so there -- and then, obviously, we're adding components to it and adding contracts and adding shows and creating things. So there's a lot of ins and outs on that business.

And we're -- and the way we've presented it is a way to try to give the utmost in transparency on that. In terms of the station size, as JP said, the business was basically flat in the quarter.

And then the investments that we're making to build out NASH were going to more than recoup in the offset in terms of the operating expenses on realizing the synergies from WestwoodOne, as well as continuing to drive efficiencies in our core business..

Your next question comes from the line of James Marsh with Piper Jaffray..

Great. 2 quick questions.

First, on the WestwoodOne deal, can you give us a better understanding of where those better-than-expected cost synergies are coming from? Is it -- I mean, the operating expense side? Or is it the kind of the rationalization of the programming costs? I was just hoping you could give us maybe an update on the competitive environment in that radio network space.

And then, second question just relates to Rdio.

And how does this distribution platform for your local stations kind of fit in with the iHeartRadio distribution of your local stations? It -- would this be just redundant? Or do you see, at some stage, that will be your primary way to distribute your local stations?.

Okay. Thanks, James. I'll take them in the order in which you asked them. On the network side -- all right, let me take them in reverse order. On RDO, the -- we've got -- as I mentioned on prior calls, this is really a multi-faceted app with on-demand custom playlists we're going to create in terms of non-local or national channels.

And then the ability to be able to distribute our brands on that app is a real possibility and something that we're in discussions with those guys now. I think it's pretty mature to say what we will be doing in terms of an exclusive or non-exclusive arrangement and how that will impact our iHeart relationship at this stage of the game.

I think it's premature to comment on that. But we do think that -- and think not only linearly, but also podcast. And if we have the ability to create a best of on our morning shows or features or bits or all the different things that we have with WestwoodOne to be able to distribute that content on RDO.

So in one app, people are able to have all of that at their disposal. It really becomes our mobile strategy, if you will. And the app itself, in terms of -- is making great progress in the automobile. It is the native app in Tesla cars outside of the U.S. and globally. And then, it was just announced -- native app in the new Volvos coming out.

So they're just starting to gain some traction embedding this app into the automobiles.

And we think that with the partnership and the content assets that WestwoodOne can bring to the table that we can give the app, which already has a terrific user experience, as I mentioned in my remarks, we can give an incremental content to give it potentially a competitive advantage.

And your -- and the first question -- James, let me know -- what was the first question again on the network?.

Yes. I was just hoping to get an understanding of what was driving the better-than-expected cost synergies from Westwood.

Was it the operating expenses, or was it the rationalization of the programming contracts?.

That's right. It's really two-fold. In other words, we studied the P&L very hard before we did the deal and we indicated where our -- where we felt -- obviously, we'll always give ourselves a little bit of room here, where we felt we could create operational efficiencies in the integration. And our team did an excellent job on that.

And as I say, we moved with dispatch to implement those pretty quickly. And so there was a slight positive surprise in terms of the operational efficiencies that we're able to create in the integration. And then secondly, on the -- we talked about the various third-party content -- contracts, excuse me, and their overall profitability.

And as we rationalize that, there's going to be incremental gain from the rationalization of these products. Some of it will occur before we're done, what we call completed integration by the end of first quarter of next year and there'll be more to go after that.

So I view this as -- I view the product rationalization because of contracts as a multi-year process. But -- and then -- and it should continue to bear fruit for us on into 2015 and 2016 as contracts roll and we're able to potentially renegotiate certain things.

So I think that -- I would look for that to be a positive upside surprise for this -- we really integrated this business very nicely to our overall platform.

And as JP mentioned, it's really transformed the way to think about the company and as a -- as now a large audio content company that, in essence, serves -- becomes the mortar between the bricks on everything that we're doing. So it's been a very positive experience for us and this will be a very strategic asset for our company going forward..

Your next question comes from the line of Avi Steiner with JPMorgan..

I appreciate the disclosure around the different revenue categories. And I want to know if you can go through the licensee line in a little more detail. Tell me how we should think about that category over time.

Is it linear? Is it lumpy? And is it fair to assume that margins on that line of business, that revenue line, is a little bit lower than the overall business?.

Well, I think, initially, yes. But remember, we're talking about -- as the NASH initiative continues to grow, Avi, and we're going to be licensing that content, everything from merchandise to specific content initiatives and partnerships that we have, we'll continue to generate incremental revenue there.

And we'll also are going to have a subscription play that -- for our consumers. So think of it as sort of a fan club. So I think there's going to be incremental opportunity. I think it's pretty tough right now to put a number on that. We're reporting what it is and saying, "Look, here's a flag in the sand.

We are going be building a revenue stream around this type of activity." And but it's premature to say. I do think you're going to see some -- when we think about NASH, we think of NASH internally as a business that will create 2% incremental growth for our company in 2015 and again in 2016.

And it's to -- and it's premature to try to -- I think it's wishful to try to see beyond that at this stage. But we believe in the way we're building this brand is to create 2% incremental growth organically from this business in 2015 and again, in 2016 and to do so at margins that are in line with the margins that we have today.

So it's going to be -- NASH is a key asset for our company. And it's going to have multiple revenue streams it -- as it's built out. And the investments that we're making now are simply to position that multi-platform brand. And as I mentioned in the remarks, we're going to have incremental announcements over the next several months.

And I think it will be very clear to the Street what we're doing with this brand by year's end. And we're working to position it to capture particular revenue streams, like the upfronts in 2015 on both digital and network. And not much of that goes on, quite frankly, on national spot.

And then -- and as well as position it for the syndication effort on radio to begin in 2015, when we're going to be licensing the IP and people can actually, similar to a network television affiliation, take a NASH affiliation in the market. And so that'll be positioned to be launched for -- really for January of 2015.

So all of those things are coming together. And there's an awful lot of work and focus that's taking place on this brand and this concept and building it out.

And as I say, it's -- we're very pleased -- we're -- a lot of learnings as we go on it, but we're very pleased with the progress that we're making and would say that this initiative is right on track and it will meet our expectations in '15 and '16..

Great.

And on the digital line, is that station website on RDO? Is there any iHeart revenue in there? Could you break that out? And maybe what else is in that almost $10 million number in this quarter?.

Well, there's digital audio sales. And part of that is the inventory that we're aggregating through our streams that are distributed through the RDO -- excuse me, through the iHeart platform, sure.

And so -- but it's every digital asset that we have in the company, from station websites to micro sites, to audio impressions that we have, to our local commerce initiatives, through SweetJack on the daily deal offering. So all of that is together in the digital line..

Okay, last one on the top line before I get into a couple of quick cost questions. But just the network of the total here, is it still 20% of, I guess, broadcast plus political.

Is that the right way to think about it?.

In terms of revenue or EBITDA, Avi?.

I'd love both, if you can give it..

You're asking the network versus the owned and operated stations, in terms of the mix in revenue and EBITDA..

But you can come back to me if you don't have it handy..

So I think we're -- you were saying political -- aside from that, just to the -- you're looking at the overall mix, Avi. I'm just trying to -- we're trying to make -- I don't want to give you the wrong number..

Got it. I had assumed that network's within the broadcast and political segment, but I could be wrong. In which case, if it's easier to give it overall, I'll take it..

Very little political on the network side. So think of the network basically as x political..

And actually, none at WestwoodOne, which is why the pro forma and the -- as reported are the same number..

Okay, maybe I'll come back. One quick expense one.

On the synergies and you talked about overachieving on that, can you maybe tell us how much of the synergies of the $40.5 million has been realized to date through Q1?.

Well, I mean, it's very little. I mean, we just started that process in Q1. But all total, it should be about $20 million by the end of the year..

$20 million by the end of this year?.

Right..

Excellent.

And then the balance next year, is that right?.

Yes..

All right. And then, a last one. Sorry to monopolize.

Did you make an excess cash flow sweep in Q1? Did you have to? And if not, can you just update us? Or if you did, can you update on what that maybe or was?.

We were required to make one. It was only about $5.5 million, credit and [ph] payments of debt we made back in the end of 2013..

I'm sorry. You faded out.

So $5.5 million, that's it?.

Yes..

And our next question comes on the line of Michael Kupinski with Noble Financial..

I was wondering, on that front, can you provide any thoughts on how big of a segment you believe that this could be in terms of revenues in the next 3 to 5 years? I was curious if the company had any specific goals or targets that they would like to achieve for their digital revenues?.

Well, Michael, I would say that it's -- we don't have a firm number on that. I think part of that is going to depend on the accelerated growth of RDO.

And you see that the types of numbers that, say, for instance, that Spotify is doing in ad sales, we will be the ad sales representative, if you will, across all of our local, regional network, national spot for the inventory across all channels. And think that we have a 15% agency fee on that, which we should produce at a very high margin.

And so I would -- that will be one component of it. And then, obviously, all of the incremental revenue that we're able to generate from impressions that we create with our content through WestwoodOne and our local stations and then working with -- and digital today is interesting, it's not just audio impressions that we're doing.

We're creating custom campaigns for clients using specific websites and tools to drive activation. And so those -- it's another -- yet another way for us to participate in the digital ad sales, particularly on a local level.

So we're working on a number of those packages right now, particularly with auto dealers, where we think it's a key area of growth for us. And so there's a lot in development, a lot of stuff.

What we do is we test, we test, we test and see what works and we're able to get results for our clients and then take it back out at scale and what -- and spread it out across our platform. So this is all the work that's going on right now. So we look for this business to ramp and continue to grow over the next several years.

Obviously, a lot of money is going into the overall space. And we're trying to get the ad packaging and the ad units and the execution of it right and do it by, quite frankly, do it by category so we can provide custom packages and solutions for advertisers..

And have you determined how much investment there will be to expand the NASH brand into video, digital and live events in 2014? Any ballpark numbers there?.

Well, I think that the numbers that you see are the -- and as we mentioned in the remarks, it is really being offset by the operational expense savings that we're creating through the integration of WestwoodOne.

So I don't think it's a -- you're talking about a couple of million bucks a quarter, quite frankly, through '14 to roll this out, but that's clearly being offset. If we do something much larger in video, that will be a different investment.

But think about what we've done with the platform, which is to -- in essence, if you took a look at the as reported, including the Townsquare assets and meaning prior to divesting them, we had a business that, in 2013, did about $1.1 billion of revenue and about $365 million of EBITDA.

And without incurring -- actually, paying down debt and without issuing any more shares in 2014, we'll have a business that does about $1.3 billion in revenue and $400 million of EBITDA.

And so again, just through portfolio management, through allocating capital and resources, selling some assets to buy some other core strategic assets and we have the ability to move our platform along and also position it, quite frankly, position it for a much more dynamic growth going forward. But we've got the same opportunity now.

As we've mentioned, we've got some incremental noncore assets in the business and some land that is not producing any revenue nor cash flow for us today, that we can -- that we are in the process of divesting.

And we have the ability to take some of those proceeds and reinvest back into the NASH brand to create what we believe is a very big opportunity for our company going forward.

So we continue to be focused on doing these things on a capital-neutral basis that doesn't dilute our shareholders, but changes the complexion of the company and provides very interesting, new dynamic growth paths for us.

And as we like to say, we're building what we believe is a very interesting media business on a foundation of great broadcast assets and local brands. And on top of that would be WestwoodOne and NASH and RDO and other things that we are working on at this stage of the game. So our strategy is pretty simple and straightforward.

And I think these results are, in essence, bearing fruit and saying, "This is the company we're building. And here's how you ought to be looking at us and expecting growth rates going forward.".

Lew, any update on the sales of nonstrategic assets? I know you're pretty far along on the L.A. property, I think.

And then, also the Giants, I was just wondering if -- any timetables or thoughts on that?.

Sure. The Giants, we did sell in the quarter. And so we received $13.5 million for the sale of the Giants stake in the quarter. And that's....

In the current quarter..

Excuse me, in the current quarter, I'm sorry. And that's already closed. And then, the Los Angeles land sale, we are in the middle of a formal process now and the RFP is going out. We've been working on the zoning process to create more value for the land.

And that is progressing very nicely and is at the stage where we're now prepared to take the RFP out. So I would look for that to be -- I don't know if we'll have -- maybe by the time we report 3Q or 2Q earnings, we should have some solid color on that. If not, it should be shortly thereafter. But this is clearly a 2014 event for us.

And as I say, we have the opportunity now, but in a capital-neutral way, to make some very targeted investments on these bets. And as we say, NASH to us is an incremental 2% growth driver for our company. And I think it's prudent to make these wise investments as we build out this platform. It's a very big idea and it's off to an excellent start..

Final question.

Is there a specific ad category that's causing weakness in the national front? Or is it just across the board? And then if you can just talk a little bit about advertising category, specifically auto, is that bouncing back on the local level in the second quarter?.

Auto has been fairly consistent for us. We haven't -- obviously, there were some weather-related issues in 1Q on auto, but wireless is tough in national right now. T-Mobile had a very big campaign last year this time that is not coming back and so that's hurting the comps. Obviously, we haven't seen political yet come back into national.

As I mentioned, national is very strong for us and first quarter was up 4%. And but in terms of our growth categories, auto is, at a local level, has been very strong, as well as health care for our company. And those have been the 2 key drivers..

Your next question comes from the line of Lance Vitanza with CRT Capital..

Just to start, if you could just clarify for me one more time.

So core station ad revenues were flat in Q1 and they're pacing flat for 2Q, is that right?.

That's correct. Local is up, national is down..

And EBITDA, your guidance is up 1% to 3% for 2Q?.

Correct..

Okay.

Turning to digital revenues and I know you went through the list of items when you're talking to Avi, but just -- is there anything nonrecurring in there? Or should we think about $10 million as kind of a new quarterly run rate in digital? Or is that understating it? How should we think about that?.

I mean, there's not, I mean, one-time in there, but that number will -- it will start to accelerate, which is why we broken it out, so you could see the growth..

Great.

And then, I guess, lastly for me, just on RDO, can you give us -- can you share with us any metrics, active listeners, downloads, total listener hours, et cetera?.

No. RDO is not sharing those publicly until they roll out the free ad-supported service. So that'll be in the back half of the year..

Your next question comes from the line of Amy Yong with Macquarie Capital..

This is Andrew for Amy. Just wanted to ask you about Nielsen ROI measurements.

Is that resonating with that, buyers? And also, just overall, on the integration of Dial, what do you currently like or dislike?.

Well, in the order you ask them, the -- there were -- or let me take it in reverse order.

The -- in terms of what we like or don't like on WestwoodOne, I think the strategic nature of the business and the -- it's been a positive surprise for us in terms of our ability to create incremental opportunities, for instance, how it will be a growth driver for, how it will help us drive the NASH initiative and present others, other content verticals that we can go out and create.

We also see opportunities as the audio space widens for us to play. And we see some B2B opportunities through WestwoodOne as well, which we'll be talking more about. So we see opportunity to launch a custom media division out of that business that we're interviewing people for now.

So I think that could be another interesting play that we hadn't anticipated when we first diligenced and bought the asset.

And your first question was?.

On the Nielsen ROI measurements. I know that Clear Channel yesterday disclosed their radio supposedly gets a better ROI relative to other media. Just wanted to know if you guys have been sharing that with ad buyers and so forth..

Well, that just came out yesterday. That was the unveiling of the study. And I -- it was an excellent study and we'll be very -- I think will be very constructive as buyers of ad time look to make their investments more efficient.

I think what it shows is that -- what we've known all along, is that radio is a terrific medium with a great deal of value in terms of the amount of time people spend with our medium and the effectiveness of an audio ad when people are driving around in their car.

And we're able to talk to people in an intimate way and have a conversation with them at the moment before they transact. And so most commerce occurs during the day. Radio is a daytime medium. We are principally a 6a-to-7p or 5a-to-7p medium. And we have 9 out of 10 people across all cohorts that are listening to the radio.

And I think what this study has showed and we also saw further evidence as part of this study, they showed 6:1 returns for CPG categories on this to drive incremental lift. And radio is typically or traditionally not done well with packaged goods. And here's an opportunity for -- there isn't a marketer in the U.S.

that wouldn't like to get a 6:1 return to drive sales and so I think that's very impactful. Also with respect to media advertising, it showed, which also we have known, that radio has a terrific ability to turn ears into eyeballs.

And we've demonstrated that through our close partnership and relationship with dick clark on a number of these live event shows, which has -- which we have used our platform on a full platform integration to drive increased ratings in those various shows. So that's another opportunity.

And what it comes down to is that as much as social and mobile are the key -- are the high-growth ad categories today, quite frankly, that's what radio has always been. It's always been a mobile medium. It's people -- they are out of home, moving around.

And then, from a social perspective, what social media is, at the end of the day, is it's a referral. And what radio has always done well is have its trusted DJs. Think of them as a friend as you would on a Facebook, but a -- it's a trusted referral from your local DJ that you listen to on a daily basis. And that moves the needle.

That moves the needle for retailers. That moves the needle for service businesses. It's a -- it's a recommendation engine, if you will, is the way to think about local radio. And quite frankly, I think marketers are starting to wake up to that..

And lastly one question on the new vertical you plan to announce soon.

Are those potential investments already included in your EBITDA guidance for sequential growth for the next few quarters?.

No, they are not. No, they are not. It sounds like they're working on a buildout in the floor below us, so I apologize for all the ambient noise here..

Your next question comes from the line of Marla Backer with Ascendiant..

I have 2 questions. First, on NASH. Obviously, you have very impressive expectations. And I think the category has generally, in the past, been considered somewhat regional. And you're showing, at this point, that it has legs beyond the regional audience.

Do you see any -- or foresee any markets where you might run into some headwinds with the brand just because of lack of interest? And I'll stop there and then I have one other question..

Okay. No, it's a good question. I think that with what you see with country music is it is -- and I say it's north of a 90 million person consumer segment. It's a quarter of the U.S. adult population. So it's not regional. It's a very large segment. We've got over 1 million people in New York City that listen to our NASH station.

And we'll be announcing a NASH station in another top 10 market in the next -- probably in the next 60 days. And so it's a -- country music is a very large and popular lifestyle or type or genre of music.

And the NASH brand is, in essence, a way to package that and to create through multiple platforms and using the leverage of that to create access for advertisers to -- for -- and for listeners or consumers, if you will, to embrace this brand and to self-identify with this brand and provide a marketing channel through the various components of this brand, whether it be audio, video, digital, print, events and ultimately, licensing and merchandise.

So that's what the NASH brand is. And quite friendly, country is also becoming -- and this isn't -- this is not the NASH brand, but the large country -- the largest country stars or artists, if you will, are selling out in London and in Europe and South America. So it's actually a genre of music.

It's uniquely American and it is, quite frankly, it's exportable. So I think it does go beyond our borders as evidenced by the ticket sales and the reaction overseas. We've already had requests from some international broadcasters on, can they affiliate with NASH.

And so I do think there's going to be licensing opportunities and the ability go beyond our borders, but we're very, very focused obviously on building this platform out right now. And so -- and when we say, "Look, it is a big idea to grow 2% incremental next year," you're talking about $25 million next year.

Do we expect the NASH brand to do $25 million of incremental revenue? Absolutely, next year. Do we expect it to double the following year as it's built out across all of these platforms? Yes, we expect it to do that. And so -- and we will give more specific guidance as the platform is built out.

And we can then go through the various elements of the platform or components, if you will and give guidance around each. But I think, generally, this is -- it has to meet that threshold for us to put that kind of time and effort and investment into it. And we have high degree of confidence that we can achieve that..

Okay. And then, one last question which is -- and if you said this earlier on the call, I missed it because I jumped on a few seconds late, I apologize.

But did you give the industry or your estimated industry a backdrop versus your organic growth rate during the fourth quarter? Or could you please give that metric, if you have it?.

We don't have that metric. I think our peers will be reporting in the days and or weeks to come and we don't have that data. We can only give our own..

And there are no further questions. I'll turn the call back over to Mr. Dickey..

Thank you, operator. We appreciate everybody getting on today. Apologize for the ambient noise and we look forward to talking with everybody in about 90 days. Have a good day. Thank you..

This concludes today's conference call. You may now disconnect..