Collin Jones - Director of Investor Relations Lew Dickey - Chief Executive Officer J.P. Hannan - Chief Financial Officer.

Avi Steiner - JP Morgan Aaron Watts - Deutsche Bank Andrew Gadlin - Odeon Capital Group James Marsh - Piper Jaffray Michael Kupinski - Noble Financial Andrew De Gasperi - Macquarie Lance Vitanza - CRT Capital Group David Phipps - Citi.

Good afternoon and welcome to the Cumulus Media Quarterly Earnings Release Conference Call. I will now turn it over to Collin Jones, Director of Investor Relations. Sir, you may proceed..

Thank you, operator. Welcome everyone to our second quarter 2015 earnings call. Thank you for joining. Before we kick off, please note certain statements in today’s press release and discussed on this call may constitute forward-looking statements under federal securities 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 forward-looking statements due to the various risks and uncertainties or other factors.

A full description of these as well as financial reconciliations to non-GAAP terms can be found in our press release and Form 10-Q, both of which were filed today at 4:00 pm. Eastern Time. With that I’ll now hand it over to Lew Dickey, our Chief Executive Officer.

Lew?.

Thanks Collin. Good afternoon everybody and we appreciate you taking the time to join us today to discuss our second quarter earnings. Also joining me today is our Chief Financial Officer, J.P. Hannan. On today’s call, we will give you an overview of our financial results and update on the industries landscape.

We’ll then also give more detail around the discrete areas of focus, our Station Group, Westwood One and NASH. Finally, we will give you a forward-looking perspective on revenue based upon current pacing as well as the expenses for the remainder of the year and turn it over to J.P.

for an update on the balance sheet and Collin will give us a quick update on our two pending land scales.

Now by way of introduction, having spent the last several years working with our corporate team to assemble our platform, now with the assets largely in place my focus has shifted on day-to-day operations of the Station Group and network about nine months ago.

Since then, I’ve been spending about three or more days a week in the field working with our teams now in over 50 markets coaching, assessing, recruiting and refining our strategies and systems.

We’ve also been very busy recruiting over the past six months with over -- having recruited over 40 highly talented industry executives to join our team this year. As such 2015 has been an important building year to set us up for 2016 and beyond. Our team is now largely in place, across our Station Group, our network as well as at corporate.

I’m excited by the caliber of talent we are now competing with as well as with a much deeper platform integration we are affecting between Westwood, the Station Group and NASH.

We are also beginning to realize the benefits of our proprietary technology platform to help us leverage these various components within the Station Group and Westwood to help drive fixed cost out of the business.

As a result, we’ve been able to make large and important investment in human capital while reducing overall costs and meeting the operating expense targets we laid out on our last call. I’ll discuss this in greater detail after we cover the 2Q results.

Second quarter results were impacted by a continuation of the market conditions we discussed last quarter with tepid consumer spending continuing to impact key advertising categories such as wireless, home improvement and auto.

Cyclical declines in political advertising also negatively impacted the quarter and will continue to do so through November of this year. On the revenue side, May saw our weakest performance so far this year. However, June rebounded, giving us momentum going into the back half of the year.

June was driven by noticeable improvement in retailing recruitment and restaurant and bar categories. In fact, many consumer discretionary categories showed their first real gains that we have seen in several years while an encouraging sign is not yet a definitive trend at this point.

More specifically our net revenue for the second quarter of 2015 was $299.3 million, a decrease of $28.9 million or 8.8% over the prior year. This was slightly better than the pacing data that we gave on our last call and in line with consensus. Our Station Group was down about 5% and our network was down 17%.

Digital business at the Station Group was up nicely through the aggregate digital revenue line in our press release, although it was down approximately $2 million, driven mostly by the phasing of Rdio user acquisition barter which will ramp back up in the third and fourth quarters, as we introduce Rdio live.

Now, in the 54 markets where we have Miller Kaplan, our radio clusters were down 4.9% driven by a 3.9% decline in local spot and a 10.8% decline in national spot. We finished slightly behind the local market, we outperformed the digital market and we performed considerably behind the national market.

On the local spot side, we experienced some temporary disruption as our new management hires in several key markets made necessary staffing changes to put their respective teams in place.

On the national front, however, we’re seeing a continued bifurcation between our largest competitor who is now benefiting from a multi-year investment in national sales infrastructure, which manifests itself again in large agency share deals at several key shops.

National scale and cross-platform integration is becoming increasingly important when competing for national business. And we are keenly focused on leveraging our Station Group with our investment in Westwood One and NASH to compete more effectively with true national reach and exclusive premium content.

As we guided on our last call, Westwood One was going to have a difficult first half followed by an improved back half with approximately 60% of the business booked in the upfronts on last fall, our newly structured sales effort is competing aggressively in the scatter market while positioning us for a stronger showing in the 2016 upfronts beginning this fall.

We have previously called attention to the execution and staffing issues in our New York office of Westwood One. And I’m pleased to say that we have recruited some of the industry’s best talent in New York, led by our new EVP of sales, Ron Russo.

We’re also entering the upfront season with our strongest team since we entered the network business with the acquisition of Citadel about five years ago. For the quarter, Westwood One’s revenue finished down 17%, due in large part to the underperformance in last fall’s up fronts.

Shifting to expenses, as I mentioned on our Q1 call, our team remains focused on increasing efficiency as we evolve legacy structures and employ technology to optimize workflow and improve speed-to-market and have better and more real-time information with which to manage the business.

We previously guided that our Station Group expenses would be up slightly for the first half of the year and flat for the back half. We also guided that total OpEx would be down approximately $40 million for the year.

Now, looking back at second quarter, our Station Group expenses were up just $1 million and Westwood One expenses were down $11.3 million, driven largely by lower content costs. As I mentioned last quarter, the integration noise on Westwood expenses is now behind us as is the overhaul of our sales operations.

Cash corporate expenses were up $1.4 million in the quarter, driven slightly by the expansion of our sales leadership team and by about $1 million in the expense timing, resulting from an acceleration of reporting and compliance activities too much earlier in the calendar year. All total, cash expenses in the quarter declined by $8.9 million.

On a year-to-date basis cash expenses are down by about $16 million. For the full year, we continue to anticipate cash expenses will decline by $40 million. Now, moving down the P&L, these results yielded EBITDA for the quarter of $80.8 million which was down $19.7 million or 20% from the second quarter of 2014.

We are certainly not happy with the EBITDA decline in the quarter; this was also in line with our prior outlook and analyst meeting consensus, estimates. The movement in our numbers following the Westwood transaction has now largely abated.

Overall, the platform we have reengineered is now much more stable and our results should be more predictable than they have been over the past year. Now with that overview of the current results, I’d like to give everyone some more color into our three main strategic areas of focus, the stations, Westwood One and of course NASH.

As I said last quarter, the focus of our Station Group continues to be recruitment, sales execution and driving ratings growth. New market managers have been hired in many of our key markets across the platform and they have been busy earning our playbook and recruiting sellers to their team.

Pierre Bouvard, formally of Arbitron and lately TiVo, was brought in during Q1 as Chief Marketing Officer and has hit the ground running, leveraging data on audience insights for our sellers in the local markets at the network and our national spot team to help them compete more effectively in the fragmented advertising landscape, doing a wonderful job.

Tommy Page who also joined us in Q1 from Pandora has already created large scale platforms, sponsorship opportunities to serve advertisers who continue to look for experiential solutions while reimagining Westwood’s existing experiential product set which we’re now offering in the 2016 upfronts and they’re being very well received.

I reiterate my comments from last quarter, we are now competing with our strongest team ever. Here’s some specific anecdotes, our Chicago cluster led by talented new recruit Peter Bowen who was formally with CBS in LA continues to meaningfully outperform the market with a combination of the Merlin stations we brought on early last year.

Year-to-date the Chicago market is down just under 1% in total revenue and our stations are up 16.5%, making Chicago our best performing market.

This has been driven as much by continued strong ratings as it has by sales executions, and we just announced a five-year deal to produce, broadcast and sell the time for the White Sox and Bulls beginning next year so it will be an exciting development for Peter and his team in Chicago.

In New York City our new morning show with Todd and Jayde has taken route and is delivering its highest ratings in a year.

The R&B station we launched, WNBM, has logged its first 0.1 rating in June and that’s the station we moved in from West Chester and NASH FM had its highest ever cume in July and Live & Local WABC has maintained a 0.1 rating consistently.

All of these ratings trends in conjunction with strong leadership driven by our new market manager Chad Lopez, formerly with CBS New York and several new additions to our sales team have us on the best trajectory in this market that we’ve seen in some time.

Lastly, a market we haven’t talked about recently, San Francisco, as a cluster our ratings are up nearly 30% year-over-year, led by the strength of our sports giant KNBR as well as the addition of NASH FM in the South Bay.

Year-to-date our stations are beating the market by 360 basis points and gaining momentum, led by our talented new market manager Justin Wittmayer who joined us from iHeart. Yet another example of how new market managers and sales leadership combined with the ratings execution to turn around a large cluster of assets for us.

Now, on to Westwood One, as I mentioned earlier the integration and synergy realization efforts following our acquisition are now largely complete.

Our plan of action to improve Westwood One sales execution has progressed nicely with the hiring of two key experienced sales leaders, Doug Johnston in Chicago who joined us from Premiere and Ron Russo who I just mentioned in New York who joined us from iHeart; now both of them are onboard.

Collectively we have developed a unified go-to-market strategy and continue to attract top sales talent to our team, led by Steve Shaw. We now have the team in place and are seeing traction in the back half of the year through our performance in the scatter market; talk more about that.

For some context as we stand here today Westwood One has booked slightly more than 80% of the business that we expect to be booked for the entire year-- for the rest of the year. During the second quarter, we started to see empirical evidence of turnaround with the integration and rebuild of the sales force basically complete.

Drilling down even more specifically on the upcoming third quarter, when we finished Q1, so at the end of Q1, beginning of April, we were pacing down 17% for 3Q at Westwood One which is where we finished 2Q.

As we sit here today, we have brought that pacing to minus six, having written 6.6 million more business during the last 90 days than we did in the prior year same period.

We’re executing at a much higher level in the scatter market and expect to continue this positive momentum for the remainder of 2015 and it’s a good harbinger as we enter the upfronts which are just beginning.

Our sports business led by Brandon Berman also continues to perform on all cylinders, pacing up double digits in the back half of the year, on the strength of our NFL primetime schedule and our 24/7 sports asset and his very strong team.

As with the Station Group, in the first half of the year, we spent a significant amount of time focused on synergy execution and cost management. As we look forward to the second half, we’ve achieved the run rate necessary to deliver the full-year OpEx reduction of 40 million that we previously announced.

Moving on to NASH, we’re making good progress on the buildout of our multi-platform entertainment and lifestyle brand which targets fans of country music.

Not only will the brand provide an outlet for incremental value as a standalone business but the rollout of this brand across our Station Group has shown meaningful impact on local ratings as evidenced by the following. In January of 2013 we launched NASH FM in New York off of a religious station.

The first week of July, it surpassed one million cume, making it the largest -- one of the largest country stations in the U.S. In May of 2013, we flipped KHKI in Des Moines to NASH. It was doing an 8:2 share before and now it does a 13.1 share in its demo. In February 2014, we flipped WKDF in Nashville to NASH FM.

It was doing a 3.5 share for tenth place, is now doing a 5.1 share for sixth place and is the number one country station in Nashville. Also in February, we flipped WZCY in Harrisburg to NASH and it’s gone from a 2.1 to an eight share in its target demo, nearly quadrupling it’s listenership in 18 months.

Recently in August 2014, we flipped KBZU in Albuquerque to NASH Icon and it has grown to a 3:3 from a 2:3 in the book prior. In November 2014, we changed WOGT in Chattanooga to NASH Icon as well which resulted in a substantial increase from a 0.7 share to a 4.7 share.

This is just a small sample set of the rating successes we’ve seen from NASH across our fleet of approximately 90 country radio stations.

And on the syndication side, America’s Morning Show had its first top 25 market clearance outside of our platform through our syndication effort on JBC Media’s WOTW in Orlando and shares in the day part have more than doubled from a 2.1 to 4.3 in demo during the same period.

And as I say during the same period -- excuse me, its key competitor in the market has seen a substantial decline in audience.

This is just an early example of a substantial opportunity we believe remains in the radio syndication business as our America’s Morning Show, NASH Nights Live and our overnight shows and feature shows continue to take route within our platform and then we will distribute and syndicate them out through Westwood One.

Also within the second quarter, you may have seen a press of our launch of NASH Next which is a digitally executed through social media, talent competition designed to find the next great country superstar.

We own all aspects of this competition under the NASH umbrella and as the audience builds, we’ll have numerous ways to monetize the platform though music, sales, touring and advertising sponsorships. We’ve seen incredible momentum to-date from a standing start and are excited about how this component of our NASH brand will help build the franchise.

Right now we’ve had over 1,000 bands and artists join the competition which will be whittled down to the top 100 later this week. Our top artists have over 50,000 social media followers a piece and are extending the NASH and NASH Next brand as they bring their fans in to vote for them to this end.

It’s causing a lot of chatter on our radio stations as well on tune-in. As a result, they’ve generated tens of millions of earned social media impressions in less than a month since the launch. This further drives brand awareness and engagement with our local radio stations.

Our engagement with both our mobile site and our app are extremely high and with more than five pages per session and over half of users returning to reengage with the app and a bounce rate of less than 5%, all good stats and it shows the appeal of this app and quite frankly this contest that we integrate with our local radio stations.

It’s a very innovative approach and as I say, it will be good for the NASH brand. We look forward to continuing to update the Street on the various components of our NASH brand as well as its contribution to our platform as a whole. Now, looking ahead to Q3 and Q4, we expect to see sequential improvement in total revenue.

For third quarter in particular, revenue totals pacing down approximately 6% with 4.3 million of adverse political comp. Ex-political, we’d be pacing down about 4.5%. On the station side, local spot is pacing down three to four with national spot pacing down low double digits. Station Group in aggregate is pacing down about 6%.

Westwood One is also pacing down about 6% as I mentioned which has made up ground back to down 17% at the beginning of April.

By the time we report next quarter’s results, we will be about a quarter of the way through the 2016 upfronts, so we will be able to give fourth quarter pacing as well as some anecdotal and empirical perspectives on our progress in the turnaround and positioning of Westwood One sales organization for 2016.

On the expense side, we expect total expenses in 3Q to be down $17 million and total expenses in 4Q to be down $7 million. This will bring the full-year total expenses down $40 million, consistent with earlier guidance. With that I’ll pass it on to J.P. who will take you through the relevant balance sheet items for the quarter.

J.P?.

Thanks Lew. Good afternoon everyone. Balance sheet activity was relatively subdued in the quarter. We finished Q2 with cash on hand of $32.7 million, that’s an increase of approximately $10 million since Q1 and a build of about $25 million since the end of last year.

Capital expenditures in the quarter were $4.7 million, bringing the year-to-date total to $14.8 million. CapEx is now settled into a more steadied run rate with several of our major projects now completed. As a result, we believe the full year 2015 number will finish in the range of $22 million to $25 million.

There was no change to our total debt in the quarter and we continue to have the full $50 million of availability under our secured receivables credit line giving us added liquidity. Our outstanding share count remains materially unchanged since the end of last year but for some minor warrant exercises.

At quarter end, we had $233.7 million shares outstanding and approximately $1.4 million exercisable in the money warrants remaining. There were two unusual non-operating items in the quarter worth mentioning. The first was a minor impairment reported on our investment in Pulsar Media, that’s a parent company of Rdio.

We adjusted the carrying value of this investment on our balance sheet down slightly by $1.1 million to $18.3 million. For more information on this internal fair value methodology, I’ll refer everyone to footnote six of our just filed 10-Q.

Second item was the recording and collection of a favorable jury award in a long-standing business interruption claim that resulted from Hurricane Katrina in 2005. In Q2, we recorded $14.6 million of these proceeds that resulted from this claim.

Of this amount, $11.6 million in cash was received by the company in June and the balance was received after the end of the quarter in July. The company recorded $12.4 million of this award to other non-operating income and $2.2 million as an offset to corporate legal expense.

Because this was a legacy Citadel claim, a portion of that offset is further credited back to our acquisition cost component in our adjusted EBITDA calculation. You can find more information about this item in the Insurance Recovery section of our 10-Q as well.

Now with that, I will pass it over to Collin to give everyone a quick update on the two outstanding non-core assets currently held for sale.

Collin?.

Thanks J.P. Starting with LA, we continue to be on track for our $125 million sale of property under our KBC Tower. All signs from the planning commission and our buyer continue to point positively at this time, and we remain on track for a close by the end of Q1 2016; this is consistent with the call we had 90 days ago. Moving over to our D.C.

property, we’re pleased to announce that we’ve entered into a definitive sale agreement on July 8th with Toll Brothers, a highly reputable developer, homebuilder and public company. As a headline, we expect to receive in excess of $75 million of proceeds with the potential to receive as much as $95 million in total.

For some more detail on the timeline, we’re currently in the middle of the customary 60-day study period; the same process we went through in LA.

During that time, Toll will be conducting their standard site diligence, engaging in conversations with the county and with the community to construct a plan that maximizes value for all of the constituents.

With a buyer of such quality as Toll Brothers, we structured the sale with the closing upon the approval of preliminary site plan which allowed us to also maximize value for our shareholders. We expect this closing of up to $85 million based upon the site yield to occur in the second half of 2016.

In the best case scenario, it could be as early as second quarter of 2016. An additional $10 million kicker is also available based upon certain approvals which under ordinary circumstances would occur about a year after the first closing.

We’ll continue to give updates on these proceedings on a quarterly basis or more often to the extent necessary, if the aforementioned timelines change in any way. With that we’ll open it up to questions.

Operator?.

[Operator instructions] Your first question comes from Avi Steiner..

Good afternoon, thanks for taking the questions. First off, you gave a lot of numbers here, a lot of great numbers; I tried to get everything down but just very quickly on the guidance. I want to make sure that if I’m doing the math right that implies EBITDA in the $75 million to $76 million range but if I’m wrong let me know..

Avi, as you know, we tend to give pacing information for the revenue side of the equation and we have given specific guidance on EBITDA.

So, your math would be correct, if we were giving guidance on revenue but we’re just giving pacing information that is where we’re -- the amount of business booked as we sit here today versus the same day in the prior year..

Fair enough. On the digital line, could you talk to us about what’s been going on there? And then I think Lew, you mentioned that the relationship and that line item should change as the relationship with Rdio changes. And I just wanted to get clarification around that..

Sure, on the digital line Avi, we actually talked about this on the last quarter call as well. There’s really three components of that line item; the first and largest component is digital revenue we generate off the sale of streams and our websites and apps at our local stations. That business was up nicely in the quarter.

We meaningfully outperformed our markets with that business. The positive year-over-year trend there was offset by the other two elements of that line; the first being national business that we-- digital business, other producers that we wrapped at Westwood One.

Late last year we actively got out of a number of those contracts as part of our producer rationalization because, they were no margin or money losing for us. And so that’s actually been a margin enhancing move but on the revenue side it’s lower.

And then largest component and what’s makes up the entirety of the decline year-over-year in this quarter is just phasing for promotional barter that we run on behalf of Rdio to help drive users. So, we saw about 2 million decline year-over-year in first quarter related to that, 2 million year-over-year in second quarter related to that.

We expect to pick that back up in the back half of the year as we lean into the promotional wait with the launch of Rdio Live..

And then a couple more here. You ran through that stuff pretty quickly.

Could you go over Washington, one more time and just maybe the timing around that?.

Sure. So, the Washington sale, we expect -- from a modeling standpoint, the easiest way to think about this would be to model 75 million to 85 million of proceeds coming in, in the second half of 2016. Closing will occur upon approval of the preliminary site plan. There are no zoning changes that need to go through any issues there.

The plan just needs to be approved by the planning commission and that process will take a little bit less than a year. We were comfortable with that timeline given the quality of the buyer in Toll Brothers as well as that was a structure that allowed us to maximize total value.

There’s been an additional $10 million kicker that could occur in the second half of 2017, depending on how many units the buyer is actually able to get on the property; we’ve got some carry in that..

Okay, so slightly different timing than I had but I think the proceeds are more than at least we were expecting. Maybe last question, somewhat qualitative and then I’ll turn it over.

But just putting through the not guidance but pacing as we think about it, are we right that at least Q2 is probably the low point and we’re improving from there and into 2016; is that the right way to think about the quarter we just had and going forward? Thank you..

Yes, Avi, I believe that is correct..

Your next question comes from Aaron Watts..

Hey guys, thanks for taking the questions. Sorry to ask you to do this, it’s been a long day.

Can you just quickly run through your pacing guidance again? I just want to make sure I got it, broadcast and then local, national and network?.

We just said that the pacing in 3Q was 6% for the network and it was 6% for the stations and those were -- and that was broken up. Obviously there’s local and national, we’re seeing a great deal of disparity there.

So, on the station side, local was pacing down around 3.5% to 4% and on the spot side, it was pacing low double digits, negative, and then the Station Group in aggregate is 6% and pacing down 6% and the network is pacing down 6%, as I say, moved up from down 17%..

Okay, great.

And then secondly, as you think about the costs you’re taking out of the business and have taken out of the business at the same time I know you’ve been investing in certain areas; is there any reason to expect that next year there’s going to have to be an additional round of kind of investment to make up for some of the cuts you’ve made or do you feel like you’re at a level now where you have the people in place you need in place, you have the systems in place that need to be there? And maybe tied to that, I guess, where do you see margins for the overall business shaking out over the kind of next year or two?.

Well, we won’t give guidance on the margins for -- because we’re not going to give EBITDA guidance right now but I would say that from the -- to answer your question on expenses, we’ve really I think been very thoughtful about rationalizing expenses across the board.

As I say, using technology, making sure that -- these businesses were very siloed and making sure that these businesses are not siloed and that they are cross-functional and working together and that we’re able to leverage fixed resources; people, equipment, sites, so forth wherever possible.

And so that’s one of the things that we’ve been very focused on and that’s enabled us to take real costs out of the business. So, what does that mean going forward? We think that the expense pace that we’re going to finish this year on a run rate is really the expense pace we’re going to be rolling over in budgets into ‘16.

And then when we get into ‘17, and we’ve talked about this on a prior call, we have some other large network contracts with certain groups that roll off in the first quarter of ‘17 that are under water right now. And so those contracts will remain in effect until they turn.

And so they’ll be another leg down in OpEx in ‘17 is the way to think about that..

And then just one last one for me. You mentioned how one of your peers out there had struck a deal with an agency, an all around kind of deal. Is there any opportunity for you to maybe explore a contract or a deal like that given what you’re doing with NASH, given your terrestrial reach, given your network presence.

Well, it’s a very good question and because -- and when we’re in -- we first had to in essence do two things; we had to build our national sales organization which is what Steve Shaw has been very, very focused on and it’s been a heavy lift over the last 12 months.

And that puts us in a position -- and as you know we are coordinating that closely with Westwood One spot and Westwood One network and ultimately we’re calling on a number of the same shops, different buyers, but same shops and that’s actually starting to converge as well.

So what we get interest from the various agencies with respect to platform buys, it transcends our station platform and it’s the ability to deliver Westwood One, and increasingly they are becoming extremely interested in our ability to deliver a multiplatform experience, particularly on the experiential side and digital side with NASH.

And so those two components, along with our Station Group, are really what is going to enable us to punch above our weight and to play in that arena. And as we’ve said before, the entire platform now reaches 250 million Americans on a weekly basis.

And so, I’ve been in some of these upfront discussions and it’s amazing how fast things are changing and what clients are looking for and the level of engagement and a platform and cross-platform advertising they would like to engage in with the various brands. And so, I think that we’ve positioned ourselves well to do that.

So, we had to do two things; we had to have the assets and then we had to have the sales team to be able to take it to market.

We’ve also done that in our sales organization with -- we mentioned Pierre Bouvard who was actually on a sales call with -- today and did a terrific job with the client laying out our insights and various things that we can do on behalf of the client as everybody becomes increasingly more focused on data and insights.

And then also, as you know, we brought on Tommy Page who is -- experiential as becoming increasingly more important. And Tommy is doing a wonderful job of productizing that set for us so we can then include that in these platform sales.

And then we also brought on Lori Lewis to help drive social for us and as clients are increasingly looking for that to be a component of the overall package. And so, this is what the clients are looking for.

And so rather than have a straight business structured just against a buyer siloed, what we’re looking for is more of a cross-platform and integrated package to take to advertisers. And that’s what they’re looking for and that’s how we’ll ultimately be able to compete for a larger share of the buy.

And I think that’s why we’ve been at a bit of a disadvantage. And I think our assets in place, they say to, to once we’re able to have them integrate, work together, combine with -- and really driven by this new team we’ve worked very hard to put in place, I think we’re going to be in a much better position in ‘16 and beyond on this.

That’s why this has really been a building year for us to pull all these pieces together, complete the integration and attract the kind of talent.

We were talking about this internally and it’s really the -- I think a testament to the assets that we’ve been able to assemble that’s enabled us to really attract this top talent into our company, and I can’t overestimate the number and quality of people that we’ve brought into our business that are going to put us in a position to compete effectively going forward.

So, it’s all coming together in this building year for us here and so that’s what we’ve been very focused on..

And your next question comes from the line of Andrew Gadlin..

Hi, thanks for the time.

On Pulsar Media, I know it’s in the Q but could you talk a little bit about how the rollout has been?.

Andrew are you speaking about the rollout of Rdio Live?.

Yes..

So, the Rdio Live will launch -- should launch, mid-month. All of the assets are in place to do that. We’ve got a couple of markets in tests today and with some Nashville assets, and the user experience is phenomenal.

It takes a unique value proposition which we’ve spoke about before, the ability to combine the over-the-air broadcast streams mixed all the way along the spectrum to the very lean-in on-demand audio listenership in one place.

So, you listen into your favorite radio station, you heard a song an hour ago, you like, you can throw it into your playlist or listen to it stream like that artist or listen to their album and then pop right back into the radio station to listen to the morning show that you come to know and love.

So, it’s a really unique user proposition and a great experience. So that will roll out with all of our stations mid-month..

So I mean, and you said that I think J.P.

said that there’s something in the Q about this but the Q’s not out yet, so what led to the write down?.

The Q is out; we have filed that. That is a closely held startup in a fast-moving space where valuations are all over the place. So, it’s a very technical calculation that drove that and that’s why I would just advise you to look at the footnote and that will give you more information..

Okay.

Previously you guys have given guidance for 25 million of NASH licensing revenue this year with something around double that in 2016, and how are things pacing relative to those two pieces of guidance?.

We mentioned that on the last call as well. We’re on track to deliver that. I wouldn’t though -- I would caution you not to characterize that as NASH licensing revenue.

I would say that all aspects of the NASH brand that we’ve got built up everything from radio syndication to our label with big machine to our magazine NASH Country Weekly all roll in together and it will be about $25 million of revenue this year. They’re embedded in each of the operating results of our other assets..

And so minimal profitability this year but do you still expect those to be profitable next year?.

Yes..

And your next question comes from the line of James Marsh. Piper Jaffray.

Just a quick question J.P. on the debt covenants for the term loan and senior notes.

Could you just kind of remind us where we stand there? And then just a bigger picture question maybe for Lew, what’s your take on this news that AT&T is now going to be including its FM chip; could it help to drive some mobile listenership as well you think?.

At this point, our covenants are suspended. We don’t have any outstanding on our revolver. So, there are no maintenance covenants in place..

Okay..

So James on the announcement for NextRadio, that app being in the phone, as you know all of these phones or most of all the Android phones have FM chips in them, they just haven’t been activated by the manufacturer/carrier, I guess it’s the manufacturer that is dictated by the carrier.

And Jeff Smulyan has done a wonderful job of A, creating the application to drive that and to power that chip if you will, in the phone and also sort of in de-fatigable approach out there to stay on top of the carriers to get them to play ball.

And so what it means, to answer your question, and I think AT&T has -- I don’t know the exact number, I think it’s around 100 million subs, give or take something like that. And as I understand it, the Android is roughly has half market share of the phones coming out today.

So, of all of the phones sold -- and I don’t know how many, I think there’s something like 180 or 185 million smartphones in the U.S., I don’t know how many are sold each year. But of the numbers that are sold under the AT&T license agreements, those phones can be turned on if they download their NextRadio app.

I think there’s also other ways to turn it on. So, long story short, it turns that handset into a transistor radio.

And so it’s just-- and as we know that the mobile penetration and this is why whether it’s Facebook or any of the competitors out, everybody wants to talk about how much of their revenue has gone to mobile and just simply because everybody is carrying these devices today.

And so it’s another way to extend consumption of our product and in essence, think about it as radio anytime, anywhere. You can listen to it in your car and you can also listen to it in your phone. And you can also do that, by the way, with an app.

And so you can do that on -- whether it’s Rdio Live or iHeart or on the Station apps, you can listen to the content there as well. The advantage to the consumer is they’re not paying data charges and so they still are able to get some interactivity and not pay data charges. So this is just more distribution for our product. I think it’s terrific.

And I think that with a carrier as large as AT&T, if this is well received, as I believe it will be, I think that will be a harbinger for others to follow. And you radio does not have a listening problem. We are -- and I also view-- by the way I view the car as a mobile device. And so there’s 250 million or 260 million cars on the road today.

And most commerce occurs during the day and radio dominates in the car as a number one medium of choice in the car by a long shot. And so I think this is good for our medium. And we agree mobile is important and not only is mobile in the handsets but it’s also very much in the cars and that’s where radio also has its home..

Your next question comes from the line of Michael Kupinski..

I was just checking, maybe I over -- I didn’t hear this.

But I know one of your revenue initiatives was CBS Sports and I was wondering if you can give us an update on how that’s trending and how that’s tracking for you at this point?.

Well, I mentioned our sports business is up double-digit for the year. And as I mentioned in the prepared remarks on this, it is due in part to our NFL, which is our play-by-play of course and our 24/7 businesses of which CBS is one of the two that we have with CBS and NBC. So, our CBS business is doing well and is positive, absolutely..

In terms of the 5% decline in Station revenue, you indicated I believe, and tell me if I’m wrong, but you characterized that as being below the market performance.

I was just wondering, what you attributed the below market performance to be in the second quarter? Were there specific stations, large stations, just the Station Group in general? Can you give us a little bit more color what’s going on there?.

Yes, it was about 100 bps and it was really confined to a handful of markets, under a dozen and that really drove that and they were really -- you have gives and takes on this, so you’ll have some that are a few dollars up, few dollars down, but in terms of anything that’s material and what we found was that it was in markets where we have made these transitions and brought new managers in that it has -- while they’re getting their team set, there’s some period of dislocation and you take a little bit of a stumble.

The national is something very different but that’s more systemic. But on the local, it was really more isolated to those types of situations where we’re in the process of a change or made a change and there’s some dislocation. And again, it’s in the whole scheme of things; it’s a relatively small amount of money against this.

And we expect by the way for the full year, I would be surprised if we weren’t adding with the markets based on how we should perform in the back half on the local side..

On the national side, they tend to buy ratings, has that been an issue or what’s going on the national side that’s most systemic?.

Well, what’s most systemic is that there’s been -- and you’ll probably hear this from other broadcasters, what’s most systemic is that the dollars, there’s been some -- it’s been a tale of two cities with respect to national performance.

And so iHeart has been performing at a much higher level than the rest of the industry that is represented by CATS and the dollars left -- and we spend a lot of time drilling down on this, the dollars that are available for the rest of the industry there’s fewer dollars than there were before iHeart is filled.

And so it’s a question of some larger share deals, as I mentioned in my remarks where they’ve used the scale of their platform to go out and entice agencies to earmark larger share deals over in their direction using their platforms, so kind of get in there early and using more assets to take dollars off the table before they’re available to the rest of the industry..

Lew, you indicated that there’s some 10 or 12 markets that are creating the large lion’s share of the issues.

Are these similar to the 10 markets that we had like two years ago where we had some issues that were driving more of the results at that time? Are these new markets or are we just seeing more problematic issues in some of these same markets?.

No. I think if you look at these markets, these would not be what I would call code red markets. We had some systemic issues on a lot of that.

If you remember, was driven by key talent retiring or departure in a number of markets; New York, Washington, Los Angeles, San Francisco where we had issues with -- even Dallas, we had issues with talent retiring some of our largest markets and that had an impact on the ratings and then subsequently had a meaningful impact on the billing.

Now, this isn’t it at all, these are markets where we’re in the process of bringing managers in and where we had some dislocation in the market like a Colorado Springs or Albuquerque, New Mexico or a Little Rock where we’re doing things.

So those are the types of markets where -- or Grand Rapids, those are the types of markets where we’ve had these issues and are working to get these things turned around.

So, as we -- as I mentioned on the prepared remarks, when you change leadership in a market and invariably the leadership that reports up to them either gets changed or responsibilities get shifted, expectations you have -- you have a temporary dislocation.

So, a number of these markets performed well at the beginning of the year and where we had some dislocation, they were working hard to address those issues and replace them with talent.

And as evidenced by when we see new talent come in like we’re seeing in New York with Chad Lopez, I mentioned our New York cluster will ex-political will clearly be positive in the back half of the year and with political probably right about breakeven.

And so I mentioned San Francisco where we had issues before and how that market has been turning nicely. Washington, D.C. has been performing extremely well and taking share for us.

And so once we get strong leadership like we have with Jake McCann and Beth Cohen in D.C., once we have strong leadership in these markets and systems are in place, we’re able to start to execute and drive business and drive performance..

Lew, one more question and it’s quite natural to see some disruption in ratings and so forth when you reformat stations and maybe you’re doing that with NASH.

Are you seeing disruption in ratings, I mean, because typically that will come back and certainly on the strength of NASH, are you seeing disruption in ratings at this point on reformatted stations to the NASH network? And if so, do you anticipate that coming back in one or two books or how should we look at that?.

Well, I gave a number of examples on this of stations that we had launched as NASH or reformatted as NASH and they really fall into two buckets.

They will be stations that were doing something else and we decided they were better purposed as a country station and obviously under the NASH banner or they were existing country stations and they were -- and we decided that it made sense to go ahead and flip them NASH and go.

And so I just-- I rattled off a number of them where we saw significant ratings improvement progress as a result of having that NASH content like America’s Morning Show and NASH Nights Live.

And by the way we think the product offering with NASH is only going to be stronger as we increase the promotions and we have whether it be NASH Next or the promotions that we’re doing with Icon and once the tour starts to move, then all of a sudden we’ve got more to talk about and tickets to give away; just more engagement with the fans.

So, I think that we’ve had a few markets where we’ve flipped something and it’s a little bit of a dislocation or discomfort to a country fan who would wondered what happened, took a little while to get used to it and then next thing you know the ratings are rebounding because the product is high quality and sometimes there’s some initial turnoff and sometimes competitors take shots and will go commercial free against you during that time period, and then that naturally moves listeners over but that’s a temporary effect as well.

And then when they start running commercials, it goes back again. So, you see it across the board.

But net-net, it has been a positive for company for sure and it is clearly something that is sticky if you will for national advertisers as we go in on these large upfront pitches and the ability to be able to provide an integrated marketing plan and activate consumers across multiple platforms is exactly what people are looking for today.

So, I think it’s a bull’s eye. And as I say. it’s really-- it has been helping our station grow and making our country platform that much stronger..

And your next question comes from the line of Amy Yong..

Thanks, it’s Andrew for Amy.

I know you gave a lot of detail on the network and pacings but probably speaking for the second half, do you think the underperformance will continue to do the upfront or do you feel that the new hires will help the scatter overtake that?.

Well the upfront is-- as you know, the upfront is baked and that sort of has that overlay across because those dollars are committed. And if you have a 50 share and in the upfront you get a 35 and that account, then you’ve got a 35 for the rest of the year.

If you had a 50 the year before, you’re down 15% in that account or I should say 30% in that account for the rest of the year. And so those things are already baked. There is scatter and our team has been gaining share in the scatter.

And then it’s really as I say, it was also the outer offices have been holding their own and the execution issues we had were in New York [ph] office and that is where we’re seeing between the staffing and the leadership and the attitude.

And I spend a lot of time there and I can tell you, it is a different place altogether and that team is loaded for bear and is really starting to perform here in the back half of the year. So, I look for -- but again, the upfronts are such an important part of this because so much of the business is booked.

I think the team is doing a wonderful job of preparing and is going to compete very aggressively there. And I think we’ll acquit ourselves well the rest of the year in the scatter market as well and I think we’re starting to show that already..

And I know you mentioned what categories were weaker in 2Q; do you have details as far as what categories are really strong right now?.

No, we get that information in arrears and I haven’t seen July’s yet and so unfortunately I don’t have that right now..

And last question, broadly speaking; do you feel that you have the right scale right now to compete nationally or on digital?.

Well, that all depends on what you mean. In other words you’re seeing a scale against whom? If it’s Facebook or Google, the answer is no. And they’re taking, I saw something today where they’re taking half the ad dollars globally now online. So, they’re obviously in a different league.

But I think what you are seeing and the tone that companies like that are setting is that scale matters and advertisers increasingly are demanding it. And that’s one area as we talked about with our network and interesting multiplatform brands like NASH were able to I believe, punch above our weight and compete in that arena.

And so but you have to have -- you have to be staffed for it and you have to have the various components to it.

And it’s something that, as we talked about our friends across the street have been resourcing this for a long time and made a lot of investments in it and they’re starting to pay off in a big way and we’re early on in that process and just assembling our team and we have our assets and we’re going to market to compete now..

And your next question comes from the line of Lance Vitanza..

Yes, Lance Vitanza. Hi. Lew, from a big picture perspective, management is working really hard but it looks like you’re running in place. You’ve paid down a lot of debt but I can’t recall leverages measured by debt to EBITDA ever having been higher. So, my question is two-fold.

One, do you continue to believe you can organically grow into this balance sheet; and two, would you make an attractive merger partner to a less leveraged entity? And if so, is that something that you’d be open to exploring?.

We don’t comment on any speculation or plans with respect to mergers or combinations. But I would say that we are throwing off free cash and we do expect to grow our business in 2016.

And we are going to be paying down debt and obviously we just -- we expect proceeds of a couple hundred million dollars which is what we guided the Street to on these land sales and which will go to pay down debt. And so, we believe we can continue to deleverage this business and pay down debt with free cash flow.

And so growing into the balance sheet, yes, I mean, it’s a mortgage that we’re working very hard to pay down. And so we want to be very focused on that and continue to execute our operating plan. And then we will always look for ways to maximize value for our shareholders.

But at this stage of the game, we’re very focused on executing our plan and paying down debt, getting these land sales completed and competing more aggressively in the national marketplace and executing. That’s the primary focus of this team..

Your next question comes from the line of David Phipps..

Can we talk about the digital business and is that still looking like it can comp positively in the second half of the year?.

It will be positive. As we said, the biggest driver of that was the $2 million decline per quarter on the Rdio user acquisition side and that will offset in both the third and the fourth quarters. So, it should be nicely positive..

And on the licensing and other revenue side, how do we think about that? It’s risen the past four quarters but is there anything special that we should think about in that line item?.

No, that line item should be fairly consistent going forward. That is predominantly affiliations for content where we get paid in cash rather than in barter which are generally fixed annual contracts or mostly on a calendar basis and also long-term fixed payments for owned towers where we get revenue from leasing those towers.

So that should be relatively stable..

And then just lastly on the Westwood One business, you’re in the upfront cycle for that. But when we looked back at it, we’ve kind of lost momentum from the Westwood One upfronts the prior year because of loss of sales and so the comp was pretty easy in the third quarter of last year.

And we’re still comping negative against that or pacing at least negative against that.

What gives you confidence that that starts to improve? I mean, we’ve gone from minus 17 to minus 6 on pacings, but how do you get to the positive numbers?.

We have to have a strong performance in the upfront going into ‘16 or stronger, I should say. And so we’re looking for a strong performance. And so, we have the upfronts that we concluded basically at the end of January last year. Think of it as you really make your bed for the year in that process.

And so that process is fairly protracted and it’s probably 40 accounts and they run from as early as now, I was in one today, all the way through the end of January. But most of it, as I say, we should have about a quarter of it in hand by the time we speak to the Street in 90 days.

And so I would say that living with this every day, the sales organization at Westwood One has improved dramatically. And we are in a position today, in strength, not only in sellers but in support and technology and in resources for research and insights and productization and marketing that we have never had before.

So, it’s a different crew that’s going to market today with the same inventory. So, I think we’ve got -- I think we will represent it very well and compete very effectively..

And your last question comes from the line of [indiscernible]..

Hi, thanks for squeezing me in. I just have one question based on some commentary during the call. Lew, you said you expect to perform in line with your markets in the back half on the local side and I think you said Q3 was pacing down 3% to 4%.

So, I’m just wondering if that implies your markets are soft or do you think I’m trying to read too much into that?.

Well, I’m saying that I think that our local execution in the balance of the second half, so that’s 3Q and 4Q would be based on everything that we’re doing as a team to execute. I would suggest that we would perform in line with our markets in the back half of the year. So, our pacing really is influenced by July right now.

And so it’s tough to say how -- what everybody else is doing and how that will stay and shakeout. Now, you’ve got five more months left of competition out there on the Street. And so I just think that my supposition is that we will be -- we will not lose ground locally between now and the end of the year..

Are you seeing improved pacings in August and September at this point?.

August is a mixed bag, quite frankly, and we’re clearly seeing improved pacings in September. Some August is dramatically better and some is not so. So, as I say, it’s a bit of a mixed bag but September in a more homogenous approach is clearly better across the platform..

And there are no further questions in queue at this time..

Operator, thank you. And we appreciate everybody joining us today. And we look forward to speaking with you again to update you in 90 days. Thank you..

Thank you for participating in today’s conference call. You may now disconnect..