Collin Jones - Director-Investor Relations Mary G. Berner - Chief Executive Officer Joseph Patrick Hannan - Senior Vice President, Treasurer & Chief Financial Officer.

Welcome to the Cumulus Media Quarterly Earnings Release Conference Call. I'll now turn it over to Collin Jones, Director of Corporate Strategy, M&A and Investor Relations. Sir, you may proceed..

Thank you, operator. Welcome all to our fourth 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.

Actual results may differ materially from the results expressed or implied in forward-looking statements. These statements are based on management's current assessments and assumptions and they're subject to a number of risks and uncertainties.

A full description of these risks as well as financial reconciliations to non-GAAP terms can be found in our press release and Form 10-K, both of which were filed today at 4 o'clock PM Eastern Time.

This call will be accompanied by a slide presentation which will be advanced in real time through an online portal, which can be accessed through a link in the Investor portion of our corporate website. The address to find this link, if you haven't already, is www.cumulus.com/investors.

After this call, the same link can be used for an encore version, and the presentation will be released via 8-K as well. With that, I'll now turn the call over to our Chief Executive Officer, Mary Berner.

Mary?.

Thanks, Collin. Good afternoon. I want to thank all of you in the call for taking the time to join us today. Before I turn the call over to J.P.

to discuss our financial results for the fourth quarter and full year 2015, I want to share with you the perspectives I have gained since joining Cumulus five months ago on the radio industry and on Cumulus' place in the industry.

Additionally, I'll give you some early color on the initiatives we have established to move the company from decline to stability and ultimately to growth.

One of the observations I made early on is that radio as an industry have some unique, enviable, and I believe underappreciated advantages, vis-à-vis new media and also in comparison to other legacy media. Radio delivers an average ROI of 8:1 on dollars spent and greater than that on key advertising categories such as home improvement and retail.

That ROI is spectacularly better than what TV and digital media deliver. Radio listenership, contrary to popular opinion, has not only grown among both millennials and persons 25 to 54, but over the last six months has also been doing so at an accelerating pace with overall industry listenership in January up more than 8% over the prior year.

Radio's local connection with communities creates brand loyalty that leads to an average time spent listening of nearly 13 hours per week and radio continues to own the 6 AM to 7 PM prime day-part in share of media consumption, which is the time of day where most consumer spending occurs meaning an advertiser can influence a consumer very close to the point of purchase.

These are all advantages that if properly positioned and articulated to advertisers will benefit both Cumulus and the industry as a whole. While I like radio's odds, there is no denying that the entire media landscape, digital included, is still in the midst of seismic change and there will be winners and losers.

What I have heard and learned over the past five months of extensive travel and group and one-on-one interactions with both employees and advertisers simply confirmed what I already believed, which is that while our challenges are formidable, Cumulus certainly has the assets to become one of the winners if given a plan to deal with its operational issues and the time to leverage and build on its considerable strength.

Again, I don't want to minimize our challenges. As you can see by the continued underperformance we experienced this quarter versus our peers, we have a lot of work to do to stabilize the business.

We are organizing that work around four foundational issues which I believe are responsible for our underperformance, and I will give you some context for the moves we are making to correct Cumulus' trajectory.

First, a well constructed operational plan wasn't or couldn't be executed at Cumulus due to a lack of management tools and information, as well as a misalignment of authority and responsibility across many functions.

Second, the company had a corporate culture characterized by a lack of focus, accountability, and collaboration and under-investment in human capital which collectively resulted in significant turnover and economic leakage.

Third, revenue was meaningfully impacted by multi-year declines in ratings across the entire platform in part due to a command and control operating strategy that often ignored local market dynamics.

And finally, a substantial amount of leverage on the balance sheet has reduced the company's capital flexibility while increasing the pressure to execute in operational turnaround quickly.

Our operational turnaround strategies thus are organized around these issues and are as follows; enhanced operational blocking and tackling, institute initiatives to improve the company's culture and drive ratings growth.

In my first meeting with the management team, I established an overarching and driving principle for our turnaround which is to be relentlessly focused on seeking the highest and best use of our people, our financial resources and our time.

We are beginning to execute on our turnaround initiatives with this level and type of focus while we simultaneously seek to address our balance sheet.

To dig into a bit more detail on each; first, as it relates to addressing our operational issues, we have already made significant changes to the organization to ensure that we get the basic blocking and tackling right.

We have reorganized the business to clearly align authority and accountability, allocating every dollar of the P&L among members of the senior management team so that there is clear responsibility for every aspect of the business.

This alignment affords us a bird's eye view over each unit and function providing greater visibility into opportunities to extract cost as well as eliminate duplicative processes and generate efficiencies.

A simple but high-impact example of this was the consolidation of our entire technical operations and IT infrastructure under one person versus the fractured control which previously existed, including separately managed engineering functions at the O&Os and Westwood One.

Under this cleaner structure, we are able to see redundancies that eluded us before. For example, legacy Cumulus stations were about to invest significant capital to replace an aging satellite distribution infrastructure that used to operate a regional radio news network in Arkansas.

Westwood One actually already has two owned satellite systems in operation.

Because for the first time we were able to look at Cumulus stations in Westwood One through one single lens, we quickly realized that Westwood One can take over the satellite distribution for this regional network at zero marginal cost avoiding the large planned capital expenditure to replace that infrastructure and eliminating the operating cost of working with a third party.

Along with this organizational realignment comes a deliberate shift from corporate command and control to an organization where local markets run their businesses with corporate providing oversight and support and facilitating efforts which can generate economies of scale as appropriate.

A nationally distributed business with 90-plus locations, each with varying operating dynamics, must be managed this way to operate well. We know the strategy comes with execution risk and we've instituted steps and checks to mitigate those risks.

Our last key strategy inside the operational blocking and tackling initiative is the alignment of compensation for leadership away from individual targets that perpetuated siloed decision making, impeded collaboration, and generated unnecessary and often counterproductive competition for resources toward a common adjusted EBITDA goal.

Now, senior management is financially incented to make operating decisions that maximize the benefit to the entire company, even if it means sacrificing some of the benefit to an individual unit.

For example, as a direct result of this change in executive incentive, for the first time ever the leadership of both Westwood One and the station group created a task force to optimize our use of inventory and to take advantage of pockets of demand.

So when the hotly contested Iowa caucuses pointed to substantial escalation of political spending by both parties, Westwood One actively gave up inventory controlled on our owned and operated stations so that the stations could clear high margin political ads.

This type of collaboration between Westwood One and our O&Os wasn't happening before on such a nimble basis or often at all. This is just one example of our compensation alignment strategy, is encouraging collaboration across the organization to drive company performance. Next on to culture.

I am well aware that some may think of culture as a soft elusive concept. However, toxic cultures are characterized by muddled thinking and decision making, unresolved internal conflicts, high turnover and an inability to recruit and retain quality employees, and they almost always result in poor performance.

Conversely, a strong positive and clearly defined culture can move a company faster than any other driver because it gets everyone on the same page as it relates to shared objectives and desired behaviors.

The key cultural values we are embracing as an organization are; focus, responsibility, collaboration, and empowerment which are the principles that will guide every decision and every deployment of human and financial resources made throughout the company. Let me give you an example of how this plays out.

We all know how extraordinarily frustrating it can be to send an e-mail and not receive a response for weeks or maybe even at all. If you were an employee in one of our markets and we're trying to get feedback from corporate, this type of unresponsiveness wasn't just a one-off, it was the cultural norm.

So early in October, as a visible and high impact way to operationalize the cultural values of being responsible and collaborative, the executive leadership and I committed to a 48-hour time to respond to all e-mails, phone calls without exceptions.

Very quickly, this enhanced level of responsiveness trickled down throughout the organization and we are now making many more decisions better and faster than before.

The implementation of a simple, but very strategic measures like this have translated into some strong early feedback on the culture-change strategies as indicated by our companywide survey conducted in January.

More than 60% of the entire company responded within three days and their feedback was indicative of the positive momentum we had hopes to generate. 89% believe our culture is changing for the better, 87% are now proud to work at Cumulus and 84% are excited about their future with the company.

While this momentum is certainly encouraging, we would be foolish to ignore one of the most damaging elements of our culture historically which was a sheer lack of investment in our people. So one of my first decisions as CEO was to sell the corporate aircraft, a transaction we completed in December.

While we will use the $6.1 million of cash proceeds to pay down debt, we're taking the operating expense savings and funding a small merit increase pool, the first time we have provided that type of compensation to our employees in nearly a decade.

This reallocation of resources will help to operationalize our goal of keeping our best employees and reducing voluntary turnover and the costs associated with that turnover.

Additionally, it is another step toward making Cumulus a pet place that could attract the most qualified people, thereby reducing our recruiting cost while upgrading the quality of our potential new hire pool. Moving to ratings, this is both our most significant challenge and greatest opportunity.

For a long time we failed to provide adequate support and tools to the programming organization. As a result, we have seen four consecutive years of sequential ratings decline hitting bottom in mid to late 2015.

On day one, we created a task force to address our ratings performance and its deep-dive into what had gone wrong resulted in a thesis under which we are now operating and the underpinning of our ratings strategy which is that increased local input, authority, and accountability will result in a better product and ratings outcome, which will then translate ultimately into stronger revenue performance.

To execute on this thesis, in late December, we reorganized our corporate programming infrastructure to support local market decision making and accountability while providing appropriate checks and balances for high-impact decisions and for those decisions where the impact extends outside of one particular market.

The redesigned organization balances local input and strategies with a wealth of specialized expertise from corporate's format specialists and analysts.

Additionally, it incorporates new processes to ensure that material programming decisions consider all pertinent variables and that local markets receive continual input and training regarding programming best practices.

In order to further support growth in ratings, we also had to recognize how years of broadcast reductions to support spending on various new initiatives, most of which failed to pan out, negatively affected the organization.

To put in perspective, on over $750 million of local and national spot revenue, in 2015 we spent less than 0.4% on discretionary non-contractual promotional strategies, which by any measure is inadequate to support the status quo, let alone fuel ratings growth. On the other hand, we spent millions on what could be considered tangential projects.

Nothing is more core to our business than driving ratings, and as a result we have eliminated investment in those kinds of non-core initiatives and have diverted those resources to fund the most high-impact ratings opportunities.

Stated more generally, beginning at the end of 2015, we have refocused our financial resources to the strategies to support the core elements of our business ending our forays into distracting side ventures.

While it's too soon to see any material trajectory change from our new ratings efforts, we did start to see some stabilization in the fourth quarter and early first quarter. It will, however, take a meaningful amount of time to convert ratings success into revenue.

Every ratings strategy and tactic goes through a series of immutable steps from development to implementation to production of sustained ratings results, which are then measured, published, and taken to advertisers where they can finally be monetized. This is the reality of our industry sales cycle.

However, even in these very early days there are indications that we're on the right track to deliver the ratings performance we are capable of. For instance, after we eliminated our nationally-mandated music list and clock strategies in October, our local Los Angeles programmers began to tailor their music and clock setup to their own market.

In November, they launched a small digital and social marketing campaign along with a cash contest to support their new tactics. These changes along with the addition of a new Midday talent have helped propel the station from 0.3 rating with men in April 2015 to a 0.6 rating in January.

In Nashville, our country station WSM-FM took over the number one spot in country in January after we started to localize the music in October, adjusted our clocks and got more competitive with our morning show. These positive moves came specifically from returning authority to our local country program director. In D.C.

in November, we brought back Jack Diamond during Morning Drive, reversing a corporate decision to remove him in 2013. Jack's departure was arguably symptomatic of an over-zealous focus on expense reduction without accurate analysis of the potential revenue impact. And in D.C.'s case, the result was dramatic, this decline in revenue.

After bringing Jack back and adjusting the music strategy on the station Mix 107.3 is showing some very early, but encouraging signs in the February ratings weekly rating.

Finally, the challenges we face with the balance sheet are significant and we are reviewing all available options to maximize value for the company and give us the time and the operational runway needed to turnaround the business.

We will continue to explore additional opportunistic debt reduction strategies similar to the discounted term loan prepayment we executed in December, which extinguished approximately $65 million face value of first lien term loan for only $50 million.

Additionally, we are relentless in our valuation of cash use through the same highest and best use lens and we also continue to explore ways to shed non-core or non-strategic assets or otherwise reduce non-value-producing cash outlays.

Unfortunately, we do not have anything remaining that is immediately actionable and individually as large as the prospective LA or D.C. land sales.

But we were able to in the last three months generate $10 million collectively from our sale of our corporate aircraft as well as the divestiture of our two trust stations that are currently under contract.

Also, by choosing not to execute our call option for KSJO-FM in San Jose, we avoided approximately $8.5 million of cash outlay that otherwise would have been expended into (18:25) April. Again, where appropriate we will continue to explore other cash generating or cash saving activities.

In five short months, we've developed and begun to implement the operational and financial strategies we believe can lead to sustainable success. The recent underperformance that we've seen against our peers highlights the challenges we must address.

Again, these challenges are as significant, but fixable with time and given time we expect our turnaround initiatives to stabilize the business and ultimately provide a foundation for growth. We look forward to updating you on our progress on future calls.

Now, I'd like to turn over the call to J.P., and after he finishes his comments, we'll jump into Q&A.

J.P.?.

Thank you, Mary. For the quarter, total revenue was $308.8 million versus $329.2 million in Q4 of 2014, a 6.2% decline. Broadcast advertising revenue largely finished in line with the third quarter, with total broadcast advertising declining by 0.5% to $290.4 million from $291.8 million in Q4 of 2014.

Local spot was down slightly, declining by 0.6% to $171.5 million and $172.5 million a year ago. And national spot declined by 10.5% to $24.9 million from $27.8 million in Q4 of last year.

As was discussed in our Q3 earnings call, national spot performance continued to disproportionately underperform versus local spot this year due to the continuation of the same factors we've mentioned historically. Network advertising in the quarter was up 2.8% to $94 million versus $91.5 million in Q4 of the prior year.

This is the first positive quarterly performance we've seen at Westwood One since our acquisition in 2013, driven by better execution in the scatter market, a relatively robust marketplace, as well as particular strength in the sale of our sports assets.

It's worth noting that the 2016 upfronts for Westwood One are now largely complete, with a few stragglers yet to close. To-date, we are down low-single digit, but importantly the marketplace remains healthy. The decline was predominantly driven by lower supply of inventory in 2014 – versus 2014.

This is a much better outcome than we achieved in the two years prior. And the team is now focused on taking this momentum forward from a strong Q4 scatter performance. Our political advertising revenue declined $8.4 million or 78.3% to $2.3 million versus $10.7 million in 2014.

We actually started to see some early political strength in advance of the Q1 primaries in fourth quarter. It's one of the reasons our finish for fourth quarter ended up better than our pacing we gave at the time of the Q3 call. Digital revenue was also down in the quarter by $7.5 million or 42.7% to $10 million, versus $17.5 million in Q4 of 2014.

This decline was almost entirely driven by the previously announced termination of our relationship with Rdio which occurred in the beginning of the quarter and which we guided for in our last call.

Excluding Rdio, which was a non-cash revenue source, digital was down only $300,000 in the quarter, and this is mostly due to the active termination earlier in the year of low margin sales rep deals.

The Rdio comparison now starts to diminish as we go into 2016 having booked only about $500,000 of Rdio non-cash revenue in Q1 2015 and approximately $1.5 million in Q2 2015. Finally, license fees, subscription fees, and other revenue in the quarter were down in aggregate by $3.2 million or 34.8% to $6.1 million versus $9.3 million in Q4 of 2014.

This is a continuation of the shift in certain contracts from fixed cash fees to an ad inventory-based revenue profile which we first highlighted on the Q3 call. We will continue to see this trend in Q1 and Q2 of 2016 before reaching a clean comparison in Q3 of 2016 and beyond.

Moving over to the annual revenue results, total revenue for the year finished with a decline of 7.5% to $1.17 billion versus $1.26 billion in 2014.

Ex-political, revenue declined by 6.3% driven by a 5.1% decline in broadcast advertising, a 30.4% decline in digital advertising as the result of the termination of the Rdio relationship, and an 11.7% decline in license fees, subscriptions and other.

Local spot for the year was the best performing broadcast ad channel, is down 2.1%, while national spot and network both declined by approximately 9%. On the costs side for the fourth quarter, our content costs were down $7 million or 6% to $109.8 million versus $116.7 million in Q4 of last year.

This was driven predominantly by the last of the synergy-related cost reductions at Westwood One. Our SG&A expense for the quarter increased $10.1 million or 8.6% to $126.9 million versus $116.9 million in the prior year period. This was driven primarily by a one-time credit we received in Q4 of 2014.

Additionally, the cost of sales related to event and sports-related revenue in the quarter increased year-over-year on higher associated revenue. Corporate overhead costs, excluding franchise and state taxes, which we add back for adjusted EBITDA purposes, were up $3.9 million (25:07) to $9.1 million versus $5.2 million in Q4 of 2014.

This was also driven by an unfavorable comparison to a one-time credit in Q4 of 2014. All told, adjusted EBITDA for the period was down $27.4 million or 30.3% to $63 million versus $90.4 million in Q4 of 2014.

For the year, non-GAAP total operating costs, again it excludes the franchise and state tax add-back to adjusted EBITDA, were down $24.4 million or 2.6% to $909.5 million versus $933.9 million in 2014. Content costs were down $37.2 million, offset by increases to SG&A and adjusted corporate costs of $6.9 million and $5.9 million, respectively.

This cost profile yielded full year adjusted EBITDA of $259.1 million, down $70.4 million or 21.4% from a 2014 adjusted EBITDA of $329.5 million. Now this beat the high end of our adjusted EBITDA guidance from the Q3 call, again driven by increased revenue pacing as the quarter progressed.

Below adjusted EBITDA in the quarter, we booked $3.5 million of remaining restructuring costs related to our CEO transition and management turnover. You'll also see a $2.1 million book loss on the sale of our corporate aircraft.

However, this sale generated $6.1 million of the cash proceeds and as an additional, benefits the P&L, which Mary mentioned in her remarks.

From a non-operating standpoint, we booked a gain of $13.2 million in the quarter related to the previously announced discounted prepayment of a portion of our senior secured term loan facility On December 31, we successfully repurchased $64.9 million of face value of our senior secured term loan for $50 million, a discount to par of 23%.

Due to this cash outlay during calendar year 2015, we do not anticipate having to make any mandatory prepayments on our senior secured term loan related to our excess cash flow sweep in Q1 of 2016. Further, we will benefit from $2.75 million of reduced annual interest expense resulting from this transaction.

In the quarter, we incurred capital expenditures of $3.4 million, brining capital expenditures to a total of $19.2 million for the full year 2015. We continue to enjoy a sizable NOL carry-forward benefit, and as such, we're not currently a federal cash tax payer.

We believe we will have fully depleted these tax attributes next year and expect to become a full cash tax payer on a federal basis in 2017, that's in addition to the state taxes we now pay across various jurisdictions. Finishing up on the balance sheet, we ended the year with $31.7 million of cash on hand.

With no outstanding balance on either of our $200 million revolving credit facility or our $50 million asset based line of credit, we have $1.84 billion outstanding on our senior secured term loan and $610 million of unsecured notes outstanding – those are due May of 2019. We have no active financial maintenance covenants in any credit facility.

At the end of Q4, we had 233.7 million shares outstanding. Now for a update on our previously announced large land sales, we continue to have two sizable parcels of land that have been classified as assets held for sale on our balance sheet. The first is our studio and tower location in Los Angeles which is currently under contract for $125 million.

There is no revision to the time table or a likely close to this transaction since our last earnings call. We continue to believe the LA land sale will close by late 2016 based upon the current timeline of necessary hearings and approvals. The second property, the WMAL-AM tower location that sits outside of Washington D.C.

in Maryland is also currently under a signed purchase contract with Toll Brothers.

The final purchase price of this second property is subject to a sliding scale of up to $95 million, with the final price to be determined by the ultimate density that the buyer is able to build on the property and hence determined the routine local zoning and building procedures.

For modeling purposes, we suggest that you use $75 million of sale proceeds. The D.C. process remains on track, but it's still very early with the buyer having submitted their concept plan and receive comments to that plan in Q4.

Assuming a former preliminary plan is filed within the next couple of months, we continue to expect the close to happen sometime in 2017. I'll give you a quick update regarding the de-listing notice that we received in Q4 from the NASDAQ.

We remain in the 180-day initial grace period regarding our non-compliance with NASDAQ's minimum listing standards as a result of having our share price below $1 for greater than 30 consecutive days.

This grace period expires on May 2 of 2016, and we continue to be focused at this stage on organically regaining compliance by achieving a stock price greater than $1 for 10 consecutive trading days prior to that date. However, we could explore other options as needed at a later date.

As Mary said, we're very focused on exploring all available options to us to address our leverage. Reducing leverage and increasing runway will both be foundational in order for the company to have the flexibility it needs to execute our turnaround plan on a parallel path.

Finally, as we look ahead to Q1, which is nearly complete, we're pacing down low-single digits with local and network both down low-single digits and growth in political offsetting a mid-single digit decline in national spot business.

The only significant financial investments backing the initial turnaround areas of focus have been a couple of key executive hires at Westwood One and in the HR function, as well as funds to support our programming and culture initiatives.

As Mary mentioned on the last call, those turnaround specific changes have been made in a cost-neutral way by identifying cost reductions through other senior executive reductions, as well as the termination of certain contracts and the sale of the corporate aircraft.

That said, we are a high fixed cost business by nature and in taking out well over $150 million of cost over the last four years, we've cut close to the bone.

However, we will continue to intelligently focus on cost reductions where we see efficiency potential, and we do face general expense escalation in 2016 that will not be fully offset by expense reductions elsewhere.

Since the expense pressure isn't going away, it underscores the importance of generating top line returns from our turnaround initiatives. And with that, I will turn it back over to Collin who will moderate our new Q&A format.

Collin?.

Thanks, J.P. We've modified our Q&A this quarter to take questions in advance similar to some of our peers. Given the amount of time since our last call, we wanted to make sure to cover as many questions as possible from our analysts and investors in a thoughtful and thorough way.

We've also received questions via email throughout the call already, and we'll try to incorporate those in a live fashion..

So to start, a number of the more macro level question's around the focus of our turnaround initiatives and early indicators were addressed in the prepared remarks, but we should begin broad.

Andrew Gadlin of Odeon Capital commented that industry reports have suggested our main focus right now is turning around the station group and that Westwood One is a secondary focus.

So first, Mary, do you agree with those characterizations, and if so, is there a bandwidth to pursue turnarounds at both entities?.

Thanks for the question, Andrew, and it's a good one. As everyday as I've said, we try and focus our time and our allocation of resources through the lens of highest and best use. And that necessarily means that we have to make decisions as to which efforts get the most attention. That said, Westwood One remains a very key focus for our organization.

As you saw in Q4, it actually had the best operating results of any of our broadcast revenue channels, but while we executed better in the scatter market in fourth quarter, the issues that I've identified for the company as a whole, including operational execution, culture and ratings, and in the network world, we might refer to ratings as audience or impressions (34:46) existed Westwood One just as they do throughout the rest of Cumulus.

The first critical blocking and tackling move there key to executing a sustainable turnaround at Westwood One was to put a single leader in place to oversee the business day-to-day as opposed to what existed, which was multiple leaders each running different and disconnected silos within Westwood One.

So one of the key additions we made since our last call was the hiring of Suzanne Grimes to head the business. Suzanne is a former – the former President and COO of Clear Channel Outdoor North America, and has 30 years of experience in advertising and content-driven businesses across media sectors.

I've personally worked with her before, so I know first-hand of her capabilities and feel confident that she will be able to address Westwood's issues head-on..

While we're on the topic of Westwood One, which drew a number of questions from our analyst, Aaron Watts of Deutsche Bank ask for more color around the upfront performance as well as how much business the upfront contributes to the year (35:45)..

Okay, thanks, Aaron. As J.P. mentioned, the upfronts still actually have a couple of straggler accounts outstanding, but for the most part they are complete. And to-date we are down low-single digits, but importantly the marketplace for network radio remains strong. Our declines, as J.P.

said, were driven predominantly by lower supply of inventory versus 2014, which underscores the focus we have to develop – on developing great content and distributing that content so we can increase the amount of inventory we have available to take to market.

To the second part of that question, the upfronts historically have accounted for about half of the revenue for Westwood One for a – in any given year..

And Avi Steiner of JPMorgan ask, what will the network business contribute in 2016?.

We're not going to get into any formal guidance for Westwood One for the year that – we don't think that will be prudent given how early we are in the year. But we did mention in our remarks that the network business is pacing again down low-single digits in Q1.

That's essentially been driven by the low-single digit results in the upfront, as we said, with a basically flat performance thus far in Q1 scatter..

So let's move over to a question on culture. Lance Vitanza of CRT Capital asked if we could update on the efforts to address our turnover..

Sure. As with any issue of this magnitude, it's going to take time to deliver measurable results. Our culture challenges occurred over a long period of time and the substantial turnover, which I mentioned on our last call, was just a symptom of those issues. As I mentioned in my prepared remarks, we do have some early indicators of positive progress.

But in the same way that these issues didn't occur overnight, they won't be corrected quickly either. We are being relentless in how we operationalize our guiding principles to certainly especially to take advantage of our early momentum we're seeing.

So in future quarters, I expect we will be able to comment more specifically on turnover numbers and statistics, but at this stage it's just too early to give you anything meaningful..

And on ratings, Mike Kupinski of Noble Financial wanted to know if we could elaborate on the issues we've seen with Cumulus' ratings.

Is the weakness isolated to any specific markets?.

As I discussed, we've put an enormous amount of effort over the last five months into really diagnosing the causes of our persistent ratings declines.

If you access the earnings call presentation off the website, you will see on page 15 that ratings in our PPM markets when we weight them for market size and look at persons 25 to 54, which is the money demo for radio, those ratings have declined consistently for the last four years before beginning to stabilize towards the end of 2015.

These PPM markets represent about half of the revenue we generate at the station group. So if we drew a graph for the diary markets which represent the other half of station group revenue, it would look very similar.

So when you see declines like this for such a substantial period of time, we believe that focusing on the performance of a few stations ignores the graph's obvious implication that there is a systemic problem. And if you try to solve a systemic problem by managing our stations in isolation, you condemn yourself to playing whack-a-mole.

So as a result, our challenge is to step back and identify the broader issues behind our depressed ratings and develop and implement a plan to address those.

So as I said on day one, we've developed a task force that took a deep dive into our programming strategy, ultimately determining that our most significant problems derive from a command of control operating strategy that ignored or underleveraged local market insights, a lack of analytical tools necessary to make good decisions and a perennial underinvestment in content and promotion of that content.

As I outlined in more detail earlier, we've now put in place a new corporate infrastructure that is designed to support – not manage – support the local market.

We've returned authority to local stations allowing them to make decisions more quickly and more appropriately for their specific audiences, but with checks and balances in place to moderate the risk that can arise from such a big change.

And we've reallocated resources from numerous non-core distractions to efforts that ratings growth in the situations that can impact our bottom line the quickest and with the least amount of risk.

I could talk you through a number of encouraging anecdotes about stations that we're starting to see successes, which appear to be at least in part attributable to the execution of our new thesis, like those we mentioned earlier or others like WPLJ in New York City which is a long time contributor to decline, and now a solid 0.3 radio station moving toward a 0.4 in the New York City where each tenth of a rating point can be millions to the bottom line.

But anecdotes do not a trend make and it is too early in the execution of our new ratings strategy to even attempt to quantify accomplishments in fixing our systemic issues.

So while our PPM markets in aggregate are showing some positive progress, our diary markets, which again are 50% of our station group revenue, are still selling off meaningful year-over-year ratings declines.

We won't have the next look at those until 2Q so – and as we wait for our strategies to take hold, so we're still going to be contending with ratings headwinds..

Thanks. That's good color. And stepping back a bit, back into 2015, David Phipps of Citi asked about market share and then how that continues to trend in 2016..

Looking back at Q4, and I don't think this will come as much of a surprise given that all of our peers have reported already, we lost share in the quarter across the board. Looking forward, since we get share data and arrears for the quarter, we don't get – we don't know yet where Q1 will fall out.

However, based upon our current pacing of low-single digit – down low-single digits, I expect we'll continue to see a gap to our peers this quarter and likely Q2 as we wait for our strategies to take hold..

Now sticking with Q4, but talking about key categories, Mike Kupinski noted that some other broadcasters have recently seen challenges with the auto category and we're pointing toward it picking up a bit as we move into 2016.

How is the auto category doing?.

Auto was a tough category for us through the course of 2015, and I think that some of our other operational challenges may have impacted our ability to execute against that category. We finished the year down mid-double digits despite continued growth in SAR (42:20). Looking forward, we have recently seen pullback in some in SAR (42:27) projections.

But frankly, softening auto demand can be good for our business as radio has historically been used and proven to be very effective for auto dealers who want to run special promotions which are often ramped up when there is a perspective that growth in car sales may be plateauing..

And how about political? J.P. mentioned we saw some early dollars in Q4. Amy Yong of Macquarie was looking for some color on political expectations for 2016..

The Q1 primaries have definitely driven strong momentum (42:54) for political spending, and we'll see growth in the quarter versus both 2012 and the 2014 cycle. However, it's relatively small dollars in relation to what will come in September and October.

Nonetheless, while it's too early to say we'll beat those last cycles of political, we feel pretty good about radio share and the likelihood that we will see it close to $25 million of political similar to the 2014 cycle..

And moving over to the costs side, Aaron Watts asked if a more local market-driven approach versus a more centralized one will have an impact on costs..

To that specific question, the answer is no. Returning authority to local market has been accomplished accompanied by appropriate checks and balances and also by a focus on holding markets accountable for hitting their numbers and remaining vigilant on expenses. So in of itself that change in strategy should not increase expenses. However, as J.P.

mentioned earlier, we are a large fixed cost business and while investments necessary to support our specific turnaround initiatives will be funded on a cost-neutral basis, we won't be able to fully offset the general expense escalators on the fixed cost of our business, things like sports rights -- rights escalators, rent, talent contract and others even with our tight focus on expense management.

This is a business reality and, as J.P. said, it underscores the importance of our turnaround initiatives driving top line growth..

So a quick modeling question on taxes and land sales, J.P., you mentioned this in your prepared remarks, but can you remind us again of the tax position as well as expectations on land sales?.

Sure. We don't anticipate paying any federal cash taxes in 2016. On the state side, we will pay $7 million to $8 million this year. In 2017, we expect we will have exhausted our NOL balance and then we will be a full federal cash tax payer.

On the land sales, there is really no change to the time table from the last call, and we still expect LA to close late 2016 and D.C. sometime in 2017..

And while we're on M&A, Andrew Gadlin asked about monetization of other non-core assets and potential there..

I mean, we're exploring all areas where we can find opportunities to generate cash or avoid cash outlays. For instance, the sale of the corporate aircraft and the two trust stations were completed over the last several months. We will continue to explore these opportunities where the math makes sense.

Right now, we are required to pay down first lien debt at par subject to our reinvestment right with any asset sale proceeds. Alternately, we were required to pay down first lien at par immediately for things like a sale leaseback for towers..

And lastly on the balance sheet, a bunch of questions. So I'll just rattle them off, Davis Hebert of Wells Fargo asked about flexibility to repurchase term loan and/or bonds.

Do we have the ability to do more discounted prepayments of the term loan like we did in December? What's the threshold of bonds to be addressed to avoid the springing maturity on the term loan? And just generally, what options are the company exploring related to the balance sheet?.

As I just mentioned that we don't have the ability to use asset sale proceeds to buy back debt at a discount, but we do have the ability to do more discounted prepayments of the term loan. A good look at that as time goes on, it's one of the only mechanisms we have available to us today to take advantage of the trading levels in the term loan.

As it relates to the bonds, I mean, we will need to refinance or otherwise push out more than $410 million in order to avoid the springing maturity that's in the term loan in Q1 of 2019..

Yeah, and I'll jump in here on the balance sheet. Obviously, we've got a lot of leverage. So while we're focused on the operational issues, we are fully aware that we do have to address the balance sheet issue on a parallel path. It's been a really key focus for the management team and the board over the past several months.

We've heard a lot of great ideas, some more actionable than others, and we're focused on finding the best ways to maximize value for the company.

We'll continue to explore these opportunities over the coming quarters as it will be critical to both delever and extend our maturities in order to give us the time necessary for our initiatives to bear fruit..

Thanks, Mary. I think that's a natural place to wrap up and we look forward to feedback on this new format and hope it's allowed analysts and investors to get more out of the time we have on these calls.

Any parting words?.

No, thanks for your time this afternoon and we'll be reporting again in two short months. I look forward to speaking to all of you then, if not before. Thank you..