Good morning, ladies and gentlemen. Welcome to the Cumulus Media Quarterly Earnings Conference Call. I will now turn it over to Collin Jones, Executive Vice President of Strategy and development. Sir, you may proceed..

Thank you, operator. Welcome, everyone to our second quarter 2023 earnings conference call. I'm joined today by our President and CEO, Mary Berner; and our CFO, Frank Lopez-Balboa.

Before we start, please note that 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 are subject to a number of risks and uncertainties as discussed in our filings with the SEC. In addition, we will also use certain non-GAAP financial measures.

We believe the supplementary information is useful to investors, although it should not be considered superior to the measures presented in accordance with GAAP. A full description of these risks as well as financial reconciliations to non-GAAP terms are in our press release and SEC filings.

The press release can be found in the Investor Relations portion of our website and our Form 10-Q was also filed with the SEC shortly before this call. A recording of today's call will be available for about a month via link in our website. With that, I will now turn it over to our President and CEO, Mary Berner.

Mary?.

Thanks, Collin and good morning everyone. In the second quarter, we generated revenue in line with expectations while EBITDA exceeded expectations. While continued softness primarily in the national advertising market drove an overall revenue decline.

We continue to deliver strong digit growth in our digital marketing services business with digital revenue comprising 18% of total revenue. We also executed additional cost reductions, which benefited EBITDA and improved our balance sheet through free cash flow generation and additional debt buybacks.

Simultaneously, we retired approximately 10% of our shares outstanding through a tender offer. More specifically during the quarter, we drove significant growth in our digital marketing services businesses, increasing revenue 21% year-on-year, while also investing further in the business to help fuel its future growth.

We executed an additional $5 million of annualized non-revenue impacting fixed cost reductions, bringing the total to $15 million this year and $105 million since 2019.

And we continue to support and benefit from our best among peers liquidity position and balance sheet, generating $12 million of cash from operations, signing a highly accretive $10 million asset sale, retiring over $32 million face value of debt at a discount, bringing our net debt down to its lowest level in over a decade and completing an equity tender offer for $5.7 million.

These actions once again demonstrate our ability to maximize performance during difficult times by aggressively and relentlessly leveraging our platform to optimize areas that we can control and mitigate downside where we cannot. This proven skill set is serving as well as we make the best of the current tough ad environment.

And we'll derive, what we believe will be a strong rebound in performance when the - environment improves. Along the way, we continue to have the financial flexibility and net leverage and liquidity profile to remain optimistic - and opportunistic in deploying capital for the benefit of our shareholders.

On our last call, we described our business mix in some detail to help you to understand, how the current softness in the national market in particular affects us.

To reiterate, our national businesses primarily consisting of the Westwood One network, national spot, national podcasting, and national streaming make up approximately 45% of our total revenue.

And our local businesses, primarily consisting of local spot, local digital marketing services, local podcasting, and local streaming make up approximately 50% of our total revenue.

We continue to see macro driven challenges across all our national ad - channels, with many national advertisers experiencing inflationary pressure and uncertainty in their own end markets that cause them to either reduce their spending or stay on the sidelines completely.

While weakness among national advertisers has been broad based, we did see some differentiation with categories such as retail and financial particularly hard hit in the quarter, while others such as telecom and consumer packaged goods showed improvement year-on-year.

This trend for the consumer packaged goods category is encouraging as we found success in leveraging Westwood One's unique position as the largest radio broadcast network to drive increased spending with top advertisers and not just in Q2, but on a forward-looking basis as well.

Similar to our national broadcast business - broadcasting business, in the second quarter in the national podcasting business also experienced revenue weakness, impacted by the decrease in spending for direct response advertisers.

That said, our podcast audience growth continues to be robust, up 19% in Q2, and in fact, not only are we a top five podcast network, but we represent what were six of the top 30 news talk shows on Apple in the quarter, dominating the category.

With these audience trends, we are seeing a substantial increase in impressions that we will be able to monetize more fully when the national - when the net national podcast revenue environment ultimately improves.

Our local businesses continue to perform relatively better than national led by our strong growth in our digital marketing services business, which as I noted was up 21% for the quarter. Local spot, which makes up approximately 80% of our total stock revenue was down 7% in Q2 consistent with our pacing guidance from last quarters call.

Local revenue came in 5%, lower year-on-year, with local advertising while we saw some downward pressure among most categories, auto remains an area of growth with the pace of that growth increasing each month during the quarter, April was up 2%, May was up 10% and June was up 14%.

Our local sales force is exceedingly well positioned to capitalize on automotive advertising. Given our deep and longstanding relationships with audit decision makers, as well as their ancillary digital products, including our digital marketing services capabilities that we are now also bringing to bear in those discussions.

Local digital marketing services was the brightest spot for us this quarter. As I've mentioned previously, this business is one that we continue to lean into heavily, as we believe represents a tremendous market opportunity with strong incremental contribution margins.

Specifically, we have leveraged our differentiated go-to-market strategy, which centers on a versatile and well-connected beat on the street sales team, offering a full suite of integrated audio and digital marketing solutions to drive significant growth in this $15 billion market, which is growing 5% to 10% a year.

This sales approach not only leads to higher sales conversion given the high touch nature of the sales process, but it also allows us to bring in new clients and add and rollout new products as advertiser needs evolve.

To that last point, we've been very successful with our suite of digital presence products we call that Cumulus Boost, which rolled out last year. We now have well over 500 active clients and nearly half of those new Cumulus Boost clients are altogether new to Cumulus, meaning they didn't previously by radio or digital from us.

And of those nearly half is expanded from their initial order to also buy additional Cumulus products. Thus far, our growth in digital marketing services has been generated on a completely organic basis with limited investment.

However, as I mentioned, given our success so far, and the size of the opportunity, we are making investments to further drive growth, increasing the size of our digital marketing services sales organization with pure play digital sellers is one of our top priorities.

As we have found, we can generate very quick returns from our refined and well executed sales strategy. For example, initial testing has resulted in a tripling of monthly run rate digital revenue. So to that end, we have already hired or in the process of hiring new sellers, which will triple our digital sales force by the end of third quarter.

Additionally, because of our unrelenting focus on enhancing both the efficiency and margins of the digital services and products that we offer, we have built a team, we have built a team to take over certain responsibilities, which are formally outsourced to our white label partners.

All in all, we're very optimistic about the growth trajectory that we expect for our digital marketing services business, particularly as we continue to ramp up our investments in this area. Meanwhile, we continue to aggressively reduce costs.

During the third quarter, we execute an additional $5 million of annualized cost reductions, adding to the $100 million of reductions that we've already made since 2019.

And finally, we remained laser focused on maintaining our best among peers balance sheet and liquidity positions, through strong working capital management and disciplined capital allocation.

In the second quarter, we bolstered our cash balance by generating $12 million of cash flow from operations and announced the $10 million sale of WDRQ in Detroit, which we expect to close shortly.

Between this sale and the sale of WFAS-FM earlier this year, we generated over $17 million of gross sale proceeds this year alone with the disposal of assets - with negligible EBITDA.

We also completed an equity tender offer for $5.7 million during the quarter, bringing us to a total of $39 million of shares repurchased out of our $50 million authorization, equivalent to approximately 22% of the total shares outstanding at year end 2021.

In parallel, we were able to complete discounted debt buybacks retiring $32.3 million face value of debt for $23.8 million of cash. Since announcing this capital allocation strategy in Q2 of last year, and combined with our last excess cash flow suite of $12.5 million, we have retired $125 million in face value of debt.

Before I turn the call over to Frank who will give you more color on the quarter, and our current Q3 pacing, I wanted to close by reiterating a couple of points. Prepandemic, our management teams successfully executed an operational turnaround while right sizing an inherited over extended balance sheet through restructuring.

And since the pandemic, this team has driven best among peers performance, on cost, takeout, EBITDA, margin recovery, free cash flow conversion, net leverage reduction and cash generation.

And in this particular cycle, we're intently focused on positioning the company to take advantage of the eventual recovery of high margin national advertising, investing in our digital marketing services business to develop a market leading position in that space, reducing fixed costs to further enhance operating leverage, and generating substantial long-term value - shareholder value from opportunistic deployment of capital.

And with that, I'll turn it over to Frank..

Thank you, Mary. Second quarter revenue was down 11% in line with the pacing commentary that we gave in our last earnings call, while EBITDA came in at approximately $31 million. The weakness in the national advertising environment remained the main factor driving a decline in total revenue.

On a relative basis, our businesses generating revenue from local advertisers continue to outperform those dependent on national advertisers. Regarding EBITDA, our results benefited from continued cost reductions.

From a category perspective, telecom and consumer packaged goods were our top performing national categories while our weakest were professional services and retail. General services and auto were our top performing major local spot categories while financial, sports betting and travel were some of our weakest.

Our local digital businesses consisting of digital marketing services, local streaming and local podcasting were up in the mid-teens. Turning to expenses, some expenses in the quarter decreased by approximately $12 million year-on-year, driven by fixed cost reductions as well as our lower variable costs and lower revenue.

As Mary mentioned, the impact of the fixed cost reduction that we executed in the quarter is approximately $5 million on an annualized basis, adding to the $100 million of reductions that we mentioned on the last earnings call. We do want to point out a couple of one-time items impacting the income statement this quarter.

First, content cost reductions, including a one-time $2 million reduction from an acquisition related earn-outs. Additionally, we recorded a $9.1 million noncash impairment charge related to real estate, which is reflected at the year-on-year bearings within the corporate expense line.

As always, we will continue to be aggressive in pursuing cost reductions to mitigate the top line impacts of the current environment. Moving to the balance sheet, we generated approximately $12 million of cash from operations this quarter.

In addition, we announced a highly accretive asset sale, which - for $10 million, which will have a de minimis impact in EBITDA and which we expect to close shortly. We remain - optimistic on non-core asset sales.

Our consistently strong cash flow reserves have allowed us to support the continued execution from a capital return and debt reduction strategy. During the quarter, we repurchased $5.7 million of shares, bringing our total share repurchase to-date to $39 million.

At this point, we have repurchased approximately 22% of the shares that were outstanding when we initiated the buyback program. Additionally, we retired approximately $32 million face value bonds at an average price of 74%, bringing total debt reduction since the beginning of the year to $39 million and $125 million since the beginning of last year.

This reduction of debt has largely offset the approximately 500 basis point increase in short-term rates increase since last year. As a reminder, we have reduced net debt by over $420 million or 42% since 2019. Looking ahead, we continue to see weakness in the national advertising market.

As a reminder, we are facing a difficult political comp in the second half. As last year, we generated $4.5 million and $8.3 minor of political revenue in the third and fourth quarters respectively. As a result on a total company basis, we are currently pacing down in the low double-digits for the third quarter.

But in that pacing, the general trends we've been experiencing remains with our local businesses significantly outperforming our national businesses. As Mary said, we remain focused on leveraging the ultimate recovery of national advertising, investing in growth areas, reducing costs, and opportunistically deploying capital.

With that, we can now open the line for questions.

Operator?.

Absolutely. [Operator Instructions] The first question comes from the line of Dan Day with B. Riley Securities. You may proceed..

Thank you for taking the questions. So just looking at your experience over the last couple of quarters really over the last year with national advertising, especially on the Westwood One Network, clearly where a lot of the challenges are concentrated right now.

I think a big reason for that is the relatively short-term nature campaign commitments, how easily, again sort to be dialed up and down.

And just wondering if you think it makes sense, as we get to a point of recovery to try and lock in campaigns longer term, maybe, you know, more of like, upfront process you see on the TV side or do you think that would just be a nonstarter with advertiser and agency clients?.

Hi Dan. Thanks for the question. We do have an upfront process for the network. It's a little bit of a soft process. But generally locks in, maybe two-thirds of the business. But unlike TV, there's an out clause within a month when the product runs.

And what we're seeing as advertisers are either pulling out at the last minute, or are sitting on the sidelines and waiting to advertise later. So, we put everything, we give everything we've got to get people to commit upfront. But I think we're seeing, the fact that - the networking particularly is well positioned.

It's the biggest Audio Network in the country, top reach vehicle, great brand building reach vehicle, and we don't see, we don't see any reason that doesn't bounce back, eventually.

But we are seeing that we are seeing that, everyone else like us, everyone, keeping an eye on interest rates and inflation and banking issues and recession talking if that, dies down, we think it will get better..

A follow-up on retail being relatively soft in the quarter. I think that's in contrast to kind of what a lot of the digital advertising players have seen in terms of retail being fairly strong so far. Just you maybe retail media being sort of one of the hotter digital media.

Maybe just talk through why you don't think that sort of the - sort of permanent shift over from kind of linear to digital.

And why you think those retailers will come back to the linear, radio and television longer term?.

Hi, Dan. It's Frank, I'll take that question. Look as Mary discussed, there are a lot of factors impacting the national advertising market. And I think one of the things that we're definitely seeing is that as interest rates go up, we're seeing companies, particularly a larger companies trying to protect their EPS performance, and they're allocating.

They're allocating their dollars very judiciously in certain areas.

So from our perspective, when we think not only about retail, its broader national advertising, thinking about the reach that we have broadly through our local businesses, as well as our network business, it's really a question of time for that money to come back from the discussions we're having with our clients broadly.

We're not hearing anything about a permanent reallocation of advertising dollars to other medium. It's clearly a competitive market. We are taking advantage of some of that - for our digital businesses, as well. But as far as we can tell, right now, it's really a timing issue as opposed to permanently reallocation of dollars..

And just - you sold two stations this year for a decent number.

You view as of kind of unique one-off situations or whether that's, strategic that the stations being a lever you more actively pursue moving forward?.

Look, we are very judicious in our portfolio. And we take a point of view that the assets that makes sense in our portfolio, we will pursue them from an acquisition perspective, although, as you know, we've been more an investor mode as opposed to an acquisition mode.

But we look, we have a balance sheet right now that we can look at acquisitions when it makes sense. These transactions are one-off transactions.

We have over 400 stations, we have lots of stations and many clusters and they're one-off opportunities, where it makes sense to sell them we'll do that as these two stations generate a gross value of $17 million and the EBITDA that we're losing from that is really de minimis.

So in terms of the accretion as we talked about in our earnings call is really significant. If there are more of those, we would actually obviously take advantage, the opportunity and use that to continue to reduce debt and potentially buyback equity..

Questions, I'll turn it over..

Thanks, Dan..

Thanks, Dan..

Thank you. The next question comes from the line of Avi Steiner with JPMorgan. Your line is now open..

Thank you, and good morning. A few questions here. One, if I can start on the pacings, please. I think you said down low double-digits.

I just want to clarify, does that factor in the headwinds you mentioned or does that hit later in the quarter? And kind of not in the pacing numbers? And what I really want to try and get into is if we strip out political is local, getting better at all sequentially and then I've got a couple more? Thank you..

Sure. Well, at the last year, most of our political dollars kicked in after our earnings call. So it's not really included in our pacing. But if you look at last year's results, the political dollars we had last year contributed just approximately 200 basis points in terms of revenues. So that will come in later in the quarter.

With regard to local, we talked about on our last call that our local spot businesses, excluding national within our spot business was down 7%. With the green shoots that Mary talked about in the auto category, we would expect the third quarter hopefully to be better than what we saw in the second quarter.

Now that's obviously dependent on the other categories, but the growth that we had with auto, which is a big category for us and was a very big category back in 2019, is helping drive that performance. But to be clear, within the local spot business, it's still down versus last year, but that's going to help us close the gap a little bit..

Okay. Thank you. And then on the cost side. Performance this quarter was - than we were expecting. I know you called out on the content side I think a $2 million one-time benefit. I just want to confirm I heard that correctly.

But anything else in that line? And I guess what's driving the year-over-year decline? And is that how we should think about it for the back half of the year?.

Right. Yes. We did want to highlight the one-time benefit such that it's not modeled going forward. And the cost savings is something that's clearly very real, and it's hard to achieve. And every quarter we're asked a question, is there more? And every quarter we say, we'll continue to look at our cost base.

I think the incremental improvements on costs or reduction in costs, by definition, will probably be smaller as we have a smaller cost base.

But having said that, the areas that we continue to focus on are reengineering the business, technical efficiencies, people efficiency if there are opportunities to consolidate markets where it makes sense to do so. Business process improvements, and these are things which is in our DNA from a continuous basis.

And so we were pleased with this incremental $5 million. So $15 million of fixed cost annualized reduction is a big number compared to what were already done, and we'll continue to do that. I would expect that the incremental reductions from here on out probably will be more modest.

But having said that, we've said that before and we continue to find costs. So that's something we'll always do. And I'll remind everyone, the operating leverage that we've created in this business is significant by reducing cost by over 100 - fixed costs by over $105 million with a rebound of high margin national, and of course next year, political.

Then we're set up well for significantly better EBITDA improvement as the market recovers..

Okay. That's great. Thank you. And then just on the Detroit station that you sold. Can we assume that's all going to debt repayment? And if I can add on to that, I guess, I see why -- any equity at all..

That will - I'm sorry, Avi. I cut you off. We were delayed..

My question was just confirming that proceeds, albeit small, but $10 million still can see, will that go to debt repayment? And then why would you buy any more equity when you have opportunities at these levels to buy back the bonds. Thanks..

Right. Well, as you know, we did take advantage of the opportunities in the second quarter on debt reduction, and we did a significant amount while still preserving a lot of cash on the balance sheet.

With regard to those proceeds, they'll go on the balance sheet as cash, and we can use that for investments, debt reduction directly or equity repurchases. And as we've said in previous quarters, we really don't talk about our plans ahead of time. And we'll be able to report on the third quarter in terms of our capital allocation plans.

Having said that, and I'll reiterate and I mentioned this on the earnings call - on the call on my script is that by having reduced gross debt by $125 million since last year, not only is that great from a leverage perspective, but as we manage our cash flow, it's immunized a lot of the increase in short-term rates.

And to the extent we continue to focus on that, that will accrue the benefits to all stakeholders. And then if and when the Fed starts lowering rates, which some people think will be next year, and then we'll turbocharge the cash flow generation from the debt reduction strategies we've implemented..

I appreciate that answer. And I don't think it's lost on anybody that - really pretty good job chipping away at absolute debt levels here. There's obviously pushback on eventual refinance, and I think we have time for that.

But if I can end it on this question, curious as to your thoughts on the given everything, that's going on and you're applying hopefully next year is a little better.

What's the right leverage to drive this business [technical difficulty] direction this year? But where do you want to be to give yourself the maximum flexibility in terms of your balance sheet. I appreciate the time. Thank you..

Sure. Well, we made a strategic decision to change our financial leverage targets last year to achieve the level of below 3.5x. Previously, that number that we had mentioned was to get to below 4x.

As you know, there are competitors in our industry that have much higher leverage numbers and have higher leverage targets, at least as they've indicated recently. Our leverage will go up by virtue of EBITDA being challenged this year and will trend down nicely next year with a recovery, although we're not giving guidance.

As we - this is an industry, I believe and we believe, that with some of the challenges that we've had from the top line, it should have less financial leverage in the business. So the first step that we made and then we recognized that was to get down to 3.5x leverage. And as you know, we were very close to that at the end of last year.

And as we continue to reduce debt, we'll revisit to the board what that right leverage number should be going forward. I can't give you what the number is, but I wouldn't be surprised if it's not 3.5%. It could be lower than that. But stay tuned on that. And we have a lot of wood to chop to get the recovery and reduce the debt.

But again, you mentioned about the debt refinancing. Our net debt is less than $600 million. It's half the debt that we had coming out of restructuring. But the markets are not great right now. But in terms of the quantum debt that we have to refinance when the market improves and our leverage, improve them on net leverage perspective.

I think we'll be a good position to take advantage of that..

Appreciate the time. Thank you so much..

Thank you. The next question comes from the line of Michael Kupinski with NOBLE Capital Markets. Your line is now open..

Thank you for taking the questions. I appreciate that. I'm trying to understand the cost cutting that the company has done.

I was just wondering, has the company reduced its footprint in the markets, decreased local talent, move towards more central programming? And if you have done that, was this done in smaller markets versus some of your lower margin markets? I'm just trying to understand the nature, because obviously, as Avi said, you cut cost much more than what I had expected as well..

Yes, that's a great question. We have looked at cost cutting across multiple paths. So the last several years, the first thing we look for is efficiency. So we've consolidated both our traffic and our business manager functions at reduced costs and at enhanced efficiencies and outcomes, actually.

We are looking -- it's really right now, real estate contract costs. We focus a lot on contracts. Some consolidation of staffing, but not much of that. We have not done consolidation of programming because we believe that the local - live and local is key to our strategy. We've improved our programming, for sure, but that's not an area of focus.

So our fixed costs, we have a very, very disciplined process as to how we get at it. But I would characterize it really in three buckets, which is contracts, general contracts, real estate and then efficiency, looking for areas of efficiency.

Which is why we always think we're at the end of it, and then we dig in again and we can - we're very, very aggressive about it..

Got you..

And if I can jump here. Michael, I can give you just a couple additional points. We do have a slimmer workforce than we did three years ago. And so when you look at the $105 million of cost reductions, probably 40% of that has to do with slimmer workforce. And it's not - and we emphasize this a lot.

It's reducing costs without impacting revenues with more efficiencies. And we look at large markets, small markets. We look at the network to reduce the fixed cost base. And the key thing that we focus on is impacting when we look at costs is to really avoid impacting revenue and in an industry that continuously has to be reengineered.

And that's why we keep on talking about the operating leverage..

Got you. Thank you for that.

The disparities in revenue, are there disparities between larger markets versus smaller markets, or the performance pretty evenly across your markets?.

I'll take that. Okay. Sorry, Mary. So the smaller markets in general are performing better than the larger markets. The smaller markets, the diary markets have less exposure to national than the PPM markets. So that's the trend that we're seeing now..

Yes, I'd on the small market, it's also the area we have most success with our digital marketing service products because smaller markets are fewer competitors. And so our relationships, longer relationships tend to go further. So that's one advantage in smaller markets, we get to be with smaller numbers..

Got you. And just a final question. In terms of the network business, can you talk a little bit about the tone of the business? There obviously was some sequential improvement in the quarter.

And I was wondering if the tone of the business has improved in the third quarter, is it simply that the comps are just getting easier?.

I would say that the tone of the business really hasn't improved. The comps are getting a little bit easier, but just the broad weakness in the national markets are challenging. Having said that, in the previous - in the last quarter, we talked about our podcasting business, and a lot of those advertising dollars are national in nature.

So although the pacing in the third quarter is still down versus last year, there's a sequential improvement in that compared to the second quarter. But overall, I wouldn't say that there's a trend, an all-clear trend yet on the national markets..

Like would you describe it as stabilizing? Or would you say that it's still not - it hasn't stabilized yet?.

I would describe it as uncertain. The fourth quarter will be really interesting as we get to the end of the year because generally, a lot of advertisers will start clearing out their budgets for the rest of the year and start planning for next year. And I think the fourth quarter will be the time for us to really give that answer.

A lot of our business is still coming in within the quarter, and so we'll talk more about that, Michael, on our next earnings call..

Thank you. That's all I have. Thank you..

Thank you..

Thank you. The final question comes from the line of Jim Goss with Barrington Research. You may proceed..

Thank you. Along the line of the questions we already had. You've done - had great success in retiring debt, reducing number of shares, meaningful cost reductions. It seems like you've done all of the things that you can manage that are in your control.

Is a big part of what you need now is an improvement in the industry? Or are there things under your further control that can enable you to perhaps participate in a stronger way, either - I know you talked about live and local being very important. I might home in a little more on just how that's working overall and by market size.

Or the mix between radio ad demand and the podcasting, which are sort of complementary products, how are you looking at the environment? And is it something - are there things that you need to - that are just out of your control and you need to benefit from some improvement that is a little indeterminate? Or are there things that are more in your control than I'm seeing?.

Yes, that's something we think about a lot. We are very, very disciplined about identifying and focusing on what we can control to mitigate what we can't. And so specifically, we focus on, as you've heard, reducing our costs. A second bucket would be innovative - trying to be more innovative and creative in programming, for example.

So for example, our ratings share, we're going on our 11th month of rating share improvement, and that includes a lot of different things that we've done on a programming basis. Developing new revenue ideas and employing them across the company. So we really doubled down on those areas, especially the growth areas.

You heard us talk about digital marketing services. So what we - during these kinds of markets, we are laser focused and extremely disciplined on what we can control. And that's why you've seen a big push on areas like digital marketing services.

And then there are - to mitigate the negative impacts of what we can't control, which is the market right now. But again, as we've said multiple times, we're confident that our operating leverage will go to our benefit with the upswing. There will be an upswing. So I think we're pretty good at this. We're pretty focused.

And we're pretty confident that when things pop back, with our operating leverage, we're going to see a nice benefit on the upswing..

Okay. And the other thing I wanted to ask about is what you just brought up, digital marketing services. I know you said you plan to lean into it more. I think you said you were going to triple your sales force in that area by the end of the third quarter. And I know one of your smaller competitors has had significant success in it. I know you're aware.

And you deal in somewhat bigger client levels based on the market size that you reach into. I assume it's a little more competitive in the types of markets you're looking into, or maybe not.

And just how far do you plan to go in that that would change the character of the company a little bit by getting into something that's a little more tangential and not exactly the same type of business, that [indiscernible] business?.

Yes. We see - we have been very, very successful in training our radio native sellers to sell both radio and digital products to both current customers and new ones. And generally their approach so far - and we do this across the company. There's more competition in larger markets, but there's a whole lot of opportunity across the country.

And generally, their approach has been to upsell radio with digital. So they go to their longstanding relationships, and they upsell radio with digital. And as we mentioned, that business is already run rating at $40 million.

So what we did is we tested adding additional digital native sellers, so not radio sellers, who focus only on digital, generally non-radio clients. And we've seen that in our early tests, a really nice payoff. And that gives us enough confidence that we're adding more direct sellers.

We're going to - we believe that if we add more direct sellers, we're going to see accelerated digital marketing services growth, both within the markets where we add those sellers, but then also on the whole.

So the way we look at that is given the fact that the business is run rating at $40 million, if we triple our sales effort, and each seller is able to just even double or double our monthly digital run rate, those numbers add up really quickly as we become - work to become meaningful players in the market.

So I would kind of wrap this up by saying there is a lot of opportunity. We operate generally in the mid- and small-sized markets, and there is a lot of opportunity, and we're seeing it. So we're very, very bullish on that..

Okay. Thank you very much. Appreciate it..

Thank you..

Thank you. I would now like to pass the conference back over to the company for closing remarks..

Thanks very much, everyone, and we look forward to talking with you again next quarter. Have a nice weekend..

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines..