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Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)

Q1 2014 Earnings Conference Call

April 24, 2014 08:30 AM ET

Executives

Richard J. Bressler - CFO

Brian Coleman - SVP and Treasurer

Effie Epstein - VP, Investor Relations

Analysts

Marci Ryvicker - Wells Fargo Securities

Avi Steiner - JP Morgan Chase & Co

Jason Kim - Goldman Sachs Group Inc.

David Miller - Caris & Company

Lance Vitanza - CRT Capital Group

Tracy Young - Evercore Partners Inc.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Clear Channel First Quarter 2014 Earnings. Now I'll turn the conference over to Effie Epstein, Vice President of Investor Relations.

Effie Epstein

Good morning and thank you for joining our 2014 first quarter earnings call. On the call today are Rich Bressler, President and Chief Financial Officer; and Brian Coleman, Senior Vice President and Treasurer.

We'll provide an overview of the first quarter 2014 financial and operating performances of CC Media Holdings, Clear Channel Communications and Clear Channel Outdoor Holdings. For purposes of this call, when we describe the financial and operating performance of CC Media Holdings, that also describes the performance of its subsidiary, Clear Channel Communications. After an introduction and a review of the quarter, we'll open up the line for questions.

Before we begin, I’d like to remind everyone that this conference call may include forward-looking statements that involve uncertainties and risks. There can be no assurance that management’s expectations, beliefs or projections will be achieved or that actual results will not differ from expectations. Please see our annual reports on Form 10-K and our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission for a discussion of important factors that could affect our actual results.

Pacing data will also be mentioned during the call. For those of you not familiar with pacing data, it reflects revenues booked at a specific date versus the comparable date in the prior period and may or may not reflect the actual revenue growth rate at the end of the period.

During today's call, we’ll provide certain performance measures that do not conform to Generally Accepted Accounting Principles. We provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases and the slide presentation, which can be found on the Investors Section of our websites, clearchannel.com and clearchanneloutdoor.com.

Please note that our two earnings releases and the slide presentation provide a detailed breakdown of all foreign exchange and noncash compensation expense items, as well as segment revenues and OIBDAN for the quarter. Our discussion today also excludes the effects of movements in foreign exchange.

With that, I’ll now turn the call over to Rich Bressler.

Richard J. Bressler

Thanks, Effie, and good morning, everybody. Once again as Effie mentioned in the opening remarks, we prepared slides to accompany this call. You can find those on our websites. Before reviewing our financial results, let me highlight several of the initiatives we’ve launched since our last earnings announcement, that should help give you a sense of where we’re taking the Company.

Starting with video entertainment, we’re living up to our promise to be everywhere our listeners want to find us. During the quarter, we announced key partnerships with Amazon’s Fire TV, Apple’s Car Play and the Samsung’s Gear 2 smartwatch. And we’re continuing to focus on expanding distribution of the iHeart radio platform to engage with consumers both in and out of the home.

On the broadcast radio front, last month Nielsen Audio and Nielsen Catalina Solutions announced that they’ve finally cracked the code and create the first single source ROI measurement tool for radio. The study showed the power of radio and highlighted radio’s ability to deliver sales lift of more than $6, every dollar spend.

According to Advertising Age, this is a ROI greater than digital or TV media. In fact Nielsen found that one retail brand delivered a sales lift of more than $23 for each dollar spend on radio advertising. Finally, we have the definitive proof of radio’s value. This is an important development as radio begins to close the gap between its massive consumer scale and engagement and its relative share of advertising spend.

Nielsen has now proved beyond a shadow of a doubt what everyone our industry has always known, that radio over delivers by far for our advertising partners and that radio provide unparalleled value of every dollar invested.

As you can imagine we’re sharing the details of this Nielsen study with our advertising partners to help them understand why radio should become a bigger part of their media mix, especially now when consumers are becoming increasingly mobile.

In fact, other heads of radio companies are joining us here next Monday when Nielsen will host an event at our office to brief advertisers, advertising agencies, and industry players on the results of the study what radio can do for their clients and for their businesses.

As BTIG’s Rich Greenfield pointed out in a recent report, only broadcast radio allows you to buy reach and frequency, delivered in a context by DJ and despite some digital competitors claims to the contrary, they can’t even come close to achieving radios effectiveness for advertisers. From an organizational standpoint, we create a new major market structure with -- under which four of our senior operating executives are reporting directly to Bob Pittman and myself.

This major markets operating group will collaborate directly with our local market management to oversee our operations in our largest and highest revenue generating markets from our core broadcast radio stations to our digital mobiles and events business as well as a more expanded coordination with Clear Channel Outdoor.

This puts the right structure in place to leverage our position efficiently and effectively as the country's leading multiplatform Media and Entertainment Company. It's critical that we are able to content and integrate our resources faster and more responsibly and this will flatten our structure in a way that allows us to accelerate our decision-making, increase our flexibility and therefore improve our results as well as increase the empowerment and accountability of our individual market leaders.

Earlier this week we also announced the new iHeartRadio Networks, which offers advertisers access to Clear Channel’s powerful collection of integrated assets, our 840 broadcast radio stations, the iHeartRadio app, the syndicated programming of premier networks, [ph] [DJ mentions], popular digital channels, local websites and more.

Advertisers can use these assets in a very targetive way to effectively reach demographic and psychographic groups, including millennials, country, Hispanic, African American, women, men, and holiday. This new unified network provides the kind of targeted impact and massive reach that marketer’s need which they used to receiving from television networks and that we can provide.

At Outdoor we launched Connect. The first global mobile interactive advertising platform that will initially reach a 175 million customers each month, of course 23 countries on five continents, the largest network of its kind. To explain it briefly, Connect turns advertising panels at 75,000 of our outdoor pedestrian accessible sites worldwide into mobile launch pads, enabling customers to tap into interactive content with their smartphone for information, shopping, entertainment and community.

From an organizational standpoint, we are also making changes at Americas Outdoor, so we can have a more effective national go-to-market strategy as well as leverage the existing infrastructure within our 39 markets.

As you know, at the end of last year we brought on Walker Jacobs, the former head of Turner’s Digital Ad Sales Group as Chief Revenue Officer and President of Sales. And earlier this year we hired Ken Shapiro, an 18-year veteran of Turner Broadcasting sales as EVP of sales for our North American operations. With strong management in place, our goal is to create full national coverage across all our specialist agencies, planning agencies, and the advertisers themselves.

Now before reviewing our financial results, let me just add that the advertising communities faced some difficulties this quarter, including business disruptions due to the extreme winter weather across U.S. Bad weather causes people not to focus on buying, especially when it comes to discretionary spending. It's hard for us to quantify the impact of weather, especially considering our national footprint, but it certainly had an impact on the advertising community.

Now turning to our first quarter key financial highlights on Slide 4. As a reminder, the first quarter has historically been our slowest and smallest quarter and that is no different this year. Overall, revenues at Clear Channel Media Holdings totaled $1.3 billion, flat on a year-over-year basis with expenses up 1% and OIBDAN down 2% to $261 million.

Revenues at Media and Entertainment grew up 2%, International Outdoor grew 1% and Americas Outdoor was down 6%. Expenses at Media and Entertainment moved higher in the quarter, resulting in a decrease of 6% in OIBDAN year-over-year. Expenses were down both at Americas Outdoor and International Outdoor with OIBDAN down 11% for Americas and up a strong 25% for International. I'll go into more detail behind the drivers of these results when we dive into the business segments.

Now let me take you through some of Media and Entertainment’s key highlight on Slide 5. I have already mentioned some of the partnerships we announced this quarter. So let me start by updating you on iHeart’s -- by iHeartRadio’s growth. We told 47 million registered users at the end of the quarter, climbing by 66% on a year-over-year basis. iHeartRadio’s total listening hours grew up 13% over the first quarter of 2013 with mobile representing 56% of iHeartRadio’s total listening hours. Downloads and upgrades both continued to grow reaching 327 million.

We are continuing to expand our events business and this quarter we had our first ever iHeartRadio Country Music Festival, in Austin, Texas which attracted some of the biggest names in Country Music, including Carrie Underwood and Luke Bryan. Its key sponsors included NBC’s The Voice, State Farm, and Jim Beam among others. The show was stream live on CMT’s Web site generating visits that averaged nearly 50 minutes of viewing time, the highest ever for the Clear Channel event.

Our inaugural iHeartRadio Music Awards are coming up next week and will be televised on NBC. Among the artists performing live during the show will be Blake Shelton, Drake, Pharrell, Pitbull and Shakira. This Award Show is the first to directly engage the consumer in the selections o f the winners, using our massive reach. To date we generated over 60 million votes, clear evidence of both our scale and audience engagement.

Now turning to Slide 6, we had several initiatives that continue to extend Clear Channel’s presence globally. In addition to Connect, which I spoke about earlier, we partnered with Adlux to extend our private aviation presence as well as Vodafone to grow our footprint in Spain.

On the digital front, we keep growing our digital displays both in the U.S and internationally [ph] [or by] evaluating our portfolio to make sure that we’re both maximizing our footprint and maximizing our return on invested capital.

Next, I’ll spend a few minutes reviewing our segment results and then we will wrap it up with liquidity, before opening up the lines for questions. Turning to Slide 7, and starting with Media and Entertainment, revenue grew 2% year-over-year driven primarily by growth in our traffic and weather businesses as well as national and digital sales. The quarter’s top categories included telecom, healthcare and auto.

Operating expenses increased 6% to $470 million due mainly to events, increased digital streaming costs, and performing rights as well as higher compensation expenses related both to higher revenues and new hires. We also continue to invest in our national and digital sales force. As we look to the rest of 2014, we expect OIBDAN will improve year-over-year driven by incremental revenues and tight expense management that we’re putting into place.

Let me cover our second quarter pacings before moving on to Americas Outdoor. Second quarter pacings through the end of last week and Media and Entertainment are down 1.9% with core stations down 3%. Now you’ve all heard me say this before. These pacings are just a snapshot in time and certainly don't include everything we do as a Company worldwide.

To give some additional color on this, in April of last year we booked a large deal with a major telecom player around the re-launch and re-branding of their company. This means very tough comps year-over-year again, because pacings essentially reflect an exact point in time.

Moving on to Slide 8 and Americas Outdoor, our revenues declined 6% to $269 million or to $270 million when excluding the impact of foreign exchange. Let me explain the declines. As I mentioned, first quarter was a slow quarter overall for advertising. In addition to that, there were three other factors. First, we're still without digital billboards in Los Angeles. Second, portfolio management resulted in selective and strategic reduction of certain inventory. For example, our contract at Boston Logan, we chose not to renew that contract. And third, it’s been a shift in how national advertisers are buying outdoor media.

Let me expand on this last point for a minute, because this is an important change. In the past, national advertisers typically committed to outdoor spend at the beginning of the year and would buy 12-month contracts. Today, we're seeing that with the growth of social media and mobile more and more advertisers wanted the flexibility to coordinate their outdoor spend with real time events and product launches throughout the year.

Several of our biggest advertisers have implemented this shift in mind. What that meant to us in the first quarter is that is as big national advertisers shifted spend to the Olympics, we were affected because of our relatively large national footprint. Although they shift with long-term advertisers of course there are some dislocations initially. We feel that in the long-term it’s an important step in outdoor becoming a medium that is just like radio, TV and digital with outdoor joining the media mix based on audience, not just location. This is a critical point.

Also, as I mentioned at the beginning of this call, we were in the process of realigning our sales force to best meet the needs of advertisers and agencies. In addition, we continue to grow our digital presence which better serve some -- serves advertisers as a seek increase immediacy, flexibility, and real-time marketing capabilities, all by launching new products around shopper marketing. Even though other players may use short-term packets, such as cutting rates to gain market share, we believe that our initiatives around organizational structure, product innovation and footprint put us in a better position for growth and success as this year goes forward and we go into future years.

Moving on to expenses, expenses were down 4% due mainly to reduced site lease expenses relating to the airport business, lower commission expenses from low revenues and cost reduction efforts from previous strategic initiatives. Second quarter pacings at Americas Outdoor are down 8.7% as of yesterday.

Through the shift in buying dynamics I just explained to you as well as our increased digital footprint, we do expect more lumpiness in our pacings. Again, these are just at -- these are just point of time metrics and do not reflect everything we do in the business as a whole. As a reminder, second quarter pacings were also affected by the 77 digital billboards in Los Angeles that were turned off in the second quarter last year.

Turning to Slide 9, International revenues rose 1% to $366 million or $365 million when exclude the impact of foreign exchange. We are continuing to see growth from emerging markets, particularly in China. On the developed markets front, U.K. performed well in the quarter and we see improvement in France primarily in street furniture and digital advertising revenue.

Our revenue increases was partially offset by declines in countries in Northern and Eastern Europe, due mainly to challenging macroeconomic conditions. Operating expenses decreased 1% to $334 million in the quarter, generally as a result of previous strategic efficiency initiatives. For pacings -- second quarter pacings for International Outdoor are up 5.9% as of yesterday.

On Slide 10, we show some of the items that affect the comparability year-over-year. First on the revenue front, we expect to benefit from this year being a political one, though with no presidential election. We have great confidence in our new political strategy unit where we're innovating around broadcast and digital segmentation and targeting. We believe Clear Channel’s powerful reach and scale, especially compared to the digital only players will enable us to help target the right people at the right time.

At Americas Outdoor’s there is nothing new to report about our digital billboards in LA. But we’re working with the industry and the city on a long-term legislative solution that benefits the community and the city government. That said, we’d only anticipate a quick resolution. As a reminder, these boards were turned off at April 15th of last year, but revenues continue to come in well into the quarter, because we were able to repurpose our other outdoor assets to meet advertiser needs. Consequently, our second quarter numbers won't be entirely [ph] [cleaned] of the LA digital impact.

On the expense side, we invested $13.2 million in strategic revenue and efficiency initiatives this quarter, consisting primarily of consolidation across locations and positions, severance and consulting expenses. These expenses are divided among the business units as well as corporate, which includes $6.3 million relating to the transition of John Hogan from CCM+E. Separately during the quarter we recognized an $8.5 million credit relating to the insurance recovery.

We expect to fund additional strategic revenue and efficiency initiatives for the remainder of the year as we continue to identify opportunities to further improve the efficiency of our business and bring more money to the bottom line.

Moving to our capital expenditures on Slide 11, CapEx for the quarter totaled $67 million, up approximately $6 million versus last year’s first quarter. Of the $67 million, approximately $37 million was invested in outdoor. We spend $12 million in our Americas segment related primarily to the construction of new digital displays and $25 million in our International segment due mainly to new billboards and street furniture and renewals of existing contracts. Our CapEx guidance for the year remains unchanged at $300 million for CC Media Holdings.

Let’s go on to our debt Slide number 12. As I’ve told you before, we continue to focus on maximizing the value of the business. We’ve made progress in improving our capital structure liquidity both organically and to capital markets and strategic transaction. As of March 31st, Clear Channel’s debt totaled $20.4 billion.

Turning to balance sheet information and the debt ratios, CC Media Holdings cash on balance sheet totaled $661 million at March 31st. Our secured leverage ratio was 6.3x. Clear Channel Outdoor ended the quarter with $270 million in cash. Its senior leverage ratio was 3.5x and its consolidated leverage ratio totaled 6.4x.

We of course have a number of leverages available to enhance future liquidity. As we’ve said previously, we continually and aggressively evaluate our businesses and asset portfolios and have demonstrated that through our ARN divestiture and the sale of other non-core assets like XM, Sirius -- like our XM, Sirius (indiscernible) that we will -- and we will continue to look for ways to optimize all of our assets.

At the same time we keep working to improve our operations and reduce our working capital needs. We are comfortable with our maturity schedules in the near-term and we will continue to take discipline and practical approaches to address our capital structures -- capital structure and liquidity. Most of all, we’re confident that our strategic revenue and efficiency initiatives will fuel our future organic performance.

I’ll close by saying that we look forward to building our momentum over the rest of 2014, especially if the current worldwide economic recovery gains more and more traction. We will continue to reinforce our foundation for growth and make progress in advancing our strategy to become the number one multimedia company in revenue and earnings in addition to reach, which we’re today. Thanks and now let’s open the line up for questions.

One just -- one slight correction I’d like to make just before we open the line up for questions. I refer to Clear Channel Outdoor senior leverage ratios, excuse me, as 3.5x, it was actually 3.6x and the consolidated leverage ratio again at Clear Channel Outdoor I referred to it 6.4x and its actually 6.5x. So just before we turn it over, I just wanted to make sure that was clear.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Marci Ryvicker with Wells Fargo. Please go ahead.

Marci Ryvicker - Wells Fargo Securities

Thanks. I just wanted to dig deeper into the national commentary. And I guess first, can you just tell us what percent of your revenue both in Outdoor and Radio is national?

Richard J. Bressler

Hello, Marci. So, if you look at national was about a third of our revenue -- around or about 35% of overall revenue for Outdoor.

Marci Ryvicker - Wells Fargo Securities

Okay. What about for Radio?

Brian Coleman

We haven't -- we don’t break that out for Radio.

Marci Ryvicker - Wells Fargo Securities

Okay. And then in terms of why there’s been a shift in Outdoor specifically in not Radio, and I am just also curious if it's particular ad categories, they’re having a larger impact in others in particular markets or is it just a broad based shift?

Richard J. Bressler

I am not sure. I wouldn’t call it really a broad based shift. And just to -- maybe just take a step back I want to make one comment Outdoor. We continue to be incredibly bullish and are incredibly bullish about the Outdoor business, and I think that’s important context. And really because of the rise of cities, people spend more than third of their time outside of home right now. I think if you look at America well particularly largely 80% of American consumers are out of their home majority of the day. So, it's really important to remember the Outdoor business. When you look at the categories by the way just the overall comment on categories for Outdoor we were strong on, in America strong on travel and transportation, real-estate, some things at government agencies, a little weaker on hotels, motels, beverages and the entertainment business. And really what happened when you look at CCOA, which I assume is what you’re referring to specifically that we just had a couple of national advertisers that we are really doing away with the 12 months contracts as part of the upfront and instead relying a little bit more in specific product launches as I highlighted in my opening remarks and social media guide (indiscernible) throughout the year. And from our standpoint I think that -- and obviously the Olympics, in the Sochi Olympics, which I think I also referred to in my remarks and that also hurt us a little bit in the first quarter. And what we don’t want to do is we don’t want to refer to kind of some short-term tactics like I think some of our competition did. And so from our standpoint where we’re driving the Outdoor business is to really say this is a critical part and piece of the overall buying plan for all the national advertisers. And if you, by the way if you look at some national brands in advertising like Coca Cola, like Apple big time brand they over index in buying Outdoor. And again we want to get to that point with all of our national advertisers that they over index in their media mix as buying part of Outdoor. So it's really, it's a shift. It would sum up the national people out there, and we put the organization in place on the Walker Jacobs to really take advantage of that shift and make sure we capture those dollars as we go into the second quarter, the third quarter, the fourth quarter as we go forward and not just kind of knee-jerk we action to some short-term needs. And the last thing I would say, I know you didn’t ask about international. But I think it's important to remember where international was, relatively a similar story. And if you look at for the last two quarters in international between Bob, William Eccleshare and myself, we really focused on our international strategy; we went back to last year that business was not performing quite as well. And we have shown over the last two quarters year-over-year our EBITDA market expansion and to direct result of the initiatives we launched last year. We changed the way we allocated capital for ROI projects, we structured our sales force to capture dollars the way the market was going with new country and regional management in certain locations, and we started doing more tactical revenue initiatives such as non-conforming bidding. So, really my simple point in raising international is to say that we run businesses that are vibrant and that change and we need to adapt to the market conditions and that’s exactly what we’re doing at CCOA in national ad sales and we continue to think it's a great business.

Marci Ryvicker - Wells Fargo Securities

So just, it sounds like it's more of a change in buying patterns versus actual money that’s leaving and going somewhere else. Is that the right way to characterize it?

Richard J. Bressler

Yes, look I am not going to characterize it, but I think yes. I think for the most part it's a little bit more in some of the change in buying patterns and we’re in a competitive environment out here for advertising dollars that you know you’re sure, a lot of people have released numbers. I am sure you have seen as much as I have over the last couple of days where there are traditional media companies, new media companies. People releasing numbers today, people releasing numbers this afternoon. But I think at the end you really need to keep your focus. We’re only thinking about focus and the eye on our price series that we have got this great set of assets which is why I went through a couple of minutes upfront about the strength of Outdoor and why we think it's such a great business both in the U.S. and outside the U.S. And then you also have to have management which is why I pointed out under the leadership of Bob, William Eccleshare and myself. Walker, Suzanne Grimes in the U.S. our teams outside the U.S. It is also about management and recognizing shifts and patterns that are out there and making sure that you change your strategies to capture those dollars when the shift in patterns happen, and that’s all you see that’s happening here. And that’s why I pointed out CCI from the credibility standpoint saying okay, we saw that shift in pattern happening outside the U.S. for international and now look at the quarter we just had. I mean international is up over 20% on the bottom line.

Marci Ryvicker - Wells Fargo Securities

Great. Thank you so much.

Richard J. Bressler

You are welcome.

Operator

We have a question from Avi Steiner with JP Morgan. Please go ahead.

Avi Steiner - JP Morgan Chase & Co

Thanks. A couple of more Outdoor before I shift gears here for a second. In the Americas if we stripped out the airport loss and non-renewal and LA, am I right that Outdoor still would have been down and is there a way to kind of frame that somehow for us?

Richard J. Bressler

Well, look I am not going to -- and Avi, I know you guys ask maybe every call a little different way, a little different question, but I am not going to breakout any of the pieces, really stick to what I was saying before. Look, LA digital we still have the 77 boards that are down. They were down starting in the second quarter of last year and back to my comment earlier, so we don’t have a clean quarter in the first quarter. I’d like a clean quarter too. We don’t have a clean quarter in the second quarter. And I just want to remind everybody that even in the second quarter even though the boards legally, technically came down April 15 of 2013 but cancellations I think as you’re all well aware take 4 to 5 weeks to come through. So we were able to execute on most of the contracts we had last year that was signed up for digital Outdoor even though the boards came down by leveraging our other assets in the portfolio. So, I think we’re still going to have some tough comps in the second quarter as it's still not clean in terms of year-over-year business.

Avi Steiner - JP Morgan Chase & Co

Fair enough. And then on, I thought in the prepared remarks, I heard you talk about this change in buying pattern is coming back long-term and if am misquoting you I apologize, but you might think about that right or did I hear that right, and is that something that you think that normalizes this year or does it take longer for that to happen?

Richard J. Bressler

No, I think you’ll see continued improvement and that’s why I purposely in my prepared remarks did not use the word long-term. It's something that Walker and his team and Suzanne they’re all over this. I was with Walkie yesterday, he was in my office, he was on in the middle of a bunch of ad sales meetings, and you’ll start to see improvement in the second quarter, the third quarter, the fourth quarter. I think you’ll continue to see improvement throughout the year. So this is not long-term. This is just like I said I think we had a compliment of events in the first quarter and again, not to be a broken record but I will be a broken record. I pointed out what we had at CCI on international and within a quarter and two quarters look at the results we’re now producing of the great work William and his team did outside the United States.

Avi Steiner - JP Morgan Chase & Co

Okay. Turning to Radio, I think you referenced a big buy last year at this time. Was that a onetime event something that comes back, can you frame that or put some magnitude around that? Thank you.

Richard J. Bressler

I am sorry, what's the question Avi, I am not …

Avi Steiner - JP Morgan Chase & Co

On Radio pacings I thought you had referenced a big telco buy last year at this time?

Richard J. Bressler

Yes, I did. My only point there and you all know if I haven't said it a 100 times, I’ll say it a 100 times more how much I hate giving everybody pacing information because it is such a snapshot, in point in time it could change so quickly and you’re catching at a superior time that we had a big buy last year. But yes we did have a big buy last year and all I was referencing is, how it affects things at the day I’m giving you those pacings. But we have, with Tim Castelli and his team and Greg Glenday and Jeff Howard, leading all of our national sales efforts. They’re constantly in the market. We have lots of buys that are going on. I was just referencing this point in time compared to last year.

Avi Steiner - JP Morgan Chase & Co

Okay. The press reported -- I don’t know if you’re going to even answer this either, but I am going to try, that you’ve been engaging in some headcount reduction on the Radio side. I don’t know if you can help us think about that in terms of margins going forward. You did talk about I think growth in EBITDA in the Radio business going forward. But anything you can talk about there would be helpful.

Richard J. Bressler

I am not going to discuss anything individually on any matters that we do. But if you just really kind of take a step back the one thing and I think Bob and I have been clear on this over the last several months not by our work by our actions we have significantly flattened our senior management organization to reduce overlap. And now that we’re riding our sales organizations to this structure we’re giving more it recourses, we’re giving people more authority, we’re giving people more accountability. We have got just a great term in place. So, that team can now be more productive, they can operate efficiently and they can operate as effectively as possible. And we’re just going to continue with that as a backdrop, we’ll continue to look for ways to be more effective and more efficient as we identify opportunities to improve our business, and look that’s out job. I mean our job is to create value for all of our stakeholders and any time we identify that we can be more effective, more efficient. Anytime we identify that we can get closer to the decision making process and the sum of all those points is to drop more to the bottom line, we expect to do that. And I expect that you’ll see to realize EBITDA benefits from all of our actions in this year as the results go forward.

Operator

A question from Jason Kim with Goldman Sachs. Please go ahead.

Jason Kim - Goldman Sachs Group Inc.

Great, thank you. Maybe a couple of question to capital structure side. First of all, is there any particular reason why you paid down the $247 million of your ABL facility during the quarter?

Brian Coleman

Sure Jason, this is Brian. That really was a cash management maneuver. We had the cash we could earn 20 basis points in short-term investments so we could earn 200 basis points so to speak by repaying the ABL. Liquidity is still available; we can re-borrow that at any time. So that’s really cash management move when we think about our liquidity it didn’t change anything because it's available to be drawn if and when needed.

Jason Kim - Goldman Sachs Group Inc.

Okay. And then, I mean I guess as I look at the trading levels of your bonds in the bank that virtually every piece of that is at the highs right now, so the market seems to be continuing to be supportive of the company and I know you typically talk about balancing between to taking advantage of market conditions and not taking on more interest expense too soon, as you look at first year maturities and obviously your last major transaction was done just at the end of last year. But has your thoughts evolved at all recently given how well your bonds are trading today, and I am talking about looking at potentially addressing more of your maturities and even ways to saving interest expense on some of your wider spread term loans.

Brian Coleman

Yes, first let me just say that it has not gone unnoticed the improvement in the trading levels across our capital structure the whole complex. So we are aware of that. I think the best way to answer this question is, if you take a look at our past behavior it's probably a pretty good indication of the company’s future behavior. We have been active in the past. We’ll continue to be active. This is just one of those things like asset sales, I can tell you actually you have something to announce, you can’t really talk about it. You still get the question and then you have to answer it like I am answering it today.

Jason Kim - Goldman Sachs Group Inc.

Understood. Thank you.

Operator

We have a question from David Miller. Please go ahead.

David Miller - Caris & Company

Hi, guys. I just wanted to flush out the Los Angeles situation a little bit more. So, at least my impression was that, those comparisons lapped on April 15th, but you guys are saying that that’s not really true because even though the boards were turned off last year on April 15th there was sort of a residual revenue effect that kind of leaked in to the bottom portion of last years quarter. Can you just flush that out for me a little bit, was it a make good situation or how should I think about that? Should I just assume basically that those comparisons don’t really lap on April 15th, should I just assume that as of July 1, that the comparison laps -- when should that comparison lap in your view? Thanks.

Richard J. Bressler

Somewhere between, what I mentioned just I want to go back through that again, because I just want to make sure I was clear, but I wasn’t clear before. So, just as a reminder the boards were turned off April 15th, you’re right on that. In the advertising world, in the advertising community cancellations usually take four to five weeks to come through since you have contracts and you have the ability to repurpose that inventory. And we’re able to do that by leveraging other assets in our portfolio. And I think it's just worth reminding all of us that yes, we did lose 77 digital boards in LA and we would -- we’re on a process, we’re working. I think as I said in my opening remarks with the municipalities in LA very constructively to move forward and to get those back. On the other hand in the same Los Angeles just as a reminder we still have -- we have 2000 traditional bulletins and posters in LA County excluding to say we have another 2800 basis, and in the Greater Los Angeles DMA we have another 3200 basis. So, we have plenty of other places to put this inventory there, and so in terms, I can’t tell you exactly how to model it and when to do it. All I can tell you is April 15th they came down, the contracts had four to five weeks to run a number of the contracts, so it's still not a clean quarter. What I would say is obviously clearly in the third quarter will be a clean quarter, the third quarter this year compared to the third quarter last year.

David Miller - Caris & Company

Okay, understood. Thanks so much.

Richard J. Bressler

You are welcome.

Operator

We have a question from Lance Vitanza with CRT. Please go ahead.

Lance Vitanza - CRT Capital Group

Thanks. It looks like you’re finally seeing a turnaround in France, it seems like it's coming sometime after the economies and so at least starting to improve. And so I am just wondering is that just a normal lag between economic recovery and Outdoor ad spend or is something else going on there, is the market getting less competitive or can you talk a little bit about that?

Richard J. Bressler

Happy to talk about it, and thanks for the question on France. The French market -- the market in France is as competitive as it was 12 months ago, so there clearly is no material change to that. I think as we’ve talked about in the last 6 or 7 months, one of our big initiatives at CCI is to allocate capital the highest return on inventory. One of our big initiatives is to identify un-served or bring a tighter focus to markets and go where we think we can capture dollars. I am not going to go into a lot of detail on that for competitive reasons, but with the downturn that was happening last year in France we took a critical look at our footprint. We managed to focus on the highest ROI. For example we do have better offerings in digital malls in France which are performed very well in Q1 and overall France came back this quarter. And by the way just, I think I pointed this out briefly your question was on France, but I’ll also want to point out the U.K. and China were also growth markets for us in the first quarter. So, we feel really good about again the job the team has done in the markets we are in.

Lance Vitanza - CRT Capital Group

If I can just get one more in quickly on the political revenue, could you remind us what the current asset configuration generated in 2Q, ’12 and 2Q, ’13 in terms of political revenues?

Richard J. Bressler

Yes, I don’t have that off head. I’ll let Effie get back to you with that. And just as a reminder our political dollars this year are relatively smaller or not even relatively are small in the first quarter. The second quarter, we expect to see the bulk of the political spending come in the third and fourth quarter. And Nathan Daschle and his team and the new political organization we have are just doing an outstanding job for us. Remember Nathan used to run the Democratic Governors Association, came on board towards the end of the last year and he and his team are working with a lot of market presence to make sure we maximize the advertising dollars. So, we feel really good about that.

Lance Vitanza - CRT Capital Group

Thank you.

Operator

A question from Tracy Young with Evercore. Please go ahead.

Tracy Young - Evercore Partners Inc.

Just focusing on the digital business, it looks like you added 15 boards this quarter, it's a little light versus prior first quarters. Is that just a timing difference compared to where they’re going to be aligned for the rest of the year? And also is there any way for us to give us the same board revenue growth on digital? Thanks.

Richard J. Bressler

Okay. So in terms of the digital expansion we did add only 15 boards this year. We're continuing to be incredibly bullish about our digital billboards. We intend to add more digital billboards this quarter than we added last and more as the year goes on. Well quite frankly the extreme weather conditions that I referenced earlier in my opening remarks and slow permitting process has forced us to push those planned installations into the second and third quarter, but I think you’ll see the pace of those pick up.

Tracy Young - Evercore Partners Inc.

Okay, thanks. And is there any way to give us just a revenue same board revenue growth figure for digital for first quarter?

Brian Coleman

No, we don’t break that out. Sorry.

Tracy Young - Evercore Partners Inc.

Okay. Thanks.

Operator

At this time there are no further questions in queue. Please continue.

Richard J. Bressler

Well thank you everybody. Effie, I, Brian and the team we’re here to answer any follow-up questions and hope everybody has a great day.

Operator

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