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Executives

Brian Coleman – Senior Vice President and Treasurer

Tom Casey – Executive Vice President and Chief Financial Officer

Analysts

Marci Ryvicker – Wells Fargo Securities, LLC

James Dix – Wedbush Securities

Avi Steiner – JPMorgan

Bishop Sheen – Wells Fargo Securities

David Miller – Caris & Co.

Jaime Morris – UBS Investment Bank

Nadia Lovell – JPMorgan Securities Inc.

Clear Channel Outdoor Holdings, Inc. (CCO) Q4 2011 Earnings Call February 21, 2012 9:00 AM ET

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the CC Media Holdings and Clear Channel Outdoor Holdings Fourth Quarter Earnings Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) And as a reminder, this conference is being recorded.

I would now like to turn the conference over to our host Brian Coleman, Senior Vice President and Treasurer. Please go ahead.

Brian Coleman

Good morning and thank you for joining us for our year-end and fourth quarter 2011 earnings call. On the call with me today is Tom Casey, Executive Vice President and Chief Financial Officer. During today’s call, we will provide an overview of the year-end and fourth quarter 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, we also are describing the performance of its subsidiary, Clear Channel Communications.

After Tom’s comments, we’ll open up the lines for questions. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements that involve uncertainties and risks. There can be no assurances that management’s expectations, beliefs and projections will result, or 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 or information may be mentioned during this call. For those 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 at the end of the period.

The company’s revenue pacing information includes an adjustment to prior periods to include all acquisitions and exclude all divestures in both periods presented for comparative purposes. It also excludes the effects of movements in foreign exchange rates.

During today’s call, we will provide certain performance measures that do not conform to Generally Accepted Accounting Principles. We have provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases, which can be found on the investor sections of our website.

A webcast of this call and the earnings press releases that were issued today can be found on the investor sections of our website at www.clearchannel.com, www.clearchanneloutdoor.com or www.ccmediaholdings.com. A replay of this conference call will be available for a period of 30 days.

With that, I will now turn the call over to Tom Casey.

Tom Casey

Thank you, Brian, and good morning, everyone. As we look back in 2011, we delivered another year of solid performance, despite the limited economic recovery. Especially important has been our ability to keep generating improved operating margins; thanks to our strategic initiatives and past restructuring efforts.

During the year, we strengthened our business in several important ways. We introduced new products, like our new iHeartRadio application; which offers more than 800 live broadcasts in digital-only stations over 150 cities; plus the ability to create custom radio stations. As part of the new iHeartRadio launch, we staged the iHeartRadio Music Festival in Las Vegas during September; the biggest live concert festival in radio history.

We launched a series of new initiatives including our strategic partners in distribution and National Programming Platforms. These groups helped enable us to use our scale, to maximize opportunities, for all of our partners; including advertisers and the music companies as well as the technology, automotive, consumer electronics, and other industries. We made significant new investments such as installing 242 new digital billboards in North America during 2011; plus expanding our digital footprint in several international markets including Sweden and the U.K.

On top of these efforts, we continue to deploy capital effectively and produce strategic acquisitions. And at the same time, we stayed disciplined on expenses, while reinforcing our leadership team with executives who have exciting plans for the company. They include Bob Pittman, who became CEO of CC Media Holdings and the Executive Chairman of Clear Channel Outdoor Holdings and William Eccleshare who now overseas all of Clear Channel Outdoor Holdings’ as its CEO.

So let’s turn to the company’s performance in the fourth quarter and full year. I’ll focus on our results for CC Media Holdings and Clear Channel Outdoor Holdings and wrap up with a review of our capital spend and liquidity before we take your questions.

In the fourth quarter, our CC Media Holdings’ revenues increased 1% to $1.65 billion driven by an acquisition of the complimentary Traffic operations to our existing total traffic network, and growth across our digital platforms and street furniture assets, despite the livelihood economic recovery and advertising market.

The quarter’s OIBDAN totaled $537 million, representing a 7% increase over fourth quarter 2010. Operating margin, which is our OIBDAN as a percent of revenue was approximately 33% an improvement of 170 basis points year-over-year.

For the full year CC Media Holdings reported revenue of $6.16 billion, an increase of 5% from $5.87 billion reported for 2010. Revenues grew across our businesses, due primarily by our digital assets and street furniture products, as well as our Traffic acquisition. In addition, our results benefited from the gradual advertisement improvement in the U.S. and around the world. The growth in revenues along with improved margins resulted in 2011 OIBDAN at $1.83 billion, an increase of 10% over the $1.66 billion generated in 2010.

Thanks to the strong operating leverage in our model, we were able to convert a substantial portion of our 2011 revenues into strong cash flows from our business operations with overall OIBDAN as a percent of revenue at approximately 30%, representing 140 basis points improvement from 2010, which was approximately 28%.

Given the slow economic recovery we’re very pleased with our results and it illustrates the leadership positions we hold with our industries and the benefits of the global diversification of our assets. Over time we’re confident that our strategic focus along with our investments and improvements in our core NOI businesses will continue to strengthen our revenues and competitive position.

Now, to the performance of our Media and Entertainment operations. As you know we are transforming our radio operations into a Media and Entertainment business to embrace new media, ensure that we are everywhere consumers, expected finance and support our advertising and strategic partners. That’s why we were making our content more accessible to listeners over broadcast, mobile and digital platforms, providing customer-focus technology and delivering the radio experience through entertainment, news, sports, talk and crisis information nationwide. While continuing to serve our local communities with best-in-class, talent, resources and support.

During the fourth quarter, our Media and Entertainment revenues increased 2% to $791 million reflecting the traffic acquisition earlier in the year as well as growth in digital revenues, partially offset by declining political advertising spend, which totaled approximately $7 million in the fourth quarter of 2011 versus approximately $32 million in 2010. Also for the fourth quarter, revenues and expenses associated with the traffic acquisition were $38 million and $36 million respectively. Revenues declined 3%, excluding the traffic acquisition’s revenues and we are about flat when you further adjust for the decrease in political spending in 2011.

Our operating expenses decreased 3% during the quarter, mainly from the lower salary and commission expenses and $19 million decline in music license fees related to a settlement of the 2011 and 2010 license fees. This decrease in expenses was partially offset by higher expenses from the company’s traffic acquisition as well as the investments associated with our digital radio services. Excluding the traffic acquisition, expenses declined at 11% or 7% when you adjust for the music license fee settlement.

For the quarter, Media and Entertainment OIBDAN rose 11% to $327 million. Among the best performing advertising categories in the quarter were financial services, retail and restaurants. While there were declines in telecommunications, travel and tourism in additional to political.

Let me batter back at our year-end digital metrics, there were more than 48 million downloads of the iHeartRadio app and our internal measurements show that we had about 37 million monthly uniques for all of our digital products and brands.

For the full year media and entertainment revenues rose 4% to $2.99 billion, driven primarily by the company’s traffic acquisition and higher digital services revenues. These revenue increases were partially offset by the decline in political spending compared to 2010 excluding the traffic acquisitions, revenue noted in the earnings release, revenues were up approximately $11 million.

Overall 2011 operating expenses grew 3% versus the prior year, expenses declined 2% excluding those from traffic acquisition. The decrease in expenses was related for mainly to lower selling and music license fees that I mentioned earlier partially offset by the higher digital evolving such initiatives as a new iHeartRadio player and the iHeartRadio music festival.

Media and entertainment OIBDAN for the full-year rose 5% to $1.16 billion from $1.1 billion in 2010. Underlying this performance is the continued improvement in our ratings and the out performance compared to the overall radio industry.

The key to the success is our diverse national and local footprint, leading content, effective yield management systems, [in way of] digital platforms and the strategic relationships with our marketers and advertising partners.

As for the first quarter of 2011, it’s still quite early in the year and so our visibility is limited. At the end of last week media and entertainment revenue was pacing up approximately 1% for the quarter as compared to the prior year period and that does exclude the traffic acquisition.

Now I’m going to move on to our Outdoor results. Clear Channel Outdoor Holdings reported revenue of $816 million in the fourth quarter, a 3% increase over the $793 million reported for 2010 fourth quarter. Excluding the effects of movements in foreign exchange rates, revenues rose 2%.

The higher revenues, along with continued margin improvements, resulted in Outdoor’s OIBDAN growing 10% versus the year ago period. OIBDAN totaled $229 million for the quarter compared to $207 million in the fourth quarter of 2010. Our operating margin reached approximately 28%, representing an improvement of about 190 basis points compared to the 2010 quarter. Excluding the effects of movements in foreign exchange rates, OIBDAN grew 9%.

For the full-year, Clear Channel Outdoor Holdings revenues grew 7% to $3 billion. This increase over the $2.8 billion reported in 2010 resulted from growth across our bulletins, airport and street furniture products, particularly in the digital displays. Excluding the effects of movements in foreign exchange rates, revenues were up 4%.

The higher revenues along with expanded margins resulted in OIBDAN growth of 15% over 2010. OIBDAN totaled $745 million compared to $648 million in 2010. Excluding the effects of movements in foreign exchange rates, OIBDAN climbed 13%.

During the quarter, Americas Outdoor revenue decreased 1% to $359 million. Revenue growth in our bulletin displays, especially digital, and our airports were offset by revenue declines in our poster and mall displays. Americas operating expenses were roughly flat and OIBDAN declined 2% to $142 million.

The stronger advertising categories include healthcare and medical, entertainment, retail, education, and restaurants.

As I noted earlier, we continue to see great momentum in our roll out of digital displays. By year-end we totaled 857 digital billboards in 37 U.S. markets, including (inaudible) displays installed during the fourth quarter. Moving forward, we expect to deploy 150 or more digital billboards across the U.S. during 2012, and we will continue to look for more opportunities to expand our digital footprint.

For the full year Americas outdoor revenues increased 4% to $1.34 billion, as a result of higher revenues across bulletins, airports and shelter displays especially with digital. Operating expenses rose 3% to $825 million for the year versus 2010. These higher expenses reflected increased site lease expenses associated with greater airport and bulletin revenues, particularly from our digital displays, as well as higher commission expenses related to increased revenues.

The Americas OIBDAN for the year totaled $512 million, an increase of 4% compared to $492 million in 2010. We’re pleased to see strong start for the Americas in 2012. At the end of the last week, it was pacing approximately 5% for the first quarter as compared to the prior year period.

Now let’s talk about our international results. During the fourth quarter, international outdoor revenues rose 6% to $457 million $159 million, resulting from its strengthened street furniture revenues across various countries including China, Sweden and Australia. Excluding the effects of foreign exchange, revenues were up 5%, operating expenses increased 4% and OIBDAN declined to 11% to $110 million.

Operating margins improved a 120 basis points compared to the fourth quarter of 2010, as we continue to maximize our operating leverage in our International segment. Excluding the effects of movements in foreign exchange rates, OIBDAN grew 9%.

For the full-year, International Outdoor revenues were up 11% to $1.67 billion, reflecting primarily higher revenues from street furniture across most countries, particularly China and Sweden. Partially offsetting [this growth] were declines in billboard revenues across several markets, such as Italy and the U.K. Revenue growth excluding the effects of foreign exchange rates was 5%.

Operating expenses rose 8% to $1.34 billion compared to 2010, attributable mainly to higher site lease and selling and marketing expenses associated with the growth in revenues. Also contributing to this growth was a $6.5 million increase related to the unfavorable impact of litigation.

Led by revenue growth from the company’s street furniture business across a number of countries, International OIBDAN grew 23% versus 2010 to $323 million. Operating margins increased to approximately 19%, representing a 190 basis point improvement over 2010 and 820 basis point improvement from 2009. Excluding the effects of movements in foreign exchange rates, OIBDAN [climbed] 17%.

Despite the challenges that our International team faced in some European countries, they continued to execute their strategic plan and delivered another great quarter to cap off a terrific 2011. They benefited from the strong leadership and a diverse geographic footprint across 30 countries in Europe, Asia and Australia.

As we entered the first quarter of 2012, our International business is still being tested by the lingering economic uncertainty in Europe and visibility does remain limited. At the end of last week, International revenues were pacing approximately flat for the first quarter compared to a year ago.

Let’s move on to capital. Clear Channel Media Holdings’ total capital spending for the year was approximately $362 million, compared to $241 million in 2010. About $291 million was in the Outdoor business and included the domestic build out of our digital board footprint and various street furniture and transit contracts internationally. As we previously mentioned, we expect 2011 capital expenditures somewhere in the rage of $300 million to $350 million. So we ended up slightly above that range, as we saw additional opportunities to invest throughout the end of the year.

For CC Media Holdings in 2012, we expect capital expenditure to be within the rage of approximately $350 million $400 million and that 75% to 80% will be in the company’s Outdoor business. As you can see from our spend in 2011 and guidance for 2012, we are continuing to deploy capital to further strengthen both our media and entertainment and Outdoor platforms; including such initiatives is iHeartRadio and Outdoor digital displays in the U.S. and internationally.

In addition to capital deployment, we’ve also been proactive in managing our capital structure. In February and June of 2011, the company’s subsidiary Clear Channel Communications Inc. obtained certain amendments to its credit facilities, which provided for additional financing flexibility and issued a total of $1.75 billion aggregate principal amount of 9.0% priority guaranteed notes due in 2021. Proceeds from the note issuance we used to refinance 2011 and 2012 note maturities and portions of the 2014 and 2016 bank maturities.

As of December 31, 2011, CC Media Holdings’ total debt stood at $20.2 billion. Clear Channel’s leverage as defined in those credit agreements at the end of 2011 was 6.9 times compared to 6.7 times the year before. And cash on the balance sheet at year-end totaled $1.2 billion.

As of December 31, 2011, Clear Channel Outdoor Holdings net debt amounted to approximately $2 billion and leverage on [notes] indenture was 3.2 times and cash on the balance sheet at CCOH was $543 million. With very little debt maturing before 2014, we remain focused on proactively managing our capital structure for delivering strong OIBDAN and cash flow for our business.

Let me close by saying that we are very pleased with our performance in 2011, our revenue growth reflected a gradual improvement of the overall AdMap market and we are encouraged by our results across our diverse global portfolio.

Looking ahead, while the economic recovery has been slower than expected, we are optimistic about the early trends we are seeing so far in 2012 and believe our business are well positioned to continue to deliver strong OIBDAN and cash flow.

Given our competitive position, continuing innovation and commitment to managing costs, together with Bob’s intended focus on securing new advertisers, marketers and other partners to utilize radio and outdoor assets, and as well as John Hogan leadership in reinventing our media and entertainment operations and William Eccleshare’s leveraging of our outdoor global scale, we believe that we can keep driving sold returns across all of our businesses. Bob, John and William make up a great leadership team that gives us confidence about our future success.

That is my prepared remarks, operator, we can now open the line for questions.

Question-and-Answer-Session

Operator

(Operator Instructions) Our first question will come from the line of Marci Ryvicker. Please go ahead.

Marci Ryvicker – Wells Fargo Securities, LLC

Thanks. Good morning. I just want to dig a little deeper into the Americas division in Outdoor. So for Q4, you’ve been pacing flat, you ended up slightly down. Can you talk about what happened in maybe just local versus national occupancy versus rate, and then there was some tough auto comps, so have those eased? And then moving to Q1, can you address the same issues in terms of pacing, national versus local, occupancy versus rate [and about] auto contract to come back?

Tom Casey

Hey Marci, a couple things. One, when you look at our pacing that we gave you, obviously that was at a point in time. It came at 1% negative. When you adjust for FX, it’s 0.5%. So, we feel we’re pretty much in line where we though we’d be. We’d like to have it obviously higher, but pretty much in line.

Not a lot changes really through the fourth quarter. I would say that, again, pretty consistent. And as we highlighted on our remarks, we did see healthcare and medical was strong, entertainment was strong, and on the weak side, telecommunications and automotive was a little weaker; but overall, kind of in line.

As we look to the first quarter though, as we said, up 5%, so we’re feeling very good to the start of the year. We’re seeing good strong growth in retail and media, healthcare and medical. Some of the weaker sides continue to be telecommunication and some of the beverage companies. But overall, we’re feeling very good about where we’re starting the year.

Marci Ryvicker – Wells Fargo Securities, LLC

Have you seen big diversions in your local business versus your national business in those categories?

Tom Casey

No, we really have not seen big diverse growth rates.

Marci Ryvicker – Wells Fargo Securities, LLC

Is it fair to say that they’re pacing similar in Q1 then?

Tom Casey

Yeah, they are. They’re just about the same.

Marci Ryvicker – Wells Fargo Securities, LLC

Okay.

Tom Casey

Yeah. They are. They are just about the same.

Marci Ryvicker – Wells Fargo Securities, LLC

Okay.

Tom Casey

They ebb and flow, but some start stronger and get (Inaudible) get stronger, but overall right at this point, they are about the same.

Marci Ryvicker – Wells Fargo Securities, LLC

And one last question, you talked about your outlook in 2011 for digital. Do you have a total target either in terms of a total number of boards or maybe penetration across your markets for digital.

Tom Casey

Well, we do, we check this very closely as you know, most of our limitation on the number that we have is mostly due to the – getting the various permits around the country, but obviously we’ve got a number of initiatives in the number of markets across the country where we want to grow. And then what are doing is working through that. So we’ve given you $150 million for the year, obviously if we can do better than that, we will. As you recall last year, we did significantly more than that we had anticipated. Again, because we saw some good opportunities, for example, in Dallas, we had a significant amount of permits approved in the fourth quarter, so we built them out. But it’s a number that we think we can – [if you remember, really] any other limitations as far as building it out or capital or anything like that is really just getting the permits.

Marci Ryvicker – Wells Fargo Securities, LLC

Right. Thank you so much.

Operator

Our next question will come from the line of James Dix. Please go ahead.

James Dix – Wedbush Securities

Thanks very much. Good morning, Tom. Just three questions I guess I have. First, again on the Americas, are you seeing any difference either in the fourth quarter or in your first quarter pacing in terms of growth for the larger versus the smaller markets in your plans. And then second, just if you can give some outlook for operating expenses or expected margin improvement as we look forward into 2012. And then my last question is just – I know over the past year the [parent] has purchased some shares in Clear Channel Outdoor; just wanted know kind of what the criteria were for share purchases there and what we might expect in terms of capital deployments for those share purchases going forward? Thanks

Tom Casey

Thanks James. Again on the first quarter versus fourth quarter, clearly as we said earlier with Marci’s comment, we didn’t really see any real change in the patients that we had given in – as part of our earnings call for the third quarter. Obviously, we continue to push hard – keep in mind that fourth quarter comps were a little bit more challenging. So that may have put some pressure on the actual reported number. But when you put it into math, it’s only about $3 million. When you look at the first quarter though, again, we’re continuing to see great growth, up 5%; we’d like to think that will continue and so, we’re cautiously optimistic. Obviously visibility in this market is challenging, but plus 5% feels pretty good.

With regard to margins, this has been the area that we have been focused on for quite sometime. When you think about the margin expansion we’ve had in the total company for our CCME; up about [300] basis points in operating margin. We think that is a terrific story and really reflects the efforts we’ve had. The expense management and revenue focus we have in this company is very, very strong and we’d like to see ourselves continue to expand those margins through additional growth and operational effectiveness.

Finally on the share repurchase; we’ve had an – longstanding belief of effectively deploying our capital and that includes not only growing the business, but also putting it to work in the areas of repurchases that’s been in the debt area, as well in the equity area. We continue to see opportunities, and we take advantage of that when we do and so we did buyback some shares during the quarter. Given the prices of our stock at that point for CCOH, we did repurchase some shares. So you’ll see us continue to be proactive managing our capital, and I think we’ve done a pretty good job of taking advantage of the market, and being aggressive when necessary.

James Dix – Wedbush Securities

Tom, just one follow-up I guess my question on the first point since your growth was more – did you see in the fourth quarter any significant differences in growth between your larger markets versus your smaller markets in the Americas and I guess a similar question in terms of large versus small market growth, in terms of your pacings in the first quarter. Thanks

Tom Casey

Yeah, and again we really have not I would say that it’s been pretty consistent quarter-over-quarter. So, I don’t have much else to share with you

James Dix – Wedbush Securities

Similar to local versus national as well

Tom Casey

Yes, that’s what I’m referring to, yeah

James Dix – Wedbush Securities

(Inaudible) like top 10 versus markets that’s 20 plus or something but if you ask me like you’re seeing fairly similar

Tom Casey

Yeah it's clearly some markets obviously are stronger than others. But I think again from a national, local standpoint we’re not seeing that significant of a difference. I think that we’ve had pretty consist within a point or two of local versus national. So, again we feel pretty good about that. As I said the national business start off a little slow in the beginning of the year and has continued to grow week-to-week in the first half of – excuse me, first quarter of 2012.

James Dix – Wedbush Securities

Great, that’s very helpful. Thanks very much.

Operator

Our next question will come from the line Avi Steiner. Please go ahead.

Avi Steiner – JPMorgan

Thanks for taking the question, guys. A couple on Radio and then a cap structure question. Just looking ahead on the expense line in Radio, how do we think about that directionally, given the settlement, which I assume was one-time in Q4? And then secondly on the Radio before my cap structure question, can you talk about how much revenue you’re getting from digital, offering some video now and maybe iHeartRadio specifically, given the re-launch last year and the partnerships you signed with other broadcasters? And then, I’ll come back for one more. Thank you.

Tom Casey

Okay. Well, first on expenses, the Radio team has done a terrific job in managing their expenses. We obviously did get some benefit from the settlement in the fourth quarter, but I would say they continue to show pretty significant improvement. So when you look at the year-over-year numbers, their margins are still up a point from 38% to 39%. So we’re continuing to see, even on small amounts of revenue growth, a pretty significant operating leverage. You could see obviously for the fourth quarter, 2% top line, 10% bottom line. This business has a lot of operating leverage and we expect them to continue to grow their top line while managing their expenses.

In addition to that, it’s including significant investment we’re making in the digital area that you mentioned. Keep in mind that the digital business today, the iHeart specific app, we are not monetizing the customized radio today, and so there’s really no digital revenues associated with that. Today, that continues to be commercial free and we’re getting great feedback from our listeners and the number of downloads we’re seeing is growing very, very nicely. As far as the absolute digital revenue, it’s actually growing very nicely; that’s from our streaming of radio stations and display ads, and that’s growing nicely year-over-year.

So we’re very encouraged with our ability to take our content and deliver it to customers in many, many mediums, and digital is just a new area for us. We’ll continue to evaluate our approach with the iHeart feed, but we’re very encouraged with the adoption and the feedback we’re getting from our customers.

Avi Steiner – JPMorgan

And on that, just one more quick follow-up. On the digital side, when do you plan on kind of trying to monetize that, be it inserting ads or perhaps [starting or is] that not even on the table right now?

Tom Casey

Well, it’s something that we’re constantly looking at, but we have no plans at this time to change our approach. And we’ll evaluate that as part of our growth strategy in expanding our reach with iHeart application. So, nothing to report right now, but we’ll keep you informed of that progress.

Avi Steiner – JPMorgan

Okay. And then on the cap structure side, how do you think about potentially raising new debt here, given the strength in the cap markets, and is it a question of cost of capital for you securing a debt extension or other flexibility from bank lenders? And then lastly, if you can talk about, since you did a good job to talk about capacity at Outdoor, but if you can talk about potential incremental capacity [you’ll have] to raise additional priority guarantee notes? Thank you very much, guys.

Tom Casey

Yeah. I’ll take the first one and let Brian handle the second one. But with regard to capital, we have consistently communicated to you and I think our actions reflect; our ongoing management of our liquidity and our capital position. We are constantly evaluating the market for opportunities to issue additional securities, looking at extension transactions or refinancing transactions. We’ve pre-funded maturities and keeping significant amounts of cash on the balance sheet. So we feel like we’ve been managing our liquidity and our maturity profile well and continue to do that.

Obviously, the market is very strong right now and we’re constantly looking at opportunities; I’ve nothing to report today, but something that we continuing to evaluate. And with regard to PGMs, Brian here – he have got a couple of comments on our capacity for PGMs.

Brian Coleman

Yeah, I mean – yeah, I think the primary question is, if you’re issuing PGMs to refinance senior secured bank debt, there really isn’t a limitation. The limiter would be under the LBL and PGM that is the incrementals in your debt baskets. As long as you’re [raising] PGMs to pay off senior secured bank debt; it’s kind of a law since you aren’t limited by that capacity constraint. If you are issuing senior debt in your (inaudible) the proceeds to pay down, other senior debt and then you’d have to be incompliant with those baskets.

We don’t disclose the baskets, but they’re not difficult to track and so that we can do that offline. I will tell you though in June when we marketed the PGMs, we did mention at that time, that we had about $250 million of availability and the only significant difference between now and then has been a $500 million repayment on the revolver. So if you take $250 million and add $500 million to, it you get to $750 million neighborhood. We’ve talked about that before, so that’s out there; that’s a pretty good idea – what we see as our incremental senior debt basket capacity remaining, but again as long as we are raising PGMs to payoff senior debt, doesn’t really impact those baskets.

Avi Steiner – JPMorgan

Perfect. Thank you for taking the question.

Operator

Our next question will come from the line of Bishop Sheen. Please go ahead.

Bishop Sheen – Wells Fargo Securities

Hi, everyone. Thanks for the detailed summary. Let me start with the capital structure. This year, the 9.25% coupon at outdoor are callable and certainly outdoor has been a terrific vehicle in the past for you to manage your balance sheet at the parent. So I was wondering if you could give us any color on your thinking ahead of how you would like to possibly recap outdoor to be beneficial to the parent holdings.

Brian Coleman

Well, Bishop, this is Brian. I will take the first point, the senior notes due hit their first fixed price call date in December of this year. I would imagine, we would look at that as any corporate finance department would, it doesn’t make sense to pay the premium lower the interest rate, I think a lot of that would have to – it will depend on the market at that time. I think another consideration we would think about is that indenture was put in place in December of ’09. The markets today would probably report us some additional flexibility in outdoor, so that I might be another reason to take a look at it. We’d be pushing out call projections that would be a negative thing to look at. So what I would tell you is, it’s pretty price (inaudible) make whole level and so, as we hit the fixed price call dates, we will make an economic determination at that point in time based on the markets at that point in time. With respect to your broader question about how do we think about outdoor, I’m not sure that…

Tom Casey

Well, I think, what I would say, Brian, is that, I think we will look at outdoor – in the [capacitated] outdoor in conjunction with our management of a maturity profile at CCMH it’s been something that we’ve talked about quite a bit. It gives us a lot of flexibility to manage our maturity stacks and – so, other than we look at all the time, Bishop, and we will expect to continue to do that.

Bishop Sheen – Wells Fargo Securities

Okay. And then one follow-up. I don’t know if you disclosed in the K, because I haven’t had a chance to look at it any redemptions – you were planning on some redemptions that were funded with the priority notes for Q1. Did you complete any redemptions or you’re going to do redemptions in Q1 at the parent of the legacy debt

Brian Coleman

It hasn't happened yet. We have a March 15 maturity I believe it’s about $240 million, $250 million of which $204 million of cash we have set aside in segregated account that was our cash proceeds from the PGM issuance and we will use that cash to redeem in part that March 15 maturity

Bishop Sheen – Wells Fargo Securities

Okay. So nothing surprising there. Last question the proxy when do you think you’ll be filing that?

Tom Casey

Bishop, probably the end of the March – end of March early April we haven’t set a specific date yet.

Bishop Sheen – Wells Fargo Securities

Thanks. Thank you

Operator

Our next question will come from the line of David Miller. Please go ahead.

David Miller – Caris & Co.

Yeah, hi, Brian or Tom a question on the Americas guidance up 5% for the current quarter can you break that out between Latin America, Mexico, and the United States. I am feeling you’re going to say no, but if the answer is no, can you at least talk about whether that 5% incorporates foreign exchange? Thanks very much.

Tom Casey

Hi David, it’s Tom. The up 5% I don’t believe has a significant FX impact. We don’t breakout the pacings by geographies here, you are correct. But you know, I think again what I said earlier is it’s a very strong start of the year. I think the team has done a terrific job positioning ourselves for the year with our digital build out. We’re continuing to see strong growth in retail and media and healthcare and restaurants. And so again the team has done a terrific job on the national side as well as the local side. And it’s just starting the year off very, very strong, so we are encouraged by it, but it’s not really driven by FX or one particular area.

David Miller – Caris & Co.

Okay, great. And just a quick follow up. I mean the Achilles heel with you guys has always been sort of international expense growth, this time you had 4%, a mere 4% international expense growth which is great. I mean what’s your feeling in terms of just kind of capping the expense growth on the international side for the year? Do you guys feel generally pretty confident that you can spit kind of a low single digit bogey on expense growth for the year that apply to international, thanks.

Tom Casey

Well, I think our international team has done a absolutely terrific job in managing, not only their expense bas, but their growth. When you look at the international business for the year, 11% top line, 8% expense and a 23% OIBDAN, kind of hard to ask for a lot more than that…

David Miller – Caris & Co.

Yeah.

Tom Casey

They have done a terrific job in managing 30 different countries. Clearly some were performing better than others. But as far as from my perspective their expense focus has been extraordinary as they have seen opportunities to leverage best practices and purchasing power around the globe. And so even in the fourth quarter, up 6% top line, 4% expense line, again driving 11% OIBDAN. I think that they’ve demonstrated a terrific, terrific run here; and I mentioned obviously the margins they’ve been able to drive year-over-year, 500 basis points increased margin. I would say the issue or the Achilles heel as you mentioned, I think that’s a legacy. This management team is focused on expenses and is driving efficiencies and has improved their margins significantly both on the top line and the expense line.

David Miller – Caris & Co.

Okay, wonderful. Thank you.

Operator

Our next question will come from the line of Jaime Morris. Please go ahead.

Jaime Morris – UBS Investment Bank

Yeah, hi. Just a quick one on International in 4Q and 1Q. I was wondering if you could talk a little bit about what you’re seeing in Europe versus the rest of the markets that you operate in.

Tom Casey

Yeah, Jaime. I would say, as you would expect, parts of Europe continue to be challenged; Italy and Spain have been under pressure for quite some time and they continue to see pressure. However, as I mentioned, the diversification of the portfolio; we’re seeing good strong growth in China and Australia and Sweden, Belgium. And so, again, this business is managing a portfolio that every year provides new challenges for them, and has done a terrific job of managing through the significant growth we’re seeing China and Australia and the challenges in Southern Europe. So we continue to be cautiously optimistic about their businesses and are investing in the highest growth areas like China, like Turkey, like Australia that continue to provide great growth opportunities. So, again, I can’t say enough about the teams focused on managing both the good and the challenging environments.

Jaime Morris – UBS Investment Bank

When you look at the pacings data for 1Q, is there any market in particular that’s dragging the difference versus 4Q?

Tom Casey

Well, as I mentioned I think we continue to see areas that are probably furthest away from Greece doing the best. So we are seeing China and Australia as I mentioned doing very, very well. And again, Italy and Spain being challenged still early in the year for the U.K., but they will have the Olympics this year, so for the year, I think they will be five. So I think overall, I think we are definitely seeing pockets, but it’s pretty consistent one, 4Q to 1Q as far as where that growth is. And we haven’t seen significant changes from the 4Q to 1Q.

Jaime Morris – UBS Investment Bank

Okay. And then, just one quick one in the 10-Q I was looking and it looks there was a change in the number of displays in the U.S., but a big change from, I think 188,000 last year to 125,000 this year, is that a transit contract or what’s driving that change?

Tom Casey

We changed the way that we counted boards in airports. We were counting them by flip and we've modified that to make it per structure. So no change in reach, no change in audience penetration, it's just more of just structures versus flips in airports.

Jaime Morris – UBS Investment Bank

Okay. Thank you.

Operator

Our last question due to time constraints will come from the line of Nadia Lovell. Please go ahead.

Nadia Lovell – JPMorgan Securities Inc.

Thank you so much. Most of my questions have been asked, but one follow-up on digital build out for 2012. You mentioned that Dallas is what helped Q4 to be significantly higher than all way you had initially guided. What markets could open up in 2012 that would push our number over the 150 guidance?

Tom Casey

Difficult to be specific, we are still working through a number of municipalities, Obviously, areas like Boston continued to be areas they we'd like to continue to grow in but to I don’t want to jinx ourselves here, but I think there is opportunities across many, many geographies and we’ll continue to work closely. So these processes take time, we need to work closely with the municipalities, and we’ll continue to press to grow as fast as we can in this area. We will keep you informed as the year progresses, if we get better clarity like as you mentioned we were very fortunate to get the Dallas permits and started putting them up right away in fourth quarter. So I think that hopefully it gives you an indication of how we think about it and how we’re proactively managing it.

Nadia Lovell – JPMorgan Securities Inc.

And then just my last question on the tax rate I mean, was there anything special in Q4 as so why taxes were so high, and what's the good run rate for 2012?

Tom Casey

Yeah, I believe, that we have two IRS settlement that affected the rate year-over-year. So, nothing other than the sale in the couple of prior year audits.

Nadia Lovell – JPMorgan Securities Inc.

Okay. And what’s your good rate for 2012 just historical

Tom Casey

Yeah. we don’t forecast a tax rate.

Nadia Lovell – JPMorgan Securities Inc.

Okay, thank you very much.

Tom Casey

Thank you welcome.

Brian Coleman

Folks, that completes today’s conference call. We appreciate each of you joining us today. If you do have follow-up questions, please feel free to contact us. Thank you very much.

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