Cumulus Media Inc Q3 FY2022 Earnings Call

Good morning ladies and gentlemen. Welcome to today’s 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 please go ahead.

Thank you, operator. Welcome, everyone, to our Third Quarter 2022 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. 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. We also posted a Q3 investor update to our website, which we encourage you to download if you haven’t already. A recording of today's call will be available for about a month via link on our website. And with that, I'll now turn it over to our President and CEO, Mary Berner.

Thanks, Collin, and good morning, everyone. Despite a challenging market environment, consistent execution of our strategic plan has put us in an enviable position that will allow us to not only effectively manage through the continuing headwinds, but also take advantage of opportunities that may arise. And in the context of this environment, our third quarter results reflect the benefits of that execution. Although total revenue driven by macro weakness declined 2%, we increased EBITDA 2% with expanded margins. Digital revenue, a bright spot, grew 5%. We generated $24 million of cash from operations. We reduced net leverage to 3.7x, and we returned additional capital to shareholders through open market share buybacks. Looking ahead, we are confident that we will maximize the impact of our multi-pronged capital allocation approach and as we continue to rigorously execute our business plan, drive shareholder value. To remind you, our plan consists of the evolution from a radio-first focus to a multi-platform audio-first content strategy, including the development and growth of multiple profitable digital businesses. Significant and continuing reduction of our cost base, which enhances operating leverage, profitability, and cash flow generation. Our high ROI internal investments, a disciplined approach to M&A, and the generation of incremental cash through non-core asset monetization. And the creation of a strong balance sheet with best among peers net leverage and liquidity to support a return of capital and debt strategy that maximizes shareholder returns. As I said, Q3 is yet again another example of the value and impact of this plan. We highlighted on our last call that the market environment, particularly for national advertising, has been weak. As we mentioned, starting in late Q2, national advertisers reduced marketing to mitigate the headwinds they face from inflationary pressures, persistent supply chain issues, finance market turmoil, and overall recession risks. That weakness in national advertising demand that we experienced affected all of our national channels, including network, national spot, and podcasting throughout Q3. On a relative basis, our local businesses have held up better, outperforming national, though notably, we did see some of that gap start to narrow as local did not outperform national in Q3 to the extent that it did in Q2. Collectively, these macroeconomic pressures resulted in broadcast revenue declines of approximately 5% in the quarter, which was the major driver of the 2% decline in total revenue. That said, through the execution of our audio-first strategy, we are successfully expanding our presence in growth areas of the audio ecosystem, driving increases in both digital audiences and digital revenue. Organizationally, we've undertaken a number of efforts to support this strategy. In programming, we've restructured and aligned compensation to incentivize our team to grow audiences in aggregate. In sales, we've executed numerous compensation, training, and recruitment tactics to both help and motivate our entire sales force to monetize our assets across platforms regardless of distribution channel. Collectively, these efforts resulted in 5% year-over-year revenue growth in the quarter across our three digital businesses, streaming, podcasting, and digital marketing services. With that growth helping to offset lower broadcast revenue performance. In aggregate, digital revenue now represents approximately 15% of total revenue. We delivered streaming revenue growth of 11% year-over-year for the quarter as our focus on continuing to deepen and increase engagement with current listeners, and bringing new listeners to our content to create sellable impressions that we monetize through local, national, network, and programmatic ad channels is paying off. We do this through developing new products, increasing distribution outlets for existing content, and expanding broadcast partnerships with digital extensions. From a new product perspective, we saw meaningful increases in audience engagement with the new sports apps that we rolled out last quarter for iconic local radio brands like The Ticket in Dallas, KNBR in San Francisco, and The Zone in Nashville. Downloads of these apps were up exponentially in Q3 driven by increased demand for our content as the NFL season kicked off. We also increased distribution of our streams through expanded renewals this quarter with TuneIn and iHeartRadio. And as we mentioned in our last call, we expanded our NFL broadcast partnership by securing the digital audio rights. Now with the NFL and Westwood One, we are truly able to serve NFL fans whenever and wherever they want to listen. With the availability of the NFL on the Westwood One stream, we have been able to create new exclusive opportunities for our advertising partners. Our flagship streaming sponsor is seeing extraordinary levels of brand equity lifted from its prominent pre-roll ad. We're looking forward to a strong second half of the season as we march toward the playoffs in the Super Bowl. Moving to podcasting, we achieved strong download growth in the quarter, up 36% year-over-year, which puts us on a run rate to nearly 1.5 billion downloads annually. Our primary strategy is to serve as a monetization, distribution, and promotional engine for large national personality-driven podcasts, mostly through partnerships and also to leverage our terrific local talent and brands to develop and monetize local podcasts. Through investments we've made, listeners are now able to hear our local talent on both a time-shifted basis mostly through our owned apps and websites as well as on our Bespoke podcast. On the national side, we've increased impressions through the growth of existing partnerships and by entering into new partnerships with established podcast content creators; a key focus has been the expansion into video companions to audio podcasts or vodcasts. With YouTube now a top three platform for podcast consumption, expanding our video capabilities is a critical value-enhancing strategy to help podcast talent reach incremental and attractive audiences, and we're taking advantage of this opportunity with many of our partners. The massive download growth that we're seeing reflects the impact of those efforts. However, while our listenership is growing robustly, since nearly all the advertisers currently in the space are national in nature, podcast revenues have not been immune to the pullback in national advertising. As a result, even though we saw strong revenue growth in our local podcasting business, it was off a small base and not sufficient to offset the market-driven softness in our national podcast. Aggregate podcasting revenue was down 4%, but we remain bullish on the prospects for the business given the strong underlying audience trends. And finally, in Q3, digital marketing services grew 12% year-over-year, driven by multi-market sales, new product additions, and strong sales execution. Our multi-market sales strategy, which is tracking up over 40% year-over-year, facilitates the ability of larger clients to place coordinated digital and broadcast campaigns across cities and states. Additionally, this year, we launched our Cumulus Boost product, which is an integrated solution for SMBs that enhances their website performance, reputation management, as well as overall productivity. We're seeing good traction in Boost customer signups and look forward to speaking more about the growth of this recurring monthly revenue stream. Overall, our ability to execute as a one-stop-shop provider at scale differentiates us from competitors in the very fragmented, $15 billion total addressable market for digital marketing services. In Q3, as per our plan, we continued to reduce costs. For continued permanent reductions in our fixed cost base, we're still on track to be more than $75 million below the 2019 baseline. We increased EBITDA by 2% and grew EBITDA margin by 70 basis points to 20%. As we monitor the increasingly tough market climate throughout the quarter, we implemented additional cost reductions with a keen focus on non-revenue impacting actions. As I've mentioned in the past, Cumulus has historically been a company that's been very lean on the cost side. But we have still been able to find ways to do business differently to drive cost reductions and more operating leverage. This year, for example, we've taken on 28 facility consolidations or reductions, which have yielded some cost benefits this year, and will result in more in 2023. With regard to capital allocation, we have always been prudent stewards of our cash, as we have focused primarily on investing in high ROI internal initiatives and partnerships as well as maintaining a disciplined approach to M&A. For instance, this year, we've invested with partners in the capabilities we needed to bring Cumulus Boost, which I just mentioned, to market. Additionally, for our podcast business, we've invested in the development and implementation of technology to enhance our sales effectiveness, yield management, and access to programmatic podcast ad channels. And over time, our disciplined approach to M&A has resulted in a high success rate with acquisitions and swaps completed at highly attractive multiples. Lastly, we have aggressively monetized our non-core assets over the years, such as land and towers, and we continue to look for opportunities to generate value from remaining non-core assets. All of these items have helped bolster our already best among peers balance sheet. During the quarter, we reduced our net leverage to 3.7x, the lowest it's been in more than a decade, while still returning $3.9 million of capital to shareholders via share repurchases and retiring $2.7 million of senior notes at a discount. We ended the quarter with $180 million of cash, and with our undrawn ABL facility, we have more than $200 million of liquidity, providing significant dry powder with which to support our multi-pronged capital allocation strategy. Looking ahead, simply put, we're in the enviable position where we have flexibility with respect to the choices that we can make to mitigate the impact of further economic slowdown while still being strategic about the actions we take to accelerate longer-term growth. As I mentioned earlier, the macro headwinds have become more challenging than expected on our last call. As we sit here today and look at Q4 report pacing, the national advertising pressures we saw through Q3 have stabilized at or near those lower levels. Also similar to Q3, local spot and digital pacing continue to be better than national spot and network. In aggregate, we are currently pacing down low to mid-single digits inclusive of political. Given the timing of this call, we don't have a full read on political spending since there's still more than a week left for political dollars to come in and the prospect of runoffs remains unclear. However, so far in Q4, the prioritization of political spending has been more heavily weighted to demographics and population areas, which don't align as well with our portfolio as they have in the past. As such, we are trending toward a political finish slightly below 2018 levels for the year. We told you on our last call that based on our pace and visibility at that time, we were on trend to the low end of our original EBITDA guidance range of $175 million to $200 million. Our trailing 12-month EBITDA grew in Q3 to $166.5 million. But given the market backdrop, achieving the low end of that range is now aspirational. As such, we're revising full year EBITDA guidance to a range of $160 million to $170 million. This is of course wider than we would have normally provided with about two months left to go in the quarter. However, the macro pressures that all ad-based media companies are feeling have resulted in a lack of visibility that makes a more narrow range impractical at this time.

Thank you, Mary. As Mary mentioned, revenue in Q3 was down 2% driven primarily by ongoing weakness from national advertisers as well as lower activity from local advertisers which in aggregate, negatively impacted broadcast revenue, partially offset by continued growth in our digital businesses. A little bit more color on the broadcast revenue lines. The drop in national advertising revenue began in late Q2 and continued through Q3. National advertising is reflected in our network revenue line with a smaller portion in our spot broadcast revenue line and also in our national podcasting business. Local spot revenue outperformed in Q3 versus national, but to a lesser extent than it did in Q2. During the quarter, we also had $4.5 million of political revenue, bringing year-to-date political revenue to $10.1 million versus a year-to-date political revenue in 2018 of $8.7 million. As a reminder, the lion's share of political dollars occurs in the fourth quarter. While we were ahead versus 2018 through September and despite strong political advertising environment and strong state overlap with markets we operate in, much of the spending and the most hardly contested political races has been skewed to demographics and population areas which are less well matched with our station footprint. Having said that, we could still have some upside from political election spending. Turning to digital, we continue to see strong growth in our digital marketing services and streaming businesses, which grew 12% and 11%, respectively. Our podcasting business experienced revenue declines of 4% driven by pullback in national advertising. With respect to category performance, home products was our best performing category with a percentage and dollar growth basis. We continue to see growth in entertainment, general services, and professional services. Automotive, after declining 5% in Q2 year-over-year, actually grew in Q3 year-over-year. While they're still down nearly 40% from 2019, that is off the lows of down more than 50%. National was our weakest category from a dollar standpoint, driven by insurance and mortgage subcategories. From a percentage standpoint, sports betting was the weakest category, driven by both overall reductions of spend by sports betting companies as well as the impact of the WynnBET comparison for us specifically. We also expect the WynnBET comparison to have a similar negative impact on our Q4 numbers. Moving to expenses. Total expenses in the quarter decreased by approximately $5 million year-over-year, driven by benefits from our continued cost reduction actions as well as lower variable costs and lower revenue. These cost reductions, which more than offset ongoing inflationary increases from items like personnel and insurance costs help us drive growth and EBITDA for the quarter of 2% year-over-year to $46.6 million. Now to the balance sheet and cash flow. We generated $24 million of cash from operations during the quarter, bringing year-to-date cash from operations to $55 million and resulting in a cash balance of $118 million at quarter end. Year-to-date, spend on CapEx has been $18.6 million, and we continue to anticipate we will spend approximately 39 for the full year 2022. During the quarter, we retired $2.79 of senior notes at a discount, bringing year-to-date debt paid down to $65.1 million. This pay down results in $3.5 million of cash interest expense savings on a full year run rate basis. We ended the quarter with net leverage of 3.7x, down from 3.8x at the end of the previous quarter. As importantly, we've continued to delever the balance sheet while still returning capital to shareholders in the form of share repurchases of $3.9 million this past quarter. Year-to-date, we have spent $28.9 million on share repurchases against our $50 million Board authorization. Since the beginning of our share repurchase program, we have retired approximately 2.1 million shares, or approximately 10% of our shares outstanding as of December 31, 2021. Liquidity, which consists of cash and availability under our undrawn ABL facility at the end of the quarter, was $213 million. As Mary mentioned, revenue is currently pacing down low to mid single digits inclusive of political for Q4. For the full year, we are revising EBITDA guidance to $160 million to $170 million. With a new EBITDA guidance, we expect to finish the year slightly above 3.5x net leverage. However, our net leverage target of below 3.5x remains unchanged.

The first question comes from Michael Kupinski with Noble Capital Markets. You may proceed.

Thank you. Thanks for taking my questions. As we look to the possibility of heading into an economic downturn, I was wondering if you can just talk a little bit about capital allocation. Do you plan to build cash instead of maybe buying back stock at current levels, even though the stock price at current levels is quite depressed? I'm just wondering if you can give us a little bit of outlook or what your thoughts are about building cash as we kind of look at a recession coming.

Michael, good morning. It's Frank. I'll take that. First, we start off and the way we look at it is we have a terrific amount of liquidity on the balance sheet between cash and undrawn ABL availability. We remember through COVID we actually generated a positive cash from operations. So going into potential economic weakness and recession, we're in a very good position. With regard to our capital allocation, what I can say at this point, we'll continue to monitor the markets, be opportunistic. We're also going for budgeting for next year. And we'll have more to say as we get into the end of the year in our fourth quarter call in February.

And there are some other broadcasters out there that are struggling. And I was just wondering if there is any increased interest in M&A activity, anything that you're seeing out there that might be of interest to you?

Given our liquidity and strong balance sheet, we are in an excellent position to explore opportunities as they arise. However, I believe many companies are currently evaluating not just the fourth quarter but also the potential impact of a recession. There’s nothing significant on the horizon. Nevertheless, as I have mentioned before, we will consider any strategic opportunities that make sense. Fortunately, we have the liquidity and resources to capitalize on these opportunities when they come up.

And you were talking about weak national advertising. I was just wondering if there is any particular category that's causing weakness? Or is it just broad based?

Yes, I can take that. It's pretty broad-based. It's across national spot, network podcast. But it seems to have hit a low and stabilized with podcasting appearing to have a rebound in the fourth quarter. We look at a lot of category trends, and we looked at it every which way, and it's really just across the board.

Got you. Thank you. Go ahead.

Mike, let me add a little bit more color. Financials, as we mentioned in our prepared remarks, are particularly weak, especially when you think about the mortgage sector and insurance companies. We did mention this, but just as a reminder, last year, we did announce a partnership with WynnBET, which did generate nice dollars for us in the third quarter and the fourth quarter, and that's national dollars, and that makes it a difficult comparison. Again, as a reminder, we did unwind that partnership in the first quarter of this year. As part of that settlement payment, in essence, accelerated dollars that we would have otherwise earned this year through the partnership. So I just want to give you that additional color.

Thanks, Frank. And can you tell me what was the WynnBET contribution last year?

What we said in the first quarter earnings call was first quarter revenues from WynnBET was in the low to mid single-digit dollars. Then the settlement was a portfolio of roughly $5.9 million or so of revenues that we otherwise would have seen through the rest of the year.

Got you.

So in aggregate, it's pretty close to a double-digit number.

Okay, great. Thank you. I appreciate it.

Thank you. The next question comes from the line of Aaron Watts with Deutsche Bank. Aaron, your line is now open.

Hi, thanks for having me on. Just a couple of questions. One first housekeeping. Can you remind me where we stand today with regards to what percentage national is of spot revenue versus what local is in spot revenue?

National is between 20% and 25% of our local spot line as per the press release. And obviously, it's virtually 100% of our network advertising revenues.

Okay. And then, on your guidance, I want to make sure I understand the underlying theme going into the download low to mid-single. Mary, when you say national has stabilized some in the fourth quarter, does that imply local has softened comparatively more? And I guess if that's the case, can you just flush out again, what areas of local are you feeling that pinch a bit more now?

Aaron, I'll take that. So the way to think about it is national declined fairly dramatically in the second quarter, accelerated in the third quarter, and stabilizing at lower levels, but down very significantly from last year. The local spot business increased 8% in the second quarter. It was slower in the third quarter and continues to be a little bit slower on pace as compared to the previous quarters. And that shouldn't be surprising because as you read about some of our larger companies in the media sector who are having softer advertising trends, there seems to be some pressure at least in the near-term on small and local businesses. How that worked through in the guidance is since a large component of our revenues comes from our local spot business, instead of adding contribution versus last year, to the extent it stays flat, or declines a little bit, that impacts the pacing from the overall company perspective, which of course is offset by the digital growth that we continue to have in our business. So hopefully that clarifies a little bit.

Yes, that's good. And then lastly for me, just with your podcast revenue down in the third quarter, can you highlight a bit more of the areas of digital that are showing strength? And is that continuing in the fourth quarter? And then Frank, maybe just what the margins are you're seeing under digital revenues now and your latest kind of outlook on where those margins can trend over the near and medium term?

I can address the beginning of that question. As mentioned in our prepared remarks, we continue to experience growth in both the digital marketing services and streaming businesses, and we anticipate ongoing growth in these areas. Regarding podcasting, this segment is primarily national advertising, so it was significantly affected by the current weak market conditions. We observed cancellations and a general decline in demand for podcasts. Nevertheless, we have indicated that this business appears to be stabilizing in terms of revenue, with a notable 36% growth in downloads, which is encouraging. We are optimistic about the future of this business. In terms of digital marketing services, our new product Boost, which we will discuss in future calls, is performing well. We launched it a couple of months ago, and it aims to complement our already successful advertising campaign products that have driven growth in digital marketing over recent years. This comprehensive suite includes products for listings, reputation management, and website development. Its subscription-based model makes it a valuable and sticky offering. We will keep you updated on its progress. Additionally, we are witnessing ongoing growth in digital services, which now accounts for 15% of our revenue and is on the rise.

Regarding margins, our digital businesses currently contribute about a third of our revenue. This distribution may vary each quarter based on organic growth. The margins for all these businesses remain strong, with our streaming business generating the highest contribution margin, which is quite similar to our local spot terrestrial radio business but slightly lower. The contribution margins from digital marketing services are around 50%, give or take. In contrast, the podcasting segment operates on a revenue share model, resulting in lower margins between 20% and 25% on a unit contribution basis.

Okay, great. I appreciate it. Thank you.

Thank you. The next question comes from the line of Dan Day with B. Riley. Dan, your line is now open.

Yes, good morning, guys. Appreciate you taking the question. So first one from me, high-level question, just looking at spot broadcast radio in the quarter, ex-political, down about 25% versus 2019, network, about 35% versus 2019. Understanding a lot of this is the macro challenges, the pullback in ad spend, especially on the national side. But just given that the gap between where we are now and where we were then, I think there's a lot of skepticism among investors that we'll ever get back to 2019 levels on the broadcast radio? Maybe if you could just talk about where we sit today, your longer-term expectations in that regard to close that gap, whether you believe there's been some sort of permanent impairment in broadcast radio versus pre-pandemic levels? And if there has been, maybe possible to quantify that in any way?

I'll take that, Dan. That's a good and challenging question regarding the long-term forecasts of our business. Earlier this year, we discussed looking towards the end of the year to compare performance with 2019. Unfortunately, we experienced economic weakness beginning in the second quarter while dealing with ongoing supply chain and labor issues. In particular, automotive remains down by 40% compared to 2019. We believe this is primarily due to supply chain challenges rather than issues with radio itself. As for the economic downturn, it's too early to determine if there's been a permanent change; however, I don't think that's the case. There are some inherent difficulties impacting listenership and our overall revenue, but these are being balanced out by growth in our digital sector. The key takeaway is the improved operating leverage we've achieved through cost reductions, which will help mitigate the revenue decline compared to 2019. It will take time to assess the full impact of the economic situation and any potential permanent changes, but we remain optimistic about the future. It's important to focus on our digital growth alongside our terrestrial radio operations to reach those EBITDA levels again.

Great. Thanks, Frank. One other one for me. In the past and on the call today, you talked about the opportunity for disciplined M&A. So the cost of capital has come up dramatically in the last couple of quarters. Just given that, has the likelihood of M&A over the next year or so changed in your view? I'm sure like something came along that was a slam dunk, everyone would entertain it. But just wondering where you sit today versus where we were earlier this year. Has M&A moved down that list of priorities just given where the cost of capital moved to and where your stocks and bonds are trading?

Right. We continue to think about the business long-term. Yes, the cost of capital is more expensive. Fortunately, we have a tremendous amount of liquidity on the balance sheet. Not surprising that multiples have come down a lot. We think that's probably more driven by, at this point, what's the economic activity as opposed to hopefully as a long-term issue with multiples. To the extent there are businesses that we can look at that we think we can buy in at attractive multiples, given our liquidity, if it helps us strategically, we will certainly look at that seriously. And as a reminder, we'll look at everything. Our principal focus has been in the digital areas. Now given what's happening in the radio markets and multiples, to the extent there are properties, whether it's on a swap basis or a purchase basis, we'll take a look at it. I'll emphasize, I think it's probably the fourth time I've said this, with over $200 million in liquidity, low net leverage free cash flow generation that puts us in a pretty good position to look at everything.

Great. And then last one from me just on podcasting. Just in the industry generally, you guys have seen a lot of these podcast representation deals where the creator changes the rep firm. The company is talking about how the weak margins that came with it. We just sort of mutually agreed to let them go to another rep. Can you just maybe talk about the mix in your podcast revenue between these rep deals that are sort of lower margin versus proprietary content that might come with higher margins. Whether there's any concern that some of the biggest clients on the rep sides might look to go elsewhere? And then, obviously, low margin, but the revenue volume is big.

Yes, I'll address that. Our approach is distinct because our major personality-driven talent agreements extend beyond just podcasting to include broadcasting and other sectors. We assess our talent and partnerships on how to help attract and monetize listenership across various platforms. For instance, we are involved with radio, as are several others, and this strategy has been quite effective for us. Regarding our owned and operated focus, that emphasizes our local efforts. Importantly, our own stations are committed to us, which has become a key area of focus and has been experiencing growth, even if starting from a small base. This is just how the industry operates, but we are increasingly recognized as a go-to destination for certain types of podcasts. We are monitoring this closely, and as I mentioned earlier, we remain optimistic about the business.

Great. Well, that's all I had guys. Appreciate the time.

Thank you.

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

All right, thank you. Wanted to ask a little bit more about the national-local mix. Your network numbers indicated an 18% decline. But in the quarter, if that rough 75-25 local national split was true for spot advertising, it wouldn't indicate the same level of shifts. So maybe that 75-25 was just an approximation that didn't really hold in the quarter. But you might talk about what happened in the national advertising within the core radio, whether it was different from what you experienced with Westwood One and whether there are things you can point out in terms of that mix that we can look for in the future?

That's a good question. The way to think about national is that we work with advertisers to provide them the flexibility across our network, and it does move around quarter-to-quarter. Some of those national dollars could have been placed depending on the inventory in the broadcast versus our local businesses. When you look at any particular quarter, it's hard to come up with a trend. Our national advertising comments were broad across our channels. It just happened this quarter that the networks suffered more of a decline than our spot business. That does jump around from quarter-to-quarter. We actively work with the national advertisers to optimize inventory and value for them. It does represent typically between 20% and 25% of our spot business, but it just moves around quarter-to-quarter.

Okay. One of the trades has been the nation's largest biller for many years. They have implemented some necessary cost cuts. In news talk, you have a fair representation. You mentioned your improved operating leverage with cost cuts. I'm curious if you could share your experience in that area and if that is one of the categories targeted for cost reductions.

Mary, you're on mute?

Yes, in general, we look at expense reduction in a holistic manner. As I mentioned in the prepared remarks, our focus has been on reducing expenses without impacting revenue. Our News Talk portfolio performs very well for us. Most of our cost reductions have been in non-revenue areas. For instance, we have reduced real estate costs and carried out some contract negotiations that do not affect programming. We are not focusing on any particular format over another.

I wouldn’t add anything to that.

Okay. My last question might be FuboTV had plans to go into sports betting, and this sort of cut out those plans. I'm wondering if the bloom is off the rose and what seemed to be an emerging growth category that everybody had for that maybe that won't be the next big thing.

Another good question. The category is growing, especially as more states legalize it. Based on our observations, the strong growth projections from last year have become more subdued in terms of business activity and the economics for sports betting companies. However, as they expand their business, attracting new customers is crucial, and advertising plays a significant role in that. The activity we've observed raises questions about whether it is influenced by broader economic factors or if projections are simply declining. I agree that the enthusiasm we witnessed in that category last year has diminished somewhat, which was also evident when a certain partnership ended. That serves as another example of this trend.

Okay. Well, thanks very much. Appreciate it.

Thank you. That concludes the questions for today. I'll now turn it back over to the company for any final remarks.

Thank you, everyone, for joining us today and we look forward to speaking with you again early next year. Have a great day.

That concludes the conference call. Thank you for your participation. You may now disconnect your line.