Ladies and gentlemen, thank you for standing by. Welcome to Clear Channel’s Second Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session instruction will be given at that time. (Operator Instructions) As a reminder, this conference is been recorded. I would now like to turn the conference over to your opening speaker Effie Epstein, Vice President of Investor Relations. Please go ahead.

Good morning and thank you for joining our 2014 second 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 second 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 our review of the quarter, we’ll open up the line for question. 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 the 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 will 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 non-cash 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 will now turn over the call to Rich Bressler.

Thanks, Effie, and good morning, everybody. Once again, as Effie mentioned, you can find our prepared slides on our website. Let me start by sharing some thoughts on the quarter. On our last call, we spend time talking about maintaining tight expense management and financial discipline as key priorities. Our results today reflect this both from a financial perspective and in terms of our business decisions. During the quarter, we continue to make progress in key areas. We grew our National, Digital, Events business and Media and Entertainment, as well as launch new contracts at International Outdoor. Through these efforts, we continue to demonstrate unique value Clear Channel provides to advertisers across multiple platforms. Building on this progress, earlier this month, we took another important step in our continuing transformation to a consumer-driven, technology fueled, 21st century media company by naming Brian Lakamp, our President of Technology and Digital Ventures. Brian will work hand-in-hand with Bob and me to lead the overall of technology platform and capabilities across our entire business, including our broadcast, digital radio, events and promotions and Out-of-Home businesses. He will also be responsible for developing our company's overall strategy and execution related to technology, big data and programmatic buying among other things. The iHeartRadio team will continue to build on a tremendous success as part of the Clear Channel networks group under its President, Darren Davis, an extremely talented executive and a strong team leader. As we mentioned last quarter, the Clear Channel networks group uses our power, reach and scale to deliver content opportunities to our partners, affiliates, advertisers, consumers and talent across Premiere Networks, the radio industry's leading network group, total traffic and weather network, the 24x7 news network and now the iHeartRadio network. We are also very excited about yesterday's partnership announcement with…

(Operator Instructions). And our first question will go to Jason Kim. Please go ahead.

Hi, good morning. Thank you for taking my question. I'll start off with a big picture question and obviously there's been a lot of chatter around the changes in the behavior of some of the national advertisers this year. It is something that you've alluded to in last quarters call as well. But can you just talk about what you are hearing from your national advertiser base as far as more competition from digital is concerned for the traditional media companies for both the Radio and Outdoor?

So a couple things. So, Jason, good morning. Let's first start with Outdoor. I think I mentioned this in the first quarter a little bit. Some of the loss of our accounts which again you've now seen in the numbers and the pacings in the six-week come back pretty stronger on domestic Outdoor, was attributable to the shift in buying patterns, where -- and again consistent with what we talked about previously several large advertisers pulled out of their upfront commitment and decide to use stock price throughout the year. We did begin to gain some traction in quarter two, again, reflected in the numbers that I went through earlier that results in 1.2% down today which I'm still not -- I happy with improvement, but obviously I don't want to be down. I think we will continue to see improvement there. But clearly our financials were impacted and are still impacted a little bit particularly because of rate, because of occupancy first then you have a lower occupancy and therefore you have some slower rate. But we are starting to see the recovery on that. In general, on the national side, look, it was a tough quarter, the second quarter as a whole for the advertising industry. Really started -- if you remember, just to go back in the first quarter with GDP was down around 3%. And that, you know, honestly blood into the second quarter a little bit. April and May as I briefly touched upon in my opening remarks were particularly tough in Radio, but we did outperform the market in both those months as measured by Miller Kaplan, was continue to outperform the market in June and it gives some additional context on national spent. Retail is a big category for us and retail was…

And then I hate to be too granular about this but when you look at the weekly trends throughout 2Q and what you are seeing thus far in third quarter and are you seeing a gradual and steady improvement on week-to-week basis as you look into the latter half of 2Q as well as into the third quarter as well – is that a fair characterization?

Yes, you could've asked daily trends. But no, – all kidding aside, look, I will stick by the numbers that I gave you and I kind of gave you the pacings, highlighted what we've seen so far in the third quarter like CCOA. We've seen the steady improvement on a week-to-week basis. We continue to see strength in local and regional and strong improvement on the national basis. International, we’re pleased with the pacings at, up 1.9% International continues, you saw in the first quarter, you see in the second quarter we can near to be very pleased about that. And in CCM&E, again, up 1.9% overall in the pacings we've had very strong performance in traffic and weather and core stations were up slightly and we expect to see that pickup with Political as we’re going throughout the third quarter

Sounds good. And just a question on the capital structure. So with the remaining portions of your 10.50% and 11% notes being called in August the only piece of debt maturity you have left in 2016 these are term loan B so how should we think about that maturity for you as you continue to look at the capital structure and then how does non-core asset sale come into play as you think about pushing out debt maturity as well?

Yes, so the $1.9 billion of bank debt is really the largest remaining piece of the 2016 stack and that's likely a refinancing candidate. So I don't know that asset sales really has a lot to do with it. I guess you could kind of indirectly get there that refinancing the 1.9 billion will create some additional cash interest expense and you want to make sure that you can cover that additional cash interest expense to liquidity. We have numerous sources of liquidity. We want to continue to grow our free cash flow, got a little excess liquidity from the issuance of the 10% notes. We're using a little bit of that to redeem the par call on the [Indiscernible]. So, I think it's part of the mix, but I don't think it is directly related to the decision whether or not to refinance the 1.9 billion and when. I think I've been pretty consistent and then my view is we'll continue to watch the markets. We want to kind of -- as we have in the past, be opportunistic that the markets are strong, they've backed up a little bit over the past few weeks, but they're still historically pretty attractive. We'll continue to look at whether refinancing some or all of the 1.9 billion make sense. And we'll continue to have dialogue about it. We have dialogue all the time around it. So, -- until we do something, we're probably going to continue to get asked question, but I do think it's something that I have a bias that we take a look at this year before we go current. Whether that's next week or three months from now? No signal on this call, but obviously we're aware of it. We think the markets are attractive, we think they are still attractive; we'll continue to watch and be updated.

Understood

Let me just add one thing on asset sales by the way and we've been talking about this, we talked about kind of my -- where I mentioned my year anniversary. We -- and you saw this in a smaller way in this quarter with our sale of non-consolidated, the Hong Kong Outdoor Billboard business, we have whether you take Sirius XM, our interest in radio stations in New Zealand through APM that were also non-consolidated and the most recent sale, we have and we will continue intensely focused to look at assets that we can get more value by selling them than having minority stakes as an operating company there, so that something we committed to all of you to do and we will continue to do that.

Thanks for the thoughts.

Thank you. We’ll go to Avi Steiner. Please go ahead.

Thanks for the time folks. Let me start off here. Just on the margin side, strategic revenue initiatives are continue to grow and just a little more granularity behind that. And I know you've been asked this before, but just timing of revenue flow through from some of these investments? And then I have a few more. Thank you.

Sure, Avi. Thanks for the question. Look, I think, -- I don’t think I believe, more than I think if you look at our revenue this year and cost initiatives, if you take out, I will say the cost the one-time cost that we invested in that CCM&E expenses -- and I assume your focus is a little more CCM&E, but I'm happy to talk about any of the other divisions -- were down on year-over-year basis in the second quarter, slightly down, but they were down. That reverses a significant change. And I don't think I am accurate that we've been down at CCM&E since the first quarter of 2013. So I feel good about that. You are going to see -- you will continue to see that in the third quarter and fourth quarter of this year. So you will continue to see expenses on a year-over-year basis go down and you will continue to see margin improvement, you'll continue to see us bring more the revenue down to the bottom line. And quite frankly this is something we do every single day in terms of challenge our efficiency, the way we do things. And so it is just a way of life in terms of the way Bob and I are running the company, and that will never change up there. And again, I think if you look at CCI and the CCO, it’s the -- Dave done a better job over the last couple years, quite frankly, and you will continue to see our focus there and those expenses continue to be flat to down even when you take out CCO. Part of the reason we done CCO was first we were down in revenue to sales commissions, but even if you take that out, we were still down our expenses on a year-over-year basis. So William and his team has done a really nice job in that area also. So William and his team has done a really nice job in that area also.

Okay, that's great. And just one last quick question on this should -- the $20 million and changes, is that right run rate for the rest of year on a quarterly basis in terms of those expenses, those initiatives?

Yeah. I'm not going to comment on that, because like I said -- I mean, if you were -- I'm not going to invite you to do this, because you'd probably take me up on a better view with. Bob and I in our office every day down, down there's on the floor -- there's probably five conversations a day, should we do this, should we do this, should we change this. We're getting the most out of this, because if we get more effective, that’s the way we have to take. I think we always -- everybody kind of has two jobs in this company and maybe three jobs in a period of time. So we are really trying to maximize the effectiveness. So I don’t want to comment on that, because I'm not in a position to comment on that.

Fair enough. Let me change directions here. Bob Pittman was quoted not long ago as saying iHeartRadio was generating revenue in hundreds of millions and I'm curious its that’s largely from the concert side, or is the revenue coming from the radio app streaming side? And related to that and particularly with the AdsWizz announcement, is that meant to grow or introduce ads separate from terrestrial side for the first time?

So couple of things on Bob's comment. Bob's reference -- I'm not going to breakout anything on Bob's comment. Bob's reference was not a standalone figure. As we both always talk really about. We talk about the overall impact of iHeart on CCM&E and again because we’re multi platform business the numbers are so intertwine with our other radio assets that we don't break out iHeart separately in terms of revenue and profitability and now see the ability to do that. On AdsWizz, which again, I mentioned in remarks, I mentioned little bit earlier – I mentioned it – we’ll talk about now for a second again. Its really incredibly excited for us because what it does and just to be clear what AdsWizz does. It gives us targeting capabilities to serve our advertisers and marketing partners, so if you think about it this way all the iHeart listeners today hear the same ad at the same time. Under this partnership that we have with AdsWizz these ads can now be personalize based on location. They could be personalized based on demographics that puts us in a very unique position to serve advertising individually with demographic and geographic information and simultaneously it scale. So if you think about that we have three key benefits. We get targeting that we can turn customer ads based on age, gender, psychographics, device platform and more. We can do on a multi-platform basis target of course the vast array of multi-platform systems whether its the connective car, in-home advertising anywhere the audio stream – stream by consumers and we get metrics. We can provide real time historical and historical analytics about the audience of each stream. So it’s a great tool to reach our consumers. So it’s a benefit to the consumers and benefit to the advertisers and we will begin our discussions, we will do it right now to educate all of our advertisers on the new capabilities.

When is that going to be rolled out? Sorry.

Its been formally launched in the late in the third quarter.

Excellent. And a couple more I think certainly a few ones and maybe Brian jumps in but I just want to confirm if I understand its correct the kind of post the Intercompany Note sale that I guess it will settle in August, the company will have about 421 million of 14s sitting in unrestricted, then how do you guys think about monetizing those? And as a quick follow-up on the HK sale, was that part of Clear Media and is that any signal all you may look to may be more broadly sell that asset to China? Thank you guys.

Yeah, I'll answer the first one. You're right, if you took -- I think it was 199 million roughly 200 million, the 2% in 21 is currently held by the company. So, when CCU issues the additional 222 in change and sells those to the unrestricted subsidiary where the 199 million, so you can add the two together and I think you get to the 21, 422, so that's correct. With respect to how we do that position I think it is optionality. They are currency that we have -- we have utilized in the past, we've sold them to the market by structuring this transaction that was announced the way we have, we preserved that refinancing capability, but haven't actually gone out and take the yield and would've had to pay had we issued to a third-party. So, I think the way we look at is we'll continue to watch how those notes trade, we'll continue to look at our liquidity needs, we'll compare this liquidity option to other liquidity options we have and whatever is the most efficient or effective we'll take a look at. There are no plans today to do anything with those notes. With respect to the Hong Kong subsidiary, it is not part of Clear Media, and I don't know if there was something else that question or if that was it, Avi?

I think that's it. I'll leave it there and you guys ever want to invite me to your management meetings, I'm happy to attend.

Thanks, Avi.

Thanks.

And we’ll go to the line of Lance Vitanza. Please go ahead.

Hi, thanks for taking the question. I guess I have two questions. The first is just on the core radio, the local national network revenues I understand that those were weak. It was obviously very challenging environment. But could you give us a sense for the magnitude of the declines in those categories in 2Q and then maybe as you look out into Q3?

Yeah, we don't -- again, I don't want to repeat what I said before. But we don't breakout any of the categories other than to point out that retail is a big category for us, which we found significantly in April and May and started rebound in June. And Entertainment and Auto showed signs of growth in June, and I've already commented two or three times about Political. But I'm not going to break anything else down.

Okay. And then my other question is with respect to iHeart. I don't know if it is possible to talk about the lifecycle of the subscriber. But with registered users of 50%, I would've expected total listener hours to be up a good bit more than 3%. Could you put that in context for us? I think Pandora is reporting total listener hours up 22%. So are you guys falling behind there, or is this just a timing issue?

Look, I mean, we are -- total listening hours -- remember, this is wide listening hours, so total listening hours continue to grow. And as you know we are up against the bigger comps so that just honestly the reason why you get a little small percentage. But if you look at May, we saw an all-time high, 160 million hours which was also about the monthly average across the quarter. So we feel -- we also have strong growth in live listening in addition to 160 million hours. So that's a huge differentiator for us in the marketplace.

Thanks very much.

Thank you. We’ll go to Marci Ryvicker. Please go ahead.

Thanks. I just want to clarify something you said. You said that in April and May the industry was really weak, but you outperformed in June got better. Where you talking about the whole company, just radio, just Outdoor?

Yeah. Those remarks were what I believe I said is, in April and May we significantly out -- we outperformed the industry for Miller Kaplan and we significantly outperformed the industry in June and again that was the radio industry I was talking about.

Okay. Then for Outdoor did you see a similar improvement when you went from April to May to June? And I would assume that the bulk of the improvement from the time you give us your pacing data to the time you reported was probably because you were lapping LA?

No, I would say it is a couple of things. Right? I mean -- first of all, we don’t give that type of breakout in Outdoor. I actually gave that sort of fair amount of detail on this call even though as you all know I know him, but I hate pacings. But I just wanted to give you those as bolometers for the progress we are making from the time we released earnings in June till today were we are down 1.2%. So a part of it is -- because we are starting to see the benefit of LA or not the benefit, we're starting to have a comparison with LA, but also a significant part of it is what I've said is that we have made a number of changes in the organization. We've strengthened the Domestic Outdoor organization. We had some issues, very honestly, that negatively impacted our relationship with the out-of-home specialists. We had some unintended consequences to that. I've been very -- I was straightforward on that in the first quarter, I was straightforward on that in this call. We took significant steps Bob, myself, William, the rest of -- Suzanne -- the rest of the management team, specifically around sales alignment to fix the issue. And now we've got the right foundation for the rest of the year and for the future years to go forward and I think you are starting to see the benefit of that. And like I say always part of – but also look we are always – our asset mix always changes, just to give you an example. We decided not to bid, we bid on the Boston Logan Airport this year which was in last year's numbers because we couldn’t get the right ROI. Because at the end of the day we’re here to make money for all of our stakeholders and at the same point we won the Boston South Street station. So LA is part of it, but the bottom line is the asset mix is always moving around it changing a little bit.

Okay. And then one question on the CBS and VAN Wagner transaction. Is that – I don't know if that changes your competitive position or their competitive position, how is this going to impact you?

Okay. I mean, we are disappointed. We didn't get VAN Wagner; they're great set of assets. Richard has done a great job in terms of building that company and he's been now handsomely rewarded. This is I think its great for us in the industry at 21.6 times multiple which is a great testament to the value of Outdoor. But if you look at our size and scale it would have been a nice asset to have but its not something that’s critical to our growth...

Okay. Great. Thank you

And we have a question from [David Miller]. Please go ahead.

Yes, hey, guys. A couple of questions. I just want to understand the mechanics a little bit of some of the items below EBITDA, particularly the tax benefit of 24.8 million if you could just take us through that but obviously skewed net income higher. Just want to understand that a little bit more. And then on – just sort of on a broader note, bigger picture, how would you guys describe the overall tone of the Outdoor business in the U.K.? Would you say it's going gangbusters, would you say it's kind of holding its own? Would you say it's pacing above the 1.9% bogey that you just issued, I realize it's just a pacing number, I understand? How would you just describe just the overall tone of the U.K. business versus the rest of Europe? Thanks a lot.

Okay, so on the tax benefit, look I'll like if you -- happy to have a follow-up with Effie in terms of more detail, but because of the results from timing in the mix of earnings particularly across different jurisdictions and the impact of not recording deferred tax assets on our current period losses because valuation allowances, you kind of get an interesting effective tax rate, let's just say that. But I'm not sure I want -- I'll let you follow-up with Effie in terms of walking through the details. On things outside the United States and you asked both -- I think you asked both about [Indiscernible], but then you asked a broader question about Europe, couple different things. First, we did launch a big contract in Italy as the exclusive operator of Airport Advertising Space in Rome's two airports. We entered into some new mall contracts in France. We added about 100 jingle displays and so when you look at our result, which we have a lot going on outside. Our business has been strong in the U.K. as it has been strong in Sweden. I think I referred to the British Airways ad in my opening remarks that we won the Cannes Lions Award for that. We got great leadership in U.K. starting with Cathy, Deaton who runs a big piece of our European Operations -- in U.K. So, I think the business as you know, I don't think I will say that business is strong, a part of it is we're creating the opportunities. I mean some of the most creative work we're doing on worldwide basis in the Outdoor business is outside the United States and it led by places like U.K. and Sweden. It is just amazing. And also like in Brazil where we have launched, some consumers is really need 70 digital clocks in Brazil which drive digital revenue. Then we have got some street furniture contracts in China too, that added. So it is a mixed bag, but simply said the U.K. is very strong.

Thank you.

Thank you, everyone for joining the call. Please feel free to follow-up with me, Effie or with Brian Coleman after the call. We look forward to speaking with you.

Thank you, ladies and gentlemen. That does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.