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Entercom Communications (ETM) Q3 2019 Earnings Call Transcript

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Entercom Communications (NYSE: ETM)
Q3 2019 Earnings Call
Nov 08, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning, and welcome to Entercom's third-quarter 2019 earnings release conference call. [Operator instructions] This conference is being recorded. I would like to introduce your first speaker for today's call, Mr. Rich Schmaeling, CFO and executive vice president.

Sir, you may begin.

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

Thank you very much, Britney. Good morning, and welcome to our third-quarter earnings call. This call is being recorded, and a replay will be available on our company website shortly after the conclusion of today's call and available by telephone at the replay number noted in our release. During this call, the company may make forward-looking statements, which are based upon the company's current expectations and involve risks and uncertainties.

The company's actual results could differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially are described in the risk factors section of the company's annual report on Form 10-K for the fiscal year ended December 31, 2018. As such, risks and uncertainties may be updated from time to time in the company's SEC filings. We assume no obligation to update any forward-looking statements, except as may be required by law.

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During this call, we may make reference to certain non-GAAP financial measures. We refer you to the Investors page of our website at entercom.com for reconciliations of such measures and other financial information. David?

David Field -- Chief Executive Officer

Thanks, Rich. Good morning. Thanks for joining us for Entercom's third-quarter earnings call. I am pleased to report that we achieved strong quarterly financial results in the quarter.

And in addition, we made great progress on our various strategic growth initiatives and enhancements to our core business capabilities. Starting with the financial headlines, Entercom posted 13% EBITDA growth in the third quarter, driven by 2% revenue growth and expanded margins. Ex-political revenues were up close to 3%. Adjusted net income per share increased 23% for the quarter.

We achieved double-digit growth in digital and network revenues. Political revenue was, of course, down substantially in this off-election year, and events revenue was also down, as we continue to selectively trim our portfolio to eliminate poor performers while selectively adding a limited number of new events. In addition, during the third quarter, we capitalized on the strength and scale of our outstanding station group to gain 210 basis points of share in spot radio revenues as reported by Miller Kaplan. Notably, we gained share in most of the country's largest markets, including New York, Los Angeles, Philadelphia, Dallas, Atlanta, Houston, and Washington D.C., which by the way, are all legacy CBS radio markets.

And in total, Entercom spot radio revenues, ex-political, were up 1% for the quarter. Our best-performing ad categories were professional services, financial services, insurance, TV cable, telecom, drugstore pharma, and home improvement. Of our top 15 ad categories, 12 are up and only two were down, being auto and concert/movies. July and August were the stronger months of the quarter with September being a bit softer.

Let's turn to some noteworthy recent developments. On our last call, we announced that we had taken an important step forward to establish Entercom, as a leading player in the emerging rapidly growing podcast space by acquiring Pineapple Street Media, entering into an agreement to acquire Cadence13. I am pleased to report that we completed our Cadence13 acquisition in mid-October. I'd like to share a few thoughts on these moves and their significance to our company going forward.

First, we should correct the record and note that the early news reports speculating on the purchase price on the transactions significantly overstated the cost. The total cost of both acquisitions, including the 45% interest we acquired in Cadence13 three years ago was $48 million, which represents a purchase price of approximately one-time projected 2019 revenues, which is well below the multiples and a number of other recent acquisitions in the space. Second, the combined transactions established Entercom as one of the three largest podcast enterprises in the United States, with approximately 150 million downloads per month of programming that we create or represent for ad sales. Third, the podcast market is growing rapidly and is expected to exceed $1 billion by 2021.

We believe we are very well-positioned for sustained success in this space due to the scale of our radio broadcasting platform, and the powerful symbiotic opportunities, driven by our leading position in sports, news, and local personalities. Furthermore, we believe that podcasting margins will grow nicely in the years ahead and that we are positioned to generate significant shareholder value creation with these investments. Even though it is early, we see a great deal of momentum across our podcasting business. In fact, our total podcast downloads grew by 72% during the third quarter.

During the quarter, we launched several new shows, including Campaign HQ with David Plouffe, Long May They Run featuring the band Phish and a handful of new collaborations with HBO and Netflix. We also just announced that we will be launching the new Ronan Farrow podcast, as a companion to his best-selling book, Catch and Kill, which will debut later this month. Turning to digital. radio.com continues to be the fastest-growing digital audio app in the country.

MAUs grew 60%, six-zero percent, year over year during the quarter. We also have beefed up our digital sales capabilities with the addition of a new digital chief revenue officer, who will oversee all of our digital sales, including podcasting. In addition, in October, we became the first and only company to develop and launch DVR-like functionality for live radio. I want to give a shout out to our radio.com development team for this significant achievement, which we have rolled out as radio.com rewind on many of our leading news and sports stations.

With radio.com rewind, listeners on enabled stations can now for the first time easily listen to what they want, whenever they want with the ability to pause, rewind, and fast forward shows for up to 24 hours without having to record them in advance. We believe this feature is an important enhancement of a live radio listening experience, and we expect to roll out additional compelling user features in the months ahead. During the third quarter, we also welcomed the stations of Alpha Media and Salem Media to the radio.com platform. We have also added podcast for Midroll, NBC News, MSNBC, and Fox Media to the platform.

On the distribution front, we launched our Apple Music and Homepod partnership during the quarter, and yesterday announced a distribution deal with Samsung's Bixby. To put all of this in context, digital, including podcasting, now represents 12% of our total revenues. Turning to events. I'd like to add a little bit of color as a way highlighting that we run a pretty significant events business across the country that includes both major concerts, as well as, boutique, money-can't-buy special listener experiences.

For example, in October, our annual We Can Survive concert at the Hollywood Bowl featured a stellar lineup of Taylor Swift, Billie Eilish, Camila Cabello, the Jonas Brothers, Lizzo and Marshmello. This event lead sponsored by AT&T supported breast cancer research and sold out in under 10 minutes. We are also looking forward to a lineup of CHR, country and alternative music holiday concerts coming up in late November and early December, including our two-day Riptide festival in Fort Lauderdale and our Not So Silent Night shows at venues, including the Barclays Center in Brooklyn, as well as, other major arenas across the country. I also want to acknowledge the terrific work a of couple of our award-winning all-new stations, KNX in Los Angeles and KCBS in San Francisco in the wake of the terrible wildfires in California, as a reminder of the important role our stations play in the lives of the American public.

In fact, the recent LAPD's wildfire press conferences, always concluded with the Police Chief advising everyone to stay tuned to KNX for real-time vital information. In times of crisis, we are reminded of the critical role radio plays keeping the public informed and safe. Whether it is California residents tuning in for vital fire invasion or passionate sports fans across the country deeply immersed in conversations about their teams or listeners who have developed deep connections as fans of our terrific lineup of leading local music station personalities across the country, our leadership position is the country's No. 1 creator of original local premium audio content has enabled us to build a scaled and uniquely engaged audience.

The addition of our podcast content and the enhanced user experience from new features like radio.com rewind will further enhance our listener relationships going forward. A few summary thoughts before I turn it over to Rich. As we step back and look at our business, we note the following. Our good third-quarter results mean that over the past 12 months, we have also posted strong double-digit EBITDA and adjusted net income per share growth over the prior comparable period.

We feel good about our outlook for 2020, based on the strong set of organic growth opportunities we have across the business. We expect to generate solid top-line and bottom-line growth in 2020. Specifically, we have leapfrogged into a strong competitive position in the rapidly growing podcasting space, and believe we are well-positioned for growth in a number of other areas, including radio.com and our other digital products, the Entercom Audio Network, events, political, and sports gambling. We are also optimistic about the potential acceleration from our national client partnership team and their work to elevate our relationships with the country's largest national brands, and the growing impact from Entercom advanced audio, which incorporates our data, analytics and attribution capabilities.

And finally, we look for continuing sequential improvement in our local radio sales. The competitive landscape, while presenting some challenges, also offers great opportunities. Audio is growing nicely and experiencing a renaissance, driven by podcasting, smart speakers, devices, and audio search. Radio remains strong as the No.

1 reach medium and the most undervalued medium in the United States, at a time when other media are increasingly disrupted and new catalysts are emerging to facilitate advertisers, reexamining their media mixes, and increasing their allocations to radio. Entercom is well-positioned to compete effectively within today's competitive marketplace, offering national scale and unsurpassed local radio platform in the country's top 50 markets with terrific premium local brands and content, and a strong presence with another important growth markets, including digital, podcasting, events, and sports. And we believe we are on a path to reduce leverage to around 4 times EBITDA by year-end 2020. All of that said, our stock is trading at what we believe is a significant discount to value.

As of yesterday's close, a free cash flow yield over 30%. We do not control our share price, but we do believe there is a disconnect relative to the strength of our business and our platforms and assets, and the opportunities we see for growth and value creation. We are excited about the future and look forward to continuing to work hard to realize significant value for our shareholders. And with that, I'll turn it over to Rich and, of course, then your questions.

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

Thanks, David. Our third-quarter net revenues were up 2%, and we're up close to 3% ex-political. For the fourth quarter, we expect our as-reported net revenues to be down 1% to up 1%, including $10 million to $12 million of podcasting revenues from our recent acquisitions. Ex-political, our as-reported net revenues are expected to be up 2% to 4%.

We closed on the acquisition of Pineapple Street Media back in July and the acquisition of the remainder of Cadence13 in the middle of October. Combined, for full-year 2019, these businesses are expected to generate between $48 million to $50 million of revenue. During 2019, we paid $38.3 million in cash to acquire both Pineapple and the remainder of Cadence13. And in 2017, Entercom paid $9.7 million in cash to acquire its initial stake in cadence.

So cumulatively, Entercom paid $48 million in cash to acquire both of these businesses or about one times their projected 2019 revenues. For the fourth quarter, we expect these podcasting businesses will be at about breakeven. And in 2020, during our first full year of ownership, we expect them to grow rapidly and that they will be accretive to our 2020 earnings. In their June 2018 report, IAB and PwC projected 2020 podcast market growth at 27%, and they projected that the size of the podcasting market will top $1 billion by 2021.

Our total as-reported operating expenses for the quarter came in at $306.7 million and include $2.7 million of M&A, integration and restructuring costs, and $1 million of costs associated with a cyberattack against the company during September. For the third quarter, excluding these one-time costs and adjusting out noncash items, like D&A, on a same-station basis, our total cash operating expenses came in at $287.2 million or down 1.6%, versus $291.8 million in the prior year. In the third quarter, we realized about $11 million in net cost synergies, bringing the total to approximately $23 million September year-to-date. Adjusted EBITDA in the third quarter grew 13% year over year, and our EBITDA margin expanded by 2.5 points to 25.4%, despite the slight headwind associated with this being a non-political year.

For the fourth quarter, we expect our as-reported cash operating expenses, including our podcasting acquisitions, will range between down 2% to up 1%. On a same-station basis, we expect that our fourth-quarter cash operating expenses will be down between 3% and 5%, and that our full-year net cost synergies will range between $38 million and $44 million. This would bring the cumulative total for our net cost synergies realized in P&L since closing the CBS radio merger to between $96 million and $102 million. We expect to realize another $25 million or so of net cost synergies in P&L in 2020, as a result of the full-year benefit of actions taken during the course of this year.

Looking at our financial position, our net debt at quarter-end was $1.68 billion. Our first lien leverage was 2.7 times, and our total net leverage was 4.7 times, both calculated in accordance with our credit agreement. During the quarter, we repurchased 5 million shares of our Class A common stock for $18.3 million at an average price per share of $3.67. The cash used for this buyback is slightly less than the 2019 savings from the reduction in our dividend announced on August 9th.

As a result of this buyback, our outstanding share count is now $134 million and our free cash flow yield based on LTM, adjusted FCF, and yesterday's closing price was over 30%. The company intends to use most of next year's $39 million in savings from a dividend reduction in action to accelerate its deleveraging and our goal remains to reduce our total net leverage to about 4 times by the end of 2020. We have paid about $18.5 million in cash income taxes, September year-to-date, and expect to pay about $22 million more in the fourth quarter, bringing the annual total to approximately $40 million. This projected annual total for cash income taxes is $10 million less than what we previously expected, as a result of the benefit of acquired NOLs and added bonus depreciation among other items.

The disruption caused by the cyberattack we experienced in September, also cost us about $400,000 in lost revenues and has caused us to increase our IT capex investment by about $2 million, as we rapidly further fortify our defenses. Our capital expenditures for the third quarter were $20.7 million net of TI reimbursements. Our full-year net expenditures are now expected to total about $75 million due to added expenditures associated with the cyberattack, our acquisition of Nash from Cumulus, and higher-than-anticipated costs on several facilities projects, which will all be fully completed by the end of this year. For 2020, we expect that our capital expenditures will equal about 3% of our net revenues.

With that, we'll now go to your questions. Britney?

Questions & Answers:


Operator

[Operator instructions] And it looks like our first question comes from Marci Ryvicker from Wolfe Research. Your line is now open.

Stephan Bisson -- Wolfe Research -- Analyst

Good morning. This is Stephan on for Marci. Just a couple of questions from me. First, are you guys seeing a big difference in local versus national pacings? We've heard national has been quite strong.

David Field -- Chief Executive Officer

Yeah, nationals, I would say, it's naturally stronger than local, but not a huge difference.

Stephan Bisson -- Wolfe Research -- Analyst

Great. And then entering 2020, we know the political year is coming. Is anything being booked yet? And how exactly are you thinking about where they come in for the year, given the climate?

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

We're not seeing a significant uptick in political revenue at this point. But Radio does typically do significantly better in a presidential political year versus a non-presidential cycle. And expectations for next year, as you know, are for it to be a record political year. We do estimate that our net political revenues in 2020 will increase year over year by over $20 million.

And we'll see how it plays out. We hope even more.

Stephan Bisson -- Wolfe Research -- Analyst

All right. And then lastly, you mentioned a bunch of really strong cities gaining share. How about the smaller markets? Are those gaining share as well? Or is there anything we can -- any color we can get there?

David Field -- Chief Executive Officer

Yeah. I mean look, overall, as I mentioned, we gained 210 basis points of spot share for the quarter. So by and large, we've done a good job of growing the business and I'd say that pattern holds across all market sizes.

Stephan Bisson -- Wolfe Research -- Analyst

Great. Thanks so much.

Operator

Thank you, and our next question comes from Zack Silver from B. Riley FBR. Your line is now open.

Zack Silver -- B. Riley FBR -- Analyst

OK. Great. Thanks for taking the question. On the sports betting side, just curious if you saw any incremental revenue in the quarter from that? And if you've had any changes to your expectations of how big of a category that could be going into next year?

David Field -- Chief Executive Officer

Look, we have -- we're excited about where that category will go for us. We've -- it has been a nice contributor. It is somewhat limited geographically based upon which states have approved gambling, and we see that additional states will be coming on board over the -- in future quarters, which we think is great. And do believe that we are uniquely well-positioned for growth in the space due to our unrivaled leadership position in sports radio.

You know most of the big sports talk stations in the country are Entercom stations. We have, by -- far and away, the largest number of pro and college teams that are our play-by-play partners. We have a terrific lineup of some of the leading local sports personalities in the country. So, we're excited about what that category will do in the future as it continues to evolve.

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

And I just add that we are seeing rapid growth off a fairly small base, and we are seeing increases in our average unit rates because there's essentially a scarcity of inventory and we're working to build additional inventory to accommodate what we see as significant future growth.

Zack Silver -- B. Riley FBR -- Analyst

Got it. And then, I mean sports rights costs on the video side have increased pretty dramatically. What are you seeing on the radio side in terms of escalators as the rates come up?

David Field -- Chief Executive Officer

We do not see that same pressure on the radio side and feel that market is quite stable, on the audio side.

Zack Silver -- B. Riley FBR -- Analyst

Thanks, David. And then, I guess one more, if I could, just on Entercom analytics, I think a couple of quarters ago, you gave us an update of how many advertisers you had on the platform, represented a percentage of revenue they represented and sort of what they were spending after they joined the platform. I don't know if you have any -- if you can quantify that at this point, whether that's grown or changed or if not more qualitative, that would be great?

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

Yeah, Zach, Rich. So, when we talked about the Entercom analytics platform at that point, we're thinking more about our web lift attribution offering and on that platform, we're over 6,000 advisors now. But since then, we've expanded the attribution use cases to include foot traffic, app download, sell-through, point-of-sale based sell-through. So, we've expanded our attribution use cases and we're starting to see greater adoption.

But I do think it's fair to say that we're at the early adopter phase of this set of new capabilities in the radio space. And we're working hard to drive adoption and gain success and use those case studies to share with others. And so, we're seeing traction and we're hopeful that over the next 12, 18 months, we're going to see more rapid adoption of these capabilities. And that digital buyers, in particularly, who can't get enough scale in the digital audio advertising space will choose to buy, I'll say, data-infused over-the-air inventory to augment their digital buy.

And then, of course, they can test that and see the effectiveness of that add-on companion buy. So, it's -- we're getting closer, but not there yet, but see -- we have a line of sight, we believe, to greater success.

Zack Silver -- B. Riley FBR -- Analyst

Got it. OK. Thanks, Rich. Thanks, David.

David Field -- Chief Executive Officer

Thanks, Zack.

Operator

Thank you, and our next question comes from Steven Cahall from Wells Fargo. Your line is now open.

Steven Cahall -- Wells Fargo Securities -- Analyst

Thanks. Maybe a first question on the Entercom audio network. Could you maybe just give us a little bit of insight as to what sort of growth you're seeing? I know you and your peers have talked about P&G, are you seeing other, sort of, blue-chip names come to that? And do you think your growth for EAN is going to be more market-share based? Or is it more about growing the pie for, sort of, nationally scoped ad campaigns?

David Field -- Chief Executive Officer

So, Steven, last year, as you know, was our first year in the -- I should say, this year was our first year in the network space. Again, another advantage of our achieving scale and we have seen strong growth, as we mentioned, double-digit growth this year. And yes, we have quite a few blue-chip advertisers and a lot of digital advertisers who have come on board to -- on our platform. We do believe going forward that we'll continue to see growth in the category and it's a little bit of both.

It will be both share gains as we take on a somewhat higher share of the category, or say, of the channel. And in addition, it will be because the channel will continue to grow, we believe. We've noted before, and it's worth repeating, that our expectations are somewhat limited in the sense that we believe we have a boutique network because it represents, at this point, just the Entercom stations. And we limit the amount of inventory that we apply to this channel and we are not looking to expand that beyond what we believe is the right balance in terms of our portfolio.

Steven Cahall -- Wells Fargo Securities -- Analyst

Great. And then on podcast. Could you give us a little bit of insight into the economics. I think what a lot of us are interested about is you're the studio here, so you're licensing or providing this content to distributors.

And for some of those big distributors, like a Spotify or Apple, what is the take rate on the revenue generated from those? And where does kind of the negotiating leverage fit in this fragmented market?

David Field -- Chief Executive Officer

Right. So first, we have our own distribution platform as well. But you're right, the distribution tends to be across lots of platforms like Apple, primarily. We think that we will continue to generate great content.

And believe that the economics of the business are going to continue to improve, particularly for players like Entercom, where we have a wealth of symbiotic advantages between -- because it really is very much an extension of our core business. And so, if you think about the ability to cross-pollinate our talent and our content across distribution platforms that really enhances discovery and promotion, which is such an important part of the podcast model. It also enables significant multi-platform sales opportunities, as we can leverage our local sales forces and work across different sales channels and deepen our customer relationships. And I think also, advertisers have put a great value on the -- on podcasting inventory, which is scarce.

And we think that's also a great thing for our overall -- the overall health of the audio market going forward.

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

And one thing to that, if you don't mind, Steven, is just that, when you look at the top genre within the podcast space, sports is right near the top, which really dovetails well into our wheelhouse and we see a lot of opportunity there to exploit and create more owned audio content. That, of course, is what Pineapple is focused on, creating original audio content where we are the publisher. And as we evolve our mix over time to have more owned content, we do see the margins in this business increasing, I'll say, quite significantly. And we hope it, over time, to be comparable to the core business.

Steven Cahall -- Wells Fargo Securities -- Analyst

And then last one from me. Is there any share repurchase that's assumed in your deleveraging target for 2020? Thanks.

David Field -- Chief Executive Officer

So as we look at the -- our balance sheet and our use of free cash flow over the next year, the number one priority is deleveraging. The bulk of our ample free cash flow generation is going to go there and you never say never, and we'll see what the future will bring. But we would expect, again, that the vast majority of our free cash flow will go toward delevering.

Steven Cahall -- Wells Fargo Securities -- Analyst

Thanks.

Operator

Thank you, and our next question comes from Aaron Watts from Deutsche Bank. Your line is now open.

Aaron Watts -- Deutsche Bank -- Analyst

Hey, guys. Thanks for having me on. I appreciate all the detail. Really, just more of a clarifier question for me, Rich, on the guide that you provided, the plus 2% to 4% ex-political, does that also include some benefit from your recent podcast acquisitions?

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

Absolutely. That is Entercom as-reported ex-political. So, it includes the $10 million to $12 million of podcast revenues we expect in the fourth quarter.

Aaron Watts -- Deutsche Bank -- Analyst

OK. And David, I guess, just as an add-on to that, I know you said September slowed down a little bit. Can you just talk about kind of the cadence of, kind of, ad sales for the platform in the fourth quarter? And any early look at, kind of, the sentiment going into 2020?

David Field -- Chief Executive Officer

Sure, Aaron. The quarter started slower. October was weaker. The pace of business has picked up and December looks quite strong right now.

As for 2020, really too early to tell. We've seen nothing to indicate that there are any issues or concerns. It appears to be business as usual. But candidly, it's early November and we really -- it's too early for us to have any really meaningful feedback to give you on that question.

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

And we're all curious, Aaron, to see how political plays out next year. You may know that Facebook has reduced the number of political advertising units it's going to support. Twitter obviously has exited political advertising. And it's -- and when you think about the number of available impressions in a given market between 2020 and 2016, linear television has seen pretty significant decline in its ratings.

So, there's less television impressions, and radio actually makes up a greater proportion of available impressions in a given market. So, it's going to be an interesting year, and you would think that that kind of demand is going to drive pressure on our pricing.

Aaron Watts -- Deutsche Bank -- Analyst

OK. Now that's helpful context. And if I could ask just one last one, David, does the comparatively newer shine that's around the podcasting business, and clearly, it's drawing in advertising. Has that -- are you seeing and do you expect to continue to see that some of that shine is going to rub off on the -- on your legacy terrestrial platform, and so much as, bringing in kind of additional dollars, maybe new advertisers who start with the cast, but could come over to the broadcast side, too?

David Field -- Chief Executive Officer

Well, Aaron, it certainly should. And we see evidence that that is happening. And at a time when there is so much disruption across, really all forms of advertising, the appeal of podcasting is absolutely getting some advertisers to pay greater retention to audio. And there is not fundamentally that much difference between running an advertisement within a podcast and running an advertisement within a piece of really great over-the-air broadcast audio.

And we do believe that's an opportunity for us going forward and one of the -- number of reasons why we're excited about being in this space.

Aaron Watts -- Deutsche Bank -- Analyst

Great. Thank you for the time.

David Field -- Chief Executive Officer

Thank you.

Operator

Thank you. And our next question comes from Craig Huber from Huber Research Partners. Your line is now open.

Craig Huber -- Huber Research Partners -- Analyst

Thank you. I apologize in advance if you've covered some of this I was on another conference call bouncing back and forth.

David Field -- Chief Executive Officer

No problem.

Craig Huber -- Huber Research Partners -- Analyst

I think you talked about -- yeah, these are popular three days were meeting companies report, obviously. I think you said you're expecting ex-political revenues up 2% to 4% in the fourth quarter year over year, including, I think, you said $10 million to $12 million from podcasting. I think probably a year ago if you guys added about two percentage points. Is that correct in the fourth quarter? So much that's going to report now on here, right?

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

Right, in the fourth quarter of last year, it was more than that. It was about three points of total political revenue. So --

Craig Huber -- Huber Research Partners -- Analyst

But the incremental --

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

And you're correct that the up 2% to 4%, is as reported, including $10 million to $12 million of podcasting.

Craig Huber -- Huber Research Partners -- Analyst

OK. And then on the cost side, can you just go through again, if you would, what are you expecting for cost year over year in the fourth quarter? And how much of that -- in that number is from the podcasting acquisitions?

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

Yeah. So we -- what we outlined was that we expect our as-reported cash operating expenses, including our podcast acquisitions, which we expect to be about at breakeven in the fourth quarter, that our expenses will range between down 2% to up 1%. And then we said, Craig, on a same-station basis, we expect that our fourth-quarter cash operating expenses will be down between 3% and 5% and that our full-year net cost synergies will range between $38 million and $44 million.

Craig Huber -- Huber Research Partners -- Analyst

That's helpful. And then maybe you could just talk a little further, about where you at this stage post the CBS Radio acquisition? Where at this stage are you guys getting the cost savings out of the system, out of just what broad areas you pull costs out?

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

Yeah. So, we're pretty much done with our integration program that -- and those final synergies were really all about leveraging the scale of the platform and moving from, I'll say, highly distributed administrative operations to consolidated operations across a number of different functions and we're largely done with that. And what we did say is that we do expect to realize another $25 million of net cost synergies or so in P&L in 2020, as a result of the full-year benefit of actions taken during the course of this year.

Craig Huber -- Huber Research Partners -- Analyst

And then next year, is it reasonable to assume that you could hold your same-station cost? I know it's early, but to up maybe only low-single-digits next year, same-station costs that we --

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

I do -- I think that's reasonable, and given the $25 million of additional net cost synergies, we expect to realize in P&L next year. And I think it's important that you said same-station basis, because obviously, the podcast acquisitions are going to change our cost profile. And we'll give more information about -- on that as part of our fourth-quarter call. We also think, Craig, that the integration program is largely wrapping up, but there's absolutely more to do.

We see other opportunities to continue to transform our cost structure over time, as we adapt our business infrastructure to changes in the advertising environment. So we're not done. We think there's more and we'll talk about that as we're prepared to.

Craig Huber -- Huber Research Partners -- Analyst

Also, I want to ask on the revenue side. You guys talked in the last year or so but big advertise like Procter & Gamble, coming back to the radio market here and stuff. Can you touch on that? And are you seeing some other large national advertisers that you can name that have sort of come back to your radio ecosystem?

David Field -- Chief Executive Officer

I don't really want to name them for competitive purposes. But what I would say is that our national client partnership team has been hard at work on this now for the last year or so. It takes time. Frankly, it takes perhaps more time than we had hoped it would take.

But that said, we are having very good evolving relationships with many large national advertisers who are in conversation with us, spending more money testing, and we are optimistic about our ability to continue to get a larger share of their spending, as they look at their media mix. And I think, in many cases, recognize that they may be underspending across audio and radio.

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

And Craig, we have said in the past that the consumer product category was up a couple of hundred percent year over year, I think, back in the second quarter. And that absolutely was not just Procter & Gamble, there were other CPG names that came back to the radio and are spending more with us.

Craig Huber -- Huber Research Partners -- Analyst

My last question, guys. What percent of revenue in the third quarter came from digital? And how much was it up year over year, please?

David Field -- Chief Executive Officer

I think we talked about the fact that pro forma now digital, including podcasting, is 12% of our business. And we also noted that digital was up double-digits for us in the third quarter.

Craig Huber -- Huber Research Partners -- Analyst

Great. Thank you.

David Field -- Chief Executive Officer

Thank you.

Operator

Thank you, and our final question comes from next Nick Kovich from Kovich Capital Market -- excuse me, Capital Management. Your line is now open.

Nick Kovich -- Kovich Capital Management -- Analyst

Thank you. Good morning, David and Richard. I want to have an understanding of the metrics by which you balance shareholder value creation by debt reduction versus share repurchases. I know the Reverse Morris Trust anniversary two years is mid-November, which frees you up to significantly buy back stock on the two-year anniversary.

And the decision by the Board to cut the dividend or reduce the dividend makes all the sense in the world, given the free cash flow and earnings yield north of 30%. So it's highly, highly accretive to shareholder value to buy back stock, given the depressed nature of the equity at this point in time. So, how do you balance share repurchase versus debt reduction in terms of shareholder value creation at this point? Should we think about the reduction in the dividend, the savings of $35 million to $40 million, as being earmarked for share repurchases at this point in time, which is on an annual basis, you could buy back 5% to 7% of the stock per year? So, I'm just trying to understand how management and the Board is thinking about this. Thank you.

David Field -- Chief Executive Officer

Thank you, Nick, and it's a great question. Let me first elaborate a bit on a point you referenced there, for the sake of those who might not understand the reference point on the Reverse Morris Trust. To your point, we have had a -- been limited in the number of shares we could acquire based upon the structure of our Reverse Morris Trust merger with CBS Radio. And as you noted earlier, that the two-year limit on that constraint expires in about a week or two.

The -- and I should add that that limit not only applies to the corporation, but it also applies to the field family as well. Now that all said, there is no silver bullet answer, of course, to your question. It is something that our board of directors and our senior leadership team thinks about. And as I mentioned earlier on the call, and as Rich mentioned in his comments as well, we are making our -- or delevering our primary goal focused on bringing down our leverage to around 4 times by the end of next year.

Now that said, we agree with you that our stock is highly undervalued and we agree that buybacks of stock are highly accretive to creating shareholder value. So it is a balancing question. And again, as we look at the world and consider all the various considerations, we think the emphasis needs to be on delevering,

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

Which is also accretive to the equity.

David Field -- Chief Executive Officer

Which is also accretive to the equity.

Nick Kovich -- Kovich Capital Management -- Analyst

OK. Thank you. I just -- trying to understand balancing share repurchases versus debt reduction because it's highly, highly accretive to buy back stock at these prices.

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

OK. Thank you, Nick.

David Field -- Chief Executive Officer

Understood. Thank you, Nick.

Operator

Thank you, that was the final question.

David Field -- Chief Executive Officer

Great. But we appreciate everybody joining us here this morning, and we look forward to reporting back to everybody here in a few months. So, thanks all so much.

Operator

[Operator sign-off]

Duration: 46 minutes

Call participants:

Rich Schmaeling -- Chief Financial Officer and Executive Vice President

David Field -- Chief Executive Officer

Stephan Bisson -- Wolfe Research -- Analyst

Zack Silver -- B. Riley FBR -- Analyst

Steven Cahall -- Wells Fargo Securities -- Analyst

Aaron Watts -- Deutsche Bank -- Analyst

Craig Huber -- Huber Research Partners -- Analyst

Nick Kovich -- Kovich Capital Management -- Analyst

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