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Entercom Communications Corp.  (NYSE:ETM)
Q4 2018 Earnings Conference Call
Feb. 22, 2019, 10:00 a.m. ET

Contents:

Prepared Remarks:

Operator

Good morning, and welcome to Entercom's Fourth Quarter 2018 Earnings Release Conference Call. All participants will be on a listen mode. This conference is now being recorded.

And I would now like to introduce your first speaker for today's call Mr. Rich Schmaeling, CFO and Executive Vice President. Sir, you may begin.

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Thank you, Evan. And good morning and welcome to Entercom's fourth quarter earnings conference call. The replay of this call 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.

Should the company make any forward-looking statements, such statements are based upon current expectations and involve risks and uncertainties. The company's actual results could differ materially from those projected. Additional information concerning factors that could cause our actual results to differ materially are described in the Company's SEC filings on Forms 10-Q, 10-K and 8-K. We assume no obligation to update any forward-looking statements.

During this call, we may make reference to certain non-GAAP financial measures. We refer you to our website at entercom.com for a reconciliation of such measures and other pro forma financial information.

I'll now turn the call to the David Field.

David Field -- Chairman, President and Chief Executive Officer

Thanks, Rich. Good morning. Thanks everybody for joining us on our fourth quarter earnings call. I'm pleased to report that Entercom delivered strong revenue and EBITDA growth in fourth quarter as our performance continues to accelerate across the organization and we begin to gain traction on our various scale driven growth initiatives. From the beginning, we have consistently stated that the first half of 2018 would be a period of extensive building and development and that we would begin to achieve top line growth during the second half of the year. We have delivered on our goal and as you will hear in a few moments we are on track for 2019 with solid pacing growth in the first quarter.

I'd like to start this morning's call with a brief recap of 2018, our first year post merger. After that, I will share some additional color on our fourth quarter results, and update you on a number of important developments before turning it back to Rich. In 2018, we moved aggressively to drive change in virtually every facet of the business to enhance our organizational effectiveness and capitalize on our opportunities. We made sweeping improvements to our leadership team, successfully completed our divestitures, significantly enhanced station programming, extricated ourselves from the USTN mess and launched a successful new traffic ad business, achieved significant expense reductions and are right on track with our integration and synergy program. Launched the rapidly growing Entercom Audio Network, relaunched Radio.com and transitioned it half of the CBS and TuneIn platforms and have made it the fastest growing digital audio app in the US.

Launched our national client partnership team to grow our business with the country's largest national brands and deployed our Entercom analytics product with meaningful investments in data and analytics and other key elements of the business under development. In fact, most of the scale driven growth initiatives we are pursuing are just getting started and we are excited about our opportunities in 2019 and beyond. 2018 was a year of transformational enhancements on many fronts and we begin 2019 as a much stronger organization than we were a year ago.

In addition, the underlying trends are encouraging. Audio was hotter than it has been in decades, driven by the rapid penetration of smart speakers, earballs and podcasting. As one of the country's two largest radio broadcasters and the country's Number 1 creator of original local audio content with the reach of 170 million Americans monthly plus the unrivaled leader in sports radio, a leading podcaster and the home of Radio.com, Entercom is well positioned to participate in the growth of the audio sector.

We have a lot of good news to share in our financial results and the progress we're making on a number of key fronts. Fourth quarter revenues grew 4% while our operating cost declined 2%. As a result, our EBITDA for the quarter increased 27%. Our best performing markets were Dallas, Miami, Orlando and Sacramento. Our revenue growth was led by strong growth in national, digital, political, network and events, offsetting the decline in local.

Turning to categories. We reported last quarter on the surge in consumer products spending and this quarter that trend accelerated further more than tripling over the prior year. This huge ad category has been a paltry spender in radio historically but is experiencing robust growth and has significant upside. There also was strong growth in internet e-commerce, home improvement, entertainment, professional services and gambling which includes casinos and lotteries. Auto was flat. In addition, during the quarter, we continued to make solid progress across our various strategic focus areas and growth drivers, let me share some color on the number of these.

We are building strong momentum at Radio.com, which is the fastest growing digital audio app in the US, according to comScore. Capitalizing on the large amount of unique premium content on our platform, our engagement and consumption are increasing with minutes per user now at an all-time high doubling since the merger. And we continue to add compelling new content and distribution. I am delighted to announce this morning that we have entered into agreements with Bonneville and Cox to be our first broadcast affiliates, and soon we'll be adding all of their stations and other content to the platform.

We also recently added CNN and Bloomberg to the platform and announced new distribution deals with Honda and Microsoft. In addition, Radio.com was a launch partner for Google and their new news initiative for Google Assistant. We are excited about the path ahead and believe Radio.com is poised to become one of the country's leading digital audio platforms. As I've mentioned on prior calls during 2018 we built a national client partnership team to capitalize on our scale and elevate our relationships with many of the largest blue chip national advertisers across the country.

While these efforts take time, we believe we offer a compelling value proposition to advertisers, many of whom are frustrated with their current advertising options. And that Radio and Entercom will over time drive the largest share of ad spending for many of these companies. We have signed deals with a handful of major national accounts for business in 2019 and beyond and expect these national client partnership development efforts to become an increasingly important part of our growth story as we get further into 2019 and the years ahead.

On a related note, we have previously mentioned how Procter & Gamble has emerged as the fastest growing radio advertiser in the country. P&G has rediscovered radio, attracted by its status as the Number 1 reach medium in the country with superior ROI. Having now tested Radio over the past year here's what P&G's CMO Marc Pritchard had to say at last month's CES in Las Vegas, and I quote.

"Radio is a great platform for us. That's one area where we have been increasing recently because what we have found is that consumers are pretty engaged with radio. We were able to find ways to reach consumers in a far more effective way and on a real local scale as well." You could not have stronger validation for radio's effectiveness. We are hopeful that as other advertisers note P&G's data driven enthusiasm for radio, we will see an increasing number of major customers rediscover radio and shift a greater share of their spending into the medium.

On our last call, we mentioned the successful launch of the Entercom Audio Network, our direct foray into the $1 billion radio network market. We are off to a strong start as advertisers are drawn to EAN as the uniquely premium network. New advertisers include Dell, Walgreens, Capital One, Discover, Kohl's, Macy's, CBS, Hilton Hotels and more. Revenues are accelerating nicely and we believe EAN will emerge as a solid contributor to our growth in 2019 and beyond.

I'd also like to report on the early progress we're making on our various data analytics and attribution efforts. You may recall that we launched Entercom Analytics shortly after the merger. We now have more than 5,000 advertisers connected to this analytics platform. These advertisers account for roughly 10% of our revenues. Our attribution has demonstrated that advertisers are achieving a significant lift in web traffic from the radio ads. This attribution capability is opening doors to new customers and enhancing our connections with existing accounts. In fact, those accounts on the platform, which were active with us in 2017 collectively increased their spending by 11% in 2018.

We are excited by these positive early returns on our investments in data and analytics and expect it to have a significant impact on our business over time as we ramp up our data driven capabilities. There have been a number of other positive recent announcements worth noting briefly. We just announced an asset swap with Cumulus that will enable us to add an additional FM Station in New York, plus a few stations in Western Mass, an exchange for our three station cluster in Indianapolis. While this is a relatively small deal, it is quite accretive percentage wise. The new station is a great addition to our terrific New York city cluster and comes with strong synergies.

We also just completed a transaction to sell surplus land, buildings and towers for $25 million. This brings our total amount of non-radio station, non-strategic divestitures to over $100 million since the closing of the CBS merger. And last week we announced the launch of Radio.com Sports, a new national digital and broadcast sports platform that sits at top Entercom's 35 leading local sports brands across the country. Radio.com sports will enhance our existing portfolio of brands and personalities and give our advertisers an effective new way to tap into our scale and content.

We recently announced that Mercedes-Benz will be the first launch partner of Radio.com Sports, and we look forward to announcing other partners soon.

Turning to first quarter performance. I'm pleased to report that our revenues are currently pacing up 3%. We are also anticipating a reduction in Q1 expenses which should enable us to deliver high double-digit EBITDA growth. And while it is very, very early, Q2 is looking pretty good in line with our first quarter pacings.

Before I turn it over to Rich, I'd like to share a couple of final thoughts on our progress. Transformation takes time. We have made enormous changes over the past 15 months to integrate, retool, and launch new scale driven growth initiatives, drive synergies, enhance leadership, change culture, establish best practices and systems, innovate and more. And along the way, we tackled and successfully solved some unexpected and untimely challenges. While we still have much work in front of us, I'm very proud of the transformational work our team has done to position us for growth and success in 2019 and beyond. We knew from the start that it wouldn't show up immediately on the scoreboard, so it is great to be able to report the strong topline and bottom line growth in fourth quarter and all the progress we're making on multiple fronts to enhance the organization and enable us to grow in past prosper in 2019 and beyond.

And with that, I'll turn it back to Rich.

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Thank you, David. Our fourth quarter net revenues were up 4% and were up 2% ex-political. Results for the legacy Entercom and the legacy CBS radio stations were both up in the fourth quarter, that are both pacing up in the first quarter. As David noted, we are pacing up 3% in the first quarter and this stat reflects the year-over-year benefit from selling our own traffic inventory. Excluding traffic, we are pacing up 1% in the first quarter. Our total as reported operating expenses for the quarter came in at $789 million and include a $465 million non-cash impairment charge and $6.2 million of integration and restructuring costs. A sustained decrease in our stock price prompted us to perform an interim impairment assessment that led to a non-cash charge of $465 million, $423 million net of taxes to reduce the carrying value of our broadcast licenses and goodwill.

The $6.2 million of one-time fourth quarter integration and restructuring costs brings our cumulative total to $33 million and we estimate that we will incur another $9 million to $12 million of such costs during 2019, as we work to wrap up the integration program. For the fourth quarter, excluding the impairment charge and one-time costs and adjusting out noncash items like D&A and miscellaneous income, our total cash operating expenses came in at $300.2 million or down 2.4% from the $307.6 million on a same station basis in the fourth quarter of 2017. This result is consistent with our prior fourth quarter guidance.

For the full year, our same station total cash operating expenses are down $28.4 million or 2.4% and our realized net cost synergies for the year totaled $58 million. We remain on track to achieve our target of $110 million net cost synergies at run rate by the middle of this year and to realize in P&L during 2019 $45 million or more of incremental net cost synergies.

Turning to our financial position, at year-end we had $192 million of cash on hand, including $69 million of restricted cash related to executing 1031 like-kind exchanges for replacement property associated with facilities projects. The restrictions on this cash will lapse by the end of this quarter. Our net debt at year end was $1.7 billion and our total net leverage was 4.5 times and our senior secured leverage was 3.5 times, factoring in all of our cash. On a compliance basis which limits how much cash we can use in determining net debt, our total net leverage was 4.8 times, our senior secured leverage was 3.6 times, and our weighted average cost of debt at the end of the year was 5.7%.

Earlier this month, we used our cash on hand to pay off a $160 million of our revolver, leaving $20 million outstanding. In January, we closed on the sale of surplus land, buildings and towers for $25 million. This brings our cumulative total for such sales to $103 million and along with our divestitures, we have generated after-tax proceeds of about $200 million since closing the CBS Radio merger. In 2019, we do not currently anticipate any further significant redundant asset sales. Our 4Q capital expenditures were $15.8 million, bringing our full year expenditures for 2018 to $41.8 million. For 2019, we expect our capital expenditures net of tenant installation allowances of about $10 million to range between $55 million and $60 million. This increase in our CapEx is due primarily to completing our integration facilities rationalization plan. Our spend will be heavily weighted to the first half of this year and is consistent with our projected incremental CapEx over the first two years post closing the CBS Radio merger.

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

Questions and Answers:

Operator

Thank you. (Operator Instructions) And our first question today is from Marci Ryvicker from Wolfe Research.

Marci Ryvicker -- Wolfe Research -- Analyst

Thank you. I'm just trying to figure out core versus the traffic network, so I did this really quickly, but I think you did about $9.5 million in revenue at the traffic network in the first quarter or on pace to do that. Can you talk about how this should ramp throughout the year, and remind us what you're expecting for 2019?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Yeah, we hope to get to that number. We're pacing close to that for 1Q. And what we said was that we think that in 2019, we do more than $30 million of traffic revenues and are targeting to get to $40 million. That's our objective.

Marci Ryvicker -- Wolfe Research -- Analyst

Is there any seasonality to this business that we should think about?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

I don't see a kind of seasonality in this business.

Marci Ryvicker -- Wolfe Research -- Analyst

Okay. And then the $200 million in post-tax proceeds that you've generated so far, can you remind us how much has been utilized and what you expect to do with the remaining cash?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Yes. So, we used the $160 million to pay off our revolver leaving just $20 million outstanding. There's some of the restricted cash is yet to free up, it will this quarter and our intent is to use all of our surplus cash to pay down debt.

Marci Ryvicker -- Wolfe Research -- Analyst

And then last, since the Company has consistently changed and evolved, can you give us what percent of revenue is local spot at this point?

David Field -- Chairman, President and Chief Executive Officer

It's interesting, it's less than 80% now, it's probably migrated more toward 70% or something in that vicinity as we've seen digital and events and other facets of the business increase, national holding its own they're around 20% or maybe just above 20%.

Marci Ryvicker -- Wolfe Research -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question is from Curry Baker from Guggenheim Securities.

Curry Baker -- Guggenheim Securities -- Analyst

Hey, good morning guys. Thanks for the question. So Spotify has entered the spoken word category with two investments in podcasting and plan to spend up to $500 million of podcasting this year. How do you see this changing the competitive landscape overall? And specifically, has it changed your strategy for Radio.com this year?

David Field -- Chairman, President and Chief Executive Officer

So a couple of things. First of all, it is great to see all the attention and energy in the audio space, right? As we've talked about, audio is clearly hot right now and it's good to see all that. We're excited that based upon our scale, we're participating in a number of audio spaces including the podcast area. I think you're aware of the fact that we own roughly 50%, just under 50% of Cadence13. And podcasting is an interesting part of our business and we continue to look at ways to accelerate our participation in growth in that area. Spotify, it's a competitive landscape out there today, there's no question about it, lots of people out there. But what's most important is that if you look at the macro statistics, audio -- radio is the number one reach medium in the United States today and radio remains that is broadcast radio remains far and away the largest player in the audio space with the lion's share of listening coming to AM and FM radio stations.

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

And we should say our content differ in kind than Spotify, we are local primarily, and so it's a different use case and different kind of content.

Curry Baker -- Guggenheim Securities -- Analyst

Okay, thanks for that. I guess segueing into that I know you guys recently launched Radio.com Sports portion, can you maybe talk about how you see your sports rights is a differentiator, what rights you have and will be on the platform? And maybe just overall advertiser receptivity and demand for sports and sports centered content.

David Field -- Chairman, President and Chief Executive Officer

Yeah, look, I mean, the sports business is a very interesting space right now with what we're seeing in sports gambling and obviously America's passion for sports. And we are, with our 45 local play by play relationships across the major leagues and not to mention college sports and our platform of the leading sports radio stations across the country, we think we're in a really good position there. By adding the Radio.com Sports presence at a national level, we think there's a real opportunity for us on a couple levels. One, to leverage the platform and provide easier on trade for national advertisers who want to touch sports fans in a local authentic engaged way at scale. We can do that far, far better than anybody else can. Secondly, the ability to be able to drive even better enhancements to our content, so that we can deliver to our sports fans all across the country, lots of cool new interesting content that goes beyond what they're currently receiving from their local station. So we're very bullish on the space, I think we are very well positioned for the future.

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

And if you look at the outlook, a number of analysts are projecting that by 2022, it's going to be a $15 billion market legalized sports betting. We note that 12 states are already in the game, there are more than 20 are working on legislation in 2019. So all the signs are that this market is going to develop fairly rapidly and we are in a great position given our dominant all sports radio content and presence. So we're excited about what it could mean over time for Entercom.

Curry Baker -- Guggenheim Securities -- Analyst

Okay, thanks. And then my final question, you guys obviously made a lot of -- had a lot of investment spending in 2018. Can you help us think about any investment spending you're going to have in 2019? What are the areas you still feel you might need incremental investment spending in any way you can help us with the magnitude there?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Yeah. So, I think that there's a lot of investment going on. What we've given as guidance is that we do expect to generate $45 million or more of net cost synergies and that net is net of our investment. So there is a lot of investments going on in Radio.com in our national capabilities like Radio.com Sports. We really do see a lot of opportunity for us to further exploit our scale and the power of this platform and that it will all be done within the confines of our integration program and other actions we're taking to redeploy expense within our structure and still deliver $45 million or more of net cost synergies this year.

Curry Baker -- Guggenheim Securities -- Analyst

Okay, thanks for the questions, guys.

Operator

Thank you. Our next question is from Aaron Watts from Deutsche Bank.

Aaron Watts -- Deutsche Bank -- Analyst

Hi, everyone. Thanks for having me on. Maybe I'll start with one or two for you, Rich. Last call you mentioned some thoughts around potentially refinancing some of your capital structure. I was just curious where your head is at on that as we sit today? And then also any thoughts you can give us on where you see your leverage trending toward by year-end?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Yes. So, first, I'd say we expect our leverage will improve by the end of this quarter given our pacing and the implied EBITDA growth. We obviously had a tough first quarter last year, that's fallen out of the TTM. And we continue to monitor that high yield and leverage loan markets with an eye toward potentially refinancing our existing capital structure. As we stated previously, we are seeking to reduce our floating rate exposure and to reduce our senior secured leverage. But we're not going to rush, and we'll execute when and if the market conditions are right. And we do see ourselves delevering over the course of this year, I think you'll see the nice progress when we present our 1Q results.

Aaron Watts -- Deutsche Bank -- Analyst

Okay, got it. Thank you. And David, maybe a couple for you. As Rich just pointed out, 2018 did start off pretty tough, I think, across the Board and the industry. As you think about the better start you're seeing to 2019, would you say that it's being driven by demand, pricing or are there other factors playing in? I know you'd spoke about P&G but maybe you can talk a little bit more about that.

David Field -- Chairman, President and Chief Executive Officer

Yeah, I mean there are a number of factors coming into play, right? So we are clearly getting traction around our initiatives. Some of them are impacting more now. We have a pickup here in traffic that we've alluded to, the network business is strong, national is good. The national client partnership effort, we're really excited about what's happening in terms of that pipeline. You'll see more of that as we go deeper into the year and beyond given the nature of those relationships. And our analytics product is also making a difference with advertisers, again, early innings on that but love the progress around that.

Local store ads, right, you saw that in the fourth quarter number and there's some fundamental issues there, I think facing all -- all local facing advertising, we'd like our game plan around that and we're optimistic about where that's going. But clearly, that is a factor that's holding us back a little bit from in terms of our overall business growth at this time.

Aaron Watts -- Deutsche Bank -- Analyst

Okay. And if I could squeeze one more and I appreciate the time. I wanted to ask a question about the digital app and I appreciate it's kind of early days of the relaunch. But as you are looking at the ad buyers that are coming in there, are they unique to the digital platform or are you seeing cross-buying from the terrestrial footprint? And then I guess secondly, are you seeing incremental dollars being spent or is it more spreading in existing budget around?

David Field -- Chairman, President and Chief Executive Officer

So, to your first question, it's definitely both, right, there's some advertisers, existing advertisers who are adding Radio.com to their buys. But there are also plenty of new advertisers and new ponds we're fishing in from digital audio customers. And some of them are -- we are able to migrate now into broadcast, others will stay strictly digital, and that's fine. To your other question, it's absolutely incremental and it's absolutely an important part of our growth. And as I mentioned before, as the fastest digital audio app in the country and with the additions, like some of the announcements we made today, I mean, adding the Cox and Bonneville stations, we think is a big move, adding CNN and Bloomberg and lots of the other exclusive content.

And so if you go -- if you look at Radio.com and sort of where we fit in the ecosystem because of our position as the leading provider of premium, local, differentiated proprietary content and what we're doing to embellish that and add other unique content, we're just excited about where that platform can evolve to over time with all the additions that we're making and think it will be an increasingly important part of our competitive posture and our business going forward.

Aaron Watts -- Deutsche Bank -- Analyst

Great. Thanks again, guys.

David Field -- Chairman, President and Chief Executive Officer

Thanks.

Operator

Thank you. Our next question is from Craig Huber from Huber Research Partners.

Craig Huber -- Huber Research Partners -- Analyst

Hi, thank you. A few questions, maybe if we could start with costs. What was the annualized run rate of cost synergies at the end of last year? That's my first question.

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

So, we're exiting really maybe 80s up to close to 90.

Craig Huber -- Huber Research Partners -- Analyst

And that's a net number just to be clear of your internal investment spending, correct?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Yes, everything we talked about just now.

Craig Huber -- Huber Research Partners -- Analyst

And then embedded in your guidance for the first quarter, you talk about EBITDA up high-single digits. Just to be clear, does that include the integration costs, restructuring costs that you had a year ago? Some people I think they'll call them onetime items or is that exclusive of that stuff?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

It excludes that. So, those onetime costs are excluded from our adjusted EBITDA, and you'll find, I'm sure you've seen it, Craig, that reconciliation is already posted on our website for the fourth quarter.

Craig Huber -- Huber Research Partners -- Analyst

Right. So, I'll making sure. And then just to help us, what are you actually budgeting for your cost percent change for the underlying same station cost percent change, if you can help us maybe in the first and second quarter, give us this (ph).

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Yeah. So the underlying kind of organic cost escalation, it -- we estimate at 2%, and then we've said that given exactly where we've obviously given our employees' merit increases, et cetera. But against that, we expect to deliver $45 million or more of net cost synergies this year.

Craig Huber -- Huber Research Partners -- Analyst

More front-end loaded, of course?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Yes.

Craig Huber -- Huber Research Partners -- Analyst

Okay. And my other -- in prior conference calls, you talked very positively about your ratings, I guess the first nine months the ratings overall for the portfolio up. Maybe I missed it, but can you share with us how the ratings did across the portfolio plus three months of last year and how you think it maybe did in generally if you have that data?

David Field -- Chairman, President and Chief Executive Officer

Yes. So we ended up 2018 with ratings growth in 11 out of the 12 months. The ratings, the degree of the growth contracted a little bit, but it's still a positive part of our story as we go into 2019. And one of the many things that we're excited about.

Curry Baker -- Guggenheim Securities -- Analyst

And my last question, if I could squeeze it in. Radio.com, give us a sense of how you think that the revenues there might be up in the first quarter, that sort of embedded in your overall guidance for pacing number up 3% for the first quarter?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Well, look, we'll tell you that the outlook for the digital audio marketplace is about 30% growth. You may know IAB, PwC projected to be about $3.2 billion, $3.5 billion market in 2019. The piece of our business that is digital audio streaming is growing faster than that as Radio.com penetrates that market. We also have other components of our digital business that are growing more consistent with the overall digital growth of kind of mid-teens. And as David said earlier, clearly a key growth driver for us, and we're excited about Radio.com's performance so far.

David Field -- Chairman, President and Chief Executive Officer

And what's exciting too is that our share of that space is infinitesimal, right? And we literally didn't play in that space at all pre-merger and it's just one of the doors that opened for us with the scale and the scope of the organization. So we like what our opportunities are there going forward as we continue to build out on that platform.

Craig Huber -- Huber Research Partners -- Analyst

Great. Thanks, guys.

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. And our final question today is from Davis Hebert from Wells Fargo Securities.

Davis Hebert -- Wells Fargo Securities -- Analyst

Good morning. Thanks for taking the questions. I just wanted to clarify one thing you guys said double-digit EBITDA growth and that is just for the first quarter, is that correct?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

That's right. So we keep -- we gave our pacings stat of plus 3% and David said, we are -- we do expect our expenses to be down in the first quarter, so it does implies if we do the math, nice double-digit EBITDA growth.

David Field -- Chairman, President and Chief Executive Officer

And to be clear, we said high double-digit EBITDA growth.

Davis Hebert -- Wells Fargo Securities -- Analyst

High double-digit. And then, so I just want to clarify one thing on that, is that necessarily constraint to the high-teens or I mean it can we just...

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

We don't want to -- we're not giving a explicit guidance figures but it's -- last year we did -- we had a tough first quarter with about $30 million of adjusted EBITDA. And we intend to do very substantively better this quarter, more akin to what 2017 looked like.

Davis Hebert -- Wells Fargo Securities -- Analyst

Okay, that's helpful. And then one question on leverage. First -- or I guess two part question. The Cumulus swap, what was the net impact to cash flow, is that leverage neutral? And then second part is how much of synergies are embedded in your leverage numbers you gave earlier?

David Field -- Chairman, President and Chief Executive Officer

So in terms of the swap, it was essentially cash flow and revenue neutral pre-synergy. And what's nice about this deal is, I think it was a nice win-win for both companies. Obviously, I'll speak to our side. But we think there's some very nice synergies and being able to tuck the New York station into our existing cluster there. Your second question again?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

He was asking about our synergies with the compliance, the leverage. I don't have the compliant certificate with me Davis, we're going to file that shortly.

Davis Hebert -- Wells Fargo Securities -- Analyst

Okay. And just follow up on NASH. I know Cumulus had kind of been very focused on that brand. Are you going to do something different with that station or is NASH a core part of your New York strategy?

David Field -- Chairman, President and Chief Executive Officer

Right. So we are big believers in the country's format. And one of the -- I guess we are the first or second whatever, probably second largest country broadcaster in the United States, and like the format and like the way it fits into our cluster there. So we have a terrific position, terrific portfolio in New York and love the addition of that station to work with.

Davis Hebert -- Wells Fargo Securities -- Analyst

Okay, thank you. And then the local being down, do you think that's more of a factor of the economy? Is there any sluggishness from your advertisers on that front? Just any comments there?

David Field -- Chairman, President and Chief Executive Officer

Look, I think it's probably less that and a little more about sort of the Amazon's and the Walmart's of the world and the impact on businesses. And also a little bit of a share shift to digital that continues in sort of smaller to middle size businesses. We think that there are certainly plenty of advertisers where the shift appears to be going now back in the other direction. And a lot of sort of larger more sophisticated advertisers have concluded that radio can and should be at least under consideration for a larger share of the business going forward.

So, look, it's -- there's a lot going on out there, but we think that we offer tremendous value to those local businesses. And as we're continuing to deploy more tools like Entercom Analytics, frankly, we see that as a big boost in our efforts to drive that the -- to drive growth across the advertisers who are rightfully so demanding accountability.

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Yeah. And it will demonstrate the value of their investment compared to other alternatives, which is really key for us.

David Field -- Chairman, President and Chief Executive Officer

So, I'll underline a comment I made earlier that we are now over 5,000 customers that are linked to our analytics platform and that the group of those advertisers who have been on that platform since 2017 based to increase their spending by 11% in 2018. And that is by and large local advertisers. So again, we think we've got good strategies deployed. And fundamentally the fact that radio is such an undervalue medium and offers the reach in ROI and so forth, at a time when there is so much disruption of the media. We'd like where it's headed, and we believe we have the toolbox to be able to play effectively there. But yeah, there's a little bit of a local -- little bit of a local headwind as there's been over the last couple of years.

Davis Hebert -- Wells Fargo Securities -- Analyst

And just a follow-up, EAN is the proprietary platform, correct?

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Correct. That's right. It's a premium network because it involves -- we pride ourselves in the quality of our local brands, and local content and it is exclusively that without sort of bringing in sort of tertiary tiny, tiny radio stations in tiny markets.

Davis Hebert -- Wells Fargo Securities -- Analyst

Okay. And then just one last question on Radio.com, I recognize revenue might be difficult to guide. But in terms of the mobile engagement, I mean, can you give us any stats in terms of percentage on -- of usage on mobile devices and how that's growing year-over-year?

David Field -- Chairman, President and Chief Executive Officer

I think you should assume that our trend lines are similar to what you're seeing in other businesses, I mean, obviously the mobile pieces. Mobile piece is really strong, smart speakers is a much smaller piece of the pie, but growing rapidly, and desktop remains strong as well.

Davis Hebert -- Wells Fargo Securities -- Analyst

Okay, great. Thank you, guys.

David Field -- Chairman, President and Chief Executive Officer

Thank you all so much. Appreciate you joining us this morning and look forward to reporting back to you again in a couple of months.

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

Bye-bye.

Operator

Thank you. And this does conclude today's conference. You may disconnect at this time.

Duration: 40 minutes

Call participants:

Richard Schmaeling -- Executive Vice President and Chief Financial Officer

David Field -- Chairman, President and Chief Executive Officer

Marci Ryvicker -- Wolfe Research -- Analyst

Curry Baker -- Guggenheim Securities -- Analyst

Aaron Watts -- Deutsche Bank -- Analyst

Craig Huber -- Huber Research Partners -- Analyst

Davis Hebert -- Wells Fargo Securities -- Analyst

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