Q3 2019 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the script third quarter earnings call for the conference all lines will be in listen only mode. There will be an opportunity for your questions and instructions will be given at that time, if you should be quite or any assistance. During the call. Please press star zero.
Well, let's just do you offline as a reminder, today's call is being recorded.
I will now over to Carolyn Micheli Senior Vice President Corporate Communications and Investor Relations. Please go ahead.
Thank you good morning, everyone and thanks for joining us for a discussion of the E.W. Scripps company's third quarter 2019 results.
<unk> conference call and webcast include forward looking statements actual results may differ factors that may cause them to defer are outlined in our stcs filings.
You can visit Dot com for more information you also can I have to receive emails anytime we disclose financial information and you can listen to an audio replay of this call. They are linked to the replay will be up this afternoon and available for a week.
Well here first this morning from Chief Financial Officer at least a kitchen and local media President, Brian Lawlor and National Media Executive Vice President Mark Thompson, and finally, the president and CEO Adam Symson.
Also during today's controller and treasurer deadline.
Their merger I mean first we closed on 15 station from Cordillera and on January 1st we closed on the acquisition of three stations from great right.
Today, I will discuss our financial results and though we had owned all the news stations those January 1st of 2018.
In todays press release, you can find the results on both an as reported basis and on an adjusted combined basis. We hope. This presentation gives you a clear picture of our growth.
Oh, sorry, I wanted to point out that street consensus estimates are not comparable to our third quarter results or fourth quarter guidance.
Analysts have already submitted new estimates incorporating the Nexstar Tribune divestitures and some have not so consensus reflects a mix of number.
Now, let's talk about already strong third quarter performance.
And our local media division on an adjusted combined or same station basis revenue was $305 million or 12%, a 12% decline for the third quarter of 2018 and last year's third quarter. We had about 57 million a political AD revenue on an adjusted combined basis compared to about five and a half million dollars in 2000.
Like tool.
Core advertising was up nearly 4% on of the adjusted combined basis retransmission, rather they know what the $109 million expenses for local media worthwhile.
Now, let's talk about the rest of the company's Q3 results on an as reported basis.
The National Media Division delivered strong results for the quarter. The division exceeded our revenue guidance amendment $90 million coming close to $100 million for the second consecutive quarter.
<unk> expenses were in line with expectation.
Segment profit for National Media came in at $5.3 million down a bit from Q2, as we had expected shared services and corporate expenses were about $14 million.
For the third quarter, the company's loss from continuing operations was about $22 million or 27 cents per share pre tax cost for the current quarter included about $17 million of acquisition and related integration cost that increase the lost by nearly $13 million net of taxes.
That works out to 16 cents per share.
So we would have reported a loss of 11 cents per share if you exclude the impact of non core items.
Capital expenditures for the third quarter told about $11 million, including just under $3 million for the FCC Republic, we expect to be fully reimbursed by the federal government for our repack costs.
Turning to capital allocation, the company made about $4 million and dividend payments in the third quarter and $12 million year to date no shares were repurchased during the quarter, we expect to stay out of the market, while we focus on paying down debt.
On September Thirtyth cash totaled $87 million, well total debt was $1.98 billion.
Next year, we expect to benefit from our newly expanded national footprint to capture even more political advertising dollars and more value for the contractual reset of about half of our pay TV subscriber helpful.
And a reminder, those contract resets coming after the Comcast household reset on January 1st.
Because of the actions we've taken over the last two years, we significantly improved cash flow profile of the company had we previously stated we expect 2020 company free cash flow to fall in the range of $225 million to $250 million with that level of cash flow over the next 12 months, we expect to de lever to the low two.
Mid fours.
Now I'd like to touch on some highlights of our fourth quarter guidance.
In today's press release, we provided local media revenue and expense and retransmission guidance on an adjusted combined basis.
Hey, Nexstar Tribune stations are now included in all periods, along with Ray calm and Cordillera station, we released tables, giving the adjusted combined historical results as a part of our press release on September 19th.
For the fourth quarter, we expect local media revenue to be down in the low 20% range in comparison to Q4 2018, that's because our fourth quarter in 2018 political AD revenue was $114 million on an adjusted combined basis.
Fourth quarter local media <unk> expense is expected to be down mid single digits. Just a reminder, that in Q4 last year, we had a 9 million dollar programming impairment charge and also some onetime cost.
We expect retransmission revenues to be up in the low single digit range over our adjusted combined results for Q4 of 18, we have knows that we have no significant contract renewals are stepped up in 2019, [laughter], we expect national media revenue of between 100 and $105 million and expenses and the high.
90 million dollar range expenses include the investment, we're making and making this year in core TV to grow its distribution to 90% of U.S.P. be helpful.
We're expecting the shared services and corporate line to come in at about $14 million again, this quarter and now here's Brian to discuss our local media result, thanks, Lisa Good morning, everybody current scripts were winding down on a really busy year, we've acquired and an hour Onboarding 27, new TV stations includes.
Seven former Tribune stations, and one form or Nexstar stations that officially joined US on September 19.
Having gone from nine stations to 60 in the last 10 years has gotten pretty good and integrating television stations.
He element of our Onboarding, a sharing with our new employees the scripts cultural values, our mission of producing meaningful storytelling and our expectation for high professional performance.
In addition to the cultural Onboarding, our integration process includes capturing the greatest possible efficiencies and synergies from our acquisitions.
Quickly moving our news stations to our many centralized systems. These include graphics master control and add trafficking.
Today is the fourth largest independent broadcaster, we've created a company with authentic local connections combined with broad national reach.
We have capturing cost efficiencies that also free up our local teams to focus on reporting the news and providing an objective platform for local businesses.
As a result from our growth scripts as a stronger more durable and more efficient local broadcast or.
Now I'd like to turn to our core advertising business during the third quarter seven of our eighth largest that core categories grew on a same station basis.
Among them services retail home improvement in communications, all showed nice year to year growth.
Typically the home improvement category continues to be especially strong.
All of these categories reflect the health of our local economies and that consumers are spending and our local markets.
It's also good to see retail performing well as we move into the holiday season.
We are pleased that third quarters category strain has continued into the fourth quarter.
Tober finished as one of our strongest AD sales months of the year.
Our political advertising revenue was very strong for an off cycle election year.
Our newly acquired stations put us in Kentucky, and Louisiana, where we just saw competitive governors races.
And we now have two stations in Virginia, which benefited from very active state races.
So we now have a steady steady stream of odd year political revenue.
By election day. This week, we had brought in more than $11 million the political advertising for the first five weeks over the fourth quarter.
Puts us at more than $20 million, a political AD revenue this year on a pro forma basis.
Finally, I'd like to discuss our Capes multicast business, which reports to me and impute appears in the National Media segment financials.
In October Kate's launch core TV on the former Tribune stations and as a result of that additional distribution network now reaches 90% of U.S. households over the air.
And 40% of all cable homes as well as global audiences on over the top platform.
And the docket at core TV is looking compelling we've got the high profile trials of Harvey Weinstein and our Kelly just around the corner.
At the same time Gordon is producing original programming, including an extensive 37 weeks series about the OJ Simpson trial.
We expect core TV programming, they continue to draw a big audiences to our nearest kids' network.
And now here's Laura.
Thanks, Brian Good morning, everyone I'd like to start by echoing Brian's enthusiasm for the warm audience reception in a rapid distribution growth of core TV our businesses across the company has come together to support the core TV launch our local TV stations and Newsy have provided AD inventory for promos or TV programming.
Ramming W.P.I. acts in New York interviewed anchors have any politician is seen a higher we help core TV launch a podcasts and we promoted core TV on Nasdaq's times square Billboard.
From a marketing and content perspective scripts is tapping into time talent and media assets across the local and national media businesses to support core TV.
And we are using the same technique to raise the profile of our other brands as well.
This is yet one more advantage of our platform at the larger and stronger media company.
Turning to our third quarter results results the National Media Division again near 100 million in revenue.
That performance includes nearly 20% revenues I think Kate.
40% growth it stature and 75% growth at Newsy.
As we look to the fourth quarter, we see it did trend newsy moderating a bit as they come up against some tough comps from the fourth quarter of last year. You can continue to look for strong double digit growth rates from these fast growing businesses.
I just did your we just launched a hit podcast I went straight to the top of the chart office Lady.
The show debuted in mid October featuring two stars and they hit sitcom the often Ghana Fisher and Angela Kinsey.
To realize best friends dissect the TV show one episode at a time and I you would expect the grade humor.
Ladies first episode has already had nearly 2 million downloads.
A new generation is watching classic TV shows such as the office and there are big podcast listeners to.
This is another Great example, voice grants is investing in businesses that cater to changing media consumer habit.
Although it did your we've been seeing success with our shows Conan O'brien needs a friend and getting curious hosted by Jonathan Dann as well then that makes it clear right.
That you're just announced this week the launch of a third scripted drama series with Marvel New media, it's called Marvel's and it's based on the popular form part comic book.
Finally, the new age beyond that Oh, Gee service will create a television documentary version of interest popular podcast Kevin's gain about the California based called levers committed mass suicide and 1997.
[noise] These high pressure high profile shows and partnerships drive new listeners and advertisers entity expanding podcast marketplace.
Did your is well positioned to capitalize on this growth because it is AD sales not work its owned and operated shows and it's less smart listener relationships divestiture podcast that.
I train our digital audio B to B business, we continue to benefit from the lives of terrestrial radio companies onto digital platform.
Try and provides these companies with infrastructure services to convert there over the air broadcast and digital strain.
And now Triton and they would offer these companies in the end, Dan podcasting solution as well.
A natural extension of our current services and Triton has also now powering Stagers technology platform.
Finally, I'd like to discuss the number of recent when foreign National News network needs.
New these profile continues to rise as it produces impactful investigations and major documentary.
The team that Newsy, and our Washington Bureau have dug into issues this year, including policemen and this classification of rape investigation. The men handling of sexual assault cases on natomas Native American land.
And he then consistent use a seamless fire alert system and the impacts of climate change.
[noise] Newsy has 114 National Journalism awards for its work. This year. In addition, it was recently identified as the most reliable and neutral cable network and I received recent media bias charge study.
Newsy subjective box based approach and a landscape of right or left oriented media outlets has been well received by audiences.
And as the audience grows so does the revenue, particularly on the over the top market well younger news consumers turn for their information and entertainment.
Now here is Adam Thanks, Laura and good morning, everybody.
This morning's announcement of scripts this third quarter results marks the eighth consecutive reporting period in the last two years, when we have met or exceeded expectations on chief financial measures improving our short term operating performance has been a top priority for this management team I'm pleased to see are terrific progress.
In September we wrapped up a busy M&A year, when we closed on our Nexstar Tribune divestiture stations.
We're now repositioned to thrive in a consolidated media landscape.
Our acquisition activity significantly improved scripts is reach and our operating profile with six these stations, reaching one in three American households, we've gained dep and scale, we now own more number one and number two stations and have added second stations in some of our key legacy.
Grips markets.
So today, where not only bigger but were better power station group is more durable better performing and will provide our shareholders with an excellent return on invested capital.
Our broadcast business provides a from financial foundation for the enterprise from this solid base will capitalize on future upside in that business, including through the growth of automated advertising and the emergence of new business models around next generation TV or a TLC threed I know that are still to come.
And at the very same time, we're setting up this company to significantly profit from the new ways that people are consuming media.
This approach is both a hedge and a growth strategy as we make modest short term investments that we're confident we'll generate significant long term value.
Our four major national businesses case, Newsy stature and Triton.
Our in fast growing media marketplaces of over the air in over the top television and digital audio in podcasting.
Our National Division is rapidly growing revenue expanding its margins and creating brand new shareholder value.
To conclude in the short term will ring and the new year with the reset of our Comcast households, delivering an immediate boost to our bottom line and then we'll work to capture the full distribution value for our local brands as we said another half of our pay TV households.
Will integrate our new stations and maximize the opportunity for financial synergies.
We will serve our audiences across the nation with election year reporting that informs our democratic process and is consistent with scripts his commitment to quality objective and trustworthy journalism across all of our news outlets.
And throughout the year will use our higher free cash flow yield to pay down debt as we move scripts back to our historical leverage ratios.
This is the growth plan, we laid out to you two years ago and this is the plan we continue to execute.
And now operator, we're ready for questions.
Certainly in ladies and gentlemen, if you would like to ask your question. Please press star one you'll hear a tone in the can't even been placed in the queue. If your question good Sam surety wish to remove yourself from the Q. Please press the pound key once again star one if you have a question.
And little line of Dan Kurnos with benchmark. Please go ahead.
Oh. Thanks, Good morning, Nice progress guys add I'm, just kind of start with a high level picture here. You know you talked about the consolidated landscape. It sounds like we've come to sort of a bit of a standstill. Most of the big assets have been picked up here I know you guys are working rapidly towards the de lever I'm just curious what you're seeing that's still out there.
How do you guys have any dry powder to go after it.
And a lot of other guys are focusing more on a return of cash as well. So just kind of high level picture and if you think there's further consolidation opportunities or everyone is kind of biting time until we get to next year and then.
You know I guess, maybe for Brian just you know are on political a you know it's it's been massive so far I'm. You know guys had been reluctant to talk about 20, given what happened in 16, but everybody is kinda inching up to new record levels. I know you guys have some interesting comps versus.
18, so just maybe some updated thoughts there. Thanks.
Thanks, Dan Good morning.
As we've said before right now our top priority for capital is for us to use that free cash flow to pay down debt and de lever I think the timing is actually ideal for us I think it's unlikely we'll see.
Significant local television M&A occurred before the election.
And so we'll use a that time period that we have in 2020, both with the Comcast step ups in the reset of our additional retrans rates along with the political cycle to pay down debt and then we will you know will address the opportunities as they come much further down the line once we're back to.
Levels of.
Debt level that we're more comfortable with Brian Hey, Dan It's Brian .
Obviously, we feel really good about.
Where we're at in 2019, the political and what it is telling US about next year. Just this week, we wrapped up the.
States seats in Virginia, we did three times as much political advertising on our two stations in Virginia as we did in 2015, and then Louisiana, where there's still got another seven days on the run off for the Governor there were already a 100% greater than we were.
In 2015, and then and the Kentucky Governor race were up over 60%. So I mean, just massive growth in these key markets I think they're really telling so obviously, we're very optimistic about next year, we think that there'll be more money in the ecosystem then there's ever Ben and I think our footprint is excellent I mean as we're looking at it.
Presidential you know, we like our footprint a lot in Florida, Michigan, Arizona, Colorado, Wisconsin, Nevada, many of those markets, we own many allstate's round two or three stations in Florida, we own five.
You know we've got three Senate races that right now of the six that are considered tossups wave three of them, Arizona, Colorado and Michigan each of those market each of those states, we have more than one market that we're doing business and we have a open Montana gubernatorial seat and then I don't know something like 40.
Six.
Congressional races that are considered tossups right now we're in like 21 of them. So I think everything's lining up real nicely for us to have a heck of a year next year.
Got it thanks guys.
Thanks, Dan.
Our next questions from Stephen Kim with Wells Fargo. Please go ahead.
Yeah. Thanks, Adam I was wondering if you could maybe give us a little bit of an outline for what retrans revenue looks like next year I think maybe the markets a little focused on your Q4 guide right now and you've got this massive step up it does kind of leave a lot of room for an interpretation. After all the M&A. So could you help us maybe just benchmark how little bit of what that.
Pharma revenue growth is going to look like in 20.
Good morning, Steven Yeah. So on January 1st will finally receive that Comcast step up we're obviously looking forward to that and we think they'll be very nice flow through on that after that we have a another 50% of ourselves that will come up and be negotiated through.
The year and so we expect as I said in the prepared remarks to be able to receive the full value of our distribution of our local brands with those those NBP. These so we think it's going to be a terrific year a from a a from a retrans perspective, Brian is Stephen it's Brian I just want to jump in.
Thank you know in the last couple of quarters, we've talked about a little bit of a retrans dyssynergy.
On our acquisition of the Tribune, and Nexstar and really this year a lot of that has to do with the fact that prior to this year, we own one CW station and so in our Retrans negotiations you know, we currently traded a little bit of that value away to maximize the value of our big fours.
But now with the end of this year, we own 13 CW stations. So our current market rate for Cws as you know below market and that would account for most of the dis synergies, but as Adam just said you know we're about to get into 50% of our subs pretty quickly and I think we'll be able to recapture that value and so we do look at those decision.
Energy is really short term yeah, I would just add just to sort of round. This out you know the scripts retrans trajectory is obviously very different than our peers. We've been waiting like we've said for years for the step up of the Comcast households, and then we've got the a the additional opportunity. So we expect retrans to have a sick.
African upside for us as we look forward.
Great and then maybe just on the National side, a couple of questions. There maybe first in the audio space you you've seen good growth there with trading instead sure. It seems like we're seeing some really rich multiples paid for podcasting assets. So how do you think about the scale that you could be in this business versus you know potentially part.
And with some assets that some really strong multiples and then on core TV is most of the advertising on that currently like direct response and do you think there is scope to expand that as the programming increases maybe more industry verticals or are getting nielson rated do improve those cpms. Thanks.
Hey, Steven its Adam So let me take the a the second question first yes, because we just launched core TV earlier. This year today most of that advertising is direct response.
Now that we are available in a about 90% of U.S. household and our Nielson rated where we'll be moving next year towards you know the brand advertising, we expect but it's going to follow the same trajectory that all of our multi cast brands have mostly direct response in the beginning.
And then the slow transition to a two to the a direct from direct response, a hybrid retros mindset in general market advertising on your question about the digital audio space. You know, we're we're really pleased with the progress the market's making a the marketplace and digital audio obviously.
Growing quickly as consumer habits change, specifically podcasting as well, we expect podcasting to be a billion dollars marketplace, probably within the next year or two.
Obviously, we've seen the same the same numbers you are and that's why we then you know so bullish on the opportunity for scripts in this space will continue to look at all opportunities as they present themselves a into digital audio space and take a take the marketplaces development does the comps.
Thank you.
Next we want to Kyle Evans with Stephens. Please go ahead.
Good morning, I wanted to kind of double back.
Get a little bit finer point on two questions Dan Adam you mentioned that there was a comfort level that you can get you on leverage.
Thinking about kind of a different capital allocation than just de leverage could you put some brackets around what that leverage level isn't that I've got some follow ups. Yeah. So let me let me speak broadly as most of you know scripts has historically been you know around three three dot five.
And that's where we've sort of always sort of seen our sweet spot relative to.
Relative to when we would restart a stock buyback program or change sort of our view Lisa you want to talk a little bit about that yeah Kyle.
Yeah.
We've said you know and the next 12 months, we would be somewhere between the mid and low fours I think we wouldn't look at restarting a stock buyback once we were in the number would start with a three.
So.
That's our priority over the next.
12 to 18 months is to really to get that debt down below.
Below for and then restart are you really take a a balanced approach to our capital allocation strategy.
Great. Thanks for that Brian you talked a little bit about state by state cycle trends.
Very very strong 2018, I guess im just looking at the pro forma 22 numbers and wondering if you think were flat to up from there in 2020, and then also along the lines of the strong.
Second half 18 political anyway for us to think clearly about the reverse displacement youre going to go. This year is that just kind of Boston the numbers.
Yeah I think.
It's gonna get lost in the numbers that you know again, I think I talked about three.
Three states for markets, where we really had some.
Displacement that would have happened mostly in a four or five week period, and I think we'll be able to make up most of that so.
I think it's mostly upside as we're thinking about 2019.
As we look out to 2020, you referenced a oh, you know a pro forma numbers in 2018 somewhere around $196 million is.
So we haven't yet the finished putting.
On the pencil on this but we clearly see upside from that Oh look a lot is going to depend on you know how quickly the Democrats can kind of narrowed the field.
The sooner they can get to one candidate the more.
Revenue upside opportunity, we have if the Democrats drag out to the primary the June or their convention, we have a short window for the upside on that but in a perfect scenario candidates would be secured and nomination in March or early April and then.
Once those two candidates for each side or the determined that starts the active spending so I think we'll be watching that early period, very well, but clearly based on the health of the ecosystem and the our footprint.
You know I would expect a a positive number beyond the historical 18 pro forma.
Well I have you could you comment on Subcount trends in Retrans and in Threeq, you on a pro forma basis and kind of what's you're factoring into your outlook. We had some some of your peers seem to get caught in the.
I don't like blackout Crossfire, just wondering what you've seen there.
Hey, good morning, Kyle It's Adam I'm Gonna take this this one.
Our pay TV households were down just a bad from the last reporting period ending in June and most of that some decline I think as you described came from the satellite providers. So I was actually pretty encouraged by this weeks a dish or sub count report that went through September .
We're obviously also still seeing growth in the virtual NBP. The households, so that's sort of where we see a we think we're sort of set up a point in time right now.
Got it lastly, Laura.
An update on newsy kind of where you're getting your best engagement with consumers. What you think you know if there any constraints, there whether or not there on the supply or the demand side and kind of how you envision.
Direct sale versus more open auction sales in the future. Thanks.
Good morning.
Right now I'd say most of 'em sort of that both the audience and revenue growth is still really driven by LTT. You can see we've been really pleased with the year over year growth rates do not 75% uneasy continues to deliver had great product to younger consumers on DRG platform.
We're seeing some small growth in cable I think you know we remind ourselves that you can't just trying to cable network overnight and expected to grow.
Instantly. So this is a marathon not a sprint and I expect that we'll see a more cable AD revenue in 2020.
And there's still a lot of demand on LGT I think I mentioned in the past where typically sold out rarely if we're not sold out.
Great. Thank you and lastly, congrats on promotions over there. Thanks.
Thanks.
Our next questions from Marci Ryvicker with Wolfe Research. Please go ahead.
Thanks, I mean, you probably posted the best core of your peers up almost 4%, Brian how should we think about going into the fourth quarter should that accelerate.
Based in your comments on October and then secondly, Adam can you just clarify free cash flow comments, you made it sounds like there could be upside to free cash flow. When you say, we expect scraps to generate significantly higher free cash flow in 2020, any other I would've expected in the press release, Thanks, Hey.
Marci, it's Brian Thanks for the compliment encore, we really proud of.
The efforts of our sellers and you know as we talked about you know what seven of our a.
Largest categories, Rob and I think as I said in the prepared comments I think we're just really pleased that the categories that speak to you know people in local markets, having money and disposable income this.
Spend on furniture on betting on you know travel and leisure on travel and.
Cruises and things like that I mean, all these subcategories are up significantly jewelry shoes appliances up double digits everywhere. It really gives us a lot of hope that our local economies and our local markets are very healthy and they're spending money and we're taking advantage of that and when the strong new business effort I think it's it's showing it.
Our numbers.
I did say in my prepared remarks October was.
Outstanding.
Obviously, our go against because the political.
It's not surprising but it was better than we expected and November is very strong as well. So I think we feel really good about fourth quarter right now.
Good morning, Marci, So we reiterated our view on free cash flow for next year, but as you pointed out with a strong political year next year, there there could be that upside for additional free cash flow.
Okay. Thank you.
Our next question from Michael Kupinski, What's normal capital markets. Please go ahead.
Thank you and congratulations on the quarter and congratulations on the promotion first excuse me I'd like to talk a little bit about Kate revenues were a little softer than I expected, especially due to the launch of core to the TV and it's kind of showed a little deceleration from the early early on I was wondering if you can give us a little color on.
Revenues for the quarter should we anticipate there will be an acceleration of the rate of growth coming in coming quarters because of core TV, just kind of in and of course because of the high profile.
[noise] court or things like we're starting to see there, but can you just give us a little color there.
Yes, so Mike if we saw I'll jump in and then I think Brian will add some color I I don't think we've seen a deceleration consistently we've seen growth into 18 20, you know fire for third quarter and was 19% so pretty consistent growth rate.
Throughout 2019, Brian I don't have gone a little bit Mike. Obviously, you know we launched on May Eightth, we had 63% in the country. When we launched and so we're just beginning to get the brand out there.
So the earlier question.
By Steven you know.
It's you know we're laying in direct response, just you know it's a brand new network would you know number no numbers when you start up so.
No I think core TV is as you.
You know building toward what we expected to be I think it we expected a slow crawl in terms the revenue, but I think about every week. The revenue continues to grow with the addition of the other 30% of the country. This week.
So a big jump up and more importantly, we got a lot of positive feedback from our de our clients that their phone.
Take rates had significantly picked up so we feel really good about court as Lisa said, almost 20% growth for the business with court really not contributing much at all to that so that speaks to the strength of bounce and laugh and grit.
There really strong right now with a lot a double digit momentum and as Corey you know gets its no gets up to pace.
I think you're going to see the benefit of it as we get into the middle of next year.
Got you think sort of color then Brian .
I was wondering if you're following up on Marci. His question. All core have you noticed any particular differences between some of your smaller markets and your larger markets number of broadcasters have indicated that national advertising seems to be pretty strong with the exception of auto can you just can't give us a little added color on core this.
Point.
Yeah, you know we had a good year on National also and we saw a lot of stability in the category some growth in different places local has.
Clearly been our strength.
We were up mid single digits inside the quarter on the local side, but I think you know the good news is our low our large markets are healthy.
Some of our biggest spot growth.
That we saw the audits double digit growth in markets like Tampa in Kansas City in Las Vegas, and so the big markets a very healthy.
But I think there are many of our small markets are pretty healthy as well. It's just you know there's a smaller opportunity there.
Gotcha, and then on Newsy want to go back to that can you talk about the number cable subs that currently has that increased over the quarter and then isn't getting the ratings that you were expecting on cable and can you talk about the prospect of adding more coverage on cable.
Hi, My guess Laura.
We are hovering right around 40 million pay TV subscribers right now.
Over the last quarter, I think Weve added and do you want to virtual anti PD side as it relates to ratings on cable you know we currently use a host of data to inform our content strategies and we just recently became rated.
So it's really early and I mentioned, a little bit earlier, and I want to marathon honest, Brad we're going it takes time for folks to define newsy and our track Channel guide, but we've seen and you know great demand for the product that new these putting out there being objective and authentic and weak.
That does the subscribers on cable I will follow suit I like our LGT audience.
Gotcha. Thank you so much appreciate it.
Our next question from Craig Huber with Huber Research partners. Please go ahead.
Yes. Good morning, Thank you for a few questions.
[noise] people sort of the TV side Brian .
You talk a little bit about auto hold it for the what you're seeing there post the anniversary of the election day, a year ago would mean, how is it look in your mind.
In November and December .
Yeah, Hey, Craig it's Brian .
Look I thought we had a pretty decent quarter in terms of automotive in the third quarter. It was down low single digits. So as you know that's kind of the best performance. We've had no. While you know inside of auto I think that's where we saw.
Some excitement the our domestic dealer groups were up double digit foreign dealer groups were about flat.
We were able to grow our individual dealers mid single digits.
We had a couple of the big brands that were.
You know up across all of their.
A brand so.
I think it felt you know it looked good obviously October you know what the displacement last year autos up significantly.
And we like the way, it's tracking for the rest of the quarter.
Is your sense, though Brian you know the say the second half in November and December can be up for auto was a too ambitious.
I don't think it's too ambitious but it is too early for me to have a.
Some conviction on that comment I think you know auto was.
Definitely for December gets laden with year end, closeouts, and and and some new models and deals to finish the year in capture market share. So it's very typical for auto to build through the fourth quarter and I would expect that to be a case. The good news was you know that I think we're all nervous about the.
The the strike the general Motors strike and that had no impact on US there were virtually no cancellations or no pull backs as a result of that there were able to get to resolve before meaningfully affected the local dealers.
Then you mentioned the retail category, which as you know Brian has not been strong.
Some parts of the last two years say, what do you make it out right now is that the strength of local economies, you're talking about I mean, given all that in store closures and bankruptcy south or it's interesting your numbers are doing well there yeah, theyre doing really well by far.
The best category, the best quarter, we've seen in a long time for retail just because the depth of it sometimes it can be driven by you know a singular sub category, but furniture was up medicine was up bedding was up appliances jewelry store as pets, I mean retail had a really good quarter and perhaps the strongest of that and the.
Biggest subset of that is furniture, which was up almost double digits. We don't really good retail quarter, which gives us a lot to optimism as you know we had toward the holiday season.
I wanted to ask you Brian on.
Retrench sub so I think Adams said it was down slightly so I take that down about jumped out about 1% of latest set of numbers you have there.
We were down about 2% correct yeah.
Okay.
And then also although TV acquisitions Youve closed on here recently, Brian just curious.
The number of.
Slots you can put in there for extra news cash that those acquisitions are much availability just put in more news hours there of course the week.
There is I think.
You know obviously, a a couple of the stations.
So if I include Cordillera you know a bunch of the stations are big fours and you know I think that.
Maybe some expansion into weekend.
And maybe some expansion on some of the CW is there, but I think as I look at the Tribune.
Think theres quite a bit of opportunity, especially because of the large markets of New York Miami Phoenix.
Our all Cws and we do see an opportunity for news expansions in all of those markets.
I would just add Cray the expansion of news for us.
Remains an opportunity for us to continue to serve out our journalistic mission and obviously ahead.
Ahead of the election maximize our yield for those markets.
I think my last TV question.
You touched on this list will get better clarity you mean, the retrans revenue number in the quarter I guess the outlook for the fourth quarter, you're saying part of that's being hurt by just synergies movie just touching a little bit further.
I also understand you had about 3 million Retrans subs come up for renewal at mid year, or so obviously sequentially versus the retrench somebody had the second quarter on a pro forma basis should do it up on that but obviously, it's been offset you're saying by this just synergies stuff. So we just talk a little further on that again. Thank you Craig Craig I would point you back to our release back in September .
19th when we closed on the Tribune Nexstar divestitures, we gave full pro forma numbers that if we had on the station back to 2000, beginning of 2018, so you'll be able to sort of dig into those numbers there.
Right right <unk>, but looking at that it looked like I'm looking at those right now it looks like you had 112 million in the June quarter for reach 113, and a half called in the March quarter. I guess, you reported 109 in the September quarter, Yeah, and I I think Brian mentioned, you know a few moments back the as Debbie so.
Really.
Most of the just synergies were associated with.
You know.
The CW is you know that well renegotiate next year. Thanks, Craig there's just a a bunch of moving parts of that obviously, we did have some subs that came up and we had some step ups inside of that.
But beyond that we did have the CW dissynergies that I explained a little bit earlier, and we have had some sub decline. So I think you know the dis synergies in the sub decline sort of offset the step ups, but.
You know those were really not meaningful relative to what we're about to.
Again with the Comcast step up at the end of the year and then the first half of the year nearly 50% of our subs next year. So I think there were some moving parts.
In the back half of this year that kind of to some degree cancel each other out but I think there's a lot upside as we look to to the 2020.
I showed you a more TV question I'm, sorry, the 2016 pro forma political number do you have that number handy.
134 million.
Okay, and then how did Triton do if that's my last question how to Triton do on a pro forma basis year over year plates for revenues.
Hi, I'm.
Hi, this growth is in line with our expectations. We did earlier this year selling non core asset and we will see the impact on triton's revenue growth for a few quarters, but outside of that they're really in line with our expectations and that decision to sell the noncore asset ginza team really the ability to us.
Focused on that too.
Core revenue streams of infrastructure measurement.
Doesn't mean, then underline that was up about 10% or so.
Yeah, good low teens.
Great. Thank you very much.
And ladies and gentlemen, just a quick reminder, if you do have a question. Please press star one next to a Davis email with Wells Fargo. Please go ahead.
Hi, Good morning, Thanks for fitting me in here I'm just a couple of quick ones from me appreciate the comments on the leverage trajectory. If you could just give given all the moving parts. The Ellie Q leverage as a 930, yeah that would be about five dot too.
And that includes or excludes Comcast that that is our adjusted pro forma two it includes konka.
Okay. Thank you and then last question kind of alluding to Steve's earlier question on podcast valuations.
There's been a couple of other other transaction is I guess in your National Media space Cheddar was sold to all T. send then TEGNA bought about Justice and quest, how do you think that translates to valuations for capes and newsy, respectively I.
I think both of them are strongly affirmations of the value. We're building for shareholders I mean for a long time, both at Newsy, a case and as well a in the podcasting business first Midroll and now you know what the named try stitch, our we've talked about our modest investments to create shareholder value in these markets.
Places and we believe we're doing exactly that obviously this company has a long history of creating and then unleashing shareholder value oftentimes through transactions, but at this moment, we're totally focused on organically growing those business businesses and yielding the value within the company.
Great. Thank you.
And with no further questions I'll turn it back to the company for any closing comments. Thank you. Thanks, everyone for joining us today.
Ladies and gentlemen that does conclude your conference for today. Thank you for your participation you may now disconnect.
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