Q4 2020 Tegna Inc Earnings Call

Right.

[music].

Yeah.

Good day and welcome to the <unk> fourth quarter 'twenty 'twenty earnings call. This call is being recorded our speakers for the day will it be Dave Lougee, President and Chief Executive Officer, and Victoria Harker, Chief Financial Officer at this time I would like to turn the conference over to Doug.

Kopelman head of Investor Relations. Please go ahead Sir.

Thank you and good morning, and welcome to our fourth quarter and full year 2020 earnings call and webcast today, our president and CEO, Dave Lougee, and our CFO, Victoria Harker or do you take this financial performance and results. After that we'll open up the call for questions hopefully you've had the.

I can tell you to review this morning's press release, if you have not yet seen a copy of the release, it's available at Tech net dot com before we get started I'd like to remind you that this conference call and webcast include forward looking statements and our actual actual results may differ factors that may cause them to differ are outlined in our SEC.

Fillings.

This presentation also includes certain non-GAAP financial measures. We have provided a reconciliation of those measures to the most directly comparable GAAP measures in the press release with that let me turn the call over to Dave.

Thank you, Doug and good morning, everyone as Doug noted, Victoria, and I will be discussing our fourth quarter and full year 2020 financial results on today's call I will also provide our expectations for this first quarter and full year 2021, which you saw included on our earnings release. This morning.

But before we turn to the financials I first wanted to take a moment to reflect on the incredible achievements of our technet colleagues over the last year.

Despite the obvious significant challenges we faced in 2020, our team remains steadfast in supporting each other and the communities we serve throughout the year, our local newsrooms, where a lighthouse a trusted information in a sea of misinformation and disinformation our stations found innovative ways to deliver news and substantive com.

Amidst the pandemic that brought clarity context, and hope to our audiences.

Never before has a core purpose of serving the greater good and more relevant and needed across our markets and beyond Arthur.

<unk> journalists and production crews utilize very creative approaches to ensure the safety of themselves and others. All the while reporting an incredibly important developments related to pandemic in their cities and states and leading up to last year's elections, our team help viewership back from fiction and implemented comprehensive voter access programs to educate voters.

And combat disinformation in fraud and.

And following the midyear, killing of Georgia Floyd and other acts of racial injustice technet stations helped to create greater awareness of systemic racism through daily reporting and multiple special programs that highlighted ratio on our quality and social justice.

And just two weeks ago, when you were a deliberate and unprecedented winter storm in Texas, our stations stepped up providing lifesaving content through our digital platforms answering questions via text messages through our UGC platform directly from folks huddled in the cold staring at their smartphones.

Information.

Holding state and federal officials accountable for systemic failure of the Texas power grid. All of this was made possible through the innovative spirit and perseverance of our nearly 1100, Texas colleagues, who were going through all the same challenges have no power no water for themselves and their families.

We cannot thank the team enough.

Now to turn to our performance for the most recent quarter and this past year.

As you saw in the commentary of our prerelease in January and the results. We posted today, we had a record breaking year. Despite unprecedented macroeconomic challenges. This performance is a direct result of the years of focus and executing against our five pillar strategy.

Which included evolving our business model to increase its resiliency and expanding our portfolio of strategically located big four affiliate stations.

Our digital platforms have continued to grow and evolve now with nearly 70 million average and duplicated monthly visitors to our digital properties.

We are also staying one step ahead of the content and services our viewers will increasingly expect.

Recent examples include our include our acquisition of locked on the leading podcast network for local sports.

Our new agreement with to be T. D for OTT distribution of our stations local products building on previous agreements with Roku and Amazon fire.

And our announcement just last week about the upcoming launch of twist.

<unk> Entertainment network for women double reached Dma's, covering 70% of U S households, when it debuts later this spring.

Twist will build on the growing and existing infrastructure of a highly on the growth I'm sorry, an existing infrastructure of our highly successful true crime and quest multicast networks.

Another a continued area of focus for US going forward is building on the critical role we play in helping stop the spread of disinformation that misinformation through the country through verify our fact checking reporting initiative launched in 2015.

In January we announced that in addition to the verify reporting we will continue to do at our local stations, we are expanding verify into a standalone national brands and will launch dedicated digital products and expand its franchise to other non techniques social media platforms like Snapchat, where we already have nearly 170000 subscribers and.

$8 3 million unique viewers.

Verify is already in high demand on a locally owned and operated digital sites growing more than 400% last year year over year.

Turning to premium on our fast growing business and the overtime over the top advertising space premium had a record year of dollar growth, finishing with revenues up more than $145 million up more than 40% relative to 2019, but despite an overall down advertising market as we all know.

With the Great TV partnership, we announced last year, our combined tech non great local sales force forces can now directly serve reach and serve local advertisers and 70% of markets covering.

Covering 70% of U S households, a distinct advantage and with our direct premium sales force, we can serve national advertisers by reaching OTT viewers across the entire country.

We expect premiums to continue to grow at a similar pace in 2021 as it did last year, continuing the strong momentum in adoption and serving as an even stronger value proposition for advertisers publishers and broadcast local broadcasters alike.

Overall protect now one of the key drivers of our underlying performance and the durability of our business model is the growth of our subscription revenue business on the top line subscription revenues finished the year up 28% exceeding the guidance we provided prior to the pandemic in the early 2020.

This growth was driven by contractual rate increases that are multiyear retrans payments, along with stone strong renewals step ups. As a reminder, last year, we repriced approximately 35% of our paid subscribers and well re price approximately 30% towards the end of this year.

These agreements combined with our multiyear affiliation agreements provide clear availability internet subscription growth in 2021 and for years to come.

For instance, unexpected side of our subscription revenue business in January.

We renewed our affiliation agreement with NBC, which covers 20 techno markets across the U S, including 10 of the top 25 markets for NBC. We now have network affiliation agreements in place covering 94% of our big four subscribers through the end of 2022 and beyond.

So to the bottom line on Retrans as we said earlier this year and were reaffirming today, we expect our net subscription profits to increase in the mid to high twenties percentage this year.

As we discussed during our third quarter call.

We had a record year with $446 million of political advertising is election year spending continues to trend higher each four year cycle.

We were able to capitalize on the unprecedented level of spending through our strategically constructed portfolio of big four stations in numerous battleground states, they're not just the presidency, but for the Senate and governor races, as well as reported our political revenues in 2020 were almost double that of 2018 and almost three times that of 2000.

<unk> 16, the prior presidential election year.

We expect 2022 to be another extraordinary off cycle robot robust cycle protector.

Our portfolio will have 24 U S Senate races in 'twenty four gubernatorial races as of today.

100% of the Senate races classified as very competitive.

Covered by Tech the markets, specifically the races in Arizona, Georgia, Yes, Georgia again.

North Carolina, Yes, North Carolina, again, Ohio, Pennsylvania, and Wisconsin, where we get spending in neighboring Minneapolis.

In terms of competitive gubernatorial races, we have Arizona, Florida, Georgia, Maryland, Michigan, Pennsylvania, and again, Wisconsin.

We remain well positioned to continue to capture these high margin revenues with even higher margins than we had prior to 2020 as a result of our political sales efforts being brought in house last year.

Combined our subscription and political revenues have surpassed 50% of our total two year revenues as we promised and are expected to comprise a greater percentage going forward.

Turning now to our non political advertising revenues as we've previously shared our advertising and marketing services were the most impacted revenues by the pandemic. However, we have continued to see quarterly sequential improvements since the peak of the pandemic, finishing the quarter down only 6% year over year, despite political displacement and the full year.

Just 4%.

I'm pleased I'm pleased to say that our advertising and marketing services are expected to finish positive in the first quarter.

This year over year Ams growth combined with our significant subscription revenue growth are key drivers of the first quarter and full year 2021 outlook, Victoria will provide more color on Ams revenue trend shortly.

Now turning to capital allocation over the past year, we have continued to be diligent in both our cost containment efforts and the thoughtful review of how we manage our capital as we discussed last quarter at the onset of COVID-19, we acted quickly and strategically to identify and implement expense reductions building on efficiencies already in place.

Prior to the pandemic.

As a result, we have executed on cost and efficiency initiatives at an accelerated pace to drive out $50 million of recurring annualized expense savings within 2020, and these same initiatives and cost cuts will continue to generate expense savings in 2021, Victoria will provide more detail on these initiatives in her remarks.

The combination of prudent expense management and strength of our revenue base led us to exceed 1 billion and adjusted EBITDA for the year.

Additionally, the two any day.

Two refinancings, we completed in 2020 lowered our overall interest rate and extended our maturities with no outstanding maturities of senior notes until 2024.

Our strong free cash flows have allowed us to continue to pay down debt, resulting in a less than four times net leverage as promised by the end of 2020.

Which was the goal we had in place prior to the pandemic and as you saw in our full year guidance today, we're expecting the finished 21 with net leverage in the mid threes.

On a two year basis, our free cash flow as a percentage of revenue also exceeded our pre COVID-19 guidance and we accomplished this while still paying a regular quarterly dividend to shareholders.

In addition to continuing our debt Paydown as always we will continue to evaluate any and all opportunities that are presented to us both inorganic and organic to support the ongoing growth of our business always through the lens of what we believe will drive the most value for our shareholders.

Further with the recent announcement of our three year 300 million share.

Purchase renewal in January we now have a number of tools at our disposal to return value to our shareholders.

Strength of our balance sheet.

Coupled with this expanded toolkit position us well to continue to create and return value both over the near and long term.

To that end following the December we initiated the buyback program. Our board has continued in active dialog on capital allocation in light of our increased cash flow generation, our expectation for continued strong financial performance and faster than expected deleveraging.

In light of those factors were carefully weighing our options to increase the amount of capital returned to shareholders through either repurchasing shares increasing our dividend or both Paul again through the lens of what.

What action is most beneficial for our shareholders. It makes the most sense in light of current market conditions.

Yeah.

Before I pass the call over to Victoria I want to highlight one of our longstanding areas of focus here at Tenda Sue.

Social responsibility Inc.

<unk> continued enhancements to our investor investor facing disclosures.

Over the last year, we've continued to strengthen our leadership and oversight over diversity equity and inclusion at Turner, including through the appointment of Grady Tripp, our chief diversity officer, and the identification of specific areas of oversight for our board related to day, Eni and the launch of a diversity inclusion.

Employee working group.

We just published our 2000 Twenty's social responsibility highlights report, which includes additional disclosure of our day Eni focus throughout China.

As well as the diversity of our workforce. We know there is room for improvement so to hold ourselves accountable. We have also established five five year goals to increase black indigenous and people of color represent representation in our content teams news leadership and management roles across the company.

The social responsibility highlights report also reflects our enhanced ESG reporting, including the adoption of SaaS B disclosure standards for our industry and a preview of more detailed tracking of our environmental impact in the near term. We would encourage you to take a look through this report which is linked for your convenience in this morning's release and can.

Also be found on our Investor website.

We look forward to continuing to show our progress in these important areas in the quarters and years ahead and with that I'll turn the call over to Victoria to cover our financials in more detail.

Thanks, Dave Good morning, everyone and thank you for joining us.

Dave discussed we had a record breaking fourth quarter and here due to the strength of our business model and the strategic decisions we've made.

Not just in these most recent challenging months, but really ever since becoming a pure play broadcast company.

Our disciplined M&A strategy has resulted in a strong portfolio of stations positioning us well to capitalize on future growth.

That's the same thoughtful approach to capital allocation has also served to strengthen our balance sheet, while growing shareholder value throughout our history.

As a reminder, my comments today are primarily focused on segments performance on a consolidated non-GAAP basis to provide you with visibility into the financial drivers of our business trends as well as our operational results.

You'll find all of our reported data and prior period comparative in our press release.

As you saw in this morning's release, we provided key guidance metrics for the first quarter of 'twenty and 'twenty, one as well all of our full year 'twenty and 'twenty one guidance remains as we provided in our January six pre release with the addition of our nonrecurring Capex outlook.

We've also added more detail as you've seen in our press release. This morning on the drivers of our projections for the balance of what we expect to be a very strong here I'll touch on our outlook in more detail later in my remarks.

For the fourth quarter total company revenue was up 35% year over year and up 46% compared to the fourth quarter of 2018.

This was driven by record political advertising revenue and continued strength in subscription revenue, partially offset by lower advertising and marketing services, which as Dave pointed out.

Hindus to accelerate each quarter since the onset of Covid.

In terms of revenue stream growth here are some additional details.

Subscription revenue increased 9% year over year this quarter.

As a reminder, it would've been up nearly 17% for a temporary suspension of service with AT&T Directv in December.

The growth reflects the impact of impact of step ups in retransmission rates with approximately 50% of subscribers repriced in the fourth quarter of 2019.

As we said on our last earnings call our subscription revenue growth was lower than prior quarters, having lapped our 2019 acquisitions by the start of the fourth quarter.

We forecast positive net subscription profit growth in the mid to high Twenty's in 'twenty, 'twenty, one and growth after that as well.

Subscriber counts continue to trend as a package with stable net subscriber counts reflected through our most recent reporting from November 20th funny.

This continued growth in our high margin subscription revenues combined with our expansive political footprint provides us with strong annuity like EBITDA and free cash flow production.

As you saw evidence. This year. This has resulted in a more resilient portfolio than ever before indicative of the ongoing successful excellent execution of our strategic plan.

Now turning to advertising and marketing services revenues, which have shown quarterly sequential improvement since the height of the pandemic in the second quarter of 2020.

And that's also serves as a key growth driver to support our first quarter and full year 2021 guidance.

Ams finished fourth quarter down 6% compared to last year.

This was primarily due to core advertising displacement related to our record political revenue of $264 million in the fourth quarter.

We continue to see recovery in non political advertising in many categories and strong audience metrics on both traditional TV and digital platforms.

To provide you with some further color on specific advertising category trends in the fourth quarter.

In fact, there was noise from political displacement among category specifically in October.

That said when looking at November and December trends, many categories are up over last year, including home improvement services banking and financing insurance and packaged goods.

Automotive improves significantly down year over year, only low single digits relative to November and December and notably automotive is pacing positive mid single digits this quarter.

Not surprisingly categories, which continue to struggle, our retail restaurants entertainment traveling and travel and tourism given the ongoing impacts of the pandemic.

Beyond these positive trends, it's also reaffirming to see advertising improvements continuing a pace this quarter as well with a M. S pacing positive over last year and expect it to finish above the first quarter of last year.

I'll.

Now turning to expenses for the fourth quarter non-GAAP operating expenses were $543 million up 9% year over year, driven by programming fees, including reverse compensation.

With higher subscription revenues.

Without programming costs expenses increased just 3% driven by continued investments in growth initiatives such as premium.

Without the impact of premium and programming all other operating expenses were down 3% compared to the fourth quarter last year as we continue to drive permanent operating efficiencies across the company.

To provide just a bit more color on the specific cost management initiatives for the year that Dave touched on earlier.

Our expense savings in 2020 of course included reducing all nonessential costs and discretionary capital expenditures during the peak of the pandemic in order to protect the long term health of our business.

However, it's important to highlight these measures were in addition to the ongoing streamlining of our business processes and company wide cost reduction efforts.

As we've discussed in our prior calls these structural improvements have been underway for some time as part of our culture, a thoughtful cost management through operational leverage.

Example of those efforts include the successful integration of <unk> taken our sales organization, which brought our national sales effort in house.

Further upgrades for a centralized streaming center also known as Master control and the strategic decision to reallocate investment away from Commoditized digital products like paid media.

Focus instead on growth in video products across the portfolio, including premium.

As a result of these cost savings and efficiencies. We've gained we're realizing our previously disclosed $50 million annual cost take out initially targeted for the end of 'twenty 'twenty, one a full year earlier than we had planned.

Oh, She's seen reported this morning. These permanent expense reductions coupled with revenue growth investments produced very strong EBITDA margins and free cash flow conversion last year and well into the future.

As a result of these drivers we achieved adjusted EBITDA for the quarter of a record $429 million.

I do think a 46% margin for the quarter.

Adjusted EBITDA was up 87% year over year, and up 57% compared to fourth quarter of 2018.

High margin political advertising revenue growth in subscription as well as ongoing cost savings all contributed to these strong results.

Yeah.

I'd like now to touch briefly on balance sheet activities and liquidity.

As we've previously mentioned we've taken a series of proactive steps in the past year to further strengthen our balance sheet.

As you May recall in September we successfully completed a $550 million refinancing the senior notes due March 2026, opportunistically, leveraging a historically low interest rate environment.

The proceeds were used to repay the remaining balance of the $350 million of 'twenty 'twenty, one notes as well as $188 million of our 2024 notes.

Leaving only $137 million left to callable in 2022.

The unused borrowing capacity under our revolver stood at $1.13 billion on December 31st.

And at the end of the quarter. We also had cash on hand of $41 million.

This resulted in total debt of $3 $6 billion for the quarter, producing net leverage of 395 times or 386 times as defined by our revolver covenant, which exclude certain items such as stock based compensation.

The strong performance of our entire portfolio of stations as well as a very strong political cycle supporting accelerated debt reduction during 'twenty 'twenty 'twenty, reducing leverage below the 4.1 times level, we had targeted on completion of the 2019 acquisitions.

Having delivered this important milestone ahead of schedule.

We reinstated our $300 million share repurchase program in December.

Obviously this leaves us ample headroom under our only financial covenant related to the revolver, which pops leverage at five five times based on a trailing eight quarter EBITDA calculation.

Reflecting our stronger financial results in 2020, including our reduced leverage S&P recently affirmed our double b minus credit rating revising their outlook to positive.

We've continued to generate strong free cash flow, a testament to our financial model and ability to carefully manage our balance sheet in the fourth quarter, we generated $350 million of free cash flow.

Fully 37% of total revenue driven by record high margin political revenue.

To provide a few thoughts now on our cap allocation before I turn to first quarter and full year 'twenty and 'twenty one outlets.

As has been true throughout our history and.

Take that has remain prudent and disciplined in managing our investments and liquidity, particularly critical during this recent period of uncertainty and market volatility.

We prioritize spending and continue to pay down debt, while delivering a regular quarterly dividend to shareholders.

As I mentioned, we also recently renewed our share repurchase program, which includes an authorization of $300 million over the next three years.

As a reminder, we had suspended our buyback program on March 20th of 2019 upon the announcement of our acquisition of the Nexstar Tribune divestiture stations.

We have stated then that our priority was paying down debt associated with those acquisitions and we did just that.

Thanks to our strong financial position, including our significant debt pay down ahead of schedule, we were able to reintroduce buybacks as an opportunistic tool to return value to shareholders.

As Dave mentioned, given our significant cash flow generation. We're also carefully analyzing our options for additional capital deployment, including returning additional capital to shareholders, while still continuing to pay down debt.

And funding any organic or inorganic investment opportunities that fit our disciplined framework.

On the M&A front each of the stations we acquired in 2019 have now been fully integrated into our portfolio and are performing well. Despite the impact of the pandemic. The same is true for our true crime network and quest Multitask networks, which we also five day only 2019.

This is a true testament to <unk> ability to not only identify opportunities that complement our portfolio and that are accretive to EPS in less than a year and immediately free cash flow accretive, but also to successfully integrate and execute on the synergies achieved by those acquisitions.

Across all of our stations and at corporate we moved quickly in early 2020 to evaluate areas for reduced or delayed spending scaling back on our capital expenditures for longer term benefits, while continuing to accelerate many of our operational efficiency efforts.

All of these actions taken together are proving now to be an increasingly important aspect of our ongoing strategy.

Now turning to first quarter and full year 2021 guidance.

In an effort to help forecast our near term results I'll now provide several key quarter ahead financial guidance metrics for.

For the first quarter, we expect first quarter total company revenue to be up mid single digits.

We expect to see year over year revenue growth both in subscription revenue as well as advertising and marketing services, partially offset by record political advertising last year.

We forecast operating expense in the first quarter to increase in the mid single digit percent driven by programming expenses.

Excluding programming costs, we project expenses to be up in the low single digit range. The majority of which is driven by premium.

For full year 'twenty 'twenty, one we expect subscription revenue to be up mid to high teens percentage driven by M. C. N V. P. D renewals completed at the end of 'twenty 'twenty as well as stable subscriber trends.

This is proof positive of our ability to work collaboratively with our N V. P. D partners to complete successful agreements, which drives strong revenue and naturally free cash flow, both now and well into the future.

As Dave mentioned after renewing our NBC affiliate agreement at the beginning of this year, we entered 'twenty 'twenty, one with clear visibility into the strength of our big four relationships with network affiliation agreements in place covering fully 94% of our big four subscribers through the end of 2022.

We expect growth in 'twenty 'twenty four 'twenty 'twenty, one full year, EBITDA and free cash flow, which will also continue to benefit from significant cost initiatives that have been underway for the past 24 months.

And as a reminder, here's an overview of our updated key full year 2021 guidance elements for the year, we expect corporate expense to be in the range of $44 million to $48 million.

Depreciation is projected to be in the range of $62 million to $66 million.

Amortization is projected to be in the range of $60 million to $65 million.

Interest expense reduced debt reduced due to the benefit of our refinancings is expected to be in the range of $187 million to $192 million.

We expect capital expenditures to be in the range of $64 million to $69 million, which includes nonrecurring capital expenditures of approximately $20 million to $22 million comprised mostly of UHF VHF transitions as well as the continuation of our centralized streaming facility.

The effective tax rate is expected to be in the range of 24% to 25%.

We expect to end 2021 with net leverage of mid three times absent any other uses of capital beyond deleveraging.

Finally.

We expect free cash flow as a percentage of revenue for 2020 in 2021 to be in the range of 25% to 21, 5%.

Hopefully all of that additional color will provide greater context for you and for your modeling.

And with that we'll now turn to Q&A to take your questions.

Thank you very much ladies and gentlemen, if you would like to ask a question on today's call T signaled by pressing star one on your telephone keypad. Please note if you're using a speaker phone to make sure. Your mute function is turned off so those are moving through our equipment. So once again that is star one on your telephone keypad to ask a question.

Moving to our first question over the phone which comes from the Chronos from the benchmark Company. Please go ahead. Your line is now open.

Great. Thanks.

Morning, and appreciate all the additional color you guys provided today just maybe on a on some core just on maybe the sports gambling category certainly been talked about a lot by the peer group in terms of becoming material I know you guys called out a bunch of your other category is doing well.

I'll go back and degree maybe.

Maybe some color on where youre, where youre, putting Matt what you're seeing there what you think the opportunity is.

And then separately you know.

It's funny, because we all know Ed.

Be a dirty word of mouth, it's amazing.

You guys are obviously, you're crushing it so I just curious Dave maybe you know I I really appreciate the incremental cost and capital allocation I think that's gonna be nicer shareholders to hear but within sort of the premium Clark and some of the other things you've done adding services expanded verified.

Moving to accelerate kind of the CTV premium aspect or are there any kind of tuck ins that would be nice here or no.

Incremental spending you can make the kind of continue to grow this thing, but even more meaningful price.

No.

Yeah. Thanks, Ken I'll take the second one first on premium we are absolutely focused on accelerating premium. We've got you know we we were first mover in this space. We've got a terrific brand that team's done a fantastic job of executing it's a fast moving space, we're not going to get left behind we're going to stay in front. So that absolutely could include tuck in acquisitions.

A number of organic initiatives as well so we're not messaging anything here today, so suggesting that we do have anything but we're absolutely focused on whatever we need to do to grow that business. Because again, you know what sets us apart in that space is that we're going to take advantage of local right, we're doing really well with national but it's a more competitive space in national.

And to be able to connect local advertisers to this opportunity and to reach that long tail of yours on OTT services is what's really important for us over the long term and yes, we're laser focused on growing that business as for sports betting look we're in the early innings no pun intended but yeah. We're seeing for instance are the state of Virginia.

You know just legalized mobile gambling very recently and in Washington D. C market, which includes both Maryland and D. C. D. C is also done it in Maryland, I believe is coming if I have my memory collect correct. So already for instance in the D. C market you can't watch a sports event on WSI without seeing ads.

Sizing from one of the books, whether it's William Hill.

You know draft kings or handle so we do see it as you know we had always said before the pandemic that it wouldn't be a growing important local area over time, but given the pandemic Ed.

And you know the loss in tax revenues are local states have had you're seeing an increased number of states are moving on it right. So we've all we've already got Arkansas, Colorado, Indiana, Indiana, Iowa.

Michigan, New York, Oregon, Pennsylvania, Tennessee M. D. C. We now have pending you know legalization come in potentially Louisiana, Maryland, North Carolina.

And others and then Theres. Other also active efforts in you know, Connecticut, Georgia, Kentucky, Missouri, and when would it be a big one for US which is Ohio. So yes, it's going to be you know if we did nothing but just continue to produce really good content on our stations and our digital services, we would be benefiting from this AD category, but we're also look.

At other ways to take advantage of it as well.

Got it Super helpful. Thanks, very much.

Yes.

Well now move to our next question over the phone which comes from Steven Cahill from Wells Fargo. Please go ahead. Your line is open.

So when he comes up mid to high single digits, and Matt and friends up kind of mid to high 20 and renewal of NBC.

No, Matt I presume, but it seems like you can probably be your reverse comp expenses growing slower than your gross retrans revenue growth, maybe just help us.

And I think through what's going on there are you at the latter end of some deals on some of the networks with modest escalators or is there anything else, that's giving you a more flat expense growth profile. This year on on programming.

Then as it relates to the Supreme Court case, if they do happen to rule in favor of the FTC. I think you said that you have some J S. David.

Did you see in the 10% to 15% accretion range could you give us some idea of what that means in terms of the total company EBITDA and and then are there some markets that are really attractive for you to look at swap with Big Boys, who are non big horse.

Yeah.

Thanks, Steven So take your first question first on Retrans look there's always there's never complete sync between when your total numbers of subs are up and win the percentage of your network subs that are up but bottom line, you're the you know it's a day.

I wouldn't use the word flat on a reverse compensation, obviously, we're paying more to the networks and as you know together we between our programming together our investments in programming their investments in programming, we're by far the highest SKU channels, especially stronger stations like we have than anything else and ecosystem and we are appropriately getting more.

For a wholesale rate together and then we're splitting that pie. So I think what you're seeing for US is that obviously, we have a very strong set of assets, we have with both our scale and our quality we have a lot of negotiating leverage on the topline and we also have negotiating leverage with the networks, but you know those apart a little bit more partnership.

<unk> I'll call them then to Retrans.

You know the M. P. P D discussions, but you know fundamentally yes, we are.

We are growing net retrans by growing the topline at a percentage.

At least or is better than the bottom line on expenses.

Oh, I'm, sorry, I know the Supreme Court.

So what.

We need to wait to see a what the ruling is gonna be Steven and and then how it gets leveled out and then how the FCC is going to interpret it so unclear whether it will be available in all markets or whether there'll be any kind of Doj qualifier a near the combined market share of two stations can have I'm sort of optimistic of you know.

Getting rid of that over time, because it's so so anachronistic and theres been a change in administration at the antitrust division of the Doj, but until we have more clarity on what and when it's just not it's just not.

Prudent of us to be giving any kind of total company EBITDA.

Suggestions on what that what it could be worth but it obviously, if we're able to execute it it will certainly be very accretive and very attractive to us specifically.

Thanks, Dave.

Thank you.

Well now move to our next question over the phone which comes from Alex Yeah of course R&D from Jpmorgan. Please go ahead. Your line is now open.

Thank you.

Couple of things first just following up on your color you gave on advertising trend Green tea honest stronger, but you just ballpark roughly kind of how big your revenues are in terms of COVID-19.

Lagging categories like restaurants, where we haven't seen a recovery yet.

Guilty improvement later this year and price.

Second question is just starting the NFL.

Once reports this Brian, but it seems to be pretty consistent.

Cause the reported stepped up a little bit larger than I think people are expected to have an impact on you in terms of maybe having you know a different outlook in terms of what's your reverse comp would be and then the inclusion of E. On some day.

Super Bowl does that impact you in the times, where you have to invest more in promoting the game. Thank you.

Thanks, Alexia So let me talk about Ams first so if I make sure I understand your question, you're sort of looking to understand kind of what the outlook on some of the weaker categories from Covid, you sound like retail and restaurants yeah.

Yeah, you seem like you know nice Mcafee in so many areas, where I'm trying to see what the opportunity is still ahead for further recovery in areas that you know how big are the areas that are still sort of lagging and so we're looking forward to how they can recover and what kind of momentum.

Yeah, I get it so restaurants have nowhere to go but up [laughter] for obvious reasons right I think another fast food has gone pretty well happened you know fast food as you know when you when you breakout the restaurants category fast food is actually I think in the first quarter and now up but restaurants or restaurants are really dragging.

So, but I will tell you writ large on these categories consumer categories. This take auto retail and restaurants together I think we are very optimistic that the store. The journal had last week about the money and the assistant on one hand, you have one percentage of the population that has been keeping their jobs working from home.

I'm saving a lot have a lot of pent up expenses in their savings accounts I think we think that bodes very well for auto.

And in retail.

As well as restaurants, and then you have another big part of the population that's likely about to get 1400 dollar checks. So when you think about all of that money when the as the vaccines come around and we do open up this economy, which we're also very optimistic about based on the news. The last few weeks, we could imagine a pretty robust recovery and <unk>.

All of those categories and you know with the exception you know retail has improved some and orders definitely improved but there are categories. Like you say like restaurants that are dragging us down. So you know despite that we're still going to have an up quarter year over year. So we're very optimistic on obviously in the back half of the year, we'll have false pumps in 2000.

20th, especially in the second quarter, given how low that was but we're very optimistic about where these numbers may end up relative to 2000.

19th.

As it relates to the NFL.

Well wait to see how the deals come out first of all day.

The NFL returning to broadcast which we're very very optimistic about will be a very good thing for the ecosystem. The Devil's in the details as it relates to and we're not going to comment on the terms of our each of our individual relationships, but obviously they will there will be issues contemplated relative to you know what the <unk>.

Streaming part of those deals are relative to any network services et cetera, like that and we will individually and then collectively through our affiliate boards you know work through the implications of those with our network partners, but so and yes games if games end up on a B C. You know 10 years ago. When we were at <unk> 60 per.

<unk> N V. C household company that wouldn't have been very good for us, but now were you know that'll much larger ABC portfolio. So we're somewhat diversified in a little bit.

Oh agnostic on that although we would obviously like to see them stay on N D C. Given our continued size.

A N b C and elected not to make sure I answered your question on advertising to get them all all your answers in there yeah.

Yeah, no that was really helpful. Thank you.

Okay. Thank you.

Well now move to our next question over the phone which comes from cause Evans from Stephens. Please go ahead. Your line is non woven.

Political questions how much political in this cycle came from presidential what do you think the percentage point brackets, where for displacement in the fourth quarter and I understand that requires guessing on your part and then given the set up you detail for US what are the odds of 'twenty two.

Better than 'twenty, and then I've got a follow up.

Alright, let me take well.

Julian our team here post the presidential information. They got let me give you the displacement. So first of all understanding Kyle displacement is an art not a science.

And we also had.

Uniqueness and we had a massive non to displace one of our larger markets Atlanta in November and December, but I think if we had the eyeball if we had that.

Put a number to it I'd say somewhere in maybe.

So high single digits, you know in terms of what it would have been relative to Ams for the quarter, but again, that's an art not a science so that would put US you know what.

It put us in low single digits positive for the quarter, but again I caution it's an art.

As for presidential so of our total spend and when T 22% was presidential.

Okay now I will say to your question about what it means for 'twenty. Two is that we've seen in the past presidential actually it does bring some dollars into the system, but it is worth noting that you know on a you know.

Even on a pro forma basis. If you look at US you know we did you know not as reported but we did two O nine and 16, a presidential year and then to 80 at 18, and that's that's not counting acquisitions, but pro forma.

Pro forma Ed on the prior company. So you know we think we're the way we look at it. This call there will be we see there's going to be continue to be significant growth on every four year cycle.

In terms of the money in the system, but if you take 22% of that out then you'd have to to get to the numbers. We had this year you'd have to get to.

And even a higher level of fund raising for res, but that said at this moment in time, we've never had a senate and governor portfolio.

Like.

And any past elections like at the moment it looks like we'll have in 'twenty two.

And as I.

So I think I answered a displacement question.

Yes.

Okay.

Quick question on sub counts could you give us.

22020 number I missed it and it sounded like you had stable sub count build into the 'twenty. One guide I just wanted to affirm that.

Yeah, we still we have been we have been very conservative every year and what are and what we model just to make sure we're right.

So, but youre right in since you know again, we're three months in arrears on our sub counts right because of the billing cycles, but when you're right now starting with July we have.

Seeing no acceleration in it and some months in improvement.

From the previous months. So it is definitely flattened out I think you've heard us say end up at about mid single digits and so that's where we are and it looks very very stable at the moment. So you know I think we're looking at and I think we're looking at continued stabilization throughout 'twenty, one as well.

Got it so 'twenty one it's just a continuation of the mid single.

Song in 'twenty, if I'm recap that's right.

That's why so much.

Yeah.

Yeah.

Yeah.

Well now move to our next question over the phone which comes from Doug Arthur from Huber Research. Please go ahead. Your line is now open.

Yeah, two questions David here any thoughts on what you're hearing you are the Olympics.

Olympics in Japan. This summer when you you haven't really like exposure, there and then Victoria on the $50 million achieved early.

Any thoughts on kind of next cost moves.

Programs in place that it could be incremental the 'twenty one 'twenty two.

Yeah.

I mean I'll take the first one Doug on the Olympics look I think the point about the so the answer is no I don't have any crystal ball about you know we're optimistic about the Olympics, taking place this summer, but I you know you've seen probably what we've seen a little bit of chaos in the head of the.

Of the organizing committee over there in Japan, but I think that the thing I would say you know for US is that as we've gotten larger and we've diversified our portfolio that the Olympics now on a good year or maybe just north of a half point of our total company revenue day incremental part of the Olympics because once.

Again now that we're not so have you know when we have a minority of our homes that are N. B C. So while it's great for NBC homes, it's a negative for all of our non NBC homes, so across our portfolio the incremental isn't what it once was as a percentage of either our advertising base, our especially our total revenue now that our other total revenues of ground. So I don't know about the play.

And the games would love to have its great marketing vehicle for US frankly, I think it would be good for the country, but from a business standpoint, we're not terribly concerned.

And in terms of finishing a swing on your question relative to the cost initiatives that I think it would be.

Premature to size them, but I can tell you just in terms of qualitatively what's underway after incremental savings beyond the $50 million that we've already identified so we have the second phase of our ERP implementation, which is gone underway this year.

Allowing us to do more on the finance transformation that we started two years ago, we have automation of certain back office and sales support order processing types of function.

And third phases really relative to our some of the efforts that we have in terms of our.

We're monitoring a traffic system. So all of those are still going to be delivering on cost savings beyond 2021, but it'd be premature to say sort of sizing incremental to the 50, what that will do birth and won't be consolidated Doug also some non station real estate, we've used for some of the backend issues that the pandemic has taught us.

We can live without it.

Great. Thank you.

Yeah.

Well now move to our next question over the phone which comes from the city kind of results from clinical research. Please go ahead. Your line is open.

Thank you. Good morning, My question is about the premium.

I wanted to ask Scott to talk about what you're seeing in terms of where the budgets are coming from the growth is very impressive are you winning budgets from our T V.

V or online so would appreciate the color on that and then it's my understanding correct that at this point all day.

Advertising base sold directly and if so I was wondering if you have plans to introduce programmatic or does it fit with the <unk>.

With the business model, but premium banking.

So we are very much avoided being much of a programmatic platform I can't speak to whether there's ever any some kind of programmatic there may be on here and there, but our our proposition and uniqueness of the advertisers that we directly source. The publishers content and then the advertiser can be absolutely comfortable and safe.

And what their advertising, what what kind of environment. It plays in.

But the other part about the budgets what we're seeing is certainly over time more and more of the budgets are coming out a discrete digital budgets at the large agencies and certainly you know it was there's certainly some television budgets to but they're not coming at our expense, they're not coming necessarily out of just specifically techno spend but over time. It is absolutely sure.

Being from TV to digital locally that will take a little bit probably a little bit more delayed, but that's happening at the local level to where there's discrete digital budget. So it's a combination of both but where the trend moving from definitely from TV into discrete digital budgets.

And did you see a big change in the rate of the relocation in 2020 or is it just a continuation of what you saw in 19.

I think and I'd have to go back and double check we got.

We'll probably get back to you on this but I definitely think there was more from the digital side.

And just did and it makes sense just given the T V budgets fell way lower than digital.

And if you read my premium.

And way outperformed traditional.

Thank you.

Well now move to our next question over the phone which comes from Craig Huber from Huber Research. Please go ahead. Your line is now open.

Yes, hi, Thank you I'm the impressive growth you guys had a premium Becky said, 40% plus washed here was that even higher than that in the fourth quarter what moves that up please.

Hang on Craig I'll get to that in just Oh, I'm, sorry, I got yes. The answer is yes.

Did you say materially better than up 40% in the fourth quarter extra week sort of.

Well, we can debate the debate the definition of material, but it was definitely higher.

Definitely higher.

Okay I appreciate that.

Sports betting day do you think in the coming few years, two three years sports betting it could be a topic like advertising category.

<unk>.

Yeah, I don't have a hard time imagine that at all.

Again, the variable will be how many states actually legalized, but I think youre going to see an acceleration of that but I said, yet because it's by depth all by definition going to be a hyper local.

Advertising issue and I and I also think you'll see stations, you'll certainly see our stations.

Doing things to get a larger share of that part.

And my last question, Dave about your changing opportunities its sales force can you just.

Dave you sound a little bit further what changes you made there was more to help drive the top line and also save costs. Thank you.

Yeah. So thanks for the question Craig It's actually it's a multi pronged approach, which always have a virtual circle. So you know we used to hack our national sales, including our political sales to an outside firm that did a very good job for us, but over time, especially with premium on and others. It became clear that you know we needed to take one.

Your ship of that and really integrate the experience with our national clients. So when do we can we can provide the right platform and frankly, we also knew we'd save a tremendous amount of money, especially in our political advertising. So even on our traditional national TV business. We now have a lower expense rate, but the other thing we frankly had been doing Craig.

Intentionally is that given that we're in a lot of large markets. We call. We do have local people, calling on major agencies and major markets call. It Dallas, Atlanta, Houston et cetera, which is really like a national business and so we've been able now with our own and our sales team to move some of those accounts to our.

In house National sales team, so that our local assets in the sales arena can be totally focused on non traditional new business very innovative idea of selling as opposed to just doing request for proposal business and so we're in the process of doing that give the credit the team a massive amount of credit for doing it during a very difficult year.

<unk> and <unk>, but it's been it's been very very effective.

Thank you Dave.

Well now move to our next question over the phone which comes from Jim Goss from Barrington Research. Please go ahead. Your line is open.

Good morning.

A little bit more on the premium.

Yeah.

One thing is you talked about streaming.

So.

The vehicle to enable growth GAAP Corp.

Core broadcast and there are more and more streaming services I Wonder if you could talk about that whole process.

Also talk about or if you're willing to give them.

<unk> says to sort of either Craig or premium or the heart.

<unk> three to five years.

And also discussing profitability aspects because I thought for some time you were just trying to establish the business.

By now it looks like you've been doing well enough that you are probably.

The black.

I Wonder if you could talk about.

That process as well.

Yeah sure. Thanks, John So in terms of streaming services, there's multiple services right. Its almost you know so we're all aware of the Netflix is in the Disney pluses and stuff, but on top of that you know just take a look at the amount of traffic on Roku, because you know roku in itself is a distribution service or sling or all if you've got a law.

Long tail of services, where it all adds up to a tremendous amount of viewing and growing viewing.

Was growing at very high CAGR is prior to the pandemic and it only accelerated during the pandemic. So obviously this is a you know absolutely critical and massively growing form of distribution forever right and so as a company. We are all we're all in on it as it works out. So so remember we have deals with publishers and some.

Jim So a publisher puts their streaming channel on cable channel, let's say like that on some of these services than we are they are at their ads that we've sold for them and their inventory will appear often in those services depending on what they are and then we have these and then we have deals with many other services.

So it's a long tail of services, where our inventory is.

It is but it's not about it's not just about our deals with the services. It's about the publishers deals where the services so were trafficking ads and selling ads for them that in some case is is you know silent to the services themselves as it relates to profitability profitability we are profitable.

We had a we had a oh.

Our revenue goal in 2020 that despite our massive growth we were short of our plan because of how bad the advertising environment was so that that has impacted our margin a little bit, but we're profitable we're gonna stay profitable and you.

You know, where we will scale it up over time, but to the earlier question somebody asked me if we've got the opportunities to invest to grow that business, it's such a big growth space for years to come we are going to invest for the long term as it relates to our CAGR.

And tell you exactly what it was but you just look at the overall CAGR for what OTT advertising revenue is going to be in the company writ large and its pretty enormous what the size of the opportunity is so it'll be up to us to figure out you know what share of that pie we can take.

One other area I, just thought I'd bring up is twist.

It seemed like a true crime network. For example, your first effort in that area, what sort of or Repurposing of some of the actual content group.

Group is creating.

Chris does not sound like that it looks like a really crazy content. The various states focused on women's entertainment.

And you're getting more active in this hole.

Programming area and I Wonder if you could talk a little bit more on the economics of what you plan to.

Do there how that syndication would be handled.

Anything you'd like to characterize it.

For its relative importance to revenues and profitability.

Yeah. Thanks, Jim So you're right to crime network does leverage some local local content, but at the moment very little we're in the very early stages of that and we're working on cost effective ways to build that up over time, and we will we're already pulling out digital archives of unsolved crimes across the you know all of our.

TV stations, which cover nearly 40% of the country and leveraging those into stories right now we've pretty much got them on Paul podcast those stories under our vault Studios brand, which often are at the top of the true crime genre on podcasting, but soon we will be moving those over to video often those will show up on through Brian, but the fact of the matter is on all three of those multi cast network.

It's true crime quest and now twist, it's almost all off the shelf library content.

Content Chen from large studios that don't have enough ways to monetize that content. So I'd say its a virtual it's ed.

Win win for both of Us and so for a period of time that programming is going to come.

From from the libraries, and there's enough of it out there and we can get it a day cost the mix the.

Channels are profitable from almost day one.

Yeah.

Okay.

Thank you very much.

It appears there are no questions queued up to someone who's claim Oh I'd like to turn the call back over to our speakers for any additional or closing remarks.

Thank you everyone. Thanks for taking the time to join US today and as you've heard from Victoria in May we are more confident than ever that the decisions our board and management have made over the last several years and especially this past year. During this incredible environment have positioned to position the company to be resilient and our business model no matter, what we face.

<unk> consistently strong in our operations and critical to our communities and customers across the country.

Look forward to all that are ahead of us in 2021 with a lot of optimism for both our business and our country Ed.

And as well as what's beyond 2021, as we continue to focus on creating value for our shareholders and to live up to our purpose of serving the greater good of the communities. We serve if you have additional questions. Please reach out to them complement at 7038736764 and again thanks for your time today.

Have a good day.

Ladies and gentlemen, this does conclude today's call. Thank you very much for your participation you may now disconnect.

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Good day and welcome to the <unk> fourth quarter 2020 earnings call. This call is being recorded our speakers for today will be Dave Lougee, President and Chief Executive Officer, and Victoria Harker, Chief Financial Officer at this time I would like to turn the conference over to Doug.

Copel <unk> head of Investor Relations. Please go ahead Sir.

Thank you and good morning, and welcome to our fourth quarter and full year 2020 earnings call and webcast today, our president and CEO, Dave Lougee, and our CFO, Victoria Harker will review <unk> financial performance and results.

After that we'll open up the call for questions hopefully you've had the opportunity to review this morning's press release, if you have not yet seen a copy of the release, it's available at <unk> Dot com before we get started I'd like to remind you that this conference call and webcast include forward looking statements and our actuaries and actual results may differ.

Actors that may cause them to differ are outlined in our SEC filings.

This presentation also includes certain non-GAAP financial measures. We have provided a reconciliation of those measures to the most directly comparable GAAP measures in the press release with that let me turn the call over to David.

Thank you, Doug and good morning, everyone.

Doug noted Victoria, and I will be discussing our fourth quarter and full year 2020 financial results on today's call I will also provide our expectations for this first quarter and full year 2021, which you saw included on our earnings release. This morning.

But before we turn to financials I first wanted to take a moment to reflect on the incredible achievements of our tech a colleague over the last year.

Despite the obvious significant challenges we faced in 2020, our team remains steadfast in supporting each other and the communities we serve throughout the year. Our local newsrooms were a lighthouse a trusted information in a sea of misinformation and disinformation our stations found innovative ways to deliver news and subsequent call.

Amidst the pandemic that brought clarity context, and hope to our audiences.

Never before has a core purpose of serving the greater good and more relevant and needed across our markets and beyond our station's journalists and production crews utilize very creative approaches to ensure the safety of themselves and others. All the while reporting an incredibly important developments related to pandemic in their cities and states.

And leading up to last year's elections, our team help viewership back from fiction and implemented comprehensive voter access programs to educate voters and combat disinformation in fraud.

And following the midyear, killing of Georgia Floyd and other acts of racial injustice technet stations helped to create greater awareness of systemic racism through daily reporting and multiple special programs that highlighted ratio on our quality and social and justice and just two weeks ago, when Europe delivered an unprecedented winter storm.

Texas, our stations stepped up providing lifesaving content through our digital platforms answering questions via text messages through our UGC platform directly from folks huddled in the cold staring at their smartphones for information.

And holding state and federal officials accountable for systemic failure of the Texas power grid. All of this was made possible through the innovative spirit and perseverance of our nearly 1100, Texas colleagues, who were going through all the same challenges have no power no water for themselves and their families.

We cannot thank the team enough.

Now to turn to our performance for the most recent quarter and this past year.

As you saw in the commentary of our prerelease in January and the results. We posted today, we had a record breaking year. Despite unprecedented macroeconomic challenges. This performance is a direct result of the years of focus on executing against our five pillar strategy.

Which included evolving our business model to increase its resiliency and expanding our portfolio of strategically located big four affiliate stations.

Our digital platforms have continued to grow and evolve now with nearly 70 million average on duplicated monthly visitors to our digital properties.

We are also staying one step ahead of the content and services our viewers will increasingly expect a few recent examples include our acquisition of locked on the leading podcast network for local sports.

Our new agreement with to be T. D for OTT distribution of our stations local products building on previous agreements with Roku and Amazon fire.

And our announcement just last week about the upcoming launch of twist.

Okay Entertainment network for women <unk>, covering 70% of U S households, when it debuts later this spring.

West will build on our growing and existing infrastructure of a highly on the growth I'm sorry, an existing infrastructure of our highly successful true crime and quest multicast networks.

Another continued area of focus for US going forward is building on the critical role we play in helping stop the spread of disinformation misinformation through the country through verify our fact checking reporting initiative launched in 2015.

In January we announced that in addition to the verify reporting we will continue to do at our local stations, we are expanding verify into Standalone national brands and will launch dedicated digital products and expand its franchise to other non techniques social media platforms like Snapchat, but we already have nearly a 170000 subscribers and.

$8 3 million unique viewers.

Verify is already in high demand on a locally owned and operated digital sites growing more than 400% last year year over year.

Turning to premium on our fast growing business and the overtime over the top advertising space premium had a record year of dollar growth, finishing with revenues up more than $145 million up more than 40% relative to 2019 with.

Despite an overall down advertising market as we all know with the great TV partnership we announced last year, our combined tech non gray local sales force forces can now directly serve reach and serve local advertisers and 70% of markets covering.

Covering 70% of U S households, a distinct advantage and with our direct premium sales force, we can serve national advertisers by reaching OTT viewers across the entire country.

We expect premiums to continue to grow at a similar pace in 2021 as it did last year, continuing the strong momentum in adoption and serving as an even stronger value proposition for advertisers publishers and broadcast local broadcasters alike.

Overall protect now one of the key drivers of our underlying performance and the durability of our business model is the growth of our subscription revenue business.

On the top line subscription revenues finished the year up 28% exceeding the guidance we provided prior to the pandemic and the early 2020.

This growth was driven by contractual rate increases and our multiyear retrans payments along with start strong renewals step ups. As a reminder, last year, we repriced approximately 35% of our paid subscribers and will re price approximately 30% towards the end of this year.

These agreements combined with our multiyear affiliation agreements provide clear availability internet subscription growth in 2021 and for years to come.

For instance on the expense side of our subscription revenue business in January.

We renewed our affiliation agreement with NBC, which covers 20 techno markets across the U S, including 10 of the top 25 markets for NBC. We now have network affiliation agreements in place covering 94% of our big four subscribers through the end of 2022 and beyond.

So to the bottom line on Retrans as we said earlier this year and we're reaffirming today, we expect our net subscription profits to increase in the mid to high twenties percentage this year.

As we discussed during our third quarter call.

We had a record year with $446 million of political advertising is election year spending continues to trend higher each four year cycle we.

We were able to capitalize at an unprecedented level of spending through our strategically constructed portfolio of big four stations in numerous battleground states, they're not just the presidency, but for the Senate and governor races, as well as reported our political revenues in 2020 were almost double that of 2018 and almost three times that of 2000.

16, the prior presidential election here.

We expect 2022 to be another extraordinary off cycle robot robust cycle protector.

Our portfolio will have 24 U S Senate races, and 24 gubernatorial races.

As of today.

100% of the Senate races classified as very competitive are covered by tender markets, specifically the races in Arizona, Georgia, Yes, Georgia again.

North Carolina, Yes, North Carolina, again, Ohio, Pennsylvania, and Wisconsin, where we get spending in neighboring Minneapolis.

In terms of competitive gubernatorial races, we had Arizona, Florida, Georgia, Maryland, Michigan, Pennsylvania, and again, Wisconsin.

We remain well positioned to continue to capture these high margin revenues with even higher margins than we had prior to 2020 as a result of our political sales efforts being brought in house last year.

Combined our subscription and political revenues have surpassed 50% of our total two year revenues as we promised and are expected to comprise a greater percentage going forward.

Turning now to our non political advertising revenues as we've previously shared our advertising and marketing services were the most impacted revenues by the pandemic. However, we have continued to see quarterly sequential improvements since the peak of the pandemic, finishing the quarter down only 6% year over year, despite political displacement and the full.

Youre down just 4%.

Please I'm pleased to say that our advertising and marketing services are expected to finish positive in the first quarter. This.

This year over year Ams growth combined with our significant subscription revenue growth are key drivers of the first quarter and full year 2021 outlook, Victoria will provide more color on Ams revenue trends shortly.

Now turning to capital allocation over the past year, we have continued to be diligent in both our cost containment efforts and the thoughtful review of how we manage our capital.

As we discussed last quarter at the onset of COVID-19, we acted quickly and strategically to identify and implement expense reductions building on efficiencies already in place prior to the pandemic.

As a result, we have executed on cost and efficiency initiatives at an accelerated pace to drive out $50 million of recurring annualized expense savings within 2020, and these same initiatives and cost cuts will continue to generate expense savings in 2021, Victoria will provide more detail on these initiatives in her remarks.

The combination of prudent expense management and strength of our revenue base led us to exceed 1 billion and adjusted EBITDA for the year.

Additionally, the two the two refinancings, we completed in 2020 lowered our overall interest rate and extended our maturities with no outstanding maturities of senior notes until 2024.

Our strong free cash flows have allowed us to continue to pay down debt, resulting in a less than four times net leverage as promised by the end of 2020.

Which was a goal we had in place prior to the pandemic and as you saw on our full year guidance. Today, we are expecting to finish 2012 with net leverage in the mid threes.

On a two year basis, our free cash flow as a percentage of revenue also exceeded our pre COVID-19 guidance and we accomplished this while still paying a regular quarterly dividend to shareholders.

In addition to continuing our debt Paydown as always we will continue to evaluate any and all opportunities that are presented to us both inorganic and organic to support the ongoing growth of our business always through the lens of what we believe will drive the most value for our shareholders.

Further with the recent announcement of our three year 300 million share repurchase renewal in January we now have a number of tools at our disposal to return value to our shareholders.

<unk> of our balance sheet, coupled with this expanded toolkit position us well to continue to create and return value both over the near and long term.

To that end following the December we initiated the buyback program. Our board has continued in active dialog on capital allocation in light of our <unk>.

<unk> cash flow generation, our expectation for continued strong financial performance and faster than expected deleveraging.

In light of those factors, we are carefully weighing our options to increase the amount of capital returned to shareholders through either repurchasing shares increasing our dividend or both Paul again through the lens.

But what accidents, most beneficial for our shareholders. It makes the most sense in light of current market conditions.

Yeah.

Before I pass the call over to Victoria, I want to highlight one of our longstanding areas of focus here at Tinder.

Social responsibility is.

Including continued enhancements to our investor investor facing disclosures.

Over the last year, we've continued to strengthen our leadership and oversight over diversity equity and inclusion Ed Turner, including through the appointment of Grady Tripp, our chief diversity officer, and the identification of specific areas of oversight for our board related to day, Eni and the launch of a diversity inclusion employee.

Working group.

We just published our 2000 Twenty's social responsibility highlights report, which includes additional disclosure of our day Eni focused throughout China.

As well as the diversity of our workforce. We know there is room for improvement so to hold ourselves accountable. We have also established five five year goals to increase black indigenous and people of color represent representation in our content teams news leadership and management roles across the company.

The social responsibility of highlights report also reflects our enhanced ESG reporting, including the adoption of SaaS B disclosure standards for our industry and a preview of more detailed tracking of our environmental impact in the near term. We would encourage you to take a look through this report which is linked for your convenience in this morning's release and can.

Also be found on our Investor website.

Look forward to continuing to show our progress in these important areas in the quarters and years ahead and with that I'll turn the call over to Victoria to cover our financials in more detail.

Thanks, Dave Good morning, everyone and thank you for joining us as Dave discussed we had a record breaking fourth quarter end here given the strength of our business model and the strategic decisions we've made.

Not just in these most recent challenging months, but really ever since becoming a pure play broadcast company.

Our disciplined M&A strategy has resulted in a strong portfolio of stations positioning us well to capitalize on future growth.

At the same thoughtful approach to capital allocation has also served to strengthen our balance sheet, while growing shareholder value throughout our history.

As a reminder, my comments today are primarily focused on segments performance on a consolidated non-GAAP basis to provide you with visibility into the financial drivers of our business trends as well as our operational results.

You'll find all of our reported data and prior period Comparatives in our press release.

As you saw in this morning's release, we provided key guidance metrics for the first quarter of 2021 as well all of our full year 'twenty and 'twenty one guidance remains as we provided in our January six pre release with the addition of our nonrecurring Capex outlook.

We've also added more detail as you've seen in our press release. This morning on the drivers of our projections for the balance of what we expect to be a very strong here I'll touch on our outlook in more detail later in my remarks.

Yeah.

For the fourth quarter total company revenue was up 35% year over year and up 46% compared to the fourth quarter of 2018.

This was driven by record political advertising revenue and continued strength in subscription revenue, partially offset by lower advertising and marketing services, which as Dave pointed out continues to accelerate each quarter since the onset of Covid.

In terms of revenue stream growth share some additional details.

Subscription revenue increased 9% year over year this quarter.

As a reminder, it would've been up nearly 17% for a temporary suspension of service with AT&T Directv in December.

The growth reflects the impact of impact of step ups in retransmission rates for approximately 50% of subscribers repriced in the fourth quarter of 2019.

As we said on our last earnings call our subscription revenue growth was lower than prior quarters, having lapped our 2019 acquisitions by the start of the fourth quarter.

We forecast positive net subscription profit growth in the mid to high Twenty's in 'twenty, 'twenty, one and growth after that as well.

Subscriber count continue to trend as a package with stable net subscriber counts reflected through our most recent reporting from November 2020.

This continued growth in our high margin subscription revenues combined with our expansive political footprint provides us with strong annuity like EBITDA and free cash flow production.

As you saw evidenced this year. This has resulted in a more resilient portfolio than ever before indicative of the ongoing successful excellent execution of our strategic plan.

Now turning to advertising and marketing services revenues, which have shown quarterly sequential improvement since the height of the pandemic in the second quarter of 2020.

And that's also serves as a key growth driver to support our first quarter and full year 2021 guidance.

Ams finished fourth quarter down 6% compared to last year.

It was primarily due to core advertising displacement related to our record political revenue of $264 million in the fourth quarter.

We continue to see recovery in non political advertising in many categories and strong audience metrics on both traditional TV and digital platforms.

To provide you with some further color on specific advertising category trends in the fourth quarter as you'd expect there was noise from political displacement among category specifically in October.

That said when looking at November and December trends, many categories are up over last year, including home improvement.

<unk> banking and financing insurance and packaged goods.

Automotive improve significantly down year over year, only low single digit digits relative to November and December and notably automotive is pacing positive up mid single digits this quarter.

Not surprisingly categories, which continue to struggle, our retail restaurants entertainment traveling and traveling tourism given the ongoing impacts of the pandemic.

Beyond these positive trends, it's also reaffirming to see advertising improvements continuing that pace this quarter as well.

M S pacing positive over last year and expect it to finish above the first quarter of last year.

Now turning to expenses for the fourth quarter non-GAAP operating expenses were $543 million up 9% year over year, driven by programming fees, including reverse compensation.

With higher subscription revenues.

Without programming costs expenses increased just 3% driven by continued investments in growth initiatives such as premium.

Without the impact of premium and programming all other operating expenses were down 3% compared to the fourth quarter last year as we continued to drive permanent operating efficiencies across the company.

To provide just a bit more color on the specific cost management initiatives for the year that Dave touched on earlier.

Our expense savings in 2020 of course included reducing all non essential costs and discretionary capital expenditures during the peak of the pandemic.

Order to protect the long term health of our business.

However, it's important to highlight these measures were in addition to the ongoing streamlining of our business processes and company wide cost reduction efforts.

As we've discussed in our prior calls.

These structural improvements have been underway for some time as part of our culture, a thoughtful cost management through operational leverage.

Example of those efforts include the successful integration of <unk> taken our sales organization, which brought our national sales effort in house.

Further upgrades or a centralized streaming center also known as master control and non strategic decision to reallocate investment away from Commoditized digital products like paid media to focus instead on growth in video products across the portfolio, including premium.

As a.

These cost savings and efficiencies with gains we are realizing our previously disclosed $50 million annual cost take out initially targeted for the end of 2021, it's Paul here earlier than we had planned.

Oh, She's seen reported this morning. These permanent expense reductions coupled with revenue growth investments produced very strong EBITDA margins and free cash flow conversion last year and well into the future.

As a result of these drivers we achieved adjusted EBIDTA for the quarter of a record $429 million.

Producing a 46% margin for the quarter.

Adjusted EBITDA was up 87% year over year, and up 57% compared to fourth quarter of 2018.

High margin political advertising revenue growth in subscription as well as ongoing cost savings all contributed to these strong results.

Sure.

I'd like now to touch briefly on balance sheet activities and liquidity.

As we've previously mentioned we've taken a series of proactive steps in the past year to further strengthen our balance sheet.

As you May recall on September 10th we successfully completed a $550 million refinancing the senior notes due March of 2026, Opportunistically leveraging a historically low interest rate environment.

The proceeds were used to repay the remaining balance of the $350 million of 'twenty 'twenty, one notes as well as $188 million of our 2024 notes, leaving only $137 million left to callable in 2022.

The unused borrowing capacity under our revolver stood at 1.13 billion on December 31st.

And that they ended the quarter. We also had cash on hand of $41 million.

This resulted in total debt of $3 $6 billion for the quarter, producing net leverage of 395 times or 386 times as defined by our revolver covenant, which exclude certain items such as stock based compensation.

The strong performance of our entire portfolio of stations as well as a very strong political cycle supported accelerated debt reduction during 2020, 'twenty, reducing leverage below the 4.1 times level, we had targeted on completion of the 2019 acquisitions.

Having delivered this important milestone ahead of schedule, we reinstated our $300 million share repurchase program in December.

Obviously this leaves us ample headroom under our only financial covenant related to the revolver, which tops leverage at five five times based on a trailing eight quarter EBITDA calculation.

Reflecting our stronger financial results in 2020, including our reduced leverage S&P recently affirmed our double b minus credit rating revising their outlook to positive.

We've continued to generate strong free cash flow, a testament to our financial model and ability to carefully manage our balance sheet in the fourth quarter, we generated $350 million of free cash flow.

37% of total revenue driven by record high margin political revenue.

To provide a few thoughts now on our cap allocation before I turn to first quarter and full year, 'twenty and 'twenty one outlook.

As has been true throughout our history.

Plug power has remain prudent and disciplined in managing our investments and liquidity, particularly critical during this recent period of uncertainty and market volatility.

We prioritize spending and continue to pay down debt, while delivering a regular quarterly dividend to shareholders.

As I mentioned, we also recently renewed our share repurchase program, which includes an authorization of $300 million over the next three years.

As a reminder, we had suspended our buyback program on March 20th of 2019 upon the announcement of our acquisition of the Nexstar Tribune divestiture stations.

We stated then that our priority was paying down debts associated with those acquisitions and we did just that.

Thanks to our strong financial position, including our significant debt pay down ahead of schedule, we were able to reintroduce buybacks as an opportunistic tool to return value to shareholders.

As Dave mentioned, given our significant cash flow generation. We are also carefully analyzing our options for additional capital deployment, including returning additional capital to shareholders, while still continuing to pay down debt.

Funding any organic or inorganic investment opportunities that fit our disciplined framework.

On the M&A front each of the stations we acquired in 2019 have now been fully integrated into our portfolio and are performing well. Despite the impact of the pandemic. The same is true for our true crime network and quest multicast networks, which we also fired Illinois in 2019.

This is a true testament to <unk> ability to not only identify opportunities that complement our portfolio and that are accretive to EPS in less than a year and immediately free cash flow accretive, but also to successfully integrate and execute on the synergies achieved by those acquisitions.

Across all of our stations and at corporate we moved quickly in early 2020 to evaluate areas for reduced or delayed spending scaling back on our capital expenditures for longer term benefits, while continuing to accelerate many of our operational efficiency efforts.

All of these actions taken together are proving now to be an increasingly important aspect of our ongoing strategy.

Now turning to first quarter and full year 2021 guidance.

In an effort to help forecast our near term results I'll now provide several key quarter ahead financial guidance metrics for.

For the first quarter, we expect first quarter total company revenue to be up mid single digits.

We expect to see year over year revenue growth both in subscription revenue as well as advertising and marketing services, partially offset by record political advertising last year.

We forecast operating expense in the first quarter to increase in the mid single digit percentage driven by programming expenses.

Excluding programming costs, we project expenses to be in the low single digit range. The majority of which is driven by premium.

For full year 'twenty 'twenty, one we expect subscription revenue to be up mid to high teens percentage driven by empty N V. P. D renewals completed at the end of 'twenty 'twenty as well as stable subscriber trends.

This is proof positive of our ability to work collaboratively with our N V. P. D partners to complete successful agreements, which drives strong revenue and naturally free cash flow, both now and well into the future.

As Dave mentioned after renewing our NBC affiliate agreement at the beginning of this year, we entered 2021 with clear visibility into the strength of our big four relationships with network affiliation agreements in place covering fully 94% of our big four subscribers through the end of 2022.

We expect growth in 'twenty 'twenty four 'twenty 'twenty, one full year, EBITDA and free cash flow, which will also continue to benefit from significant cost initiatives that have been underway for the past 24 months.

And as a reminder, here's an overview of our updated key full year 'twenty and 'twenty one guidance elements for the year, we expect corporate expense to be in the range of $44 million to $48 million.

Depreciation is projected to be in the range of $62 million to $66 million.

Amortization is projected to be in the range of $60 million to $65 million.

Interest expense reduced debt reduced due to the benefit of our refinancings is expected to be in the range of $187 million to $192 million.

We expect capital expenditures to be in the range of $64 million to $69 million, which includes nonrecurring capital expenditures of approximately $20 million to $22 million comprised mostly of UHF VHF transitions as.

As well as the continuation of our centralized streaming facility.

The effective tax rate is expected to be in the range of 24% to 25%.

We expect to end 2021 with net leverage of mid three times absent any other uses of capital beyond deleveraging.

Finally, we expect free cash flow as a percentage of revenue for 'twenty, and 'twenty and 2021 to be in the range of 25% to 21, 5%.

Hopefully all of that additional color will provide greater context for you and for your modeling.

And with that we'll now turn to Q&A to take your questions.

Thank you very much ma'am, ladies and gentlemen, if you would like to ask a question on today's call. Please signal by pressing star one on your telephone keypad. Please note if you're using a speaker phone to make sure. Your mute function is turned off just to those of Sigma moving equipment. So once again that is star one on your telephone keypad to ask a question.

I'll move to our first question over the phone which comes from the Chronos from the benchmark Company. Please go ahead. Your line is now open.

Great. Thanks. Good morning appreciate all the additional color you guys provided today.

Just maybe on.

Some chords upon maybe the sports gambling category certainly been talked about a lot by the peer group in terms of becoming material.

Got called out a bunch of your other category is doing well and has to be auto back in degree maybe some color on where youre, where youre, putting Matt what youre seeing there what you think the opportunity is and then separately you know.

It's funny, because we all know Ed.

Be a dirty word and now it's amazing.

John you guys are obviously, you're crushing it so I just curious Dave maybe you know I I really appreciate the incremental thoughts on capital allocation I think that it would be nice for shareholders to hear but within sort of the premium Clark and some of the other things you've done adding services expanding verified is there any way to accelerate kind of.

CTV premium aspect or are there any kind of tuck ins that would be nice here or.

Incremental spending you can make the kind of continued to grow this thing, but even more meaningful.

Yeah. Thanks, Dan I'll take the second one first on premium we are absolutely focused on accelerating premium we've got you know we've.

We were first mover in this space, we've got a terrific brand that team's done a fantastic job of executing it's a fast moving space, we're not going to get left behind we're going to stay in front. So that absolutely could include tuck in acquisitions, a number of organic initiatives as well. So we're not messaging anything here today, so suggesting that we do have anything but we're absolutely.

We focused on whatever we need to do to grow that business. Because again, you know what sets us apart in that space is that we're going to take advantage of local right, we're doing really well with national but it's a more competitive space and national and to be able to connect local advertisers to this opportunity and to reach that long tail of yours on OTT services is what's.

The really important for us over the long term and yes, we're laser focused on growing that business as for sports betting look we're in the early innings no pun intended but yeah. We're seeing for instance, the state of Virginia.

You know just legalized mobile gambling very recently and in Washington D. C. Market was you know includes both Maryland and D. C. D. C is also done it in Maryland, I believe is coming if I have my memory collect correct. So already for instance in the D. C market you can't watch a sports event on WSI without seeing advertising.

From one of the books, whether it's William Hill.

You know draft kings or handle so we do see it as we had always said before the pandemic that it wouldn't be a growing important local area over time, but given the pandemic Ed.

And you know the loss in tax revenues are local states that had you're seeing an increased number of states are moving on it right. So we bought we've already got Arkansas, Colorado, Indiana, Indiana, Iowa.

Michigan, New York, Oregon, Pennsylvania, Tennessee in D. C. We now have pending you know legalization come in potentially Louisiana, Maryland, North Carolina.

And others in and Theres. Other also active efforts in you know, Connecticut, Georgia, Kentucky, Missouri, or when would it be a big one for US which is Ohio. So yes, it's going to be if we did nothing but just continue to produce really good content on our stations and our digital services, we would be benefiting from this AD category, but we're also looking.

Looking at other ways to take advantage of it as well.

Got it Super helpful. Thanks, very much.

Yes.

Well now move to our next question over the phone what's called this wrong, but you wouldn't call from Wells Fargo. Please go ahead. Your line is open.

So.

Brands up mid to high single digits, and net Retrans up kind of mid to high 20, when their new World NBC.

No, Matt Hooper him, but it seems like you've implied that your reverse comp expenses growing slower than your gross retrans revenue growth, maybe just help us.

Kind of think through what's going on there or even at the latter end of some deals on some of the networks with modest escalators or is there anything else, that's giving you a more flat expense growth profile this Iran on programming.

And then as it relates to the Supreme Court case, if they do happen to rule in favor of the FTC. I think you said that you have some day assay, which could each be in the 10% to 15% accretion range could you give me some idea of what that means in terms of the total company EBITDA and and then are there some markets that are really attractive for you to look at swap with big important topic for us.

Okay.

Thanks, Steven So take your first question first on Retrans look Theres always theres never complete sync between when your total numbers of subs are up and when the percentage of your network subs that are up but bottom line you're the you know it's.

I wouldn't use the word flat on a reverse compensation, obviously, we're paying more to the networks and as you know together we between our programming together our investments in programming their investments in programming, we're by far the highest SKU channels, especially stronger stations like we have than anything else and ecosystem anywhere appropriately.

Getting more for a wholesale rate together and then we're splitting that pie. So I think what you're seeing for US is that obviously, we have a very strong set of assets, we have with both our scale and our quality we have a lot of negotiating leverage on the topline and we also have negotiating leverage with the networks, but you know those are part a little bit more.

Ship discussions I'll call them, then the Retrans.

You know the M. P. P D discussions, but you know fundamentally yes, we are.

We are growing net retrans by growing the topline at a percentage.

At least or is better than the bottom line and the expenses.

Oh, I'm, sorry, I know the Supreme Court.

So what.

We need to wait to see a what the ruling is gonna be Steven and and then how it gets leveled out and then how the FCC is going to interpret it so unclear whether it will be available in all markets or whether there'll be any kind of Doj qualifier.

Near the combined market share of two stations can have I'm sort of optimistic of getting rid of that over time, because it's so so anachronistic and theres been a change in administration at the antitrust division of the Doj, but until we have more clarity on what and when it's just not it's just not.

Prudent of us to be giving any kind of total company EBITDA.

Suggestions on what that is and what it can be worse, but it obviously, if we're able to execute it it will certainly be very accretive and very attractive to us specifically.

Thanks, Dave.

Thank you.

Well now move to our next question over the phone which comes from Alex Yeah of course, they don't need from JP. Morgan. Please go ahead. Your line is now open.

Thank you.

Couple of things first just following up on your color you gave on advertising Craig.

Great to see auto stronger, but you just ballpark roughly kind of how big your revenues are obvious.

Obviously lagging categories like restaurants, where we haven't seen a recovery at that Craig.

You'll see improvement later this year and my second question is you're starting the NFL.

Press reports this Brian but it needs to be.

Pretty good cause the reported step up a little bit larger than I think people expect it to have any practices are you in terms of maybe having you know a different outlook in terms of what's your reverse comp would be an endless Inc.

Division of E E.

Dave Super Bowl does that impact you in Japan, where you have to invest more in promoting day.

Kim.

Yes.

Thanks, Alexia So let me talk about Ams first.

So if I'm trying to understand your question, you're sort of looking to understand kind of what the outlook on some of the weaker categories from Covid, you sound like retail and restaurants yeah.

Yeah, you seem like you know nice recovering some of the areas, where I'm trying to see what the opportunity is still ahead for further recovery in areas that you know how big are the areas that are still sort of lagging.

Looking forward to how they can recover and what kind of momentum.

Yeah, I get it so restaurants have nowhere to go but up.

For obvious reasons right I think now the fast food is doing pretty well I'm happy you know fast food as you know when you when you breakout the restaurants category fast food is actually I think in the first quarter now up but restaurants or restaurants are really dragging so but I will tell you writ large on these.

Categories consumer categories, just take auto retail and restaurants together I think we are very optimistic and people to the store. The journal had last week about the money in the system on one hand, you have one percentage of the population that has been keeping their jobs working from home saving a lot have a lot of pent up expenses in their savings accounts I think we.

Think that bodes very well for auto.

And in retail.

S as well as restaurants, and then you have another big part of the population that's likely about to get 1400 dollar checks. So when you think about all of that money when when does it is.

As the vaccines come around and we do open up this economy, which we're also very optimistic about based on the news. The last few weeks, we could imagine a pretty robust recovery and all of those categories and you know with the exception you know retail has improved some and orders definitely improved but there are categories. Like you say like restaurants that are dragging us down.

So you know despite that we're still going to have an up quarter year over year. So we're very optimistic on obviously in the back half of the year, we'll have false comps to 2020, especially in the second quarter, given how low that was but we're very optimistic about where these numbers may end up relative to 2000.

19.

As it relates to the NFL.

Look we'll wait to see how the deals come out first of all day.

The NFL, we're turning to broadcast which we're very very optimistic about will be a very good thing for the ecosystem. The Devil's in the details as it relates to we're not going to comment on the terms of our each of our individual relationships, but obviously they will there will be issues contemplated relative to you know what the.

<unk> part of those deals are relative to any network services et cetera, like that and we will individually and then collectively through our affiliate boards.

You know work through the implications of those with our network partners, but so and yes games. If games ended up on a B C. You know 10 years ago. When we were 60% NBC household company that wouldn't have been very good for us, but now were much larger ABC portfolio. So we're somewhat.

Diversified and a little bit.

Oh agnostic on that although we would obviously like to see them stay on N D C. Given our continued size.

N D C and unless you want to make sure I answered your question on advertising to get them all all your answers in there yeah.

Yeah, no that was really helpful. Thank you.

Thank you.

Well now move to our next question over the phone which comes from cause Evans from Stephens. Please go ahead. Your line is non woven.

Hey, thanks.

Two questions how much political in this cycle came from presidential what do you think the percentage point brackets, where for displacement in the fourth quarter and I understand that requires guessing on your part.

Then given the set up you detail for us what are the odds of 'twenty two it could be even better than 'twenty and then I've got a follow up.

Alright, let me take well.

Julian our team here Paul is the presidential information together, let me give you the displacement.

So first of all understanding Kyle displacement is an art not a science.

And we also had uniqueness and we had a massive non to displace one of our larger markets Atlanta in November and December, but I think if we had the eyeball. If we had to put a number to it I'd say somewhere in maybe you know high single digits you know.

In terms of what it would have been relative to Ams for the quarter, but again that is an art not a science. So that would put US you know would have put us in low single digits positive for the quarter, but again I caution, it's an art as for presidential so of our total spend and when T 22 person.

<unk> was presidential.

Okay now I will say to your question about what it means for 'twenty two.

Is that what we've seen in the past presidential actually does it bring some dollars into the system, but it is worth noting that you know on Ed you know.

Even on a pro forma basis. If you look at US you know we did you know not as reported but we did two O nine and 16, a presidential year, and then 280 818, and that's not counting acquisitions with pro forma.

Performing Ed on the prior company. So you know.

We think with the way we looked at it this call there will be we see there's going to be continue to be significant growth on every four year cycle.

Right in terms of the money in the system, but if you take 22% of that out then you'd have to to get to the numbers. We had this year you'd have to get to.

An even higher level of fund raising for res, but that said at this moment in time, we've never had a senate and governor portfolio.

Like.

And any past elections like at the moment it looks like we'll have in 'twenty two.

And as.

So I think I'll answer your displacement question.

Yes.

Okay.

Quick question on sub counts could you give us.

22020 number I missed it and it sounded like you had stable sub count built into the 'twenty. One guide I just wanted to affirm.

Affirm that.

Yeah, we still we have been we have been very conservative every year and what are and what we model just to make sure we're right.

So, but youre right in since you know again, we're three months in arrears on our sub counts right because of it because of billing cycles, but when you're right now starting with July we have sue.

No acceleration and in some months and improvement.

From the previous months. So it is definitely flattened out I think you've heard us say end up at about mid single digits and so that's where we are and it looks very very stable at the moment. So you know I think we're looking at and I think we're looking at the continued stabilization throughout 'twenty, one as well.

Got it so 'twenty one is just a continuation of the mid single that you saw in 'twenty, if I'm recap that's right that's right. So much thanks, Mike.

Yeah.

Well now move to our next question over to Paul which comes from Bill Barker from Huber Research. Please go ahead. Your line is now open.

Yeah, two questions, Dave any any thoughts on what you're hearing you are the Olympics.

The Olympics in Japan. This summer when you have a fairly light exposure there and then Victoria on the $50 million achieved early.

Any thoughts on kind of next cost moves.

Programs in place that it could be incremental the 'twenty one 'twenty two things.

Okay.

I mean I'll take the first one I'm Doug on the Olympics look I think the point about the Olympics. So the answer is no I don't have any crystal ball about and are optimistic about the Olympics, taking place. This summer, but I you know you've seen probably what we've seen a little bit of chaos in the head of the.

Of the organizing committee over there in Japan, but I think that the thing I would say you know for US is that as we've gotten larger and we've diversified our portfolio that the Olympics now on a good year or maybe just north of a half point of our total company revenue the incremental part of the Olympics because once.

Again now that we're not so have you know we are a minority of our homes that are NBC. So while it's great for NBC homes, it's a negative for all of our non NBC homes, so across our portfolio the incremental isn't what it once was as a percentage of either our advertising base, our especially our total revenue now that our other total revenues of ground. So I don't know about the play.

And the games would love to have its great marketing vehicle for US frankly, I think it would be good for the country, but from a business standpoint, we're not terribly concerned.

And in terms of finishing a swing on your question relative to the cost initiatives I think it would be premature to size them, but I can tell you just in terms of qualitatively what's underway for incremental savings beyond the $50 million that we've already identified so that's the second phase of our ERP implementation, which is.

Non underway this year.

Allowing us to do more on the finance transformation that we started two years ago, we have automation of certain back office and sales support order processing types of function.

The second and third phases really relative to our some of the efforts that we have in terms of our some of our monitoring of traffic systems. So all of those are still going to be delivering on cost savings beyond 2021, but it'd be premature to say sort of sizing incremental to the 50, what that will do more.

It won't be consolidated Doug also some non station real estate, we've used for some.

Backend issues that the pandemic has taught us that we can live with that.

Great. Thank you.

Yeah.

We'll now move to our next question over the phone which comes from the city, Arizona from kind of all research. Please go ahead. Your line is open.

Thank you. Good morning, My question is about the premium.

I wanted to ask you to talk about what you're seeing in terms of where the budgets are coming from the growth is very impressive are you winning budgets from our T V.

V or online so would appreciate the color on that and then is my understanding correct that at this point all of the.

Advertising based sold directly and if so I was wondering if you have plans to introduce programmatic or does it fit with the.

With the business model of a premium on the house. Thank you.

That facility. So we are very much avoided being much of a programmatic platform I can't speak to whether there's ever any some kind of programmatic there may be on here and there, but our our proposition and uniqueness to the advertisers that we directly source. The publishers content and then the advertiser can be absolutely comfortable and safe.

And what their advertising.

What kind of environment it plays in.

But the other part about the budgets what we're seeing is certainly over time more and more of the budgets are coming out a discrete digital budgets at the large agencies.

And certainly you know it was there's certainly some TV budgets to but they're not coming at our expense, they're not coming necessarily out of just specifically techno spend but overtime. It is absolutely shifting from TV to digital locally that will take a little bit probably a little bit more delay, but that's happening at the local level to where there's discrete digital budget. So.

It's combination of both but with a trend moving from definitely from TV to discrete digital budgets.

And did you see the change in the rate of the relocation in 2020 or is it just a continuation of what you saw in 19.

You know I think and I'd have to go back and double check we had and then I know, we'll probably get back to you on this but I definitely think there was more from the digital side.

And just did and it makes sense just given a television budgets fell way lower than digital.

And if you read my premium premium way outperformed traditional.

Thank you.

Well now move to our next question over the phone which comes from Craig Huber from Huber Research. Please go ahead. Your line is now open.

Yes, hi, thank you.

Impressive growth you guys had a premium I think you said, 40% plus washed here was that even higher than that in the fourth quarter or was that up please.

Hang on Craig I'll get to that in just a yeah I'm sorry, I got it yes. The answer is yes.

Did you say materially better than up 40% in the fourth quarter.

Everybody sort of.

Well, we can debate the debate.

This is a material, but it was definitely higher.

Hi.

Okay I appreciate that.

Sports betting day do you think in becoming a few years two three years sports could it could be a topic like advertising category for your TV stations.

Yeah, I don't have a hard time imagine that it all.

Again, the variable will be how many states actually legalized, but I think youre going to see an acceleration of that but I still yet because it's by depth all by definition going to be a hyper local.

Advertising issue and I and I also think you'll see stations, you'll certainly see our stations.

Doing things to get a larger share of that pie.

And my last question, Dave about your changes through advertising sales force can you just.

Dave you sound, a little bit for what changes you've made there and the support to help drive the top line and also save costs.

Yeah.

Yeah. So thanks for the question Craig It's actually it's a multipronged approach, which always have.

A virtual circle. So you know we used to hack our national sales, including our political sales to an outside firm that did a very good job for us, but over time, especially with premiums and others. It became clear that you know.

We needed to take ownership of that Ed.

And really integrate the experience with our national clients. So we could we could provide the right platform and frankly, we also knew we'd save a tremendous amount of money, especially in our political advertising. So even on our traditional national TV business. We now have a lower expense rate, but the other thing we frankly had been doing.

Craig intentionally is that given that we're in a lot of large markets. We call. We do have local people, calling on major agencies and major markets call. It Dallas, Atlanta, Houston et cetera, which is really like a national business and so we've been able now with our own and our sales team to move some of those accounts.

Due to our in house National sales team, so that our local assets in the sales arena can be totally focused on non traditional new business very innovative idea of selling as opposed to just doing request for proposal business and so we're in the process of doing that give the credit the team a massive amount of credit for doing it doing it varies.

Difficult year, and but it's been it's been very very effective.

Thank you Dave.

Yeah.

Well now move to our next question over the phone which comes from Jim Goss from Barrington Research. Please go ahead. Your line is open.

Good morning.

A little bit more on the premium.

One thing is you talked about streaming.

<unk> as a.

The vehicle to enable growth GAAP core broadcasting as there are more and more streaming services I Wonder if you could talk about that whole process.

Also talk about or if you're willing to give any guidance as to sort of a craig or premium or the next three to five years.

So discussing profitability aspects because for some time you were just trying to establish the business.

By now it looks like you've been doing well enough that you are probably in the black.

I Wonder if you could talk about.

That process as well.

Yeah sure. Thanks, John So in terms of streaming services, there's multiple services right. It's all about you know so we're all aware of the Netflix is in the Disney pluses and stuff, but on top of that you know just take a look at the amount of traffic on Roku, because you know roku in itself is a distribution service or sling or all together.

Long tail of services, where it all adds up to a tremendous amount of viewing and growing viewing.

It was growing at very high CAGR is prior to the pandemic and it only accelerated during the pandemic. So obviously this is a.

Absolutely critical and massively growing form of distribution forever right and so as a company. We are all we're all in on it as it works out. So so remember we have deals with publishers in some case, Jim So a publisher puts their streaming channel on cable channel, let's say like that on some of these services.

Then we are there are ads their ads that we've sold for them and their inventory will appear often in those services depending on what they are and then we have these and then we have deals with many other services. So it's a long tail of services, where our inventory is but it's not about it's not just about our deals of the services.

About the publishers deals with the services, so were trafficking ads and selling ads for them that in some case is is you know silent to the services themselves as it relates to profitability profitability. We are profitable you know obviously, we had a we had a piano.

Our revenue goal in 2020 that despite our massive growth we were short of our plan because of how bad the advertising environment was so that that has impacted our margin a little bit, but we're profitable we're gonna stay profitable and.

Where we will scale it up over time, but to the earlier question somebody asked me if we've got the opportunities to invest to grow that business, it's such a big growth space for years to come we are going to invest for the long term as it relates to our CAGR and I couldn't tell you exactly what it was but you just look at the overall CAGR for what.

OTT advertising revenue is going to be in the company writ large and its pretty enormous what the size of the opportunity is so it'll be up to us to figure out you know.

What share of that pie, we can take.

One other area I, just thought I'd bring up is twist.

It seemed like.

True crime that work for example, your first effort in that area.

Sort of a repurposing of some of the actual content.

<unk> group was created.

Chris does not sound like that it looks like a really crazy content to various states broke smart weapons entertainment.

And you're getting more active in this whole program.

Graham in area and I Wonder if you could talk a little bit more on the.

Economics of what's your plan to.

Do there how that syndication would be handled.

Anything you'd like to characterize.

For its relative importance to revenues and profitability.

Yeah. Thanks, Jim So you're right to crime network does leverage some local local content, but at the moment very little we're in the very early stages of that and we're working on cost effective ways to build that up over time, and we will we're already.

Pulling out digital archives of unsolved crimes across the you know all of our TV stations, which covered nearly 40% of the country and leveraging those into stories right now we've pretty much got them on Paul podcast those stories under our vault Studios brand, which often are at the top of the true crime genre on podcasting, but soon we'll be moving those over to video often though.

It will show up on true crime, but the fact of the matter is on all three of those multicast networks to crime Quest and now twist, it's almost all off the shelf library content.

Content, Jim from large studios that don't have enough ways to monetize that content. So I'd say its a virtual it's ed.

Win win for both of Us and so for a period of time that programming is going to come from.

From the libraries and Theres enough of it out there and we can get it at a cost that makes the.

Channels are profitable from almost day one.

Okay. Thanks.

Thank you very much.

It appears there are no current questions queued up to someone who's been a I'd like to turn the call back over to our speakers for any additional closing remarks.

Thank you everyone. Thanks for taking the time to join US today and as you've heard from Victoria in May we are more confident than ever that the decisions our board and management have made over the last several years and especially this past year. During this incredible environment have positioned to position the company to be resilient and our business model no matter, what we face.

Consistently strong in our operations and critical to our communities and customers across the country.

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