Q1 2021 Gray Television Inc Earnings Call
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Thank you thank.
Thank you operator, good morning, I am Hilton Howell, the chairman and CEO of Gray television. Thank all of you for joining us for our second call. This week and our first quarter 2021 earnings call happily with me in person for the first time in 14 months of Gray is fully vaccinated.
Non masks executive officers, our president and co CEO, Pat La flattening, our chief legal and development Officer, Kevin laid tag, our Chief Financial Officer, Jim Ryan and our Chief Operating Officer, Bob Smith, We began this morning, where the disclaimer that Kevin will provide.
Thank you Hilton and good morning, everyone certain matters discussed on this call may include forward looking statements regarding among other things future.
Future operating results, our pending acquisitions and the impact of the novel Coronavirus and the disease known as COVID-19.
On our future operating results those statements are subject to a number of risks and uncertainties actual results in the future could differ from those expressed or implied in any forward looking statements. As a result of various important factors that have been set forth in the company's most recent reports filed with the SEC, including our most recent annual report on form 10-K.
And our most recent earnings release the company undertakes no obligation to update these forward looking statements.
Gray uses its website as a key source of company information. The website address is www G. R. A y dot television.
Included on the call, maybe a discussion of non-GAAP financial measures and in particular broadcast cash flow broadcast cash flow of less corporate expenses operating cash flow free cash flow adjusted EBITDA and certain leverage ratios.
These metrics are not meant to replace GAAP measurements, but are provided as supplements to assist the public in the analysis and valuation of our company Inc.
Put it in our earnings release as well as on our website are reconciliations of non-GAAP financial measures of the GAAP measures reported in our financial statements and now I will turn the call of the Hilton.
Thank you Kevin as I mentioned on Monday morning, We issued our first quarter earnings release, we beat the street would be guidance and we're very proud of our financial results flowing from increased economic activity prudent cost management, and a variety of strategic initiatives or improve.
The first quarter earnings report was completely overshadowed by our announcement five minutes later of our transformational acquisition of Meredith Corporation.
Our second billion for multibillion dollar deal of 2021.
And both of the Mondays Big announcement, followed our other big recent news of our announcement from just last Thursday.
Week ago today a day.
All of the Quincy divestiture stations to our friend borrowing Alan and his Allan media.
We have been exceptionally busy lately to say beliefs.
Today's call will focus on our earnings release, because as you know we can only discuss the Meredith transaction and a special investor call on Monday morning.
We are quite happy to have reported such great earnings this past Monday.
Even if it went mostly unnoticed.
We hope this call will satisfy that we.
We reported total first quarter revenue of 554 million, an increase of $10 million or 2% from the first quarter of 2020.
Net income attributable to common stockholders was $26 million or 27 cents per diluted share.
In the first quarter of 2021, our combined local and national broadcast revenue, excluding political advertising revenue, which we call total core revenue increased by approximately 4% compared to the first quarter of 2020 as advertiser demand has returned.
Amid the end of political displacement.
We reported $819 million of cash on hand at the end of the quarter with a total leverage ratio as defined in our senior credit facility of three eight times on a trailing eight quarter basis after netting our cash on hand and <unk>.
Giving effect to all transaction related expenses.
We're very proud of these core results.
Credit the continued dedication and excellent work throughout the first quarter of Bai are mostly working from home employees.
Our second quarter guidance with Jim will discuss reflect our reflects our continued optimism and a quickly recovering economy that drives increased consumer spending and increased advertising and nearly every one of our markets and our production companies on the.
March 31, 2021 gray paid its first quarterly dividend to its common shareholders since the great recession.
The resumption of this dividend confirms our boards and our management's conclusion that our business is stable debt our prospects are bright and that a return of capital to shareholders through a cash dividend together with occasional share buybacks will not deter us from our long.
Term goals to continue to grow gray television into the finest media company in the country.
Our recent acquisitions will have no impact on the payment of our dividend or its subsequent growth in size.
We will hear next the few remarks for my colleagues, which I am exceptionally proud to now have around the table with me with additional color to our first quarter earnings release and other recent news and thereafter I will open the line for questions. So I'll turn it over to Pat.
Thanks, Hilton Dennis Hilton just mentioned, our combined local and national broadcast revenue, excluding political which we call total core revenue was up 4% in the first quarter of 2021, while.
While we didn't quite rebound to 2019 levels, we were definitely and the Zip code.
We saw strength in financial home improvement health.
Health legal and the supermarket categories, all up mid single digits to mid teens over Q1 'twenty.
Our pacings, which are not always of great predictor for future revenue is still quite strong.
There are a lot of positive numbers in our Q2 pacings as of today and we are optimistic about the quarter.
We continue to believe gambling will be the fastest growing core AD category for us this year the auto.
The category is pacing, 48% of ahead of last year's horrendous second quarter, yes.
Nevertheless continues to lag improvement in other categories due to the well documented chip shortage issue hopefully the supply chain stabilizes over the summer and that category will rebound in the back half of 2021.
The production companies had a challenging first quarter due to the loss of a number of basketball games on the ACC schedule due to COVID-19 related issues. If you recall, we had some games moved from January back into December which further impacted those numbers.
Going forward, we expect that business to rebound back to pre COVID-19 numbers as our as our new business pipeline is healthy and we expect to produce and deliver all of 'twenty, one 'twenty two football and basketball games and OTT News. Our production group is launching origin sports this quarter, which will dry heavily from the Raycom Sports archive. We're also seeing tremendous audience of revenue growth for.
For power nation are automotive enthusiasts production company in Nashville in the OTT space on the digital side of the business audience was down a bit from the record numbers in first quarter of 'twenty, but we still set company records for video plays and whether App users and our OTT audience for news products is surely showing nice growth.
That includes audience from our station apps on Amazon fire, Roku and Apple TV.
Digital revenue is growing nicely and as a reminder of grades of an equity partner in premium and our rollout is now complete across all of our markets revenues for premium and are tracking well ahead of the projections for 2021, and these OTT and connected television AD sales would be of solid contributor this year of our digital products and growth.
Now I'll turn the call to Kevin.
Hi, good morning again.
The Big news of the first quarter was our agreement to acquire of Quincy media and it's very strong stations and employees.
That announcement from February now seems like ancient history.
Last Thursday, we were thrilled to announce that we had concluded the competitive Quincy divestiture process with an agreement to sell the divestiture stations to Byron Alan's Allen media for $380 million of.
Personally very happy to see these stations added to Allen media is growing portfolio.
In terms of process, our Quincy transaction does not raise any regulatory issues other than the need for approval of the divestiture sales to Allen media the.
The bleeding FICO on Quincy is close of the FCC.
Last Thursday, I'm, sorry in terms of process are.
Okay.
You did a paragraph.
Sorry, the Meredith the acquisition should follow the similar pattern of quick filings no special or novel issues for the regulators and prompt regulatory approvals on.
On Monday, we commenced the process to divest our television stations in the only overlap market between Gray Meredith.
Other than finalizing this divestiture sale the Meredith transaction complies with all the FCC ownership rules and Doj standards as.
As Meredith and Gray explained in our Monday communications. The parties are very committed to closing the gray Meredith transactions prior to the end of this calendar year.
Turning to retransmission after our prior earnings call. We successfully completed the last of our year end 2020, retransmission consent agreements with another large mvpds.
That agreement was retroactive to January one 2021.
Looking forward, we have two agreements that expire the summer that combined represent approximately 24% of our Mvpds sub base.
And as we have done with more than 480 mvpds over the last six months.
We anticipate that we will successfully and quietly conclude these two negotiations with economics that reflect the value of our unmatched portfolio of high quality local television stations.
For the second quarter, we anticipate that gross retransmission revenue will increase by 11% to 12% compared to the first quarter the.
The second quarter excuse me to the second quarter of 2020.
The total gross retransmission revenue of between $245 million to $247 million.
For the calendar year, we expect total gross retransmission revenue for the legacy Gray stations, meaning excluding the Quincy of Meredith stations of it.
Least $1 billion.
That would represent a 15% to 17% increase over 2020.
Our retransmission revenue less network compensation payments is expected to grow between 12 and 13% in 2021.
And again this annual guidance does not include the impact of the Quincy for Meredith acquisition.
On total subscribers, we continue to see large increases and large decreases among our various cable satellite and OTT distributors.
All told however, we are pleased that the total paid beg for subscribers across all platforms saw only modest declines.
Between the first quarter of 2020 in the first quarter of 2021, our total paid big for subscribers decreased by only one 6%.
Many consumers are shifting from traditional cable and satellite operators to the OTT providers. Most consumers continue to see value in a paid subscription for a service that includes their local broadcast stations.
Now I'll turn the microphone over to Jim Ryan.
Thank you Kevin good morning, everyone.
As usual the filing our 10-Q, a little bit later today and everybody has had the actual release since Monday Hilton.
Hilton's earlier remarks on Q1 results cover the key highlights of the quarter. So I will make my some brief comments on our Q2 guidance and as Pat indicated.
We are encouraged with the continuing improvement we're currently seen in Q2.
As of today based on our current forecast for the quarter ended June 30 of 'twenty, one compared to the quarter ended June 32020.
We're expecting total core revenue will increase by 38% of 40% to approximately $272 million of $277 million.
The total core revenue will be very close to 202019 levels of.
$283 5 million and were very encouraged that we're close to the 2019 levels as Kevin just said retransmission will go Roe of 11% to 12% to something between $245 and $247 million and our total broadcast revenue.
We will increase.
<unk>, 220% to $530 to $540 million and the production revenue will approximate $8 million to $9 million.
And our operating expenses broadcast expenses will be increasing to approximately $360 million to $365 million.
$21 million of that increase is explained by increasing the reverse comp.
To the networks production company expenses will range between 9% and $10 million and our corporate expenses will range between 17% and $20 million as we start incurring additional transaction related expenses with the pending acquisitions.
I will turn the call now to Bob Smith, our Chief operating officer. Thank you Jim we're very excited to begin working with the merit of the stations. We believe the are a great fit for gray, both geographically and culturally it's been of great week for our employees as they responded enthusiastically to the Meredith acquisition. In addition, all of our senior leadership has received positive feedback for merit.
Employees, who as they are non professionally for some time, where all of its also excited to exchange and share best practices of both news and sales with the combined company's 2022 should be a banner year in regards to political advertising in fact, perhaps the happiest person in gray on Monday when the announcement came out was Mike Jones, our VP of political sales was located in Washington DC.
We began planning for the transition as of Monday, and I can tell you that all of US are really eager to close both Quincy and Meredith just as fast as possible.
This call began a few minutes ago. The radio television Digital News Association announced that is awarded of combined 57 Regional Edward R. Murrow Awards for excellence in journalism to 'twenty six of Gray's local stations are to NDA selected W view.
The New Orleans for nine separate awards were also honored with three of awards for overall excellence of the highest honor bestowed to again W. <unk> in New Orleans, WK White tea in Lexington, Kentucky, and kw QC in Davenport, Iowa six of our stations one regional morals for best newscasts starting again with W view, the UE in New Orleans.
Which is joined in this category by Wasd in Baton Rouge, Louisiana, Wm television in Madison, Wisconsin W. K Y T in Lexington, Kentucky W television <unk> in Toledo, Ohio, and Ww BT in Richmond, Virginia. We also had for winners from the investigator reporting category, starting again with WWE in New Orleans as well as <unk>.
Donald Lu based Hawaiian news now W. RTW in Augusta, Georgia, and <unk> in Green Bay, Wisconsin.
Finally, I want to highlight the <unk> in Lexington, Kentucky, and Ky television in Springfield, Missouri for the regional Murrow Awards for excellence and innovation Congratulations to all of these winning news teams and professionals. The competition for any journals award for 2020 had to be the strongest ever in light of all of the unprecedented and historic news events as well as tremendous.
Thats the gate of efforts by local media companies in every market truly we are great proud of this week I will now turn the call back the Hilton.
Well. Thank you very much Bob the we're exceptionally pleased with the news out of the radio television Digital News Association and very proud of the professionalism of all of our folks in the fields.
Right now our rooms, operator, we will open the line for questions from anyone that may have for them.
Thank you Sir at this time of I'd like to take any questions you might have for us today.
The order to ask the question you will need the press star one on your telephone.
Again that would be star one on your telephone.
We have our first question from Kyle Evans from Stephens. Your line is now open.
Hi, Thanks, Thanks for the detail around growth in net Retrans for this year could you help us think about the cadence on the 20%. That's renewing next year, just thinking about what quarters.
Kyle.
This is Kevin we have about 24% of the status of renewing.
Of this summer.
Two big contracts I mentioned on the call we ask.
We have no retrans.
Up for renewal of next year.
We've pushed through everything.
Starting last year and.
The.
Some of them.
The the cadence of what we've done it's been pretty intense but that means that on the back side Theres no retrans renewals of any any substance between the.
This summer.
And the end of 2022.
Great and then.
My recollection is that you just got done with all of your networks as well, but just remind me when those all queue back up.
Yes actually the.
The network deals were done a few years ago.
We haven't done the network deal in.
Probably three years four years, depending on the network.
We have all of our CBS up at the end of this year all of Fox at the end of 2022 of ABC and NBC up of the end of 2023.
Great and then last one.
Thinking about the puts and takes for the 2020 political cycle versus I'm.
I'm, sorry, the 22 political cycle versus 2020 by sizing presidential and maybe the Georgia windfall. Thanks.
Presidential as.
25% to 30%.
Political last year, the Georgia <unk>.
Number.
Yes.
Obviously, a fairly significant when you can.
Look at what we reported.
We reported right around election day and then.
We're putting $430 million for the calendar year that Delta was entirely the Georgia runoff theres about $4 million to $6 million.
Political revenue that hit in the first quarter of this year. The first few days of January.
We can assume there won't be a double run off of the Senate and Georgia in 2022. The rest of what you saw were very competitive races up and down the line from U S Senate and the governor how.
<unk> seats, the levels, we hadn't seen before and even other.
The other races in balance.
So I think we're all feeling very.
Good about political in 2022.
As you know house and Senate are raised are closed.
People have not dropped their political divisions and started the thing income by us. So we expect the politics will continue to be.
A.
Very important.
Area for the company in 2022 and beyond.
The.
When the control of the House and Senate Hauswirth then it gets very close you see.
Of political activism fundraising and therefore spending in the GA exemplifies that but I think you also saw that throughout the year.
Spending in the house and Senate races, so debt when we passed for 2022, it's really almost Georgia all over again house and Senate are are both kind of up for grabs in 2022. So we are very optimistic about our current platform and our current portfolio, adding the Quincy stations, which had extremely good political last year.
And then of course Meredith stations rounding out for us in Nevada.
Arizona.
That's a lot more exposure to Missouri.
It's really unmatched.
Unmatched unparalleled portfolio of <unk>.
In terms of the hot political races in 2022 and beyond with the again the sole exception for us not being in the state of Pennsylvania.
Kyle This is Hilton let me just.
Reinforce what Kevin said and what I think is an exceptionally propitious timing for both of these acquisitions because they will both close.
The Quincy first but then mirror the second in 2021, and so our new leverage numbers, which will be right at where we were when we closed.
Our transformational deal with Ray Com.
It will be almost immediately began to be paid down by some of the most really exciting on political races in 2022 and literally the house is divided by two.
For two or three or four seats.
It's a 50 50 Senate.
And we're going to see political dollars from Alaska to.
The Florida from.
Arizona, and Nevada, Georgia alone will have both a very I'm certain contentious and expensive gubernatorial race and senatorial race and our new portfolio.
Gives us <unk>.
Liquidity coverage.
For the whole state everywhere.
And so I really do think.
To echo.
I guess it was volume hubs comments, the happiest person upon the announcement.
Of this deal was the person responsible for selling all the.
Of our political ads and so I think that gives you a true professionals view.
What 2022 is going to be doing for gray and I do not believe.
I Love, our broadcasting peers I do not believe the.
The pump.
Company has a better political footprint than growth.
Items.
Thank you.
Thank you. Our next question is for.
The <unk> Aaron Watts from Deutsche Bank.
Please go ahead.
Okay. Thanks.
Thanks for having the Ann.
Couple of questions first.
Turning to our core advertising is turning the corner.
Hearing your commentary correctly is it fair to say that core growth.
We returned to pre pandemic levels give or take if we look at 2021 on the whole and is it.
Visibility improving of the advertising recovers as well are you seeing bookings coming in for later in the year at this point.
So on your first question.
Tough to make commentary on the full year at this point, but we are optimistic about the second quarter getting close to 2019, I think Bob can chime in here, but I am not sure of that.
There's this big movement towards placing earlier for the quarter I think things the business is generally being placed.
Later than it used to be.
And I don't think Thats really.
Changing much correct, Bob Yes, I would add debt.
For some time now.
It's quarter by quarter for the most part and it does.
Tend to be placed.
The later than it historically had been but right dollars patch said, we're optimistic second quarter look solid.
But.
The trend will continue in that business will be placed right before the quarter and then inside the first month of every quarter as it has been for some time.
Let me add in California.
I mean, I think that we earn.
I think we are having a very healthy return to advertising demand my personal feeling is the fact that it's not up double digits is largely to do with well documented publicity about supply chain.
Problems literally everything in the world economy is being slowed down by production and so automobiles are behind in terms of new production by.
Six and seven.
Car that are ordered a year ago and I still don't know when it's going to get in.
I mean chip suppliers, you can't get those zone and so there is a huge.
Resistance Youre.
Youre not going to advertise if you've got nothing to sell right and so that is a hangover from COVID-19, but I think it's been.
Then ratified all been rectified and so I think that as that gets.
Settled I think youre going to see advertising ramp up much more aggressively.
Just a personal opinion.
Thats, how I was actually going to ask you how much pent up demand do you think there is because of the supply chain issues, especially with auto but I think you just answered the question.
Yes, I think it's huge.
Just think about the ship debt got turned horizontally to the Suez Canal now I'll tell you we could send for five of the kids from Chick fillet over there and they would have that fixed in a minute because.
But but it did slow down everything worldwide for a long time.
And so I mean.
The shipping and the international dependence that we have for all products.
Is really quite remarkable and I think it is.
The weakness in the strength that has just recently been exposed to the average the average consumer.
Okay, Thanks, very much of them.
Thank you. Our next question is from Steven Cahill from Wells Fargo.
Please go ahead.
Thanks.
Maybe first just curious what your comments are on the private market you've been.
A competitor for stations <unk> been a seller probably in competitive processes and I think sometimes investors wonder how much private capital there is out there looking at broadcast and we've certainly seen it come in from time to time, most recently with with Allen media. So just curious kind of your color on how much demand there is for stations in the private.
Marketplace, and maybe how that differs for multiples in the public marketplace and then it seemed like sports betting are gambling is becoming a really big category like political. It also seems like it's a very local category because you can target around gains in areas, where it's legal I'm. Just wondering how big you think that category to get to over the long term. Thanks.
Hi, Stephen it's Kevin.
I don't know how we can give.
An overall view of kind of what private market multiples would be all we see is we have just one data point here of the data point is.
The Quincy transaction.
That was a R.
The acquisition of Quincy went through an auction conducted by the Wells Fargo investment the investment bank team.
It was the competitive process. We know there are others, there obviously were happy too.
The cross the finish line before others with terms that.
Were acceptable to Quincy.
I think.
That's an interesting data point, but it's for a group of television stations and a certain number of markets with the weighted transaction the structure that may or may not be applicable to smaller transactions or for that matter of larger private market transactions our divestiture process.
Again with more than three dozen parties asking for an NDA.
Some of those were new entrants.
There were a few of the name the larger names you would know, but I'd say most of it was most of the actually I can tell you almost all of the party who signed an NDA. We are private buyers are non public owned buyers that we add a private transaction again wells Fargo conducting an auction.
<unk> over a couple of months with the interested parties and we crossed the finish line with Byron Allen.
We have the data points here from the quantity of transaction, but I don't know what that would mean, if I just wanted to buy a television station in DMA number 100 of $1 50, or 200 and also remember that.
For us.
The competition drives a lot of that with those who does the patient's performance and that can vary based on all kinds of factors.
Our legacy number one is it a market of super competitive.
The high cost place to do business into the low cost place to do business. So it's hard for me to answer our multiples are we've shared everything that we possibly can share publicly.
I hope you can get some feel from there, but I don't have a better sense of what's happening the private market and conversations and which were not involved.
Got it and as far as the economy.
Yes, as far as the sports many of US Bob Smith, it's going to be the big story for some time, especially.
In our markets, we're well positioned I think right now currently in the countries roughly I believe 25 states legalize gambling, we're seeing in those states we're seeing.
Quite a bit of money.
First quarter was quite big second quarter is significant even though it's part of the light of sports calendar to a certain extent from a bedding standpoint of the year when football kicks up again in third and fourth quarter I.
I think Lucie.
The bigger spending at that time also next up it appears the three of that states that are going to legalize it the South Dakota, Louisiana, North Carolina, and we are really as you know those markets well positioned and.
As soon as that happens.
Net into the market pretty quickly with pretty heavy.
Rating points schedules.
Thanks.
Thank you.
Our next question is from Jim Goss from Barrington Research.
Go ahead of that.
Thanks, I've got a couple.
Just one further thing on the political situation that does sound like you are in a very great position.
I'm curious and.
In terms of the increased coverage within the state with the additional stations day.
<unk> is a big positive.
Is there.
Any difference in terms of the greater competition in the larger market share of acquiring for both viewers and and including the political dollars that the influences any of this as well.
Yes, I'll take that one it's Pat.
So.
If you think about some of the additions that will be coming online there is Atlanta.
Phoenix.
There's going to be a lot of money out there.
Because of their larger markets of the dollars are going to be bigger.
In general there is more competition of larger markets Theres more television stations.
But I think.
What we're concerned about is really or dollars coming in and those dollars will be significant.
I would just add to it in our own footprint the current footprint Charlotte.
In 2021.
I had an enormous amount of money in a very competitive market.
In fact, the record setting amount of money into.
Into 2020.
Okay.
And the other thing and broadcast usage evolution I'm wondering if you see day.
Do you sense of the <unk>.
Of the incremental viewing.
Again, the developed a year ago as the pandemic.
Made its presence felt.
At your properties, if you held the.
Hold on to.
A fair bit of that viewing or has it sort of gone back to Marvin normalized state.
It's dropped a little.
But I think I think the.
The unfortunate benefit of the pandemic was that local television was.
Rediscovered or discover the for the first time buy.
Lot of people and.
Because of the.
The service we provide locally.
The numbers did pop they have returned to <unk>.
Elevated, but more normal levels and the.
The reality is that's true both on the.
Both in digital and linear.
Okay last thing.
For the Retrans uplift you noted the other day with the Meredith acquisition.
Is that the same for programming fees and robust situations advantageous for grades the ability to negotiate and its positioning relative to Meredith.
Both are positive.
So Jim the the <unk>.
Synergy number we talked about.
Meredith on retransmission is a net number.
So we've already factored in the network affiliation fees.
And keep in mind that with any of our acquisitions when we acquire the station or a station group, we inherit the existing network affiliation agreements with those of our assumed until they come up for renewal in the ordinary course.
Okay alright. Thank you thanks for clarifying that.
Thank you. The next one is from John Kornreich.
From JK media.
The Lions, Okay. Good morning of couple of questions.
I believe Jim you said that.
As the projection for this year grocery trends should be of 1 billion of more which is up 15% to 17% Retrans expense of 12 to 13.
I understand the top line.
But if you haven't had a network of affiliated.
The contract come up in three years, why should retrans expense fee of 12% to 13% or the.
Escalators that high.
Each year of of network agreement year year, Retrans is going to go up.
By double digits.
It varies a little bit year to year, but it goes up and it's a rising rate market on both sides of the equation. So as growth continues to go up.
Reverse has been going up as well.
Jim.
Kevin Let me add.
John Sorry, let me, let me add.
Two of the networks also have a percentage fee basis net percentage of Ratchets up.
Typically every year, so as our growth growth for affiliates of that network are of those networks, they're taking not just a an outside share of our increased.
The gross retrans, they're taking an increased share over the amount that they were taking of the tenders that we're taking previously okay. Now I understand one of the question Kevin.
What's your feeling about why your subs decline is like three or four points better than the industry.
Yes, yesterday Fox I think of it.
With Fox.
They still trending down more than 5%.
Ah.
Again, this is our our speculation and judgment.
Part of that is that the our virtual <unk>.
Growth was very significant.
Throughout last year.
So we saw that with the year end numbers, we talked about some of that is because Hulu television and Youtube TV.
Only came to some of the gray market in the last two years, they havent quite reach perhaps the saturation.
That they've reached in some of their original markets.
Broadband seems to have been more deployed more and we see this right in the.
In the broadband <unk>.
The numbers from the Mvpds broadband is expanding and we're seeing in our markets of smaller markets of rural markets.
Uptake, which makes Hulu and Youtube TV, even if they were and others.
Even if they were in the market for the last couple of years, they were not actual competitors to cable and satellite until people subscribed for broadband.
And then finally, we.
We have some overexposure to satellite given the portfolio of stations.
Given the markets in which they operate we were hit by some.
And continuing to be hit by some significant losses in the satellite space. We took some of those hits earlier.
And so while theres still some real challenges with the satellite subscribers.
Some of that pain, we kind of took before other people debt.
So it may be again this the speculation that maybe that some of these vacates are from satellite are more pronounced in the larger markets.
Then they offer on the process because we already saw some of those hits earlier.
Okay, all sounds reasonable good explanation thanks for.
For your help.
Sure. Thank you Sir.
Thank you.
The next one is from Alan Gould from loop capital.
Thank you I've got two questions first on core advertising you don't have many either of the big Big market. So are you seeing much variability across the country in terms of advertising coming back in your various markets.
Not really.
Okay pretty pretty consistent.
Okay and the second one directed Mark Jim what are your thoughts about fixed versus variable rate on your debt going forward I mean, I know on the Meredith deal. It's roughly half term loan half bridge loans do you think that bridge for you don't like to lock in fixed rates or given all of the free cash flow that you should generate with the political year.
You want to keep it more short term variable.
Well as we talked a little bit on our Monday call I mean, the commitment is there.
As we get closer to the closing date later this year, we will be going to market and the mix of the final structure.
Is going to be dependent on market conditions.
Later this year.
I'll make some make some decisions at that point I think if you look at it historically, we've had a pretty balanced approach between fixed and floating.
And we probably.
Won't stray too far away from a reasonably balanced approach.
As we move forward now again.
We've also been from time to time opportunistic in the markets depending on.
What what market or markets are willing to offer more favorable terms. So we're certainly going to be.
Evaluating any any opportunistic.
Opportunities, we get too as we get closer to what marketing day.
Jim if I could just follow up what radar you're paying roughly on your floating rate debt right now.
LIBOR of $2 50 on the.
The highest price tranche and the older tranche is LIBOR two of the quarter.
Thank you.
Thank you. The next one is from Michal Krupinski from Noble capital markets. Please go ahead.
And thanks for taking the questions.
In the last call I asked the question about the new broadcast standard and some broadcasters have been talking about this might be the new revenue growth opportunity for the industry and I. Appreciate it Kevin net pack that you outlined for US your station upgrades the schedule there how should we think about the revenue opportunity for the new broadcast Stan.
And how do you plan to use the <unk>.
New opportunity what are you seeing in terms of the opportunity in terms of revenues from different types of services and things that you might.
We have explored here.
So the.
Thanks for the question, it's still it's Pat by the way, it's still a little difficult to size the opportunity.
And you've heard this before but there are there is the.
<unk> three point of the standard has the number of features that will allow stations to do more in terms of targeted advertising.
Become essentially of data pipe into cars and.
And so while we can't size. It today, we feel strongly that it is.
A good investment in the industry and the company's future and but the.
But candidly today I can't throw numbers at year end.
In terms of that upgrade cycle.
How.
Can you just give us a sense of how expensive. It is first of all and secondly, how many stations do you plan to have rolled out let's say by the end of the year end of next year.
Yes, so it varies by market and the technical configuration in.
In each at each station.
So.
Again, I mean it.
By the end of this year with the current Gray portfolio I think we were looking at just the three.
Three markets.
As Kevin mentioned earlier in the week.
Once the acquisition of mirrors closes the debt rate will accelerate a little.
So there'll be there'll be significantly more launches in 2022% in 2021.
Okay. Thank you I appreciate it.
Thank you Matteo a day.
Again, if you would like to ask the question simply press Star then the number one on your telephone keypad.
Alright, well operator, thank you so much and I want to thank everybody here that has joined US for this call. This morning. We appreciate your time, we appreciate your support.
And we will talk next quarter, if not before.
This concludes today's conference call. Thank you for participating you may now disconnect.
Have a great day.
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