Q1 2021 Gray Television Inc Earnings Call
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Mr. How long you may begin your call.
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 and person for the first time and 14 months of Gray is fully vaccinated.
Non masks executive officers, our president and co CEO, Pat and the flattening, our chief legal and development Officer, Kevin late Tag, Our Chief Financial Officer, Jim why on and our Chief Operating Officer, Bob Smith will begin 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 operating results, our pending acquisitions and the impact of the novel Coronavirus and of disease and as COVID-19.
And on our future operating results those statements are subject to a number of risks and uncertainties actual results and the future could differ from those expressed or implied and any forward looking statements. As a result of the various important factors that have been set forth and 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 <unk>.
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.
<unk> cash cash flow less corporate expenses operating cash flow free cash flow adjusted EBITDA and certain leverage ratios the smell.
<unk> are not meant to replace GAAP measurements, but are provided as supplements to assist the public and the analysis and valuation of our company included in our earnings release as well as on our website are reconciliations of non-GAAP financial measures. The GAAP measures reported and 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 are in.
The first quarter earnings report was completely overshadowed by our announcement Bob minutes later of our transformational acquisition of Meredith Corporation, our second billion from multibillion dollar deal of 2021.
And both of the Mondays Big announcements followed our other big recent news of our announcements from just last Thursday, a week ago today a day.
Sales of the Quincy divestiture stations to our friend bar and Alan and his al on media.
We have been exceptionally busy lately to say beliefs.
Today's call will focus on our earnings release the cause as you know we can only discuss the Meredith the 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 and 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.
And 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 the 2020 and advertiser demand has returned.
And amid the and the 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 3.88 times on a trailing eight quarter basis after netting our cash on hand and <unk>.
Giving effect to all transaction related expenses.
We are very proud of these core results and we 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 with what our reflects our continued optimism and the quickly recovering economy that drives increased consumer spending and increased advertising and nearly every one of our markets and our production companies on <unk>.
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 and that our prospects are bright and that a return of capital to shareholders through a cash dividend together with the occasional share buybacks will not deter us from our long.
Term goals to continue to grow gray television into the finest media company and the country.
Our recent acquisitions will have no impact on the payment of our dividend or its subsequent growth and size.
And we will hear next the few remarks from 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 to questions. So I'll turn it over to Pat.
Thanks, Hilton and insult and just mentioned our combined local and national broadcast revenue, excluding political which we call total core revenue was up 4% from the first quarter of 2021 well.
Well, we didn't quite rebound 2002.
2019 levels, we were definitely and that ZIP code, we saw strength and financial home improvement health.
Legal and the supermarket categories, all up mid single digits to mid teens over Q1 'twenty.
Our pacings, which youre not always of great predictor for future revenue was still quite strong.
There are a lot of positive numbers and 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 automd.
Motive category is pacing, 48% of ahead of last year's horrendous second quarter.
Nevertheless continues to lag improvement and other categories due to the well documented chip shortage issue hopefully the supply chain stabilizes over the summer and that category will rebound and the back half of 2021.
The production companies had a challenging first quarter due to loss of the number of basketball games on the ACC schedule due to COVID-19 related issues and if you'll 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.
From power nation are on automotive enthusiast production company and Nashville in the OTT space on the digital side of the business audience was down a bit from the record numbers and first quarter of 'twenty, but we still set company records for video plays and whether App users and our OTT audience for news products as Shirley showing nice.
And that includes audience from our station apps on the Amazon fire Roku and Apple TV.
Digital revenues growing nicely and as a reminder of grades and equity partner and premium on and our rollout is now complete across all of our markets revenues from premium and are tracking well ahead of projections for 2021, and these OTT and connected television AD sales would be of solid contributor this year of our digital products and growth I'll now turn the call to Kevin.
Hi, good morning again.
The Big news of the first quarter was our agreement to acquire Quincy media and it's very strong stations and employees.
And announcement from February and now it 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 borrow on Alan's Allan media for $380 million and 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.
Bleeding cycle on and Quincy as close of the FCC.
Last Thursday.
And I'm sorry in terms of process are.
Alright.
And that paragraph.
[laughter], sorry, and the Meredith acquisition should follow the similar pattern of quick filings no special and novel issues from the regulators and prompt regulatory approvals on.
On Monday, we commenced the process to divest our television stations and 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.
And as Meredith and Gray explained and our Monday of 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 N V. P D.
That agreement was retroactive to January one 2021.
Looking forward, we have two agreements that expired this summer and 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 the 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.
For 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 and Meredith stations.
Of at least $1 billion.
And 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 2020 one.
And again this annual guidance does not include the impact of the Quincy or Meredith acquisition.
On total subscribers, we continue to see large increases and large decreases among our various cable satellite and OTT distributors and.
All told however, we are pleased that the total paid big four subscribers across all platforms saw only modest declines.
Between the first quarter of 2020, and the first quarter of 2021, our total paid big four 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 and 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's had the actual release since Monday.
Hilton's early remarks on Q1 results covered the key highlights of the quarter. So I'll 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 third and forecast for the quarter ending June 30 of 'twenty, one compared to the quarter ended June 30 of 2020.
We're expecting total core revenue will increase by $38 and 40% to approximately $272 million of $277 million.
Total core revenue will be very close to a 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 will increase 18% to 20% 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 of.
To the networks production company expenses will range between nine 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'll 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 great fit for gray, both geographically and culturally it's been of great week for our employees as they responded enthusiastically to the merits of its acquisition. In addition, all of our senior leadership has received positive feedback from Meredith employees, who they are non professionally for some time.
We're all of its also excited to exchange and share best practices and 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 and gray on Monday when the announcement came out was Mike Jones, our VP of political sales who's located in Washington, DC, We began planning for the transition as a month.
And I can tell you that all of US are really eager to close both Quincy and Meredith just as fast as possible.
Since this call began a few minutes ago, the radio television and 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 Archie NDA select the W view the.
And New Orleans for nine separate awards were also honored with three of awards for overall excellence the highest honor bestowed to again, WWE and New Orleans W. K Y T and Lexington, Kentucky, and kw, QC and Davenport, Iowa six of our stations one regional morals for best newscasts starting again with W view, the UE and New Orleans.
Which is joined on this category by W. ASB, and Baton Rouge, Louisiana, Wm television and Madison, Wisconsin, WK wide and Lexington, Kentucky, W. TV, <unk>, and Toledo, Ohio, and Ww BT and Richmond, Virginia. We also had four winners from the investigator reporting category, starting again with WWE and New Orleans as well as <unk>.
On a little based Hawaii news now W. RTW, and Augusta, Georgia, and WB, a Y and Green Bay, Wisconsin.
Finally, I want to highlight the BK wide and Lexington, Kentucky, and Ky television and 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 and.
Investigators efforts by local media companies and every market truly where gray proud of this week I will now turn the call back the Hilton.
Well, thank you very much Bob and we're exceptionally pleased with the news out of the radio television and Digital News Association and very proud of the professionalism of all of our folks and the fields and.
And right now our rooms, operator, we will open the line for questions from anyone that may have them.
And.
Thank you Sir at this time and we'd like to take any questions you might have for us today.
I would like 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 for the detailer on gross and net Retrans for this year could you help us think about the cadence.
On the 20% that's renewing next year.
Quarters.
Kyle This is Kevin we have about 24% of the salaries renewing.
This summer and through those the two big contracts I mentioned on the call and we actually have no retrans.
Up for renewal next year.
Pushed through everything.
Starting with the last year and.
The.
So the.
And 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 this.
This summer and.
And the end of 2022.
Great and then.
The recollection is that you just got done with all of your networks as well.
And when those all queue back up.
Yeah actually the network deals were done a few years ago.
We haven't done and network deal and.
Probably three years four years, depending on the network.
We have all of our CBS up at the end of this year all of the Fox at the end of 2022 of ABC and NBC up of the end of 2023.
Great and then last one.
Help us think about the puts and takes from the 2020 political cycle versus.
Sorry of the 22 political cycle versus 2020.
And the presidential and maybe the Georgia windfall. Thanks.
So a presidential is from.
25% to 30% of political last year, the Georgia number was I mean.
And I say fairly significant.
And you can look at what we reported we reported right around election day and then.
And we and everyone.
$430 million for the calendar year that Delta was entirely the Georgia runoff theres about $4 million to $6 million of.
Political revenue that hit and the first quarter of this year. Those first few days of January.
So I think we can assume there won't be a double run off of the <unk>.
And it in Georgia and 2022, the rest of what you saw were very competitive races up and down the line from U S Senate the governor.
Our house seats, the levels, we hadn't seen before and even.
Other races and balance.
And so I think we're all feeling very.
Good about political in 2022, there as you know the house and Senate are razor close.
People have not dropped their political divisions and started singing income by us. So we expect the politics will continue to be.
A.
Very important.
Area for the company and 2022 and beyond.
The.
And one of the control of the house and Senate Housewares and it gets very close you see.
Off of political activism fundraising and therefore spending and the Georgia exemplifies that but I think you also saw that throughout the year.
Spending on the house and Senate races, so that when we fast forward to 2022, its really almost Georgia all over again the house and Senate are are both kind of up for grabs and 2022. So we are very optimistic about our current platform and our current portfolio.
And the Quincy stations, which had extremely good political last year, and then of course merit of stations rounding out for Us Nevada and.
Arizona.
Giving us a lot more exposure to Missouri.
It's really <unk>.
Unmatched unparalleled portfolio of you.
In terms of the hot political races, and 'twenty 'twenty, two and beyond with the again, the sole exception for us and not being in the state of Pennsylvania.
Kyle This is sold and let me just.
Reinforce what 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 merit of second and 2021, and so our new leverage numbers, which will be right at I mean, where we were when we closed.
Our transformational deal with Ray Com.
And 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 or three or four seats.
It's a 50 50 Senate.
And we're going to see political dollars from Alaska.
The Florida from.
Arizona, and Nevada, Georgia alone will have both a very on certain contentious and expenses gubernatorial race and senatorial race and our new portfolio.
Gives us ubiquitous coverage for those whole states everywhere and so I really do think.
To echo.
I guess it was Bob's comments, the happiest person upon the announcement of.
Of this deal was the person responsible for selling all of our political ads and so I think that gives you a true professionals view about what 2022 is going to be doing from gray and I do not believe while on <unk>.
All of our our broadcasting peers I do not believe that any company has a better political footprint and gray television.
Thank you.
Yes.
Thank you our next question and that's from the line of Aaron Watts from Deutsche Bank.
Please go ahead.
Hi, everyone. Thanks for having the on.
Couple of questions first of its encouraging to hear core advertising is turning the corner.
Hearing your commentary correctly is it fair to say that core will essentially returned to pre pandemic levels give or take if we look at 2021 on the whole and.
And the 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.
Yeah.
Tough to make commentary on the full year at this point, but we are optimistic about 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 and I don't think thats really it.
The changing much correct, yes, I would add debt.
For some time now.
And its quarter by quarter for the most part and it does.
Tend to be placed.
Later than it historically had been but right dollars Pat said, we're optimistic second quarter look solid.
But.
The trend will continue and 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.
Okay, Let me add and how things.
I mean, I think that we and 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 document and publicity about supply chain problem.
<unk> literally everything and 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 and and so there is a huge.
Resistance I mean youre.
And 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.
Been 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 and that's <unk>.
Just a personal opinion.
And that's 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.
Yeah, I think it's huge.
And just think about the ship debt got turned horizontally to the Suez Canal now I'll tell you we could send four of five of the kids from Chick fillet over there and they would have that fixed and a minute because.
But.
It slowed down everything worldwide for a long time.
And so I mean it.
The the shipping and the international dependence that we have for all products.
Is really quite remarkable and I think it is a.
The weakness and the strength that has just recently been exposed to the average the average consumer.
Okay. Thanks very much on.
Thank you. Our next question is from Steven Cahall from Wells Fargo.
Go ahead.
Thanks.
Maybe first just curious what your comments are on the private market you've been.
A competitor for stations, you've been a seller, probably and competitive processes and I think sometimes investors wonder how much private capital there and there is out there looking and 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 and in the private.
Market price and maybe how that differs from multiples and the public marketplace and then it seems 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 games and areas, where it's legal so just wondering how big you think that category could get to over the long term. Thanks.
Hi, Steve and it's Kevin.
I don't know how we can give.
And overall view and kind of what private market multiples would be all we see is we have just one data point here of the data point is.
Quincy transaction.
And that was our acquisition of Quincy went through a and auction conducted by the Wells Fargo investment and investment Bank team.
No. It was the competitive process. We know there are others. There obviously were happy too.
Crossed the finish line before others with terms that were acceptable to Quincy and.
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 way. The transaction was structured debt may or may not be applicable to smaller transactions or for that matter of larger private market transactions, our divestiture process began with more than $3 and parties asking for an NDA.
Some of those were new entrants.
There were a few of the the name of 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 were private buyers are nonpublic wholly owned and buyers.
And we add a private transaction again wells Fargo conduction and auction process over a couple of months with the interested parties and we are.
Cross the finish line with fiber and Allen.
So we have the data points here from the Quincy transaction, but I don't know what that would mean, if I just wanted to buy of television station and DMA number.
100 of $1 50, or 200 and also remember that there is.
The competition drives a lot of that but so too does the patient's performance and that can vary based on all kinds of factors is that of.
The legacy number one is it a market of super competitive.
Is it of high cost place to do business is at a low cost place to do business. So it's a little hard for me to answer our multiples are we've shared everything that we possibly can share publicly.
And 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 betting of as Bob Smith, it's going to be the big story for some time and especially.
And our markets, we're well positioned I think right now currently and the countries roughly I believe 25 states legalize gambling, we're seeing and in those states we're seeing.
Quite a bit of money.
First quarter was quite big.
Second quarter is significant even though it's probably of the lightest sports calendar to a certain except from of bedding standpoint of the year when football kicks up again, and third and fourth quarter.
And I believe and see.
The bigger spending and at that time also next up.
Here's the three next stage of that.
And we're going to legalize it the South Dakota, Louisiana, and North Carolina, and we are really as you know and those markets well positioned and.
As soon as that happens and they get into the market pretty quickly and with pretty heavy.
The rating points schedules.
Thanks.
Thank you. Our next question is from Jim Goss from Barrington Research.
Go ahead of us.
Thanks, I've got a couple.
One on further thing on the political situation and it does sound like you're in a very great position I am curious.
And in terms of the increased coverage within the state with the additional station and say I imagine is a big positive.
Is there.
And the difference in terms of the greater competition and the larger market share of acquiring for both viewers and and the AD dollars, including the political dollars that the influences any of this as well.
Yes, I'll take that one and it's Pat.
So you know if.
If you think about some of the additions of that'll be coming online there is Atlanta and there is.
Phoenix.
There's going to be a lot of money out there and.
Because of their larger markets of the dollars are going to be bigger.
In general there is more competition and larger markets Theres more television stations.
But I think what we're concerned about it really of dollars coming in and those dollars will be significant.
And I would just add too and our own footprint corporate per Charlotte.
And 2020.
Had an enormous amount of money and a very competitive market.
And in fact of record setting amount of money.
And 2020.
Okay.
And the other thing and broadcasts usage evolution I'm wondering if you see a day.
Sense of the.
The share of the incremental viewing us.
And to develop a year ago as the pandemic.
The made his presence felt.
At your properties have you have you held of.
Hold on to.
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.
A lot of people and <unk>.
Because of the.
And the service we provide locally.
The numbers did pop they have returned to the.
Elevated, but more normal levels and the.
The reality is that's true both on both.
Both on digitally and the linear.
Okay and last thing the Retrans uplift you and noted the other day with the Meredith acquisition.
Is that the same for program and fees and were on.
And we're both situations advantageous for grades the ability to negotiate and its positioning relative to Meredith. So both are positive.
So Jim the the synergy number we talked about with 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.
The inherent in the existing network affiliation agreements and those were assumed until they come up for renewal and the ordinary course.
Okay Alright. Thank you. Thank you for clarifying that.
Thank you. The next one is from John Kornreich.
From JK media.
The lines, Okay. Good morning of couple of questions.
I believe Jim you said that.
And I said projection for this year grocery trends should be of 1 billion of more which is up 15% to 17% of retrans expense of 12 to 13.
And I understand the top line.
But if you haven't had a network of affiliates.
The contract come up and three years, why should retrans expense be of 12% to 13% or the.
Escalators that high.
Yeah.
Each year of the network agreement year. Your Retrans is going to go up.
By double digits and.
It varies a little bit year to year, but it it goes up and it's a rising rate market on both sides of the equation. So as growth continues to go up.
A reverse has been going up as well and.
Jim.
Also the Kevin let me add.
John Sorry, let me, let me add.
Two of the networks also have a percentage fee basis, right and that percentage of Ratchets up.
Typically every year so as our growth grows for affiliates of that network are of those networks, they're taking not just a and outside share of our increased.
The gross Retrans theyre, taking and increased share over the amount that they were taken out of his tenders that we're taking previously okay. Now I understand one of the question Kevin.
On.
What's your feeling about why your subs decline is like three or four points better than the industry.
Yes yesterday Fox.
And with Fox.
There is still trending down more than 5%.
Ah.
Again, this is our our speculation and judgment.
Part of that is that the our virtual <unk> sub growth was very significant.
Throughout last year.
And we saw that with the year end numbers, we talked about some of that is because Hulu television and Youtube TV.
And only came to some of the gray market and the last two years other right. They haven't quite reached perhaps the saturation.
And that they've reached and some of their original markets.
Broadband seems to have been more deployed more and we see this right and the.
And the broadband sub numbers from the Mvpds broadband is expanding and we're seeing and our markets and smaller markets of rural markets, a lot more uptake, which makes Hulu and Youtube TV, even if they were and 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 will subscribe to broadband.
And then finally.
We have some overexposure to satellite given the portfolio of stations, we have given the markets and which they operate and we were hit by some.
And continuing to be hit by some significant losses and the satellite space. We took some of those hits earlier and.
And so while theres still some real challenges with the satellite subscribers.
Some of that pain, we kind of took before other people did.
And so it may be again this is speculation and maybe that and some of these vacates are from satellite are more pronounced and the larger markets.
And then they offer on a cautious because we already saw some of those hits earlier.
Okay, well, it sounds reasonable and good explanation and thanks for.
Can you 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 the big Big market. So are you seeing much variability across the country in terms of advertising coming back and your various markets.
Not really.
Okay pretty pretty consistent.
Okay and the second one directed more 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 turmoil and 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.
And you wanted 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 and we will.
And make some maintenance 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.
And we probably.
It won't stray too far away from of reasonably balanced approach.
As we move forward now again.
We've also been from time to time opportunistic and 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 on this from Michal Krupinski from Noble capital markets. Please go ahead.
And thanks for taking the questions.
And 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 appreciated cabinet net pack that you outlined for US your station upgrades and the schedule there.
Should we think about the revenue opportunity for the new broadcast standard and how do you plan to use this.
The new opportunity and what are you seeing in terms of the opportunity in terms of revenues from different types of services and things that you might have.
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.
And so while we can't size. It today, we feel strongly that it's the.
A good investment and the industry and the company's future and but the.
But candidly today I can't throw numbers at you and.
In terms of that upgrade cycle.
And 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.
And 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 just the three.
And three markets.
And as Kevin mentioned earlier and 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 and 2021.
Okay. Thank you I appreciate it.
Thank you Mark.
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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