Q3 2021 Sinclair Broadcast Group Inc Earnings Call
Good morning, ladies and gentlemen, and thank you for your patience be conference will begin shortly once again. Thank you for your patience the conference will begin shortly.
[music].
Good morning, ladies and gentlemen, and welcome to the Sinclair broadcast group third quarter of 2021 earnings conference call at.
At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host Lucy Rudest, Howser, Executive Vice President and Chief Financial Officer.
The floor is yours.
Thank you operate are participating on the call with me today, or Chris Rapley, President and C. D. L Broadway sports President broadcast and cheap offer a cheap advertising revenue officer, <unk> zinc or a vice president of Investor Relations will we begin bill J Mcintyre will make are forward looking statements disclaimer.
Certain matters discussed on this call back include forward looking statements regarding among other things future operating results such statements are subject to a number of risks and uncertainties actually results in the future could differ from those described in the forward looking statements as a result of various important factors such factors have been set forth in the company's most recent reports as <unk>.
Filed with the S E C and included in our third quarter earnings release company undertake no obligation to update these forward looking statements. The company isn't this website is a key source of company information, which can be accessed at www Dot S. C. G. I dot net in accordance with regulation F. Either call is being made available to the public.
A webcast replay will be available on our website and will remain available until your next quarterly earnings really included on the call will be a discussion of non-GAAP financial measures, specifically adjusted EBITDA adjusted free cash flow and leverage company considered adjusted EBITDA to be an indicator of the operating performance of his assets.
Company also believes that adjusted EBITDA is frequently used by industry analysts and investors and lenders as a measure of valuation.
These measures are not formulated in accordance with gap and are not meant to replace got measurements and may differ from other companies use. This for formulations accompany does not provide bread reconciliations on a forward looking basis.
Are there discussions and reconciliation that accompanies non-GAAP financial measures to comparable GAAP financial measures can be found on his website www dot S. B G. I Dot net first briefly will now take you through our operating highlights.
Good morning, and thank you for joining us today before I go over the quarter's results and other developments since our last earnings call I want to address recent ransomware attack on our company.
On Sunday October 17th accompany identified that certain servers, and workstations and its environment, where encrypted with ransomware and disruption of certain office and operational networks. As a result of the encryption and indications that data was taken from our network.
[noise], probably upon detection of the security event Senior management was informed and we began to implement incident response measures to contain the incident.
Conducted an investigation and began to plan for restoration of operations. We go Council and Sarah Cyber security forensic firm and other incident response professionals were engaged in law enforcement and other governmental agencies were notified the investigation into the incident remains I'm going.
Needless to say, we are ensuring that operations are back to where they need to be as quickly as possible. We are working with internal resources and outside forensic accountants determined the financial impact of the Internet.
While we maintain insurance to cover losses related to cyber security risks and business interruption, such policies may not be sufficient to cover the losses.
I want to thank our employees for their quick response and create a work around as we work through the recovery process. Their agility. During this time is a testament to the ethos of our company and we're extremely proud of our team dedication to restoring our systems.
Now I'll turn to the quarter's results the combined companies third quarter, adjusted EBITDA and adjusted free cash flow or at the high end of our guidance range, while third quarter media revenues or within our range when adjusting all for the one time change and the distribution rebate of dollars tied to a shift in game counts in the calendar year, but.
The leaks.
Looking at recent trends we.
We are seeing a majority of add February he's recovering quickly however, the auto sector and other associated others associated with the supply chain continue to lag impacted by lower inventories.
While it's difficult to ascertain when the inventory shortages will be alleviated, we're seeing continued strength in our largest category services, coupled with significant growth from sports betting companies that have helped mitigate the weakness in auto.
While we're also starting to see early AD spending for the 2022 midterm political cycle early indications from third party research reports are for a robust 2022 political spending cycle when coupled with even a slow improvement from auto and continued growth in sports betting as more states legalized.
We are optimistic heading into 2022.
Speaking of the Arts and business, we had a busy last couple of weeks as far as sports rights renewals on the MLB Friday, we renewed our exclusive local rights agreement with a Detroit Tigers Tigres agreement includes direct to consumer and other digital rights similar to the other three MLB teams, we have renewed over the past 12 months or so.
In regards to the N H L. We renewed our contract with the Detroit Red Wings in regards to the M. B, a we renewed our agreement with the Cleveland Cavaliers.
I would like to address the recent chatter about our direct to consumer initiative that we continue to work on for the first half of next year lunch discussions continue with the leagues and on the structure and other specifics of the direct consumer product. This is an important initiative for all parties and all our partners, including the teams.
<unk> yeah.
The evolution of viewer your habits makes it imperative that our current product is extended so that it is attractive to all viewers in it teams territory, who can subscribe to it whether traditionally through M. B P DS.
Or through direct to consumer.
What's important to note is that we have exclusive local rights for our teams and those rights cannot be infringed upon by any other party to launch a direct to consumer product without significant ramifications.
So we continue to negotiate in good faith with all interested parties to make direct to consumer of reality. In addition, we continue to engage in discussions with stakeholders around finding the direct to consumer product.
Now I'd like to take a minute talk and for a minute about a T. S. C. Three vanilla or what has what is also referred to as next Gen broadcast for those who are not familiar with it. This is a groundbreaking technology that is expected to transform the broadcast industry significantly, allowing it to move from just to purveyor of video and audio too.
Provider of data for a multitude of industries.
I've talked in the past about his benefits.
The ability to transmit four to five times the video content through our existing spectrum, a higher quality immerses video and audio experience.
Targeted advertising capabilities and a one to many platform that is more reliable efficient secure and cheaper for customers and many of the technologies. There currently utilizing.
The next Gen broadcast platform will enable significant enhancements for communities around more robust emergency learning capabilities not just the rudimentary warnings you you see now for weather and such and will enable enhanced education opportunities for areas of the country, where the internet is either unaffordable unavailable or unreliable.
And then there's the technologies attributes around its mobility and portability precision G. P S positioning and ultra low latency, which make it ideal for connected automotive applications like napping itself driving can you, please which rely on a great deal of precise and timely data delivery cellular and Wifi have difficulty economic delivering.
There are a myriad of other data vacation uses for the technology as well, including mass software updates meter readings remote monitoring and maintenance of buildings and countless other uses.
I want to dig a little bit deeper to give you better insight into our current priorities or next gen broadcast in the applications me any industry you're working on one.
One important priority is driving the enablement an adoption of next gen broadcast by demonstrating the viability date of delivery is a service to potential customers.
Currently there is testing going on in numerous markets.
And areas to confirm.
Expectations around quality and versatility of next Gen broadcast services.
Initiatives in this area include encouraging trials of data delivery to automobiles testing to precision G. P. S capabilities through the use of drones.
Testing of broadcast a next gen broadcast reception with phones developed by our partner Syndicate labs infrastructure improvements developed by your cast that era joint venture with SK Telecom and distance learning initiatives utilizing the new technology <unk>.
Meaningful progress in testing and all of these areas is is very encouraging and reinforces our belief that next year in broadcasting is a game changing technology that is the future of the broadcast spectrum and the broadcast industry.
<unk>.
So the question I'm sure everyone wants to ask.
Is how far is it out before we begin to monetize the opportunity.
The question I'm sorry, the answer is that while the timeline is not set just yet the opportunities are starting to come together.
Timeline is approaching for broadcasters to begin to utilize this technology and the mass market as I stated earlier, the enablement and adoption of the technology had scale are key factors in getting monetization the.
The next Gen Broadcasting all is currently expected to be available in approximately half of the T V viewing households by the end of 2021 and at least 75%.
By the end of 2022.
They're already 70, Nexgen T D models capable of receiving a new signal, including all assuming Sony's Tvs with an expected over 2 million Nexgen T capable Tvs to be sold this year. According to C. T a.
Meanwhile, testing continues on phones and business to business use cases expected to follow soon thereafter.
Now I've previously talked about the value of this additional usage to our spectrum.
1.7 billion using the most recent auction pricing.
Other ways, we can monetize the spectrum are by utilizing it for our business use cases or fulfilling it up to third parties looking transmit data to ask users either way. It's clear that next gen broadcast will be a game changing technology for the broadcasting industry. Unfortunately, Claire and we're very excited that this technology is that much clothes.
Being ready for monetization.
I would also like to address some of the new programming that we are developing.
At the end of September we launched an evening edition of our successful news program a national desk.
We have been very happy with the performance of the morning edition of the National desk, which is added engaging news and engaging news program with a distinctive style and tone on stations were previously running syndicated programming that garner fairly low ratings and that date apart.
Since the launch of the morning edition of the National desk, we have seen his ratings and impressions trend meaningfully.
We have similar expectations for the evening edition of the National desk, which will feature some new content features developed for the show.
[noise] Miss includes the fact, Czech team in which a team of researchers are working on air and onset with the T. N D. Anchor team fact checking an issue of the day. These segments will delve into the details of an issue a bill or other hot button political our government topics and explain in real time.
It affects the American people.
Another new feature being added to the national desk will be a rapid response team of dedicated staff of digital writers exclusively covering breaking news.
The rapid response teams posts will live on the T. N D sofa channels insight branded other national desk and syndicated across all Sinclair television station sites.
The ability share content across our business and platforms as a key synergy that benefits our company.
For example, we have a new show on your development that will that is expected to launch at the beginning of next year titled The rally.
The show is plan to be a new fast paced 90 minutes sports program, covering all sports topics fused with social Influencers interactivity and the voice of the fan <unk>.
Show utilized Sinclair sports talent from all of our platforms across the country, providing national coverage with a local authority and encouraging viewers to interact through contest giveaways and commentary.
The new program will be aired across her arson stadium and stir platforms engaging all cohorts Ah sports viewers.
And I would be remiss, if I did not call out the growth of our tennis channel International platform, which is already expanded into the U K, India and Greece. This year with more countries coming soon.
The platform was recently nominated for platform in the year for best original content and best Digital first production. So we're very proud of our achievements and the tennis arena, where our content and reach really sets us apart.
Finally, we received quite a few calls from investors regarding the sum of the parts analysis, we did in our last or install I wanted to make sure people are clear on the pieces that make up that valuation I think the valleys investment as well understood orange and options to purchase up to 12.8 million chairs, which at today's price equates to approximately 600.
A million dollars the.
The M. P V of the tax shield as a result of the purchase the our sense is also fairly straightforward, which we estimate to be worth 1.2 billion over the remaining 13 years.
The other two big pieces are the three that opportunity I discussed earlier on the call, which we believe to have a value of at least 1.7 billion based on previous spectrum options as well as an encore assets.
I'll give you a little bit more clarity on what resides in those non-core assets.
There are several areas in which we have made investments, including real estate investments in venture capital and private equity funds and direct investments in companies, mainly focused on technology content and advertising.
The more meaningful of these message include a minority stake in place like holdings and thank you lapse playful I as a marketing and multimedia rights holder some of the most prestigious collegiate teams in sports venturous across the country as well as a leader in <unk> sports.
Thank you labs is a key partner in the development of a T. S U Penn L and market, leading five G products, including transmission hardware receiver chipsets and mobile phones are investments and venture capital and private equity funds allow us to be opportunistic around business and this is operating a new technologies T. M T adjacencies.
And complimentary sectors to our core business.
In total these assets I have just outlined at a total value together that well exceeds our current market price, adding even and it conservative multiple four or 185 T V stations are tennis channel.
News on stir as well as the R. S ends and then subtracting out or that gives you a value well over double where we trade today.
So I hope I've given you some idea of how we look at the opportunities that lie ahead for Sinclair, while the broadcast industry continues to evolve. So do we as we seek ways to grow organically in our television and sports businesses through building content partnering with others with <unk> that share our vision and seeking ways to engage our viewers with that.
I'll turn it over to Lucy for some deeper commentary on the financials Lucy. Thank you Chris Good morning, everyone for the third quarter results for broadcast and corporate another adjusted EBITDA for the quarter was better than we got it driven by lower than expected media expenses with 2020 <unk>.
Dan shall election year results versus last year went down as expected due to the lower political ad revenues.
Media revenues for the corner, where within our guidance range and down 3% versus the same period a year ago.
Excluding the political add impact medium revenues increased 10% on higher core advertising and distribution revenues.
For broadcast another for advertising revenues in the third quarter increased 17% compared to the same period, a year ago and went down 2% versus 2019 pro forma.
While the automotive category continued to be weak strength in the services and sports betting categories help to offset the auto weakness.
Distribution revenues for broadcast another increased 3% versus last year and was it the high end of our guidance range.
Media expenses were 9% higher than this year's third quarter first this last year on higher network programming fees and production expenses particular around more tennis tournament.
Media expenses, how apple with favorable to our guidance on <unk> continued cost management efforts across multiple areas and timing of expense.
Turning to the local sports <unk> S discussed on previous earnings calls distribution revenues and sports right payment in the local sports shaken it can be impacted by the actual number of games delivered versus minimum game guarantees, which can result, and rebates and paid to distributors.
Received from the cheese.
As a result, our prior estimate of rebates due to our distributors was increase this quarter by $14 million as the number of local games expect it to be delivered decreased for the N H L.
The rebate results in a reduction of distribution revenues for the third quarter.
From a cash payment standpoint, there remains 201 million of distribution rebate can be paid.
Of which 15 million is expected to be paid in the fourth quarter of 2021.
And 186 million expected to be paid in the first half of 2022.
Local sports adjusted EBITDA for the quarter was within our guidance range. Despite the distributor rebate accrual taken during the quarter and fewer games provided by the cheese and expected.
Adjusted EBITDA verses third quarter of last year was down due to the net benefits of team and distributor rebates favorably impacted last year's third quarter.
Medium revenue spend the local sports segment increased 4% to 759 million. The increase was the result of higher distribution revenues, partially offset by the $14 million distributor rebate a pool taken in the corner.
AD revenues declined versus a year ago in part due to the auto category weakness as well as pent up advertiser demand last year due to the absence of life sports for several months prior to them starting up again in the third quarter of 2020.
Distribution revenues came in higher as compared to Q3 of last year as the third quarter of 2020 included 128 million of distributor rebate approvals, which was offset by dropped carriage and continued subscriber churn.
Excluding this quarter's distributor rebate of cool medium read the news would have been within our guidance range.
Local sports media expenses for the third quarter were down 10% from a year ago on lower sports rights amortization due to the number and timing of games last year.
D expenses, excluding sports rights amortization increased 17 million with the increased primarily driven by cost associated with transitional services and production expense.
Midi expenses were favorable to our guidance in part due to timing and in parts.
Controls.
I local sports adjusted EBITDA for the third quarter, excluding the 20 million of non-recurring items is 264 million down from the prior year, but within our guidance range.
For the consolidated companies in Claris total media revenues for the third quarter or 1.526 billion up slightly from the third quarter of last year.
Dusted EBITDA, which excludes 27 million of one time expenses increased to 451 million.
Compared to expectations revenues were slightly below our guidance due to the rebate pool and adjusted EBITDA was within our guidance range.
Third quarter consolidated adjusted free Cashflow, which excludes the adjustment for the non-recurring items is 207, two 7 million, which was at the high end of our guidance range.
And a quarter, we had 25 cents diluted income per share on 76 million weighted average common chairs compared to $43.53 diluted loss per share a year ago, which included an impairment charge.
It just it for the non-recurring items in the impairment income per share was 52 cents for the quarter versus income per share of $2.13 a year ago.
Now turning to the consolidated company balance sheet consolidated cash at the end of the corridor, which 1.051 billion, including 558 million at S. T G and 476 million at Diamond.
Neither credit silos for Bob are we strong during the quarter and as of the end of the quarter the balance board under the accounts receivables facility with 183 million.
Total get at the end of the third quarter was 12.530 billion the.
The net leverage ratio for consolidated Sinclair at quarter end with 6.9 times.
Saint Clair television groups first lien indebtedness ratio on a trailing eight quarters is 2.7 times on a covenant a four and a half.
And 3.9 times on the net leverage faces Barnes, which is in our target range dime.
Diamond Firstly in indebtedness ratio on a tree on four quarters with eight eight times on a covenant up six and a quarter times.
Oni Springs, if the revolver strong over 35%.
Simon's net leverage was 11.4 times.
During the quarter, we pay down 15 million of debt and paid 16 million in common stock dividends.
Now before I turned to our fourth quarter and pull your guidance.
Want to know he said our expectation exclude impact of the cyber <unk> incident, and therefore guidance does not take into effect any cost where potential lost revenue from the event as the investigation is still ongoing in the financial impact not yet determined.
As Chris mentioned, we maintain insurance to cover losses related to cyber security risks and business interruption, but such policy may not be sufficient to cover all lost.
For our broadcast in other statements.
Fourthquarter guidance reflects absence of political which is the main driver for media revenues to be down tracks minutely, 11% to 13%.
For 860 wanted to 880 million versus the fourth quarter of last year.
Compared to pro forma fourth quarter of 2019 media wrappings would be up 7% to 9%.
Excluding the impact of political AD revenue fourthquarter core advertising is expected to be low double digit percent.
Is Q4 blast year and up low single digit percent versus Q4 of 2019.
For the full year media revenues are expected to decrease 1% to 2%.
Increased 10%, excluding political ad rabbit.
Fourthquarter adjusted EBITDA is expected to be between 240 and $256 million compared to 408 million last year, primarily on the absence of the political revenue.
Full year adjusted EBITDA, it's expected to be 792 nine.
For the local sports statement.
Fourth quarter medium revenue is expected to be up 33% to 34%.
703 to 712 million versus Q4 of 2020.
As a reminder, last year's Fourthquarter included a distribution revenue rebate, a pool of 168 million.
For the full year media revenues are expected to be on the 14th of 15%.
Fourthquarter adjusted EBITDA is expected to be negative 8 million deposited 1 million due primarily the timing of sports rights payment.
Associated with this started the N b, a and N H L seasons and continued subscriber churn.
As compared to fourth quarter last year. The decline is driven primarily by 120 million of net rebate benefits book in 242020 continued subscriber churn as well as district distributor carriage dropped in the fourth quarter of last year.
Pull your adjusted EBITDA is expected to be 505 to 514 months.
Or the consolidated company Fourthquarter media revenues are expected to be up to to 7%.
Two 1 billion five Hunter 44 million to 1.572 billion.
Fourth quarter adjusted EBITDA is expected to be 232 to 257 million at Fourthquarter, just your free cash flow 33 to 58.
Full year media revenues are expected to be 6.159 billion to 6.187 billion adjusted EBITDA 1.298 billion to a million 322 million and adjusted free cash flow.
$8.08 to $8.41 per share with that I would like to open it up to questions operator.
[noise] certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do EM well. According to your question. Please pick up your handset listening on speakerphone to provide optimum sound quality. Please hold one poll for questions.
[noise] [noise] [noise].
[noise].
Operator, just check.
<unk> on the on the questions.
Certainly please stand by one moment.
Next question is coming from Gansu, most from benchmark.
Yeah exactly.
The rest of your question.
Can you guys hear me.
We can.
Can you hear us great. Thanks, Yeah, I can hear you back now so I don't know what's going on this morning, but uhm any way I certainly.
Thank you rightly called out the amount of noise and the media around what's going on with the R. S N.
I just want to hear from from you rather than from them. You know you kind of laid out some options I guess so to the extent you certainly address your your firm belief that they can't circumvent you from a D. T. C perspective, so you'd have to be involved in the conversations but maybe.
What's on the table in terms of.
Do you have sufficient rights to be the leader and this would have to be a group effort just kind of help us think through how you are trying to tackle this problem with the leagues and attached to that obviously I think there's a lot of speculation out there and I have to take a shot Chris around the dish negotiate.
Can be tied to somehow come around that I don't know if you care to.
Comments on the factual nature of that statement or not but anything kind of helpful. As I think you're still not going week to week with there should be really helpful.
<unk>.
So I guess I'll I'll address dish first we are in very short term renewals at this point and we don't comment online negotiations. So that's what I'll I'll stay on that question and then.
As it relates to the league. So if we have.
For MLB, we have linear and authenticated streaming rights for all teams and we have direct to consumer rights now for four Fourteens, which are all the teams that we've renewed coast.
Acquisition, and our expectation there is that we will accumulate more direct to consumer rights.
As teams for new.
And then for NHL an M. B, a we have always had linear authenticate streaming and D to see rights and.
And those are under current renewal discussions as a part of a larger deal which includes mark expansion authenticated streaming and direct to consumer right. So.
That's where we stand from our rights perspective, and and we do things we have a critical mass in terms of rice rights to to launch a product and you know that's that's what we intend to do.
Do you do you think that I mean diddly.
<unk> have a critical mass and you know you do is there any pushback from the league in terms of you know.
Trying to have a unified product or you know obviously you were interested in the other artisans before but you know to the extent that it requires more of a joint effort or something about H or I mean does that is that being contemplated or do you really believe that regardless of how that goes forward you can get a product.
And the pronounced okay sure.
Well, if you're alluding to bring in other groups like.
The Comcast ours, and or the 18, tr's and like I've always thought that consolidation of the rest of the industry makes sense I mean, the the where where where in a much better position than anyone else to move forward on direct to consumer because we've been planning for this and for.
Quite some time, it's not something you can just flip a switch on overnight, but I do think ultimately adding in rice from other groups like like Comcast N. A T and T makes sense, whether you do that through transactions partnerships.
Contracts Consortiums, you know that that is all I think things that will be contemplate in a in a stage too.
Got it that's helpful. Then obviously I'm sure you're aware of where the unsecured Sir trading just any kind of incremental thoughts on restructuring within your son style.
Yeah, well, we continue to believe that a new money deal is possible and discussions with the credit or advisors are continuing with Ernest internist and and we're also simultaneously containing discussion discussions with our various commercial partners around that.
Insane.
Okay fair enough and good luck getting past the random order stuff that's never a pleasant.
Thanks, Dan.
Thank you. Your next question is coming from Stephen Coho from Wells Fargo. Your line is alive.
Thank you you made me persist.
Follow up on non questions about restructuring <unk> could you maybe put a little more color on the liquidity position of Diamond today I got anything that you think is cause for concern and you're mentioning those constructive discussions do you think you'll need to draw anymore liquidity you know I'll go get done or do you feel pretty comfortable about where diamond is from.
City standpoint, and then Lucy could you put some color around the implied retrans sequential growth in the fourth quarter of it looks like it's it's pretty solid and I know, we've talked a little bit about how net retrans has been negatively impacted by some of your renewal timing. This year. So we could we could we start to look at Q4 as an accelerating that retrans profile and 22.
You too thanks.
[noise], Thank Steve I'll address on the liquidity side, there is ample liquidity at Diamond and we we are good for the next 12 months. So we're comfortable there.
And [noise].
Steve on the on the Retrans. So as we reported this morning Grace Retrans revenue, we're expecting to grow and low to mid single digits for this year, which we've talked about for a multiple calls reasons, why which is primarily just having one renewal in the back half of this year.
And then that also assumes mid single digit percent subscriber churn broadcast.
And on on the churn side, and then I'll get the net retrench omniture inside your weakness itchy as you saw in the numbers for both broadcast N. B R. S. N a slight improvement ensuring you see it saw that in the revenues and but not really enough.
For us to change our pull your outlook, which again is.
Mid single digit charnel broadcast high single digit on on the R. S. N and then on the net Retrans again as we've discussed for multiple quarters on the earnings cause net retrans. We can continue to expect to decline mid single digits. This year.
Again, that's due to the modest increase in the grocery trends as well as the mismatch in both the network in India.
Contract that renewed this year and then timing up there is contract.
So.
So and then at this point, we're not really ready to talk about 2022 or beyond but what I will say is we have approximately 25% of ourselves for new wing next year with the vast majority of their is coming up early in the year and then we have about 25% of the networks.
Coming up.
Next year by theories are spread some at the beginning of the year. Some later in here.
Great. Thank you.
Mmm.
Thank you. Your next question is coming from David Hamburger from Morgan Stanley. Your line is alive.
Hi, Thanks for the for the questions.
I just wanted to clarify you mentioned direct to consumer product offering launching them look in the first half of next year just to clarify is the plan to have a direct to consumer streaming product in the market for the baseball season next year. So by April.
There are a launch expectations have not changed obviously, if there were a change in our rights versus the status quo with a mood that may make that adjustment, but that is it.
It doesn't look like what's going to happen here, so that our plans on launch timing her maiden name.
Okay, and I'm Gonna go back to your comments on the first quarter earnings call. You had mentioned specifically, though that you had the streaming right for the vast majority of our team and.
And did you did qualify that or maybe a caveat that weird discussions we could be from the teams on advancing some of those right to.
To make the product even better.
I was wondering just to clarify your comments now you're saying that you have direct to consumer rights for for baseball teams. So is it.
Uhm, essentially you're saying for the other time baseball things you do not have explicit.
Direct to consumer streaming right in in place or an agreement in place with those kind of other teams and then with the M. B, a and N. H L. Last earnings call you had highlighted in maybe the beginning of the M. B, a and N. H L season. This year would be kind of a finish line is that if I can quote would you said for.
Shading those renewals, but just to clarify here so.
Essentially it would seem you have explicit stream rights for only four of of your team at this juncture does that sir.
Well I think I would add to that that you know the we expect to get to the finish line with the NHL an M. B a on those renewal discussions.
So so that's <unk> that's.
Over 30 change there.
And then with baseball I guess cause your laundry for the baseball season any clarity on the other 10 team.
None of those right.
I mean, it sounded like burnt orange invitations M O B a commissioner gave recently was that.
You don't have that right.
On on the 10 teams that is correct and so how that has been working as that that those are rights of enrolled in as we renewed the master agreement and that that is our current expectation.
Mmm, Okay, and then just quickly on you know the financing for this product offerings agreed on the last call. We discuss this you'll you'll do are looking for new money as part of this launch effort and it seems that could be used to be you have not been successful getting money from existing diamond store.
Creditors I'm wondering what avenues, you might pursue with Sinclair be willing to put new money into this adventure if that were needed or do you still hope.
I hope that you will be successful and may be negotiating with diamond for creditors or could there be another potential equity investor here.
Look I think.
That's all possible look we believe that a new money deal is is still possible with.
The creditors and we continue to have constructive discussions with that I.
In that regard as as it relates to other sources of capital Sinclair or otherwise that the you know those were not we wouldn't uhm.
You know.
Exclude those from from any possible solution here, but those would have to.
<unk> each each party would have to have something in it for them to to make such investments.
And just so when you have a sense of your expectations here when when would we expect to hear some development april's not that far off and we're wondering how you communicated to the market cause your physician both.
Financial flexibility.
New money investment and then you know you'll have enough of a runway or time here to launch this product offering and fell into the market.
Well I think I think it's important to note is that we already do have an app and this is a product extension of what we're already building. So on the technical side, there's there's a lot of work and effort.
Around and making enhancements to that.
Experience in making making it available to be switched on to for purchase on a direct consumer basis. So so things are moving in tandem in order to hit are tiny and as soon as we.
Uhm settled the weeks, we will we will lay out more specifics at that time.
To just one quick follow up cause it's the last question with regard to renewables with the distributors. If all you could send a link an optimum you don't need a car communications really this year was there any part of those renewal discussions and I imagine they might be part of the discussions with dish about cause direct to consumer product offering and then how 'bout fits into the existing.
Relationships you have with those distributors.
Yes, where where applicable we have built in.
What I had referred to in the past in terms of pricing protection for the distributors, where they get to buy on a wholesale basis and the consumer will buy on a retail basis. So there is a significant margin there.
In terms of price differential uhm that is in every one of our renewables over over the last.
Couple of years, we have implemented where in where it needed that.
That provision.
[noise], Okay. Thank you very much.
Thank you. Your next question is coming from Aaron What's from Deutsche Bank. Your line is alive.
Everyone. Thanks for having me on Christmas. It is it fair to say that the the take down on the top end of guidance for diamond for the full year and EBITA mainly reflects.
Dash not coming back this year and I guess relatedly as we're now approaching the midpoint of the N F. L season, which I at least view is the time of year, when you're probably a peak negotiating leverage with distributors.
I guess I'm, just trying to understand like your willingness to provide extensions at this point in contrast, maybe to some of your peers right now and kind of what.
What agreements or terms of maybe you've been laid down that give you comfort and providing extension this deep into the NFL season with dish.
Yeah. So there's not a lot I can stay on dish because it is still an active negotiation as I mentioned, we are in very very short term renewals at this point in time for a lot a lot of the dynamics that you just mentioned.
And and our our expectations are guidance reflect sort of what our current.
Expect it up on this.
Okay, Alright, and one follow up I I kind of go the launch of a D. C platform in the first half of next year, what would that would it be your plan to launch that with just before MLB teams. You currently have the day to see rights too or is it your expectation that by that law.
Launch there would be some further traction on right with the teams and or the week.
You know that that certainly is a possibility but at this point.
Things are still fluid, so I wouldn't want to commit one way or the other two how that might play out.
Okay, and if I could just asked to to others.
I'm a station side given some of the actions being taken by your network partners to bolster their own streaming services such.
Such as placing content on those services that used to be exclusive to broadcast do you see any opportunity during the next round of renewals with the networks to push back on increases in reverse comp and I guess relatedly, how should we think about where the margin is today on retransmission fees and where that might be headed over there.
Extra years, especially in light of the new longterm NFL broadcast deal.
Mhm.
Look where.
As as we've I think stated many times.
Margin isn't really.
Something that we focus on we focused on growing been net dollars cause we don't you don't.
Create EBITDA with signage margin, we created by adding incremental dollars and we had we had some tough timing this year on net retrans.
Which we've talked a lot about so I won't repeat it.
And we think will will be able to get back on the growth trend.
After we get through this adjustment here and really that's what matters at the end of the day in terms of how we grow additional profitability.
And and we see we see big upside on on Retrans still existing given given the relative strength of broadcast versus.
What's happened to cable channels or the.
Over the following over the last few years.
Okay got it one last one and I appreciate the time just around the capital allocation policy for the television station group, but.
I think there's been a little bit of an overhang at least on the S. T. G credit side due to worries about direct or and or implied support for diamond encompassing cash distributions or retransmission fees.
Would appreciate your latest thoughts on how to how much support direct or otherwise you see the television station group, providing diamond going forward and thanks again.
Thanks, There uhm.
Uhm, so as as we've as we've stated many times the two silos, we'd be of them quite independently.
In terms of.
Capital structure and funding their business plans going forward to the extent that uhm Sinclair.
Therefore, the television side or to support a.
Diamond there would have to be a a strong financial reason to do so so just think about it as two independent parties and and if the investment makes sense, then obviously it could happen, but if it doesn't then anyway.
[noise]. Thank you. Your next question is coming from Lance Potenza from Cohen you lose your line is live.
Thanks, guys I wanted to go back to the recent New York Post story and the way. It was written suggested MLB is thinking about moving ahead on direct T. A direct to consumer and possibly doing it without diamond or Sinclair, but no migraines, a little different I mean, I would think that MLB their incentive right is just too.
To ensure that consumers have got access to like games online not only for guys that are in diamond R. As in territories, but for all of the teams in its leash and in other words believe won't be content with Bally sport doing a great job for example, if AT&T and N B C. You're failing to promote the raw.
So am I crazy to think that all parties actually could be better off all parties, including the our Thanksgiving instead of each R. S N having its own local sports out there was some sort of national MLB app that essentially plugged in to each of the rsm's local content.
The <unk> could still get paid for providing the content, but could benefit from major league baseball branding and promotion of that kind of thing or do you think that we'd really is just trying to disintermediated euro cents.
Look we are big believers in scale in the <unk> in general, but very specifically in direct to consumer.
And and that.
In order to be successful indirect consumer longterm, we think you need scale well beyond a team or just a league.
And that's why a multi sport offering makes a lot of sense. That's why we've always said districts consumer off.
Extension that will or planning on launching is just the start in terms of where we would go and I'm going to be a market leader in the U S and direct to consumer sports.
You know thinking that you could do that with only one league.
We think is.
It doesn't make sense and and certainly dovetails with everything I've said about wrapping in the other R. S N content and ultimately other direct consumer rights over time.
Okay. Thanks, and then maybe just a quick follow up so how much major league baseball's concerns do you take center around D over leveraged balance sheet at Diamond.
If the balance sheet were cleaned up because that is basically game on at that point or or are there other issues that the league is concerned about.
Look I think I'm getting additional financing would be helpful. For all parties I think that's sort of undeniably true so.
And.
I think I think you're you're spot on and that observation.
[noise], Okay. Thanks, guys.
Thank you there are no further questions in the queue I will now hand, the conference back to Chris Ripley, President and C. E. N C E O for closing remarks. Please go ahead.
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[noise] [noise] [noise] [noise]. Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.