Q2 2023 Gray Television Inc Earnings Call

[music].

Speaker 1: Welcome to the Great Television's second quarter 2023 earnings call. I will now turn the call over to Houghton Howell. You may begin.

Okay.

Welcome to the Gray television second quarter 2023 earnings call I will now turn the call over to her and how low you may begin.

Speaker 2: Thank you, operator. Good morning, everyone. As, as Misty mentioned, my name is Hilton Howell. I'm the chairman and CEO of Gray Television and thank you all for joining us for our second quarter 2023 earnings call. I am absolutely delighted that today we also have with us on this call Sandy Breland, our longtime senior managing vice president, who recently became Gray's chief operating officer. Welcome, Sandy.

Thank you operator, good morning, everyone as as Mr. <unk> mentioned my name is Hilton Howell I'm, the chairman and CEO of Gray television and thank you all for joining us for our second quarter 2023 earnings call.

I'm absolutely delighted that today, we also have with US on this call Sandy <unk>, our long time senior managing Vice President, who recently became graves Chief operating officer welcome standing in addition, and as usual I'm joined by Paul <unk>, Our President and co CEO , Kevin Latex, our chief legal and development.

Speaker 2: In addition, and as usual, I'm joined by Pat LaPlatinie, our President and Co-CEO, Kevin Latek, our Chief Legal and Development Officer, and Jim Ryan, our Chief...

Officer, and Jim Ryan, Our Chief Financial Officer, and we will begin with a disclaimer that Kevin will provide as I, usually am I here.

Speaker 2: And we will begin with a disclaimer that Kevin will provide.

Speaker 3: Thank you Hilton we have topic we could call call on mute.

Thank you Hilton we have comp back recall column unit. Please.

Speaker 3: Thank you Hilton. Good morning everyone. Gray uses its website as a key source of company information. Website address is www.gray.tv. We will file our quarterly report on Form 10Q with the SEC later today. Included on the call may be a discussion of non-GAAP financial measures, and in particular broadcast cash flow, operating cash flow.

Thank you Hilton and good morning, everyone Gray uses its website as a key source of company information website address is www T. R. A wide dot TV, we will file our quarterly report on Form 10-Q with the SEC later today.

Put it on the call maybe a discussion of non-GAAP financial measures and in particular broadcast cash flow operating cash flow.

Speaker 3: recash flow, and certain leverage ratios. These metrics are not meant to replace gap measurements, but are provided as supplements to assist the public in their analysis and evaluation of a company.

Free cash flow and certain leverage ratios. These metrics are not meant to replace GAAP measurements, but are provided as supplements to assist the public in their analysis and valuation of our company.

Speaker 3: included in our earnings release, as well as on our website, our reconciliation to the non-GAAP financial measures to the GAAP measures reported in our financial statement.

Included in our earnings release as well as on our website a reconciliation to the non-GAAP financial measures to the GAAP measures reported in our financial statements.

Speaker 3: Certain matters discussed this call may include forward-looking statements regarding, among other things, future operating results.

Certain matters discussed this call may include forward looking statements regarding among other things future operating results. Those statements are subject to a number of risks and uncertainties.

Speaker 3: Those statements are accepted to a number of risks and uncertainties.

Speaker 3: 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. Company undertakes no obligation to update these forward-looking statements. I now return the call to Hilton.

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 company undertakes no obligation to update these forward looking statement.

Speaker 2: Thank you, Kevin. Great television strong start in the first quarter of 2023 continued through our second quarter. Today, we beat guidance and consensus estimates on all five key metrics. We beat on core advertising revenue. We beat on retransmission revenue. We beat on political advertising revenue. We beat on EBITDA, and we beat on free cash flow.

I now return the call to Hilton.

Thank you Kevin Gray television strong start in the first quarter of 2023 continued through our second quarter today, we beat guidance and consensus estimates on all five key metrics, we beat on core advertising revenue, we beat on retransmission revenue we beat on political.

<unk> advertising revenue, we beat on Abbott Dawn, and we beat on free cash flow and.

Speaker 2: In particular, our total revenues of $813 million for the quarter exceeded the high end of our revenue guide.

In particular, our total revenues of $813 million from for the quarter exceeded the high end of our revenue guidance. In addition, our total operating expenses of 593 million were below the low end of our expense guidance for the quarter, we were especially pleased at the performance of.

Speaker 2: In addition, our total operating expenses of $593 million were below the low end of our expense guidance for the quarter.

Speaker 2: We are especially pleased at the performance of our television stations during the quarter.

Speaker 2: core advertising revenue increased 4% on a year-over-year basis.

Our TV stations during the quarter, our core advertising revenue increased 4% on a year over year basis with both local and national core up in low single digits on a year over year basis.

Speaker 2: with both local and national core up in low single digits on a year-over-year basis.

Speaker 2: and significantly and as we had predicted, the auto category also continues to recover strongly for braing.

And significantly and as we had predicted the auto category also continues to recover strongly for great mean.

Speaker 2: Meanwhile, political was particularly strong also for a second quarter preceding a presidential election year.

Meanwhile, political was particularly strong also for a second quarter preceding a presidential election year.

Speaker 2: Our strong footprint of number one ranked television stations has and will continue to allow us to over index on political advertising dollars.

Our strong footprint a number one ranked television stations has and will continue to allow us to over index on political advertising dollars as such we are very much looking forward to the 'twenty 'twenty four presidential election cycle.

Speaker 2: As such, we are very much looking forward to the 2024 presidential election cycle.

Speaker 2: The second quarter of 2023 compares quite well to last year's second quarter, in which we set all-time records for political revenue.

The second quarter of 2023 compares quite well to last year's second quarter in which we set all time records for political revenue.

Speaker 2: The continued strength in Grey's revenue despite that tough comp, confirms that our television station portfolio is delivering the trusted content that our viewers want. It also shows that the strong content and deep reach that we have, will continue to produce real value for our advertising clients.

Continued strength in Gray's revenue, despite that tough comp confirms that our television station portfolio is delivering the trusted content that our viewers want. It also shows that the strong content and deep reach that we have will continue to produce real value for our.

Speaker 2: Since the end of the first quarter, Gray's leadership team has remained very busy on a number of fronts. First, as we mentioned, we promoted Sandy Breland from senior managing vice president to the role of our chief operating officer.

Advertising clients.

Since the end of the first quarter Grays leadership team has remained.

Very busy on a number of fronts first as we mentioned, we promoted sandy Breeland from senior managing Vice President to the role of our Chief operating officer.

Speaker 2: Second, we promoted Matt Jauquin to Chief Revenue Officer, Mike King to Chief Marketing Officer, and Matt Moran to Senior Managing Vice President.

Second we promoted Matt Jacqueline to Chief revenue Officer, Mike King to Chief Marketing Officer, and Matt Moran to senior managing Vice President.

Speaker 2: Importantly, Gray renewed and extended our CBS affiliation agreement for all the former Meredith markets as well as all of our legacy Gray television markets. We're very pleased with this extension and renewal.

Importantly, gray renewed and extended our CBS affiliation agreement for all of the former Meredith markets as well as all of our legacy legacy Gray television markets. We're very pleased with this extension in renewable.

Speaker 2: We reached a historic set of agreements that Pat LaPlatinie will cover in more detail with the Phoenix Suns and the Mercury to return their games to broadcast television and to expand the team's reach within its market in Arizona by threefold.

We reached a historic set of agreements that Paolo platinum will cover in more detail with the Phoenix SUNS and the Mercury to return their games to broadcast television and to expand the teams reach within its market in Arizona by threefold.

Speaker 2: We also struck a deal with the CW network covering a package of ACC sports rights that partially mitigated the losses from the unfortunate disruption caused by the Diamond Sports bankruptcy.

We also struck a deal with the CW network covering a package at ACC sports rights that partially mitigated the losses from the unfortunate disruption caused by the Diamond sports bankruptcy.

Speaker 2: We are happy to report also that phase one of our Assembly Atlanta Studio project is now largely complete.

We are happy to report also that phase one of our Assembly Atlanta studio project is now largely complete.

Speaker 2: Phase one covers the public infrastructure build out for the entire Assembly Atlanta project and the construction of the assembly studios, which encompasses 19 new stages, most of which are under a long-term lease with NBC University.

Phase one covers the public infrastructure build out for the entire Assembly Atlanta project and the construction of the Assembly studios, which encompasses 19, new stages, most of which are under a long term lease with NBC universal impact as we speak with you.

Speaker 2: In fact, as we speak with you today, NBC Universal is moving into its new sound stages, middle spaces and offices.

Today NBC Universal is moving into its new sound stages, middles spaces and offices.

Speaker 2: Despite the current writers and actors strike, we anticipate that production will begin in the next few months, not only in the leased NBC Youth facilities, but also in the newly constructed studios that Gray retained for our own use and then for lease to other third-party production houses.

Despite the current writers and actors strikes, we anticipate that production will begin in the next few months not only in the least NBC you facilities, but also in the newly constructed studios that gray retained for our own use and then for leased to other third party production houses.

Speaker 2: We have not yet altered our plans and do not intend to and do not anticipate to do so in light of the writers and actors strike, which we sincerely hope will be resolved amicably in the near term for the good of all parties in our industry.

We have not yet altered our plans and do not intend to.

And do not anticipate to do so.

Of the writers and actors strike, which we sincerely hope will be resolved amicably in the near term for the good of all parties in our industry.

Speaker 2: The investment in Assembly Atlanta over the last few years, and particularly during the first half of 2023, is now largely comp-

The investment in Assembly Atlanta over the last few years and particularly during the first half of 2023 is now largely complete we anticipate the remaining construction cost to wrap up and finish the Assembly studios portion of the overall project in the second half of this year, we'll be in a range of between 25 and <unk>.

Speaker 2: We anticipate that remaining construction costs to wrap up and finish the assembly studios portion of the overall project in the second half of this year will be in a range of between $25 and $30 million net of expected governmental incentives than reimbursing.

$30 million net of expected governmental incentives.

Speaker 2: Over the next five to seven years, the Atlanta assembly development will be completed with various mixed use projects across the remaining roughly two-thirds of the site's total acres.

Dan reimbursements over the next five to seven years, the Atlanta Assembly development will be completed with various mixed use projects across the remaining roughly two thirds of the site's total acreage I will now introduce Pat la flattening to provide more color on our operations Pat Thanks films.

Speaker 2: I will now introduce Pat LaPlatinie to provide more color on our operations. Pat? Thanks Hilton. During the second quarter of 2023, Grace Television stations and production companies continued executing well, seemingly better than other parts of the advertising ecosystem.

During the second quarter of 2023, Gray television stations and production companies continued executing well it seemingly better than other parts of the advertising ecosystem.

Speaker 4: Once again, our advertising revenue continues to demonstrate positive results, and we expect to see continuing positive trends for the rest of the year.

Again, our advertising revenue continues to demonstrate positive results and we expect to see continuing positive trends for the rest of the year.

Speaker 4: We read with some dismay stories reporting softness in auto advertising, particularly on the national side.

We read with some dismay storage reporting softness in auto advertising, particularly on the national side.

Speaker 4: Those stories are not reflective of Gray's experience at all. To the contrary, Gray's television station has posted a 20% year-over-year increase in auto in the second quarter, and this increase is led by even larger increases year-over-year in national auto in the Film Learner Foundation. Thanks, All Of You,applause

Those stores are not reflected the grays experience at all to the contrary graze TV stations posted a 20% year over year increase in auto in the second quarter and this increase was led by either larger increases year over year in national auto advertisement.

Speaker 4: Meanwhile, our stations continue to excel at developing new business from local customers who previously did not advertise on our platform.

Meanwhile, our stations continued to excel at developing new business from local customers, who previously did not advertise on our platforms.

Speaker 4: In the first quarter, we were pleased to report that our new local direct business brought in 9% more revenue than the first quarter of 2022.

In the first quarter, we are pleased to report that our new local direct business brought in 9% more revenue than the first quarter of 'twenty two.

Speaker 4: We improved upon that result in second quarter when we brought in 15% additional revenue from new local direct business over the second quarter of last year.

We improved upon that result in second quarter, when we brought in 15% additional revenue from new local direct business over the second quarter of last year.

Speaker 4: Political advertising has also been strong, as Hilton mentioned. Now, in both the first quarter and the second quarter of 23, we have literally doubled the amount of political ad revenue that our current station portfolio received in 19, the last year that preceded a presidential election.

Political advertising has also been strong as Hilton mentioned.

Now in both the first quarter and the second quarter of 'twenty. Three we have literally doubled the amount of political AD revenue that our current station portfolio received a 19 the last year the preceded a presidential election year.

Speaker 4: Political advertising revenue has been particularly strong in Arizona, Louisiana, Virginia, and Iowa.

Political advertising revenue has been particularly strong in Arizona.

Speaker 2: We're not prepared to make any full year political ad estimates at this time, given the wide range of uncertainties this far out. But still, we're encouraged by the doubling of political revenue over 2019 levels that we've experienced in the first half of 2023.

Louisiana, Virginia in Iowa, we're.

We're not prepared to make it we're not prepared to make any full year political AD estimates at this time, given the wide range of uncertainties as far out but still we are encouraged by the doubling of political revenue over 2019 levels that we've experienced in the first half of 2023.

Speaker 2: In addition to these sales successes, Sandy and I, with assistance from many others, are actively engaged in discussions with certain professional sports teams and leagues.

In addition to the sales successes sandy and I with assistance from many others are actively engaged in discussions with certain professional sports teams and leagues recall that in early may the Phoenix SUNS in Phoenix Mercury announced an innovative deal that returned their games to television stations in Arizona owned by Greg.

Speaker 2: Recall that in early May, the Phoenix Suns and Phoenix Mercury announced an innovative deal that returned their games to television stations in Arizona owned by Greg.

Speaker 2: At that time our deal was conditioned on the expiration of an arrangement between Diamond Sports and the Suns and Mercury. In July the Diamond deal for the Suns expired and the Suns and Mercury deal with Gray became effective.

At that time, our deal was conditioned on the exploration of an arrangement between Diamond sports and sons and Mercury in July the Diamond deal for the SUNS expired and the sons and Mercury deal with Gray became effective.

Speaker 2: We're all very excited to be able to present these great teams to all the people of Arizona.

All very excited to be able to present these great teams to all the people of Arizona.

Speaker 2: Our discussions with other teams and leagues indicate that the new sports rights deal we have in Arizona can work in other markets as well. Whether we replicate that structure or find new ways to partner with professional franchises, we see a growing recognition in the market that returning professional sports to local broadcast stations will increase marketing value, advertising sales revenues, fan engagement, as well as team value. We're spending a lot of time analyzing these professions.

Our discussions with other teams and leagues indicate that the new sports right rights deal, we haven't Arizona can work in other markets as well, where do we replicate that structure or find new ways to partner with professional franchises.

We see a growing recognition in the market. They are returning professional sports to local broadcast stations will increase marketing value advertising sales revenues fan engagement as well as team value for.

We're spending a lot of time analyzing just professional sports opportunities.

Speaker 2: In the coming months, we hope to have more innovative sports rights partnerships to announce that will return local teams to our broadcast stations and to local fans.

The coming months, we hope to have more innovative sports rights partnerships to announce they'll return local teams to our broadcast stations into local fans.

Speaker 5: I'm Sandy Breland and I'm very happy to join my colleagues on this earnings call, especially when we have so many positive developments and success.

I'll now turn the call to Sandy. Thank you Pat I'm Sandy Burlington I'm very happy to join my colleagues on this earnings call, especially when we have so many positive developments and successes personally my career began intelligent newsroom and I focused a good amount of my time, the last few years and great local news resources, including our investigate TV.

Speaker 5: my career began in television newsrooms and I focused a good amount of my time the last few years on Gray's local news resources including our Investigate TV in Washington DC operation

Speaker 5: I'm therefore very honored to join this call when Gray has so much great news to report about its own news act.

In Washington D C operation.

I'm, therefore, very honored to join this call when Greg has so much great news to report about its own news effort.

Speaker 5: In June , with the greatest sense of humility, Gray received recognition from the NAB Leadership Foundation's 2023 Celebration of Service to America Awards, which honor excellence in community service by local radio and television stations.

In June with the greatest sense of humility Gray received recognition from the N. A b leadership Foundation 2023 celebration of service to America Award, which honors excellence in community service by local radio and TV stations.

Speaker 5: This year, Gray received the TV Ownership Group Award in recognition of the outstanding work by Gray's Investigate TV unit and its series, The Sixth, which exposed a critical shortage of public defenders across the country.

This year Gray received the television ownership Group award in recognition of the outstanding work by Grace investigate TV unit and its series, the six which exposed a critical shortage of public defenders across the country.

Speaker 5: The Foundation also selected Grace KTTC in Rochester, Minnesota as its small market television station winner for its 5th District Eagles Cancer Telephonic.

The Foundation also selected Grace K T T C and Rochester, Minnesota as its small market TV station winner for its fifth district Eagles cancer telephone, while kw C. H in Wichita, Kansas and W. T. B Y in Dothan, Alabama were named finalist for their exemplary community service.

Speaker 5: KWCH in Wichita, Kansas, and WTBY in Dothan, Alabama were named finalists for their exemplary community service.

Speaker 5: Also during the second quarter, the Radio Television Digital News Association awarded a combined 78 regional Edward R. Murrow awards for excellence in journalism to 31 of Gray's local stations.

During the second quarter the radio television Digital News Association awarded a combined 78 regional Edward R. Murrow Awards for excellence in journalism to 31 of Gray's local stations the.

Speaker 5: The awards roster was led by 10 separate awards to Hawaii News Now and Honolulu Hawaii and 7 separate awards to WVUE in New Orleans, Louisiana.

The awards roster was led by 10 separate awards to Hawaii is now in Honolulu, Hawaii and seven separate awards to debut the UAE in New Orleans, Louisiana.

Speaker 5: This September , Gray will launch across his stations a new weekday news magazine program called Investigate TV Plus.

This September gray will launch across the stations a new weekday newsmagazine program called investigate TV plus the newsmagazine will showcase groundbreaking investigations, featuring Grays Award winning investigate TV unit, plus consumer health and original content curated from Grace.

Speaker 5: The news magazine will showcase groundbreaking investigations featuring Gray's award-winning Investigate TV unit plus consumer health and original content curated from Gray's 113 local market

Speaker 5: While we have no plans to become a new syndicated programming house, we have been pleasantly surprised by tremendous audience reaction to our Investigate TV weekend show that airs primarily on Gray's own station.

113 local markets well.

Well, we have no plans to become a new syndicated programming has we have been pleasantly surprised by tremendous audience reaction to our investigate T V weekend show that airs primarily on Grace owned stations.

Speaker 5: Despite not airing at a consistent time period or having national promotion behind it, the current Investigate TV weekend program has been posting ratings that surpass many well-known broadcasts in cable programs.

Despite not aron at a consistent time period or having national promotion behind it. The current investigate TV weekend program has been posting ratings that surpassed many well known broadcast and cable programs.

Speaker 5: that unlike our weekend program are cleared in 100% of the country.

Unlike our weekend program are cleared in 100% of the country.

Speaker 5: This tells us that there is an audience for good quality news programming, particularly investigative pieces that highlight otherwise unknown issues and that consistently produce results.

This tells us that there is an audience for good quality news programming.

Particularly investigative pieces that highlight otherwise unknown issues and that consistently produce results.

Speaker 5: Gray will make the new weekday Investigate TV Plus programs available to local television stations owned by other broadcasters as well. Thanks for your time and thanks for your interest. I now turn the call to Kevin. Thank you, Sandy.

Greg will make the new weekday investigate TV plus programs available to local television stations owned by other broadcasters as well. Thanks for your time and thanks for your interest I'll now turn the call to Kevin.

Speaker 3: In the second quarter on a year-over-year basis, our retransmission revenue grew 3% as a result of contract re-pricings to the beginning of 2023.

Thank you Sandy.

In the second quarter on a year over year base.

Basis, our retransmission revenue grew 3% as a result of contract re pricings at the beginning of 2023.

Speaker 3: Our subscriber trends are down low single digits on a year over year basis and therefore essentially matching or slightly beating the industry as a whole.

Our subscriber trends are down low single digits on a year over year basis and therefore.

Essentially matching or slightly beating the industry as a whole.

Speaker 3: Our network reverse compensation expenses increased by less than our gross retransmission revenue during the second quarter. As a result, our net retrans revenues grew slightly to $159 million in the second quarter.

Our network reverse compensation expenses increased by less than our gross retransmission revenue during the second quarter as a result, our net retrans revenues grew slightly to $159 million in the second quarter.

Speaker 3: Consistent with prior years, we expect retransmission revenues to decline somewhat between the second and third quarters as subscriber churn routinely increases when spring...

Consistent with prior years, we expect retransmission revenues to decline somewhat between the second and third quarters as subscriber churn routinely increases when spring turns into summer.

Speaker 3: Net retransmission revenues therefore continue to generate substantial cash flow that helps support the company during off years in the political cycle as we have this year.

Retransmission revenues, therefore continue to generate substantial cash flow that helps support the company during off years in the political cycle as we have this year.

Speaker 3: We have discussed many times part of the reduction in broadcast affiliate retransmission revenues are the result of the networks exploiting the FCC's streaming loopholes to control the distribution of their affiliate signals on virtual distributors.

We have discussed many times part of the reduction in broadcast affiliate retransmission revenues are the result of the network's exploiting the FCC's streaming loophole to control the distribution of their affiliate signals on virtual distributors.

Speaker 3: Recently, the four affiliate boards organized the Coalition for Local News.

Recently, the four affiliate board organize the coalition for local news.

Speaker 3: Coalition is an important step forward in the long battle by affiliates to regain control of the distribution of our content.

Coalition is an important step forward in our long battle by affiliates to regain control of the distribution of our content.

Speaker 3: and to keep for ourselves the value that the virtual MVPDs are already paying the networks for affiliate signal

And to keep for ourselves the value that the virtual mvpds are already painted networks for affiliate signals.

Speaker 3: Finally, I'd like to highlight just how strong Grey's portfolio of high quality television stations really is.

Finally, I'd like to highlight just how strong grays portfolio of high quality television stations really yes.

Speaker 3: We recently decided to compare Comscore's total average audience impressions during prime time for all of Gray's television stations to the broadcasting cable network.

We recently decided to compare comscore as total average audience impressions during prime time for olive Gray television stations to the broadcast and cable networks.

Speaker 3: In the month of May 2023, the ratings data indicate that Gray's Television Station

In the month of May 'twenty twenty-three the ratings data indicate the graze TV stations easily surpassed one of the big four networks audience, and we're only a bit less than a total impressions log by the other big three networks.

Speaker 3: easily surpassed one of the big four network's audience. And we're only a bit less than the total impressions logged by the other big three network.

Speaker 3: is a particularly impressive feat because unlike the big four broadcast networks, our stations are only available in 36% of U.S. television households.

This is a particularly impressive feat because unlike the big four broadcast networks. Our stations are only available in 36% of U S television households.

Speaker 3: In addition, in May 2023, Gray's station's total average audience impressions exceeded the combined audiences of Fox News, MSNBC, and CNN during prime time hours and during late local hours. Late news hours.

In addition in May 2023, Gray's stations total average audience impressions exceeded the combined audiences of Fox News M. S. N B C and C N N during primetime hours and during late local hours late news hours.

Speaker 3: It bears repeating that the audience across Grey's television stations exceeded all three cable news networks combined when our stations are available in just 36% of the country. This concludes my remarks. I now turn the call to Jim Ryan.

Paresh repeating that the audience across graze TV stations exceeded all three cable news networks combined when our stations are available and just 36% of the country. This concludes my remarks, I'll now turn the call to Jim Ryan.

Speaker 6: Hilton, Pat, Sandy and Kevin have covered the key highlights of the quarter in the year to date. So my marks are going to be really very short. Again, on our Q2 results, we are very pleased and we are exceptionally pleased with the core revenue up 4% in the second quarter.

Thank you, Kevin and good morning, everyone.

Hilton pad Sandy and cabinet have covered the key highlights of the quarter and year to date. So my marks who we're going to be really very short again on our Q2 results. We are very pleased and we are exceptionally pleased with the core revenue up 4% in the second quarter.

Speaker 6: Starting to our guidance for Q3, again, we are extremely pleased that we are saying based on the strength of our strong operating performance of our 113 television stations that we continue to expect core local revenue to be up in the low single digit range.

Turning to our guidance for Q3 again, we are extremely pleased that we are saying based on the strength of our strong operating performance of our 113 television stations that we continue to expect core local revenue to be up.

Speaker 6: I will remind everyone again as mentioned in both the release and in the queue that will be filed shortly that the anticipated 33 to 43 million impairment charge relating to the Diamond Chapter 11 rejection of our ACC contract.

In the low single digit range.

I will remind everyone again as mentioned in both the release and in the Q that will be filed shortly that the anticipated 33 to 43 million impairment charge relating to the Diamond chapter 11 rejection of our a C C contract.

Speaker 6: is a pre-tax non-cash, and I repeat, non-cash charge, and we have a new agreement with the CW to air certain ACC games which mitigates in part the loss of the former diamond contract.

Is a pre tax non cash and I repeat noncash charge.

And we have a new agreement with the CW to air certain a C C games, which mitigates in part the loss of the former Diamond contract.

Speaker 6: All in all, the in and out of all of this is immaterial to this company.

All in all the in and out of all of this is immaterial to this company.

Speaker 6: Our full year commentary really has not changed since we first gave full year guidance on our fourth quarter call two quarters ago.

Our full year commentary really has not changed since we first gave full year guidance on our fourth quarter call two quarters ago.

Speaker 6: We continue to expect our core revenue will be somewhere around 1.5 billion up low single digits.

We continue to expect our core revenue will be somewhere around 1.5 billion up low single digits.

Speaker 6: We continue to expect our retransmission revenue of approximately 1.5 billion. Again, we'll be up low single digits.

We continue to expect our retransmission revenue of approximately 1.5 billion again will be up low single digits.

Speaker 6: We expect currently our political revenue to be approximately 60 million, which is an improvement of the approximate $50 million range we provided our last call. And our increase to 60 million is given because of the solid first half political revenues that we just reported and in light of the record early presidential spending that we have been booking. We expect currently our political revenue to be approximately 60 million, which is an improvement of the absolute value of our last call. And our increase to 60 million is given because of the solid first half political revenues that we just reported and in light of the record early presidential spending that we just reported and in light of the record early presidential spending that we just reported

We expect currently our political revenue to be approximately 60 million, which is an improvement of the approximate $50 million range, we provided at our last call and.

And our increase 60 million is given the.

Given because of the solid first half political revenues that we just reported and in light of the racket early presidential spending that we have been booking.

Speaker 6: We expect our total broadcast revenue in 23 to be somewhere in the range of $3.2 billion.

We expect our total broadcast revenue are in 23 eight to be somewhere in the range of $3.2 billion.

Speaker 6: Our operating expenses before depreciation, amortization, gain and loss on disposal of assets will be approximately $2.5 billion. And that would exclude any non-cash impairment charges that I just discussed.

Our operating expenses before depreciation amortization gain and loss on disposal of assets will be approximately 2.5 billion and that would exclude any noncash impairment charges that I just discussed.

Speaker 6: Broadcast operating expenses we continue to expect to be in the 2.3 billion range.

Broadcast operating expenses, we continue to expect to be in the 2.3 billion range.

Speaker 6: Our reverse network comp, we expect to be approximating $936 million. Our non-cash stock comp will be approximately $5 million. I'm sorry, that's incorrect. Our non-cash stock comp of about $20 million.

A reverse network comp are we expect to bees approximate approximating $936 million.

Our noncash stock comp ER will be approximately 5 million.

I'm sorry, that's that's incorrect noncash stock comp of about.

Speaker 6: And our non-cash 401k expense will be about 10 million for the year. Our corporate expenses will be around 120 million.

$20 million.

And our noncash 401k expense will be about $10 million for the year, our corporate expenses will be around a $120 million.

Speaker 6: Cash uses for the year again have not changed significantly since we first gave you estimates at the beginning of this year. We expect cash interest of about $435 million.

Cash usage for the year again has not changed significantly since we first gave you estimates at the beginning of this year, we expect cash interest of about 435 million.

Speaker 6: I'll remind everybody that with the 5% SOFR interest rate caps that we put on $6.2 billion of our floating rate debt in the first quarter.

I'll remind everybody that with the 5% sulfur interest rate caps that we put on $6.2 billion of our floating rate debt in the first quarter.

Speaker 6: that we are well insulated from further interest rate increases and with the interest rate caps in place.

That we are well insulated from further interest rate increases and with the interest rate caps in place. We arent currently are at about 95% fixed our rates on all of our debt.

Speaker 6: We are currently at about 95% fixed rates on all of our debt.

Speaker 6: Cash taxes, again, we expect to be in the range of 38 to 46 million for the year. That is including the benefit of a pending refund of approximately $21 million.

Cash taxes again, we expect to be in the range of $38 million to $46 million for the year that that is including the benefit of a pending refund of approximately $21 million a routine capex is still in the range of about 110 million as you know what.

Speaker 6: Our routine capex is still in the range of about $110 million. As you know, our preferred dividends are consistently $52 million a year. And again, our required term loan amortization on the term loan D is an annual $15 million.

Preferred dividends are consistently $52 million, a year and again our required term loan amortization on the term loan D is an annual 15 million.

Speaker 6: consistent with generally consistent with what we've said before we expect our free cash for the year to be in the range of approximately a hundred and fifteen million.

Consistent with generally consistent with what we've said before we expect our free cash for the year to be in the range of approximately $115 million.

Speaker 6: At this point, again, I reiterate that we are well positioned midway through 2023 and look forward to a successful conclusion of the rest of the year. I'll turn the call back to Hilton.

At this point again, I reiterate that we are well positioned midway through 2023 and look forward to a successful conclusion of the rest of the year I will turn the call back to Hilton.

Speaker 7: Thank you, Jim. Well, to summarize, grade-generated, free cash flow in the second quarter and the company continues to have a strong liquidity profile with no near-term maturities. As Jim noted, we have an interest rate cap in place to protect us from further interest rate increases on our bank debt, but we envision no changes in our dividend policy.

Thank you, Jim well to summarize gray generated free cash flow in the second quarter and the company continues to have a strong liquidity profile with no near term maturities as Jim noted, we have an interest rate cap in place to protect us from further interest rate increases on our bank debt.

Speaker 7: We continue to focus on deleveraging our balance sheet. Finally, while we have no term needs to refinance any of our debt tranches, we are encouraged that the trading levels of our securities continues to recover as macroeconomic recession concerns seem to be abating.

But we envision no changes in our dividend policy, we continue to focus on deleveraging our balance sheet.

Finally, while we have no term needs to refinance any of our debt tranches. We are encouraged that the trading levels of our securities continues to recover as macroeconomic recession concerns seem to be abating with half of the year behind US now it is clear that gray has begun in 2023.

Speaker 7: With half of the year behind us now, it is clear that Gray has begun 2023 in a strong fashion and will finish the year strongly.

In a strong fashion and we will finish the year strongly our efforts to deliver the content audiences want and advertisers need are evident in our solid ratings, our core advertising results and our successful strategic initiatives with.

Speaker 7: Our efforts to deliver the content audiences want and advertisers need are evident in our solid ratings.

Speaker 7: core advertising results and our successful strategic initiatives.

Speaker 7: With the capital investments in phase one of the Assembly Atlanta Studios development essentially complete, Gray's board of directors continue to direct free cash flow to paying down our debt and improving our balance sheet as we progress to the next 18 months of what we expect will be another very strong political advertising cycle.

With the capital investments in Phase one of the Assembly Atlantis Studios development essentially complete.

<unk> Board of directors continue to direct free cash flow to paying down our debt and improving our balance sheet as we progress through the next 18 months of what we expect will be another very strong political advertising cycle.

Speaker 7: Operator at this time would like to open up the line for questions from anyone.

Operator at this time, we'd like to open up the line for questions from anyone.

Speaker 1: Okay, if you would like to ask a question, please press star 1 on your telephone keypad. Again, to ask a question, press star 1 from your telephone keypad.

Okay. If he would like to ask a question. Please press star one on your telephone keypad again to ask a question press star one on your telephone keypad.

Speaker 1: Our first question is going to come from Aaron Watts with Boyce Bank. Aaron, your line is on.

Our first question is going to come from Aaron Watts with Deutsche Bank.

Speaker 8: Hi everyone, thanks for having me on today. A couple questions for you. I'll start with

Your line is open.

Hi, everyone. Thanks for having me on today, a couple of questions here and I'll start with that.

Speaker 8: One on core advertising, you grew 4% in 2Q, you're guiding up in 3Q. What are the gives and takes in there sequentially? Just some general softening around the edges and maybe you could parse out national and local for us and how they're trending relative to the low single digit growth each had in 2Q. So I'll start legend.

One on core advertising you grew 4% in Q2, you're guiding flat to up in <unk>. What are the gives and takes in there sequentially just some general softening around the edges and maybe you could parse out national and local for us and how theyre trending relative to the low single digit growth each had.

And not QQ.

Yeah, So I'll start and let Jim jump in its pattern.

Speaker 4: So, you know, look, I think one factor there is automotive. Automotive is up, as you heard, substantially, and it will be up substantially in Q3. Working against a positive comp, one of the first positive comps we've seen in...

So.

Look.

I think one factor there is automotive and automotive is up as you heard substantially and it will be up substantially in Q3 working against the positive comp one of the first positive comps we've seen in the.

Speaker 2: better part of 10 years from Q2-22, pardon me, Q3-22. So yeah, that's part of it. But it's overall a very, very positive story. You know, in Q3, we continue to see

The better part of 10 years from Q2 'twenty two pardon.

Pardon me Q3 'twenty two.

So.

Part of it but it's overall a very very positive story.

Speaker 2: you know, positive growth from home improvement and legal. Obviously automotive we talked about, and there's a few other categories, you know, including communications and the lotteries that are down a bit. But all in all we expect to see a pretty solid performance in Q3.

In Q3, we continued to see.

Positive growth from home improvement and legal.

Obviously automotive we talked about and there's a few other categories.

<unk> commute.

Communications and our lottery that are that are down a bit but all in all we expect to see a pretty solid performance in Q3.

Speaker 6: Aaron, as we've commented last several, many calls, on a relative performance basis, local is performing a little bit better than national.

Yeah Eric.

As we've commented last summer many calls.

On a relative performance basis, local is performing a little bit better than national.

Speaker 6: But we already said earlier in the call that national auto in Q2 was significantly better than overall local. I think looking into Q3 that that relative performance between local and national is you know not changing dramatically they're both up.

But we already said earlier in the call that a national auto in Q2 was significantly better than overall local.

I think looking into Q3 that that relative performance between local and national.

It is.

Speaker 6: Uh, and, uh, you know, no surprise to anybody that the local side is, is doing better. And in part, I'd point to, as Sandy mentioned that, or it's at it, Pat and Sandy mentioned that very strong. Uh, uh, results and emphasis on, uh, the. You know, creating new local direct business month after month.

Not changing dramatically they're both up.

And you know no surprise to anybody that the local side is doing better and in part I'd point to it as Sandy mentioned that there is said Pat ANSI and he mentioned that very strong.

Results in an emphasis on the.

The <unk>.

Creating new local direct business month after month.

Speaker 8: Okay, that's helpful. Maybe I'm parsing too thin here, but.

Okay. That's helpful. I mean, maybe I'm parsing too thin here, but.

Speaker 8: We've heard from some others that maybe national, which had obviously been choppy the last several quarters, perhaps turning a corner. Is that anything you'd call out or just it's

We've heard from some others that maybe national law, which had obviously been choppy the last several quarters.

Perhaps turning a corner.

Is that anything you'd call out or just.

Speaker 6: think you just said it. Yeah, I said it. And I think from our standpoint, since our, our local has been exemplary for several quarters, that relative split, you know, relative split, we think is holding fairly consistent, but we're very, very pleased with what they're both doing.

It's sort of holding steady at as you kind of just said.

I think you just said yeah I you said it right I think from our standpoint since R. R. A local has been exemplary for several quarters that relative split.

Relative split we think is holding fairly consistent but we're very very pleased with what they're both doing.

Speaker 8: Okay, all right, great. And then if I could flip over here. One other quick add to that is, remember, we've said this many, many times over the years, our proportion of local to core is probably much higher than everybody else's. So,

Okay, Alright, great and then.

Okay.

One other quick add to that is.

Remember we've said this many many times over the years, our proportion of local to core is probably much higher than everybody else's. So.

Speaker 6: You know, other people, when national tweaks up or down, they may see it faster or see it proportionally more, but because of our local, we just don't see it as much.

You know other people when when national tweaks up or down they may see it faster or see it proportionately more but because of our local we just don't see it as much.

Speaker 8: No, it's good to hear that your local is hanging in there. So, understood.

No. It's good to hear that your local is hanging in there so understood.

Speaker 8: On the retran side, it sounds like your underlying subscriber erosion landed down low single digits.

On the Retrans side, it sounds like your underlying subscriber erosion landed down low single digits.

Speaker 8: Related to how you're tracking versus the industry overall, I would think the general trend we've seen since the pandemic, that of job and population growth over indexing in the southeast relative to many other areas of the country would play to your benefit. Do you think gray over time can be a net benefactor of that theme, one that may allow you to do a little better on the grocery trans side given that population and job shift to an area I consider a sweet spot for you? Hi.

To how you're tracking versus the industry overall I would I would think the general trend we've seen since the pandemic that of job and population growth over a indexing in the southeast relative relative to many other areas of the country would play to your benefit you think gray over time can be a net benefactor of that theme.

One that May allow you did a little better on the gross retrans side, given that population and job shift to an area I consider a sweet spot for you.

Speaker 3: I think that's a good observation. We don't really, we certainly have a very strong presence in the southeast and I agree. We see population moving to the southeast, that's more homes, that's more households, more pay TV subscriptions and more audience.

Hi, Aaron.

This is Kevin obviously.

I think that that's a good observation.

No we don't really.

We certainly have a very strong presence in the southeast.

And Oh.

Korea as we see population moving into southeast that's more homes, it's more households, that's more.

Speaker 3: If the Southeast grows disproportionately better than the rest of the country, that's probably going to benefit Gray a little bit more than others.

Pay TV subscriptions and more audience. So.

The south east grows disproportionately better than the rest of the country, that's probably going to benefit a little bit more than others.

Speaker 8: All right, last one for me, and I appreciate the time. I heard the comments around security prices rebounding as perhaps some concerns dampen around the macro picture. Jim, last quarter you.

It's a fair observation.

Okay. All right last one for me and again I appreciate the time I heard the comment around security prices rebounding as perhaps some concerns dampen around the macro picture.

Speaker 8: about your bond prices trading at a discount. I think that relationship still exists today. Any updated thoughts on perhaps using that as a lever to help use CAAS to de-leverage the balance sheet, which I know is a stated goal.

Jim last quarter, you got asked about.

About your bond prices being trading at a discount I think that relationship still exists today.

And any updated thoughts on perhaps using that as a lever to help you.

Speaker 6: So Aaron, my answer to this quarter, just like the last couple of quarters, is pretty consistent. I will place it under the banner of I can never say never, but consistent with what we've been saying for a while, I would say the probability of focusing on our 2026 term long maturities.

You know used cash to deleverage the balance sheet, which I know is a state of goal of yours.

So Aaron My my answer this quarter just like the last couple of quarters is pretty consistent I will place. It under the banner of I can never say never but consistent with what we've been saying for a while I I.

I would say the probability of focusing on our 2026 term loan maturities versus being opportunistic on bond pricing is probably where we will continue to put our focus again on the 26 term loan maturities.

Speaker 6: versus being opportunistic on bond pricing is probably where we will continue to put our focus again on the 26 term loan.

Understood. Thank you Daniel.

Speaker 1: Our next question is going to come from Dan Kurnos from Benchmark. Dan your line is on.

Thanks, Jeremy.

Our next question is going to come from Dan <unk> from benchmark Dan Your line is open.

Speaker 9: Great, thanks. Good morning. Hilton, can I just go back to some of the comments around assembly? I just want to make sure that we understand that the writer's strike is not causing any necessarily delays in revenue recognition. It sounds like NBC is still moving in. Separately, in the release, there's a...

Great. Thanks, good morning.

I'll just go back to some of the comments around Assembly I just wanted to make sure that we understand that the writers strike does not causing any necessarily delayed revenue recognition it sounds like <unk> still moving in and separately in the release there.

Speaker 9: $90 million in additional cash proceeds from a quasi-governmental authority and or limited land sales later in 2023. I don't know if that's part of the value unlock. I know that's incremental. Can you guys just kind of talk to that and sort of...

$90 million in additional cash proceeds remaining Aussie governmental authority is or the mid land sales later in 2023, I don't know if thats part of the value unlocked and hope that incremental can you guys just kind of talk to that and sort of.

Speaker 9: thoughts on future value unlock there for the real estate? In terms of revenue, Dan, please know that the vast majority of what we get is going to be rental income from NBCU as they take possession. And literally a couple of days ago there were dozens of 18 wheeler trucks.

Thoughts on future value unlock therefore, the real estate in terms of revenue Dan. Please know that the vast majority of what we get is going to be rental income from NBC U as they take possession and literally a couple of days ago. There were dozens of 18 Wheeler trucks.

Speaker 7: that were arriving here from all over the country bringing in you know, lights, cameras, grip, stuff and everything else and so that will begin and then there are some things that are backed up that are talking to us about also leasing the studios that we have kept.

That were arriving here from all over the country, bringing on.

Our lives cameras, Grub staff and everything else and so that will begin and then there are some things that are backed up that are talking to us about also leasing the studios that we have capped so I believe that we will start seeing revenue I know that we will start seeing revenue in the fourth quarter of this year.

Speaker 7: So I believe that we will start seeing revenue, I know that we will start seeing revenue in the fourth quarter of this year.

Speaker 7: With regards to the reimbursement, there is a community improvement district.

With regards to reimbursement, we there is a community improvement district.

Speaker 7: that we have that overlays the entirety of the project. Both Pat and I are on that board and it has north of a hundred million dollars in liquidity in the CID and as issues that are public i.e. streets.

We have that overlays the entirety of the of the project both Pat and I are on that board and it has north of $100 million in liquidity in the CIB and as issues that are public I streets.

Speaker 7: utilities, various other things, as those are complete and then are assumed by the local municipalities, gray is reimbursed from the CID proportionally. And so I think we've received about 39 million issues.

Streets.

Utilities various other things as those are complete and then our assumed by the local municipalities.

Gray is reimbursed from the CIB proportionately and so I think we have received about 39 million ish.

Speaker 7: year to date and we anticipate more as things mature out and get...

Year to date, and we anticipate more as things kind of mature out and get completed.

Speaker 9: Got it. So that's just incremental reimbursement that has nothing to do with, you know, additional studio leasing or sale, lease backs or any other incremental value unlock you could achieve with the real estate, correct? Correct. That is purely a balance sheet activity. It is not a P and L act.

Got it so that's just incremental reimbursement that has nothing to do with additional scale leasing or or sale leasebacks or any other incremental value unlocking achieve.

Correct correct that it's purely a balance sheet activity. It is not a P&L activity.

Speaker 9: Okay, got it. Thank you. And then just going back to the guide for a second, Jim, I just also want to double-click on maybe lapping the Meredith Station acquisitions. I know you said that we expect the goodness as it's been because you guys have outperformed the broader industry by a few points now on core. Is that something else that we should be factoring into kind of the Q3 guide that sort of goodness starts to fade a little bit?

Okay got it. Thank you and then just going back to the guide for a second Jim I. Just also wanted to double click on.

Maybe lapping Meredith station acquisition I know you said that we expect the goodness as it's been you guys had outperformed the broader industry by viewpoint now encore.

Is that something else that we should be factoring into kind of the Q3 guide that sort of good news starts to fade a little bit.

Speaker 3: We closed two years ago, not one year ago. So, yeah, I mean...

We closed two years ago, not one year ago.

Speaker 6: We closed on Meredith and Quincy two years ago. We said consistently starting sometime last year through every call.

Yeah I mean.

We had we closed on Meredith in Quincy two years ago.

We said consistently starting sometime last year through every call.

Speaker 6: since then that we had thought that there was revenue upside in, especially in certain Meredith markets. We have consistently said for several quarters that we are...

Since then that we had thought that there was revenue upside in especially in certain Meredith markets. We have consistently said for several quarters that we are.

Speaker 6: reaping the benefit of that assumption, that that assumption was never baked into the synergies of the deal we announced.

Reaping the benefit of that assumption that that assumption was never baked into the synergies of the deal we announced.

Speaker 6: We see continuing benefit from the Meredith markets. They are making tremendous progress that.

We see continuing a benefit from the Meredith markets, they're making tremendous progress that's in part why we outperformed I think the industry in Q2 backed by a few points, but what I'm reading is by.

Speaker 6: heart why we outperformed I think the industry in Q2 not by a few points but what I'm reading is by

Speaker 6: probably close to eight to 10 points. So please give us credit to Stu. And that will continue.

Probably close to eight to 10 points. So please give us credit is due.

And you know that will continue.

Speaker 6: For the reasonably foreseeable future in garnering benefit, we've commented that that's both on the local side and on the digital side, also to some extent on the national side, but also

For the reasonably foreseeable future in garnering a benefit.

We've commented that that bolt on the local side and on the digital side also to some extent on the national side, but also.

Speaker 6: The entire rest of the portfolio is performing very strong.

The entire rest of the portfolio is performing very strongly.

Speaker 6: So part of it's the Meredith revenue upside story that we've been talking about for a while, but the rest of the portfolio is doing very well too.

So part of it's the Meredith revenues upside story that we've been talking about for a while but the rest of the portfolio is doing very well too.

Speaker 9: It certainly wasn't a negative comment. I'm just trying to understand any laughing elements going into Q3. So, um, but that's helpful. I didn't take it as a negative. I just want to get some credit.

It certainly wasn't a negative comments I'm, just trying to understand any lapping elements going into Q3. So.

I didn't take it as a negative I just wanted to get some credit.

Speaker 9: Fair enough, fair enough, Jim. Last one for Mr. Kevin, obviously. Just a question on retrans. Just want to make sure that the Q2 number, is that clean? Did that beat? Mostly because subturn came in below what you expected, or was there any kind of true-up noise? I know most of your trips have that happen in Q1, so just wanted to make sure.

Okay Fair enough fair enough Jim.

Last one for Mr. Kevin Obviously, just a question on Retrans just want to make sure that the Q2 numbers that clean.

Mostly because of churn came in below what you expected or was there any noise in Q.

So I just wanted to make sure.

Speaker 3: Our returns, our growth came in a million higher than our guide because the subs were not as...

The.

Our retrans, our gross came in a million higher than our guide because it subs were not as Oh.

Speaker 3: we had modeled, we have been attempting to be particularly conservative in all of our guides over the last year since the...

Did not decline as much as we had modeled we have been attempting to be particularly conservative in all of our guides.

Speaker 3: We were a little surprised on political last fall that we are...

Over the last year.

A year since it would be.

A little surprised on political last fall. So we are.

Speaker 3: Again, we're trying to model things conservatively so that we don't have any negative surprises out there. So yes, our subs came in a bit better than expected.

Again, we're trying to model things and then Ive conservatively. So that we don't have any negative surprises out there. So yes, we are.

Our subs came in a bit better than expected.

Got it alright, thanks, everybody I appreciate it.

Speaker 1: Our next question is going to come from John Dixon with Artemis Investment. Your line is open. Good morning.

Thank you Dan.

Our next question is going to come from John Dixon with the R&D investment.

Line is open.

Speaker 10: I just wanted to tell you as a as an investor in your company, I'm very, very impressed with your portfolio and the leadership of your team.

Good morning, Hilton and your team winning.

I just wanted to tell you as a as an investor in your company I'm very very impressive.

Speaker 10: One of my questions, one of my concerns from a long-term picture is your debt load.

With your portfolio and the leadership of your team.

One of my question is one of my concerns from a long term picture is your debt load.

Speaker 10: I just wanted to question you guys. Can you give some more insight into what you're doing to pay for the COVID-19 pandemic?

I just wanted to the question you guys can.

Can you give some more insight into.

Into.

Speaker 7: Let me begin and I'll let Jim follow up with all that. We have had a pretty direct...

Or what you're doing to to pay that debt down.

Let me begin and then I'll, let Jim follow up with all that.

Speaker 7: communication with the street and all of our investors about what our intentions were to do.

We have had a pretty direct.

Communication with the street in all of our investors about what our intentions were to do an.

Speaker 7: And that was to grow the size of our portfolio. And we have allowed our debt ratio to grow into the five range. And then we have quickly paid it down. That happened after the acquisition of Shores. It happened after the acquisition of Raycom. And we're in the same situation now.

And that was to grow the size of our portfolio and we have allowed our debt ratio to grow into the five range and then we have quickly paid it down that happened after the acquisition of assures that happened after the acquisition of <unk> Com and.

Speaker 7: our percentage ratio, in my judgment, is really

And we're in the same situation now our percentage ratio in my judgment is is really.

Speaker 7: not totally accurately reflected. Because we have such a high quality portfolio of television stations during a political year, we have a very strong proven record of over delivering on political.

Not totally accurately reflected because we have such a high quality portfolio of television stations. During a political year, we have a very strong proven record of over delivering on political and so as you measure the ratio of the quarters that we had a lot of big political.

Speaker 7: So as you measure the ratio, the quarters that we had a lot of big political...

Speaker 7: And so we have paid down about $600 million in absolute debt over the last

Roles and so we've paid down about $600 million in absolute debt over the last.

Speaker 7: several quarters and that is our intention to do that going forward. So I think that you will see us continuing to produce our ratios and our absolute data.

Several quarters.

And that is our intention to do that going forward. So I think that you will see us.

Continuing to produce our our ratios in our absolute debt as well.

Speaker 10: Well, thank you Hilton and that's really the only question I had and Lance I'd just like to leave it as I really appreciate the leadership of your team. I think you're doing well and I'm very impressed with the quality of your portfolio. Thank you very much. You're awfully nice. I certainly appreciate it. Everybody does.

Well, thank you Hilton and that's really the only question I had then lastly, I'd just like to leave it as I really appreciate the leadership of your team I think youre doing well and I'm very impressed with the quality of your portfolio. Thank you very much.

We're awfully nice I certainly appreciate it everybody does John .

Speaker 1: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. To ask a question, press star 1 on your telephone keypad. Our next question is going to come from Steven Cahill with Wells Fargo. Your line is open.

Yes.

Yeah.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad to ask a question press Star one on your telephone keypad. Our next question is going to come from Steven Cahall with Wells Fargo.

Speaker 8: Yeah, maybe 1st, just pick up on the last question. So it would be great. Jim, if maybe you could just walk through some of the puts and takes to get to free cash flow available for debt pay down this year. You know, I know you talked to a free cash flow number, but between maybe some of the dividends and the capex, how much cash do you think you'll be able to use for debt reduction this year? And then I assume that's going to be a big number next year. So, you know, any kind of outlook on the amount of debt you might be able to bring down with the big political year coming next.

Line is open.

Yeah, maybe first just.

Pick up on the last question so it.

It would be great. Jim if maybe you could just walk through some of the puts and takes to get to a free cash flow available for debt Paydown. This year.

I know you've talked to a free cash flow number but between maybe some of the dividend then and the capex how much cash do you think you'll be able to use for debt reduction this year.

And then I assume that is going to be a big number next year. So any kind of outlook on the amount of debt you might be able to bring down with a big political year coming next year.

Speaker 6: Steven, I said our free cash as we define it would be in the 150 million range.

Steve and I said, our free cash as we define it.

B and a $150 million range.

Speaker 6: As you know, we define pre-cash before our common dividend, which is currently running about $28 million a year.

As you know we define free cash before our common dividend, which is currently running about $28 million a year.

Speaker 6: And it would also be before the.

And it would also be before the.

Speaker 6: expected net investment for a full year 23 in the assembly project.

The expected net investment for a full year 23 in the Assembly project.

Speaker 6: $55ish million on a net basis on a full year. So we will be paying down some debt late this year. You are absolutely right, and Hilton basically said the same thing a couple of minutes ago, that historically, as you know, in political years, we perform exceptionally well and have worked for...

Roughly.

55 ish million dollars on a net basis and a full year.

So we will be paying down some debt.

Late this year.

You are absolutely right in and Hilton.

Basically said the same thing a couple of minutes ago that historically as you know in political years.

We.

Performed exceptionally well and had four.

Speaker 6: longer than we can remember out indexed on a per capita basis, political revenues from anybody in this pierce.

The longer then we can remember out indexed on a per capita basis political revenues from anybody in the peer space.

Speaker 6: We see no reason why 24 won't be similar. We are certainly not going to put a full year estimate on 24 political as you can imagine. Only to say it's going to be a large number. Political comes cash in advance. So it for all intents and purposes goes directly to free cash flow.

We see no reason why 24 won't be similar we are certainly not going to put a full year estimate on 'twenty for political are you in.

Imagine.

Only to say, it's going to be a large number political comes cash you didn't dance so for all intents and purposes.

Speaker 6: So we will be able to make a significant payment of debt, especially the latter part of next year. I'll remind people that...

Direct lead a free cash flow.

So we will be able to make a significant payment that especially the latter part of next year I'll remind people that.

Speaker 6: for every political season except for 22, and it changed slightly in 22, but history has said...

For every political season, except for 'twenty, two and it changed slightly in 'twenty, two but history has said that about half of our political in 'twenty. Two it was slightly less than half of our political but anyways. The vast majority of political what shows up in the <unk>.

Speaker 6: that about half of our political, and in 22 it was slightly less than half of our political, but anyways the vast majority of political shows up in the fourth quarter of the year.

Speaker 6: which in 24 will allow us to make a

Fourth quarter of the year, which in 24 will allow us to make a.

Speaker 6: significant debt pay down. You can look at our investor deck and see what we've done in prior political years to

Significant debt pay down you can look at our investor deck and see what we've done in prior political years too.

Speaker 6: I can't guarantee the past is the future, but if you look at the investor deck and see what we've been able to do in free cash in political years, I think it will be very instructive to everyone.

Can't guarantee the past is the future.

But if you look at the investor deck and see what we've been able to do in free cash in political years, I think it will be very instructive to everyone.

Speaker 8: Thanks, Jim. And maybe to follow up on that political theme, you know, this could be for for Jim or for Pat. I think your guidance for a Q3 in political is lower than what you did pro forma in 2019. Is that just some conservatism after some of the more dynamic nature of political spending? And maybe related to that, Pat, how many political impressions do you pick up in core in the back half of the year? Because I imagine that's a pretty big tailwind given the level of crowd out you had last year.

Okay.

Thanks, Jim and maybe to follow up on that political theme, yes, it could be for Jim or for Pat.

I think your guidance for Q3 and political is lower than what you did pro forma in 2019 is that just some conservatism. After some of the more dynamic nature of our political spending and maybe related to that cat.

Cat, how many political impressions do you pick up in core in the back half of the year, because I imagine that's a pretty big tailwind given the level of crowd out you had last year.

Speaker 2: It'll definitely, it'll be impactful in September , October in terms of crowd out. You're right. We are being conservative, you know, and for obvious reasons. You know, obviously the former president is a huge wild card and

It'll definitely it'll it'll be impactful in September October in terms of crowd out.

You are right, we are being conservative and for obvious reasons.

Obviously, the former president of huge wildcard.

Speaker 2: His situation, I think, sort of dictates conservatism. So

And his situation I think sort of dictates conservatism so.

Speaker 2: it could turn out significantly better or it could fall into a wide range.

It could turn out significantly better or it could be you could.

Speaker 2: I think that particularly in October of last year, there was a significant sort of crowd out factor.

Fallen to a wide range, but.

I think I think that Ah.

Particularly in October of last year, there was a significant.

Speaker 6: Yeah, but obviously, if you look at this, Steven again, if you're comparing the 19, yeah, we're probably a little more conservative. As Pat said, there's probably a reason to be. We've obviously had an extremely strong first half performance.

Sort of crowd out factor September and October .

Yeah.

But obviously.

And if you look at it is Steve It again, if you're comparing an 19 year, we're probably a little more conservative as Pat said, there's probably a reason to be we've obviously had an extremely strong first half performance.

Speaker 6: You know, we started the year with a political guide. I'd have to go back and look, but I think it was closer to 40 million than the current 60 million guide. So certainly our expectations have been improving as we've gone along. You know, I think, again, T.P.

You know we started the year with a political guide I'd have to go back and look but I think it was closer to $40 million in the current 60 million guide. So certainly our expectations have been improved me proving as we've gone along.

You know I think.

Speaker 6: year is a, except for the early president, 24 presidential money, it is a traditional off year.

And keeping in mind that.

This year is a except pretty early president twenty-four presidential money. It is a traditional off year.

Speaker 6: Traditional off year is progressing kind of like we would expect it to I don't think any of us have seen any major red flags yet.

Traditional off year is progressing kind of like we would expect it to I don't think any of us have seen any major red flags yet.

Speaker 6: there and as Pat said the wild card in political whether it's Q3 or Q4 is going to be what happens with the early 24 especially the early primary state.

There and as Pat said, the wildcard in political whether it's Q3 or Q4 is going to be what.

What happens with the early 'twenty four, especially the early primary states. We certainly expect that we will we will be getting more money on the early primary states as we go through the latter part of the year, because we're very strong position in those states.

Speaker 6: We certainly expect that we will be getting more money on the early primary states as we go through the latter part of the year because we're in a very strong position in those states.

Speaker 6: We'll kind of let the numbers take care of themselves. You know, we all in all for a nonpolitical year and we've commented about

We'll kind of let the numbers take care of themselves.

You know, we all in all for a nonpolitical year and we've commented about.

Speaker 6: unimaginable early political spend in 23 going into 24 for the 24 presidential cycle.

An unimaginable early political spending in 'twenty three going into 'twenty four for the 24 presidential cycle.

Speaker 6: At the end of the day, we think political for 23 as an off year is going to take care of itself.

At the end of the day, we think credit political for 'twenty. Three is an off year is going to take care of itself.

Speaker 8: Thank you, and then maybe just the last 1 for Kevin, we do kind of our own sub counts and forecast as well. And your low single digit number certainly sounds better than ours. I think some of the delta may be paramount plus and peacock, which I know you do get paid on for your stations as well. So number 1, is that correct in terms of the way you're doing your sub counts? And is there any way to think about the impact of paramount plus and peacock within that low single digit rate that you're at now? Thank you.

Okay.

Thank you and then maybe just the last one for Kevin.

We do kind of our own sub counts and forecast as well in your low single digit number certainly found better than ours I think some of the Delta may be Paramount fucking Peacock, which I know you do get paid on for your stations as well so.

Number one is that correct in terms of the way Youre doing your sub counts and is there any way to think about the impact of Paramount plus in peacock within that low single digit rate the trend. Thank you.

Speaker 3: Always included.

Stephen we have always.

Speaker 3: every distributor who pays us a fee for the linear distribution of our signals as a distributor when we do subscriber counts and we have always count...

Always always included.

Every distributor who pays us a.

Fee for the linear distribution of our signals as a distributor of Omi do subscriber counts and we have always counted a subscriber.

Speaker 3: with Paramount Plus and before that CBS All Access.

Speaker 3: when we count subscribers. We are getting paid a monthly fee per sub for the 24-7 distribution of our signal. So we have never excluded them and I don't see a reason to exclude them otherwise. In terms of magnitude of Paramount Plus and Peacock, I'm concerned about the amount of signal that we get from the signal.

With Paramount Pos and before that CBS all access.

When we count subscribers. They are we are getting paid a monthly fee per sub for the 24 seven distribution of our signals. So we have never excluded them and I don't see a reason to exclude them otherwise.

In terms of magnitude of Paramount Parson Peacock.

Speaker 3: been asked I think every call for that. We're not supposed to be disclosing that.

I'm concerned about giving that percentage out monastic every call for that.

Speaker 3: So numbers for any distributor and we provide combined number. I think it provides.

We're not supposed to be disclosing the.

So numbers for any distributor and we provide the combined number I think it provides it.

Speaker 3: easy roadmap for people to figure out what Paramount Plus' numbers are, and we're not prepared to do that. We are the biggest CBS affiliate, and so you can presume that...

They're all easy roadmap for people to figure out what Paramount pluses numbers are and we're not prepared to do that we are the biggest CBS affiliate.

And so you can presume that that's.

Speaker 3: Paramount Plus is a very large part of that, and Peacock is a fairly small part of that.

Between Peacock and Paramount plus it's.

Paramount passes a very large part of that Peacock is a fairly small part of that.

Great. Thank you.

Speaker 1: Our next question is going to come from Nick Sangler with Steven Think. Nick, your line is...

Thanks Steven.

Our next question is going to come from Nick <unk> with Stephens, Inc. Your line is open.

Speaker 11: Hey, everyone. Thanks. First off, man, do I wish I received compliments like you just received from the art of this investor there. So aren't you going to follow up? I mean, come on. It's always nice to hear and nice of them to do so. I did say.

Hey, everyone. Thanks.

First off man do I wish I received complements like you just received from the Artemis Investor there.

You're going to follow up I mean come on.

It's been it's always nice to hear and nice to them to do so.

Speaker 11: But if you, you know, moving on to the questions here, just if you, if you strip out auto's contribution to growth in the quarter, which I imagine

Uh huh.

But if you move to the questions here just if you if you strip out auto's contribution to growth in the quarter, which I imagine it's back of the envelope math is pretty sizeable assuming.

Speaker 11: back of the envelope math is pretty sizable assuming you know auto is maybe 20% of the mix at this point and obviously growing 20% just curious how you gauge I guess local performance in the quarter and and the outlook

Auto is maybe 20% of the mix at this point and obviously growing 20% just curious how you gauge I guess local performance in the quarter and the outlook stripping out auto and if there's really any other verticals to call out that.

Speaker 11: stripping out auto and if there's really any other verticals to call out that is contributing to the growth outlook and commentary.

Speaker 6: As we said consistently for multiple quarters, home improvement has continued to be very strong quarter after quarter. Q2 is no different.

That is contributing to the growth outlook and commentary.

As we've said consistently for multiple quarters home improvement has continued to be very strong quarter after quarter.

Speaker 6: And our expectations for Q3 for that is not different as well based on a long track record. And as we've also commented for the last, oh at least year if not longer, legal has done exceedingly well.

<unk> two is no different than our expectations for Q3 for that is not there for them as well based on our long track record and as we've also commented for the last.

Oh at least year, if not longer legal has done exceedingly well.

Speaker 6: You are right, part of it is a story about auto rebounding which we had said for a long time would eventually happen and guess what, it did. But there is also, again, other bright spots. Some categories that you would expect like fast food, probably a little challenge, but that's been challenged for longer now than I can remember. No surprise there. And things like that. And again, I think that new local business...

So.

You're right part of it is a story about auto rebounding, which we had said for a long time would eventually happen and guess what it did.

But there was also a again other bright spots.

Plate in some categories that you would expect like fast food, probably a little challenge, but that's been challenged for longer now than I can remember no surprise, there and things like that and again I think.

Speaker 6: Month after month, quarter after quarter is, I mean that's...

You know that new local business development.

Speaker 6: basically not auto that's that's mom and pop uh you know growing growing business the good old-fashioned

Month after month quarter after quarter is I mean, that's.

That's basically not auto that's that's mom and pop.

As you know growing growing business that is good old fashioned way.

Speaker 11: Got it on, that's helpful. And then I did want to talk on the sports rights because you guys, you guys kind of brought it up, but basically I'm wondering if you're able to provide really any details.

Uh huh.

Got it no that's helpful and then.

I did want to talk on the sports rights. Because you guys you guys kind of brought it up but basically I'm wondering if you're able to Brian really any details.

Speaker 11: on the structure that you've got with the Phoenix Suns and Mercury. And perhaps alternatively, you spoke to just many different types of structures these sports deals can take.

On the structure that you've got with the Phoenix SUNS in Mercury and perhaps alternatively.

Speaker 11: I'm wondering maybe you could just actually just walk us through that. Like, what what types of structures do you foresee? Just like, whether or not there's typically fixed payments, potential advertising rev share agreements, just anything to kind of help us understand what these structures look like as. Potentially more are to be announced as we push forward. So, I'll start.

You spoke to just many different types of structures. These sports deals can take.

I'm wondering maybe if you could just actually just walk us through that like what what type structures do you foresee just like whether or not there's typically fixed payments potential advertising Rev share agreements just anything to kind of help us understand what the structures look like as potentially more our to be announced as we push forward.

Speaker 2: there are an infinite number of ways you can structure these deals. There's variances in distribution, whether it's all over the air, whether it's some...

Yeah, So I'll start it's Pat.

There are a number of ways you can structure these deals.

There's variances in distribution, whether it's all over the air whether it's some.

Speaker 2: over the air, some cable, some direct to consumer, some over the air with direct to consumer. There's a lot of ways that can be played. There are differences in the way the inventory gets sold. Does the rights acquirer sell the inventory? Does the team sell the inventory? Who does the production? Is there pre and post? There's just a ton of different variables that impact those types of things.

Over the year some cable some direct to consumer some over the air with direct to consumer there is a lot of ways that can be played there are differences in the way ways. The inventory gets sold.

Does the Reits acquire or sell the inventory does the team sell the inventory who does the production.

Is there a pre and post there's just a ton of different variables.

Speaker 2: And I think we're at a point where all that's sort of starting to get figured out. But it's a very fluid situation and as is the diamond situation and we're just monitoring where we need to monitor, we're acting where we need to act. And but we do believe there will be opportunity.

That that impact those types of discussions.

And and I think we're at a point, where all that's sort of starting to get figured out, but it's a very fluid situation and.

And.

As is the.

The diamond situation and we're just monitoring where we need to monitor we're acting where we need to act.

Speaker 11: Got it and then all right, last last 1 from me here just on political given. I think some estimates are coming out. Maybe.

But we do believe there will be opportunity there.

Got it and then alright last last one from me here just on political given.

Speaker 11: Maybe 11 billion in this cycle, maybe 12 billion for the cycle.

Some estimates are coming out maybe maybe.

Speaker 11: and obviously the potential for that to be some pull forward I guess into 2023.

Maybe 11 billion in this cycle, maybe $12 billion for the cycle.

And obviously the potential for there to be some pull forward I guess into 2023 as you look across your markets are there any maybe worth highlighting where you are seeing political AD spend at this point in time significantly above or just different in general from what you would have.

Speaker 11: As you look across your markets, are there any maybe worth highlighting where you are seeing political ad spend at this point in time significantly above or just different in general from what you would have seen at this point in time in the last presidential election? That might be a leading indicator of just how large this spend might be as we think about the whole cycle. Thanks. Short answer is no.

At this point in time in the last presidential election, there might be a leading indicator of just how large this.

The spend might be as we think about the whole cycle. Thanks.

Short answer is no.

Speaker 3: or early primary states to any noticeable extent. I mean, look, it's still getting any money now.

People arent really advertising outside of the.

For early primary states to any noticeable extent I mean look it's still getting any money now for presidential primary is still a big deal and that's why I was doing really well in the other states that are generally performing well or a governor's race in two states State House race in Virginia.

Speaker 3: primary is still a big deal. That's why Iowa is doing really well. And the other states that are generally performing well are governor's race in two states, the State House race in Virginia, and then there's some issues that have popped up from time to time.

And then there are some issues that have popped up.

Speaker 3: historically been a 19 it was a fourth quarter event. It's now happening a little early but it's happening in the primary.

From time to time, but.

Presidential primary money is.

Has historically been.

19, it was a fourth quarter event, it's now happening little early but it is happening in the primary primarily io it for us.

Got it thanks, guys I appreciate it.

Speaker 1: As another reminder, if you would like to ask a question, please press star 1. Our next question is going to come from Alan Gould with Loop Capital, you're in line.

Thanks, Nick.

Okay.

As another reminder, if you would like to ask a question. Please press star one.

Our next question is going to come from Alan Gould.

Speaker 12: Thank you. 1st question Kevin, can you go ahead, drill down a little bit more about what the facility boards are doing to negotiate to get the virtual distribution? Any benchmarks? We should be looking for you're trying to literally change laws. So what's going on? Can you just give us some more details there? The focus of the coalition is to.

Loop capital your line.

Thank you first question, Kevin can you drill down a little bit more about what the affiliate boards are going to negotiate to get the virtual distribution any benchmarks, we should be looking for or are you trying to literally change laws. So what's can you just give us some more details there.

The focus of the coalition is too.

Speaker 3: basically to request comment on a 2014 rulemaking that was asking whether the FCC should update its rules to reflect potential arrival of virtual reality.

Courage, the FCC to reopen.

Basically to request comment on a 2014 rulemaking.

That was asking whether the FCC should update its rules to reflect.

Speaker 3: Comments submitted in 2014 are obviously stale in 2023. We are simply at this point the ask is for the FCC to reopen the proceeding and let people tell the FCC what's going on.

The potential arrival of virtual Mvpds.

Comments submitted in 2014 are obviously still in 2023.

Our simple yet at this point the ask was for the FCC to reopen preceding what people tell the FCC was going on.

Speaker 3: That's that's clearly where we're at. There has been support both sides of the aisle in the Senate

That's that's what where we're at there has been support both sides of the aisle in the Senate.

Speaker 3: supporting the FCC to again just open the window and let us let the FCC hear what's going on and what has developed in the nine years since they asked questions about an industry that literally did not exist today.

Supporting the FCC to again, just open the window and let us what the FCC here, what's going on.

And what has developed in the nine years since they ask.

Speaker 8: Any timeframe when we should hear whether the FCC chooses to open that window again? It's entirely up to the chairwoman.

Ask questions about an industry that literally did not exist at that time.

Any timeframe when we should hear whether you actually see chooses to open that window again.

It's entirely up to the chairwoman.

Speaker 8: Thanks and Jim, two questions for you. An easy one is that pre-cashable estimate $115 million or $150 million and on diamond sports, is that all behind us now? Or is there any potential liability remains?

I don't I don't know.

It's all.

Entirely off the chairwoman.

Thanks, Jim two questions for you the easy one is that free cash flow estimate 115 million, a 150 million and on diamonds towards is that all behind us now or is there any potential liability remaining.

Speaker 6: So free cash as we define it is approximately 150. Mhm. And.

So free cash as we define it is approximately 150.

Speaker 6: The issues with the diamond bankruptcy and the impact on our historic agreement is behind us. Obviously, as we said, technically that's a Q3 event, but you've got the numbers there, but it is all behind us at this point. And as we've said, we...

Mhm and.

The.

The issues with the diamond bankruptcy and the impact on our historic.

<unk> is behind US obviously, as we said that technically that's a Q3 event, but you've got the numbers there, but it is all behind us at this point and as we've said we are.

Speaker 6: as a result of the diamond rejection of the contract, we were able to put a new contract in place with the CW for ACC Games. And I would say that the, clearly the net impact on the company with the ins and outs.

As a result of the diamond rejection of the contract we were able to put a new contract in place with the CW for ACC games.

And I would say that the clearly the net impact on the company with the ins and outs.

Speaker 6: we move forward is going to be a significantly immaterial number.

We move forward is going to be a immaterial.

Significantly immaterial number.

Speaker 1: Our next question is going to come from Craig Huber with Huber Research. Your line is on.

Okay. Thank you very much.

Thank you Aaron.

Our next question is going to come from Craig Huber with Keybanc. Your line is open.

Speaker 13: Thank you. I wanted to ask first off, obviously your core advertising numbers are much, much better than your peers out there. I wanted to give you a chance to just explain why you think you guys are outperforming their peers so much out there.

Oh, Thank you I wanted to ask first off.

Obviously your core advertising numbers are much much better than your peers out there I wanted to give you a chance to just explain why you think you guys are outperforming their peers. So much out there I mean, we all ever thoughts I would like to hear your bullet points of why you think you're outperforming so much on core please.

Speaker 6: Well, this is Jim, I'm going to start and then I'm going to let Pat and Sandy jump in.

Well this is Jim I'm going to start and then I'm going to.

I'll, let Pat Sandy jump in.

I'm not going to comment on the peers only to acknowledge the debt obviously the results that we published today.

Seem to be leading the peer group in core advertising, but.

But within the quarter and year to date.

You'd have to ask them I respectfully I'm not going to comment on appear.

You should ask peers.

What why they think their results or their results I, certainly cannot and will not answer for them.

Answering for gray.

I think it goes back to what we had been saying literally for decades and.

Q2s results I think again is it many times in the past prove it.

We have the preeminent.

Portfolio with asset quality in the TV broadcast business and we have had that for decades.

We have always had a focus on strong local operations with an exceedingly laser focus on strong local news operations.

And when you got us strong local news operation wrapped around a strong larger overall TV operation and most of the hydrogen 13.

13 markets you operate in.

You have a chance to consistently perform well two exceedingly well to outperforming the peer group.

So what what we're saying in this quarter is really no different than what we had said lots of times and lots of other quarters.

I would add on that is Pat I would add.

And at the risk of being a little bit repetitive we.

We talked about our new local direct efforts.

We're packing on north of $30 million, a quarter in new business every quarter and Thats growing.

We talked a little bit about the Meredith impact.

Which we which we telegraphed back when we closed on Meredith we thought there was revenue upside there and there is and youre seeing the impact of that.

Finally, and again, something I've talked about quite a bit on previous calls our training efforts and our category focused approach that's paying great dividends, we have a really well trained sales staff and we invest in category experts to move our business forward.

Thank you are seeing the result of all that right now.

And my second question, if I could your comments earlier about the Phoenix SUNS arrangement for games in here on your stations there.

How can you just discuss if you would what percent of the games or number of games, you're anticipating showing on your TV stations.

Susan.

So we would guess.

The numbers flexible depending on how many games go to the networks, but historically somewhere on the order of 70 games.

So it's a lot okay.

That's what you were trying to do more of these and other markets. If the opportunity arises I assume because economics must be quite favorable to you.

Yes.

Okay and then also on your local news ratings.

Early morning News and maybe late night can you give us a sense of how those reading trends are doing to give separate the too early and late day.

Yeah. So.

Yeah are you know look we have a bunch of good television stations and.

You know I can't sit here and tell you that theres this dramatically dramatic spike.

Up or down.

The numbers are.

Our large and continue to be large.

Morning News, there was a little bit of a little bit noise in morning news numbers around COVID-19.

And.

But we're back sort of.

Returned to normal you got any thoughts on that Sandy, yes, it's kind of we are back to normal there, but we have seen especially in some of our larger markets and quite frankly, some of the former Meredith markets, where we've seen our audience in the morning News Grad significantly and we're very we're very pleased with that and the same I would say for late news as well, we're seeing that in several of those markets.

Sorry, So you suggested maybe versus pre pandemic 2019 levels, the ratings or stay flat or up.

No. We were just saying there has been a bit of a normalization and.

We're also saying that.

The Meredith markets, which are the larger markets. We have we're seeing audience growth in key in and a number of those markets.

Okay. My last question if I could this ongoing Hollywood strike. If this thing continues here do you anticipate any.

Negative ramifications for your TV stations here.

This is Jim I'll start off and Patterson, you're welcome to join in but we don't see that as a significant headwind one way or the other.

Obviously it will have.

Sure.

Two a.

A modest degree we think some impact on prime time, as we move through the fall obviously, it'll all depend on how quickly.

The strikes are settled and as Hilton said, we hope that they're settled amicably for all parties concerned sooner than later, but.

Any strike eventually gets idled.

We don't given the limited amounts of inventory that we have is we have available to sell in prime time.

The impact to us as we move through September in fourth quarter is is not significant at all I mean, we've seen it before it's not a big deal given again.

You know the local broadcast niche that we occupy we are we are not in network. So.

You know.

Not a super big deal to us.

Great. Thank you.

Okay.

One left to come.

And our last question is going to come from Jim Goss with Barrington Research.

Line is open.

Thank you.

One more on the.

Sports programming, you've been talking about with the Phoenix and the ACC.

Youre, making compelling arguments for betting getting involved and I do understand its early stages and trying to figure. This all out but I am wondering how far are you do plan to take this how extensive the separate type fee.

And I assume theres pretty good competition.

For those sports rights locally.

Can I comment on that and the verb the big issues always seem to be how does it fit into <unk>.

Network scheduling because you're.

And all of the areas, where you have a network feed.

To interrupt our prime time, and a lot of cases I'm, just wondering how how it blends with that sort of situation.

Yeah sure I'll start Jim it's Pat.

So we have a number of.

Independent television stations in larger markets.

Phoenix happens to be one of those markets. So in markets, where we have these.

These independents.

Not a problem, it's a great opportunity.

And then I think what youll see on affiliated stations.

Is you said the sub channels to carry these games. So theres not just the CBS affiliate, but theres other other channels that we are.

Where it would be there would be no issues carrying.

Pro sports games.

So there's there's no.

It's going to vary by market.

But particularly in larger markets, where we do have independence, which include Phoenix Atlanta Portland.

We have two signals in Cleveland.

There are great opportunities there should be great opportunities in those markets.

Okay and.

Okay.

And one last thing after years of scaling up your platform and developing assembly studio.

And a variety of other things.

Do you have any further growth ambition, Dan focusing on your high quality expanded platform save for the other 3%.

And getting into the cap limit or are you sitting still for a while and just evaluating which has been undertaken.

Yeah.

With regard to the last three points to the cap.

We have said consistently for a long time.

There are no must have stations left.

In our opinion.

Over time.

And I stress over time is clearly theres absolutely nothing today.

But over time, if the right thing came along at the right time when.

Or are we felt good about our leverage at say differently. When our leverage was lower would we consider some transaction or a couple of transactions to get the last three percentage points.

That's a definite maybe but it would depend on the circumstances of the time the outlook, we have as a company the price our leverage because again there is no must have left in our view.

We have been very clear on assembly the phase one studio project.

Is.

Essentially completed it will be can be will wrap up its completion over the next few months.

We have said consistently that there is remaining acreage that remains to be developed and you don't lose opening comments he talked about that that's a long term project for the company.

That will be exceedingly thoughtful about.

But other than that I think we've been very clear for a long time that.

We view our Assembly studios is a complementary business to the core operations of the company.

And we've said for a long time that we we are happy to entertain when it makes sense to this company.

Further acquisitions of either again potentially core business and TV, although those opportunities are going to be exceedingly limited or.

Or other complementary businesses, but it has to make sense to us and we're not going to go off and you know completely.

Change, what we have been doing for many decades as far as our core business and our core philosophies.

Okay. Thank you very much then.

Alright, Thank you Jim.

Okay.

There are no more questions in queue. So ill turn it back over to you for any closing remarks. Thank you operator and thank all of you for joining US. This morning, and we look forward to talking to you next quarter have a great weekend.

Yes.

Take your call you may now disconnect.