Q4 2023 The E.W. Scripps Co Earnings Call

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Operator: Thank you for standing by. Welcome to the Scripps fourth quarter 2023 earnings call. At this time, all participants are in a listen only mode.

Thank you for standing by welcome to the Scripps fourth quarter 2023 earnings call. At this time all participants are in a listen only mode. Later, we'll conduct a question and answer session instructions will be given at that time. If you should require assistance during the call. Please press Star then zero as a reminder, this.

Operator: Later, we'll conduct a question and answer session. Instructions will be given at that time. If you should require assistance during the call, please press star then zero.

Operator: As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Executive Vice President of Investor Relations, Carolyn Michelli. Please go ahead.

Conference is being recorded.

I'd now like to turn the conference over to our host executive Vice President of Investor Relations Carolyn Micheli. Please go ahead.

Carolyn Michelli: Good morning, everyone, and thank you for joining us for a discussion of the E. W. Scripps Company's financial results and business strategies. You can visit Scripps.com for more information and a link to the replay of this call. A reminder that our conference call and webcast include forward-looking statements, and actual results may differ. Factors that may cause them to differ are outlined in our SEC filings.

Thanks, Rich and good morning, everyone and thank you for joining us for a discussion of the E. W. Scripps company's financial results and business strategies, you can visit Scripps Dot com for more information and a link to the replay of this call. A reminder, that our conference call and webcast include forward looking statements and actual results may differ factors that may cause them to differ are outlined in our SEC filing.

Carolyn Michelli: We do not intend to update any forward-looking statements we make today. Included in this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and valuation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies' uses or formulations.

We do not intend to update any forward looking statements. We make today included on this call will be a discussion of certain non-GAAP financial measures that are provided as a supplement to assist management and the public in their analysis and valuation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies uses are for.

<unk> included in our earnings release are the reconciliations of non-GAAP financial measures to the GAAP measures reported in our financial statements. We'll hear first this morning from Scripps Chief Financial Officer, Jason Combes, then from Scripps Chief Operating Officer, Lisa Knutson, and finally from President and CEO, Adam Simpson Here's Jason.

Jason Combs: Included in our earnings release are the reconciliations of non-GAAP financial measures to the GAAP measures reported in our financial statement. We'll hear first this morning from Scripps' Chief Financial Officer, Jason Combs, then from Scripps' Chief Operating Officer, Lisa Knutson, and finally from President and CEO, Adam Simpson. Here's Jason.

Jason Combs: Good morning, everyone, and thank you for joining us. Let's start today with a look at our strong finish to 2023. I want to review a few fourth quarter and year-end highlights, then I'll give guidance for the first quarter and several four-year items, and I'll conclude with capital allocation and our debt picture. We were very pleased in 2023 by significantly exceeding our pre-cash flow expectations. On our last earnings call in November, we set a range of $50 to $60 million in four-year free cash flow, and we ended up with about $77 million.

Thanks, Carol and good morning, everyone and thank you for joining us.

Let's start today with a look at our strong finish to 2023 I want to review a few fourth quarter and year end highlights then I'll give guidance for the first quarter and several who your items.

With capital allocation and our debt picture.

We were very pleased that in 2023 by significantly exceeding our free cash flow expectations on our last earnings call. In November we set a range of $50 million to $60 million in full year free cash flow and we ended at about $77 million.

Jason Combs: The overperformance was driven by our highest political advertising revenue for an off-cycle election year, as well as stronger-than-expected ad revenue results in Scripps Network. Also, in 2023, we achieved $752 million in distribution revenue as we renewed 75% of our pay TV house. That was up 15% over 2022, and those results drove net distribution dollars up more than 40%. We are pleased we were able to successfully avoid any blackouts with the cable and satellite providers throughout all of those negotiations.

The over performance was driven by our highest political advertising revenue for an off cycle election year as well as stronger than expected AD revenue results and Scripps networks.

Also in 2023, we achieved $752 million in distribution revenue as we renewed 75% of our pay TV households.

That was up 15% over 2022, and those results drove net distribution dollars up more than 40%.

We were pleased we were able to successfully avoid any blackouts with the cable and satellite providers throughout all of those negotiations.

Jason Combs: For the fourth quarter of 2023, we reported financial results that nearly all met or exceeded the expectations we set in November. We executed tight expense management, and our Scripps Networks revenue came in better than expected at down only 7%, driving network segment profit performance. Network's revenue for the fourth quarter was $230 million, exceeding our guidance because of better-than-expected revenue from all three key areas, general market, connected TV, and direct response. Network's Q4 segment expenses were $166 million, down 1.2 percent from the prior year quarter.

For the fourth quarter of 2023, we reported financial results that nearly all met or exceeded the expectations. We set in November.

We executed a tight expense management and our Scripps networks revenue came in better than expected at down only 7% driving network segment profit performance.

Scripps networks revenue for the fourth quarter was $230 million exceeding our guidance because of better than expected revenue from all three key areas general market connected television and direct response.

Scripps networks Q4 segment expenses were $166 million down one 2% from the prior year quarter.

Jason Combs: Segment profit in networks was $64 million. In our local media division, total revenue was down 12% from the prior year quarter due to the absence of election-year political advertising revenue. Political ad revenue in Q4 of 2023 did exceed our expectations at $16 million, driven by spending in Montana and Ohio. Total political ad revenue for 2023 was $33 million. As I mentioned before, the highest for an off-cycle election. In the fourth quarter, local core advertising revenue was up 1% from the prior year period, and local distribution revenue was up 22% due to renewals of our cable and satellite. Local media expenses were up less than 5% from the prior year quarter.

Segment profit in networks was $64 million.

In our local media Division total revenue was down 12% from the prior year quarter due to the absence of election year political advertising revenue.

Political AD revenue in Q4 of 2023 did exceed our expectations at $16 million driven by spending in Montana and Ohio.

Total political AD revenue for 2023 was $33 million as I mentioned before the highest for an off cycle election.

Fourth quarter local core advertising revenue was up 1% from the prior year period, and local distribution revenue was up 22% fueled by renewals of our cable and satellite agreements.

Local media expenses were up less than 5% from the prior year quarter. This increase reflects higher programming fees and the cost of sports rights agreements with two National Hockey League teams.

Jason Combs: This increase reflects higher programming fees and the cost of sports rights agreements with two National Hockey League teams. Local media segment profit was nearly $86 million. In the segment labeled Other, we reported a fourth quarter loss of $12 million.

Local media segment profit was nearly $86 million.

In the segment labeled other we reported a fourth quarter loss of $12 million. The segment includes spend on promoting our tableau over the air viewing device.

Jason Combs: The segment includes Spen for promoting our Tableau over-the-air viewing. Shared services and corporate expenses were $24 million, up a bit from our November guidance, as better-than-expected quarterly results drove our variable compensation higher. The loss attributable to shareholders of Scripps was $268 million, or $3.17 per share.

Shared services and corporate expenses were $24 million up a bit from our November guidance is better than expected quarterly results drove our variable compensation higher.

The loss attributable to shareholders of Scripps was $268 million or $3 17 per share.

Jason Combs: Pre-tax costs for the quarter included a non-cash goodwill impairment charge for Scripps Networks of $266 million. In addition, we recorded $9.4 million in restructuring charges. These charges increase the loss attributable to shareholders by $3.15 per share.

Pretax cost for the quarter included a noncash goodwill impairment charge for Scripps networks of $266 million.

In addition, we reported $9 4 million in restructuring charges. These charges the increase the loss attributable attributable to shareholders by $3 15 per share.

Jason Combs: The restructuring costs are related to our company-wide reorganization. We are on track to realize annualized savings of more than $40 million by the middle of this year. As of quarter end, cash and cash equivalents totaled $35,000.

The restructuring costs are related to a companywide reorganization, we are on track to realize annualized savings of more than $40 million by the middle of this year.

As of quarter end cash and cash equivalents totaled $35 million.

Jason Combs: Our net debt at quarter end was $2.9 billion. We ended the year with net leverage of 5.7 times, per the calculations in our credit facility. Now, I'd like to discuss a few key guidance items for the first quarter and full year 2024. For the first quarter in the Scripps Networks Division, we expect revenue to be flat to down low single digits. We expect first quarter network segment expenses to be down low single digits.

Our net debt at quarter end was $2 9 billion. We ended the year with net leverage of five seven times per the calculations in our credit agreements.

And now I'd like to discuss a few key guidance items for the first quarter and full year 2024 for.

For the first quarter and the Scripps networks Division, we expect revenue to be flat to down low single digits. We.

We expect first quarter network segment expenses to be down low single digits.

Jason Combs: We expect total local media revenue to be up in the low teens percent. We expect local poor ad revenue to be flat to up in the low single digits. Lisa will give more color in a moment about our strong start to the quarter with key categories, including auto. We expect Q1 local media expenses to be up about 10%. If you back out the cost associated with our new sports deals, network fee step-ups, and one-time facility work, local media expenses would be up in the low to mid-First quarter. Shared services costs are expected to be about $24 million. We expect the segment labeled Other to generate a loss of about $7 million in Q1 as we continue to educate consumers about free over-the-air viewing and to promote our Tableau device. Now I'd like to touch on several full year items.

We expect total local media revenue to be up in the low teens percent range. We expect local core AD revenue to be flat to up low single digits at least will give more color in a moment about our strong start to the quarter with key categories, including auto.

We expect Q1 local media expenses to be up about 10%.

If you back out the costs associated with our new sports deals network fee step ups and one time facility work local media expenses would be up in the low to mid single digits.

First quarter shared services costs are expected to be about $24 million.

We expect the segment labeled other to generate a loss of about $7 million in Q1, as we continue to educate consumers about free over the air viewing and to promote our tableau device.

Now I'd like to touch on several full year items.

Jason Combs: We expect our local political advertising revenue to come in between $210 and $250 million this presidential election. We expect Connected TV revenue for the networks to increase by more than 40 percent, excluding the impact of our low-margin programmatic product that we're funding. We expect our distribution revenue growth to be modest this year because we're renewing only 5% of our pay-to-be house. We expect capital expenditures of $70 to $80 million.

We expect our local political advertising revenue to come in between 210 and $250 million in this presidential election year.

We expect connected television revenue for the networks to increase by more than 40%, excluding the impact of our low margin programmatic product that we're sunsetting.

We expect our distribution revenue growth to be modest this year, because we are renewing only 5% of our pay TV households.

We expect capital expenditures of $70 million to $80 million that includes onetime cost to build out a new station facility and to reconfigure office spaces, where we're consolidating our footprint to lower operating expenses.

Jason Combs: That includes one-time costs to build out a new station facility and to reconfigure office spaces where we're consolidating our footprint to lower operating costs. We expect cash interest this year of between $200 million and $210 million, cash taxes of $50 million to $60 million, and depreciation and amortization of $150 million to $160 million. We do not have any required pension contributions.

We expect cash interest this year of between $200 million to $210 million cash taxes of $50 million to $60 million in depreciation and amortization of $150 million to $160 million we.

We do not have any required pension contributions this year.

I'd like to end by discussing capital allocation and debt Paydown as you know scripts took on significant debt in early 2021 to acquire iron media.

Strategic purchase of eye and form the foundation of our scripts network segment, which has helped the scripts to diversify its revenue base and to build strong nationwide over the air audience reach.

Jason Combs: I'd like to end by discussing capital allocation and debt pay-down. As you know, Scripps took on significant debt in early 2021 to acquire Ion Media. The strategic purchase of ION formed the foundation of our Scripps Networks segment, which has helped Scripps to diversify its revenue base and to build a strong nationwide, over-the-air audience. The new segment has increased the durability and profitability of our enterprise. The ION television stations and the Spectrum have opened up significant growth opportunities for the company in local and national media. Remarkably, in the three years since acquiring that debt, Scripps has already paid down 22 percent, significantly outpacing our peer group. We've brought our total debt down by nearly $1 billion from about $4 billion to about $3 billion today. That represents 98% of our discretionary capital applied toward that reduction. Focusing on debt paydown, we have elected to defer the payment of our preferred equity dividend to Berkshire Hathaway. This deferral was permitted under the terms of our agreement with Berkshire.

The new segment is increase the durability and profitability of our enterprise the ion television stations in the spectrum have opened up significant growth opportunity for the company in local and National media through Scripps Sports.

Remarkably in the three years since acquiring that dead Scripps is already paid down 22% significantly outpacing our peer group, we brought our total debt down by nearly $1 billion from about $4 billion to about $3 billion today.

That represents 98% of our discretionary capital applied towards debt reduction.

Good thing on debt pay down we have elected to defer the payment of our preferred equity dividend to Berkshire Hathaway. This quarter. This deferral as permitted under the terms of our agreement with Berkshire, a deferral will allow us to maximize the pay down of our traditional bank debt and provide us with more flexibility in refinancing our upcoming maturities.

This will change our rate on the preferred dividend from 8% to 9%.

This year it is our intention to delever aided by cash from our political advertising revenue incremental cash flow that may come from other topline revenue operating expense levers and financing offers so when you hear us say every quarter that our top capital allocation priority is paying down debt. We are backing that up with our actions now here's Lisa the share highlights for most of the local media and Scripps networks operations.

Lisa Knutson: A deferral will allow us to maximize the paydown of our traditional bank debt and provide us with more flexibility in refinancing our upcoming maturities. This will change our rate on the preferred dividend from 8% to 9%. This year, it is our intention to fund it with cash from our political advertising revenue, incremental cash flow that may come from other top-line revenue, operating expense levers, and finances. So when you hear us say every quarter that our top capital allocation priority is paying down debt, we are backing that up with our actions. Now, here's Lisa to share highlights from both the local media and Scripps Network. Thanks, Jason, and good morning, everyone.

Thanks, Jason and good morning, everyone I am pleased to start by sharing that the advertising momentum. We saw begin to build in the fourth quarter has continued as we moved through the first quarter, that's true across both our operating segments from local media core advertising to several of our National network revenue stream. This morning, I will give you color on our local.

Core advertising categories for Q4, and Q1, and then discuss the trends we are seeing in the national and National advertising with Scripps networks, then I'd like to look ahead to this season's upfront, which will be upon us very quickly and we'll wrap up with our political outlook.

In local media for fourth quarter, we saw our top five categories and up higher year over year, the top performer with automotive up 9% followed by home improvement up 8% and the media and communications category up 6%.

Lisa Knutson: I'm pleased to start by sharing that the advertising momentum we saw begin to build in the fourth quarter has continued as we move through the first quarter. That's true across both our operating segments, from local media core advertising to several of our national network revenue streams. This morning, I will give you color on our local core advertising categories for Q4 and Q1, and then discuss the trends we are seeing in national advertising with Scripps Network. Then I'd like to look ahead to this season's upfront, which will be upon us very quickly, and we'll wrap up with our political outlook. In local media for the fourth quarter, we saw our top five categories end up higher year over year. The top performer was automotive, up 9%, followed by home improvement, up 8%, and the media and communications category, up 6%.

Also notable with services, our largest category, which was up 3% that is the first quarter services has finished up year over year and five quarters.

Moving into the first quarter. The services category is up quarter to date as our automotive Paul improvement and retail we see continued momentum as we move through this quarter and are optimistic about a solid finish.

Turning to Scripps networks for the fourth quarter saw us begin to build back up.

Some of the direct response advertising daughter dollars that had declined as inflation spiked in recent quarters and easing of inflation has brought back our advertisers who are reliant on tapping consumers' discretionary income demand is up and therefore, so our ad rates.

Lisa Knutson: Also notable was Services, our largest category, which was up 3%. That is the first quarter services has finished up year over year in five quarters. Moving into the first quarter, the Services category is up quarter to date, as are Automotive, Home Improvement, and Retail.

As you know the entire national advertising marketplace was challenged by last year's weak upfront, which was down 10% for script the upfront typically laser and a nice foundation, 30% or so.

Lisa Knutson: We see continued momentum as we move through this quarter and are optimistic about a solid finish. Turning to Scripps Networks, the fourth quarter saw us begin to build back some of the direct response advertising dollars that had declined as inflation spiked in recent quarters. An easing of inflation has brought back DR advertisers who are reliant on tapping consumers' discretionary income. Demand is up, and therefore, so are our ad rates. As you know, the entire national advertising marketplace was challenged by last year's weak uptrend, which was down 10%.

Our first quarter dollars, we're making up ground with our aggressive tactics to drive rate and D are in scatter and that accounts for the momentum you see in our first quarter Guide and fact scatter pricing is up more than 35% over upfront pricing.

Connected television revenue has continued to be strong for Scripps networks 2023, So a year over year increase of nearly 70% after backing out the impact of the low margin programmatic product we are discontinuing.

Lisa Knutson: For Scripps, the upfront typically lays in a nice foundation, 30% or so, of First Quarter dollars. We're making up ground with our aggressive tactics to drive rate in DR and scatter, and that accounts for the momentum you see in our First Quarter guide. In fact, scatter pricing is up more than 35% over upfront prices. Connected TV revenue has continued to be strong for Scripps Networks.

Looking ahead, we're expecting more than 45% growth in our connected television revenue for first quarter and for the full year, we are guiding to more than 40% increase in CTV again after removing the programmatic products to show the extent of organic growth.

We're benefiting from continued audience growth as Americans seek out new options for AD supported free TV and we continue to expand our distribution within the marketplace.

Lisa Knutson: 2023 saw a year-over-year increase of nearly 70% after backing out the impact of the low-margin programmatic products we are discontinuing. Looking ahead, we're expecting more than 45 percent growth in our connected TV revenue for the first quarter. And for the full year, we are guiding to more than 40 percent growth in CTV, again, after removing the programmatic product to show the extent of organic growth.

In fourth quarter, we launched ion on Pluto and it quickly grew to be the number one network on its entertainment tier Likewise ion was named by Google television as one of the most watched live channels of 2023.

Ion is the only broadcast network available in the SaaS marketplace, which is a premium programming lineup that includes top rated procedural and live sports.

If the analysts are correct and describing fast as the new cable then ion and the Scripps networks are exceptionally positioned for more CTV revenue growth.

Lisa Knutson: We're benefiting from continued audience growth as Americans seek out new options for ad-supported free TV, and we continue to expand our distribution within the marketplace. In the fourth quarter, we launched ION on Pluto, and it quickly grew to be the number one network on its entertainment tier. Likewise, ION was named by Google TV as one of the most watched live channels in 2023. ION is the only broadcast network available in the FAST Marketplace, which is a premium programming lineup that includes top-rated procedurals and live sports.

I wanted to talk now about our aggressive approach to selling the upfront. This coming season, why we expect significant significantly improve our outcome. This year under the direction of our new Chief revenue Officer, who came to US from MPC you were taking a much more aggressive stance. We've scheduled our upfront for April nine a month.

Ahead of the large conglomerates in person event, we are expecting several hundred buyers to attend the new approach is commensurate with the stronger position, we hold as a result of our expansion into live sports the most valuable content genre for linear television.

Lisa Knutson: If the analysts are correct in describing FAST as the new cable, then ION and the Scripps networks are exceptionally positioned for more CTB revenue growth. I want to talk now about our aggressive approach to selling the upfront this coming season and why we expect to significantly improve our outcomes. This year, under the direction of our new Chief Revenue Officer, who came to us from NBCU, we are taking a much more aggressive stance. We've scheduled our upfront for April 9th, a month ahead of the large conglomerate's in-person events. We are expecting several hundred buyers to attend.

<unk> sports and our partnership with the WNBA and the National Women's Soccer League are the foundation for recasting ion into an entertainment destination for younger and more diverse audiences at scale, which is more attractive than ever to advertisers.

Our national Sports sales efforts are drawing new premium advertisers to ion and other scripts network brands across all time periods.

Sports advertising is serving as the tip of the spear for scatter market advertising in general to that end. We are focused on growing our base of regular advertisers drawn by our sports programming and expanding into CTV into <unk> and.

Lisa Knutson: The new approach is commensurate with the stronger position we hold as a result of our expansion into live sports, the most valuable content genre for linear TV. Sports and our partnership with the WNBA and the National Women's Soccer League are the foundation for recasting ION into an entertainment destination for younger and more diverse audiences, which is more attractive than ever to advertisers. Our national sports sales efforts are drawing new premium advertisers to ION and other Scripps Network brands at all times. Sports advertising is serving as the tip of the spear for scatter market advertising in general. To that end, we are focused on growing our base of regular advertising, drawn by our sports programming, and expanding into CTV and into our popular entertainment brands with a specific focus on multicultural. In addition to the lift from sports, we are seeing ratings successes that also position us well to benefit as the ad market recovers. In fact, the Scripps Networks were the only national entertainment portfolio showing year-over-year growth in the first quarter, both in prime and total day.

Into our popular entertainment brand with a specific focus on multicultural.

In addition to the lift from sports we are seeing ratings successes that also position us well to benefit as the AD market recovers in fact, the Scripps networks are the only national entertainment portfolio showing year over year growth in the first quarter, both in Prime and total day, we are delivering 7% more households, and.

<unk>, 5% more total viewers than at the same time.

Last year. This growth is separate and in addition to the audience growth and momentum we see.

We are experiencing on CTV.

I'd like to conclude by giving you color on our political AD revenue opportunity for 2024.

As you know each race each market and each election year have different spending as determined by where the toss ups are taking place and where the national parties impacts put their AD dollars to work what.

What we know for sure is that the ecosystem.

System of spending will be larger than ever.

And we know that local broadcasters will continue to take the lion's share of that spending.

Lisa Knutson: We are delivering 7 percent more households and 5 percent more total viewers than at the same time last year. This growth is separate and in addition to the audience growth and momentum we see. We're experiencing on CTV.

That impact puts the total election spend at 10.2 billion compared.

Compared to 9 billion in 2020.

And the firm says 52% of the advertising spend will go to local broadcasters compared to 48% last time.

Lisa Knutson: I'd like to conclude by giving you color on our political ad revenue opportunity for 2024. As you know, each race, each market, and each election year is different. Spending is determined by where the toss-ups are taking place and where the national parties and PACs put their ad dollars to work. What we know for sure is that the ecosystem.

For script, Jason mentioned are clearer line of sight now is a range of $210 million to $250 million, presumably we're going to see the same two candidates running ads in 2020, but there are a couple of new factors to think about here one vital support is not what it was in 2020 and too much.

The money Trump has raised is going through his legal defense not to its campaign.

Lisa Knutson: The system of spending will be larger than ever, and we know that local broadcasters will continue to take the lion's share of that spending. Ad Impact puts the total election spend at $10.2 billion, compared to $9 billion in 2020. And the firm says 52% of the advertising spend will go to local broadcasters, compared to 48% last year. For Scripps, Jason mentioned our clearest line-of-sight now is a range of $210 to $250 million. Presumably, we're going to see the same two candidates running in 2020. But there are a couple of new factors to think about here. One, Biden's support is not what it was in 2020, and two, much of the money Trump has raised is going to his legal defense, not to his campaign.

So while experts say there will be a greater level of fundraising for this cycle. It won't necessarily be spent on the presidential race, the states, where Scripps does expect to benefit from presidential election, spending, our Arizona, Nevada, Wisconsin and Michigan.

Turning to the U S Senate races, Scripps has local stations in seven competitive states all of which have Democrats defending their currencies, Montana is a big one with Senator John Hester, we're already seeing significant orders coming into Montana, where scripts commands strong market share across the state.

We're also well positioned in Ohio, with two big ABC stations, and in Wisconsin, Maryland, Michigan, and Arizona, which also are projected to have tight Senate races, with national money pouring into the support party's candidates.

In Nevada, our Las Vegas stations will benefit from both a contested Senate race and being in a prejudice presidential swing states.

Lisa Knutson: So while experts say there will be a greater level of fundraising for this cycle, it won't necessarily be spent on the presidential race. The states where Scripps does expect to benefit from presidential election spending are Arizona, Nevada, Wisconsin, and Michigan. Turning to the U.S. Senate races, Scripps has local stations in seven competitive states, all of which have Democrats defending their current seats. Montana is a big one, with Senator Jon Tester.

We have no contested governors races, the cycle and fewer competitive house races, because of gerrymandering in redistricting efforts nationwide. However, another area of opportunity that could be beneficial is our is the ballot referendums in some of our bigger states, including Florida, It's estimated that up to <unk>.

States could have controversial ballot issues.

One such measure in Ohio last ball helped to drive our over performance with political for the year. So we'll be watching to see whether those issues make it onto the ballot in key states. This summer.

Lisa Knutson: We're already seeing significant orders coming into Montana where Scripps commands strong market share across the state. We were also well positioned in Ohio with two big ABC stations. And in Wisconsin, Maryland, Michigan, and Arizona, which also are projected to have tight Senate races with national money pouring in to support party candidates. In Nevada, our Las Vegas stations will benefit from both a contested Senate race and being in a presidential swing state. However, we have no contested governor's races this cycle and fewer competitive House races because of gerrymandering and redistricting efforts nationwide.

Before I turn it over to Adam I would like to thank scripts employees for their hard work and perseverance during especially demanding time a year ago. The company began a significant reorganization. In addition to realizing meaningful cost savings. We have made many changes to the way we do business, we have acted with urgency and rethinking the best ways to serve our audiences.

And our advertisers and to create new value for the enterprise.

While necessary that changes that haven't been easy and I credit our resilient employees for making it work and now here's Adam.

Thanks, Lisa and good morning, everyone. It's been into multiple with several months in the U S media landscape last September after a 10 day impasse during which you would have thought we were witnessing the end of pay TV Disney and charter announced the landmark distribution agreement that reinforces the power of the cable bundle.

Lisa Knutson: However, another area of opportunity that could be beneficial is the ballot referendums in some of our bigger states, including Florida. It's estimated that up to seven states could have controversial ballot issues. One such measure in Ohio last fall helped to drive our overperformance with politics for the year. So we'll be watching to see whether those issues make it onto the ballot in key states this summer. Before I turn it over to Adam, I'd like to thank Scripps employees for their hard work and perseverance during a specially demanding time. A year ago, the company began a significant reorganization. In addition to realizing meaningful cost savings, we have made many changes to the way that we do business. We have acted with urgency in rethinking the best ways to serve our audiences and our advertisers and to create new value for the enterprise. While necessary, the changes haven't been easy, and I credit our resilient employees for making them work. And now, here's Adam.

Just a few weeks ago, Disney Fox and Warner Brothers Discovery announced the sports streaming partnership and again from the market's reaction you would've thought it was literally the end of TV I completely understand why even the most seasoned immediate investors struggling to sort through the chaos.

I've been a part of this business for a while and while it feels and it feels like the market is always ready to believe the worst about broadcast.

As a journalist myself, leaving the company with the journalism mission I prefer to deal in facts and steer clear of rumor innuendo and speculation. So I thought I'd start this morning, with what we actually know about these changes to the marketplace and how they impact scripts.

To start the yet to be named sports focused streaming joint venture will be yet another virtual mvpds in an already crowded and somewhat established marketplace. It will also be competing with and likely cannibalizing other streaming products from the very same companies that make up the partnership.

Adam Simpson: Thanks, Lisa, and good morning, everyone. It's been a tumultuous several months in the U.S. media landscape. Last September, after a 10-day impasse during which you would have thought we were witnessing the end of pay TV, Disney and Charter announced a landmark distribution agreement that reinforced the power of the cable bundle. Then, just a few weeks ago, Disney, Fox, and Warner Bros.

And somewhere between 40 and $50 a month it will be less expensive than most of its virtual mvpds competitors and it will also be much less of a complete consumer proposition than the existing pay TV bundles.

If this is all about attracting the sports fanatic, it's hard to say, it's a slam dunk.

Adam Simpson: Discovery announced the Sports Streaming Partnership, and again, from the market's reaction, you would have thought it was literally the end of television. I completely understand why even the most seasoned media investor is struggling to sort through the chaos. I've been a part of this business for a while, and it feels like the market is always ready to believe the worst about broadcasting. As a journalist myself, leading a company with a journalism mission, I prefer to deal in facts and steer clear of rumor, innuendo, and speculation.

March Madness will be incomplete the Olympics will be missing outright and subscribers will get only half of the NFL. The very sport that makes up the top 200 programs on television.

It's the introduction of yet another service into a fragmented landscape that will likely confuse and confound an already frustrated consumer.

This is not to say that the new offering won't get subscribers if as the partners say it will target cord cutters, we at Scripps will very much benefit from increased distribution fees and strength and reach.

Adam Simpson: So I thought I'd start this morning with what we actually know about these changes to the marketplace and how they impact Scripps. To start, the yet-to-be-named sports-focused streaming joint venture will be yet another virtual MVPD in an already crowded and somewhat established marketplace. It will also be competing with, and likely cannibalizing, other streaming products from the very same companies that make up the partnership. At somewhere between $40 and $50 a month, it will be less expensive than most of its virtual MVPB competitors, but it will also be much less of a complete consumer proposition than the existing pay TV bundles. If this is all about attracting sports fanatics, it's hard to say it's a slam dunk.

Executives have confirmed over and over that affiliates like Scripps will be carried along and compensated just as we are with the other virtual mvpds.

I can't see why analysts nor investors would see this as some sort of killer app, but hey, if it adds new value to linear TV I'll be happy to root for its success and take advantage of its reach because we will get paid for our ABC and Fox affiliates.

To be clear fragmentation and disruption we're here well before the JV announcement and Scripps has already been driving growth in this chaos, even if wall Street has yet to recognize it.

Adam Simpson: March Madness will be incomplete, the Olympics will be missing outright, and subscribers will get only half of the NFL, the very sport that makes up the top 200 programs on TV. It's the introduction of yet another service into a fragmented landscape that will likely confuse and confound an already frustrated consumer. This is not to say that the new offering won't get subscribers. If, as the partners say, it will target cord-cutters, we at Scripps will very much benefit from increased distribution fees and strength in reach. Executives have confirmed over and over that affiliates like Scripps will be carried along and compensated just as we are with the other virtual MVPDs. I can't see why analysts nor investors would see this as some sort of killer app, but hey, if it adds new value to linear television, I'll be happy to root for its success and take advantage of its reach because we'll get paid for our ABC and Fox affiliates. To be clear, fragmentation and disruption were present well before the JV announcement.

We continue to reap the benefits of retransmission revenue and expect to do so for years to come last year, we renewed 75% of our service drove net distribution margin expansion and created new incremental value through agreements driven by our sports strategy, there should be more growth here to come from the productive relationships.

Have with both traditional and virtual pay TV platforms.

Pay TV is still a solid business that will support scripts as we transition to our next growth phase.

Because of our platform diversification strategy distribution revenue accounts for less than a third of scripts as total company revenue. So we are much less reliant on it than others.

Our reach and revenue are buoyed by the growing over the air audience and our aggressive moves in connected TV strategies that are paying off and powering real financial growth.

Aggressively tackling future opportunities even when they are disruptive has been a consistent thread in the script story and thanks to our foresight connected television revenues for the enterprise should be well past the $140 million this year.

Adam Simpson: And Scripps has already been driving growth in this chaos, even if Wall Street has yet to recognize it. We continue to reap the benefits of retransmission revenue and expect to do so for years to come. Last year, we renewed 75% of our subs, drove net distribution margin expansion, and created new incremental value through agreements driven by our sports strategy. There should be more growth here from the productive relationships we have with both traditional and virtual pay TV platforms. Pay television is still a solid business that will support Scripps as we transition to our next growth phase. Because of our platform diversification strategy, distribution revenue accounts for less than a third of Scripps' total company revenue, so we are much less reliant on it than others.

As Lisa pointed out our networks portfolio stands alone growing ratings and with our focus on live sports momentum is on our side and the advertising market to.

Once again, we benefit from pay TV reach but arent limited by it we're growing opportunity around it.

Scripps is heavily leaning into the opportunity of free TV, and we're making it even easier for media consumers with tableau, which delivers the most popular linear programs via over the year right alongside another 65 or so premium fast channels.

You could even think of tableau as the only fast platform to offer the NFL and college sports.

That in and of itself makes it a more compelling sports proposition than the new JV service and it's free.

Tableau can now be found in most major retailers Walmart Dot com launched in January Amazon is the top retail partner accounting for about 60% of sales the home shopping network launched tableau in October with exceptional results selling out its first airing in only a few minutes and we expect HSN to drive.

Adam Simpson: Our reach and revenue are buoyed by the growing over-the-air audience and our aggressive moves in connected TV, strategies that are paying off and powering real financial growth. Aggressively tackling future opportunities, even when they are disruptive, has been a consistent thread in the Scripps story. And thanks to our foresight, connected TV revenues for the enterprise should be well past $140 million this year. As Lisa pointed out, our network's portfolio stands alone in growing ratings.

Portion of unit sales in 2024.

As we move into this year, we will continue to explore partnerships, both regional and national to expand our footprint and scale.

Since we launched our latest version in August we have had incredible engagement with users. The first party data show is that on average customers are watching two hours a day and that OTT programming accounts for most of that viewing.

Adam Simpson: And with our focus on live sports, momentum is on our side in the advertising market, too. Once again, we benefit from pay TV's reach but aren't limited by it. We are growing opportunity around it. Scripps is heavily leaning into the opportunity of free TV, and we're making it even easier for media consumers with Tableau, which delivers the most popular linear programs via over-the-air right alongside another 65 or so premium fast channels. You could even think of Tableau as the only fast platform to offer the NFL in college sports. That, in and of itself, makes it a more compelling sports proposition than the new JV service. And it's free!

50% of that time is spent watching live sports news and talk shows.

Speaking of data tableau is the only platform in the market that directly measures over the year viewing.

Our backend measures all of the same data that set top boxes do and more.

That valuable data and the monetization of the SaaS platform or the recurring revenue streams that drive value further downstream and we will make up the average revenue per user metrics, we will share with you in the future.

Adam Simpson: Tableau can now be found in most major retailers. Walmart.com launched it in January. Amazon is the top retail partner, accounting for about 60% of sales. The Home Shopping Network launched Tableau in October with exceptional results, selling out its first airing in only a few minutes. And we expect HSN to drive a significant portion of unit sales in 2024. As we move into this year, we'll continue to explore partnerships, both regional and national, to expand our footprint and scale. Since we launched our latest version in August, we have had incredible engagement with users. First party data shows us that, on average, customers are watching two hours a day and that OTA programming accounts for most of that viewing. 50% of that time is spent watching live sports, news, and talk shows. Speaking of data, Tableau is the only platform in the market that directly measures over-the-air viewing.

While the tableau platform makes TV easy, it's live sports and live news they make linear TV most relevant today.

And that's why we continue to aggressively pursue sports rights that are appropriate to our local market depth and the scale of our national reach with ion.

For local broadcasters in particular, winning sports rights as yet another catalyst for the growth of over the air among cord cutters and for the durability of the pay TV bundle.

It's a growth strategy that is creating immediate new value for just the two national Hockey League partnerships that we already have underway in Los Angeles, and Phoenix, We project, a 3% lift in core advertising revenue for 2024, and we continue to see many partnership opportunities with teams ahead in both the near term and law.

Long term.

On the National side last year, we completed a very successful first season with the WNBA.

Here's the power of ions reach and our CTV, plus Otas plus pay TV strategy.

Adam Simpson: Our backend measures all of the same data that set-top boxes do, and more. That valuable data and the monetization of the FAST platform are the recurring revenue streams that drive value further downstream and will make up the average revenue per user metrics we'll share with you in the future. While the Tableau platform makes TV easy, it's live sports and live news that make linear television most relevant today, and that's why we continue to aggressively pursue sports rights that are appropriate to our local market depth and the scale of our national reach with ION. For local broadcasters, in particular, winning sports rights is yet another catalyst for the growth of over-the-air among cord cutters and for the durability of the paid TV bundle.

The WNBA spotlight on ion the Friday night franchise, we launched grew the wnba's audience by 30%, while drawing a hefty premium above typical AD rates on ion for that time period.

65% of the revenue last season, it was from new to scripts advertisers.

This year, we'll be back with the WNBA on Friday nights and it will be women's soccer on Saturday nights.

<unk> is proud to be launching a franchise night doubleheader for the NWS L. As part of the leagues Landmark rights agreement with.

We start the season on Saturday March 16th sponsorships and advertising sales are well underway and having the intended effect on our whole networks portfolio.

2023 was a tough year as a result of an unsteady and uncertain economy, but theres a lot to celebrate in the work. This company is doing to best position itself for continuously improving near term performance and long term value creation and now operator, we're ready for your questions.

Adam Simpson: It's a growth strategy that's creating immediate new value. For just the two National Hockey League partnerships that we already have underway, in Los Angeles and Phoenix, we project a 3% lift in core advertising revenue for 2024, and we continue to see many partnership opportunities with teams ahead in both the near-term and long-term. On the national side, last year we completed a very successful first season with the WNBA. Here's the power of Ion's Reach and our CTV plus OTA plus pay TV strategy. The WNBA's spotlight on ION, the Friday night franchise we launched, grew the WNBA's audience by 30% while drawing a hefty premium above typical ad rates on ION for that time period. 65% of the revenue last season was from new-to-Scripps advertisers. This year, we'll be back with the WNBA on Friday nights, and it will be women's soccer on Saturday. The league is proud to be launching a franchise night doubleheader for the NWSL as part of the league's landmark rights agreement.

Sure.

Thank you if you wish to ask a question. Please press one then zero on your Touchtone phone you may remove yourself from queue at any time by pressing one zero again, if youre using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one then zero at this time.

One moment please for the first question.

Yes.

We will begin with the line of Dan Carnose with the benchmark company. Please go ahead.

Thanks, Good morning.

Adam maybe just to start with sports.

Could you just give us your thoughts on the impact of maybe diamonds being allowed to survive I guess for another 18 months given the cash inflow over there and what that might mean for your ability to go after incremental local sports rights and then you know look obviously you've been out there a lot on the.

Adam Simpson: We start the season on Saturday, March. Sponsorships and advertising sales are well underway and are having the intended effect on our whole network's portfolio. 2023 was a tough year as a result of an unsteady and uncertain economy, but there's a lot to celebrate in the work this company is doing to best position itself for continuously improving near-term performance and long-term value creation. And now, Operator, we're ready for your questions. Thank you. If you wish to ask a question, please press 1, then 0 on your touchtone phone. You may remove yourself from the queue at any time by pressing 1, 0 again.

On the JV and I think most people believe that it's going to be de minimis to the marketplace. If it even gets off the ground, but there's obviously been a lot of commentary about sports just moving to streaming over time and I know that broadcast is included in all of these packages, but just kind of your thoughts on being able to sustain that.

Operator: If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press 1, then 0 at this time. One moment, please, for the first question. We'll begin with the line from Dan Kurnos with the Benchmark Company. Please go ahead. Thanks, everyone. Adam, maybe just to start with sports.

<unk> power and leverage within the sports industry as more and more sports shift as Randy.

Adam Simpson: Could you just give us your thoughts on maybe Diamond being allowed to survive, I guess, for another 18 months, given the cash inflow over there and what that might mean for your ability to go after incremental local sports rights? And then, you know, look, obviously, you've been out there a lot on the JV, and I think most people believe that it's going to be de minimis to the marketplace if it even gets off the ground. But, you know, there's obviously been a lot of commentary about sports just moving to streaming over time, and I know that broadcast is included in all of these packages, but just kind of your thoughts on being able to sustain negotiating power and leverage within the sports industry as more and more sports shift to streaming. Yeah, good morning, Dan.

Yes, good morning, Dan Thanks for the questions.

On the Amazon investment into the RSM.

I guess near term it means the teams are committed to the RSM contracts.

So either the RSA and breaches those deals or in the event diamond seek some sort of discount that the team has decided to reject which will then open up.

The opportunity for teams to move in a different direction longer term nothing about this investment changes the reality that the <unk> can't deliver the reach that team owners need given the erosion, we're seeing in pay TV.

Adam Simpson: Thanks for the questions. On the Amazon investment into RSN, I guess, near term, it means the teams are committed to the RSN contracts until either RSN breaches those deals or, in the event Diamond seeks some sort of discount that the teams decide to reject, which will then open up, you know, the opportunity for teams to move in a different direction. You know, longer term, nothing about this investment changes the reality that RSN can't deliver the reach that team owners need, given the erosion we're seeing in pay TV. And that's why they continue to turn to broadcasters.

And that's why they continue to turn to broadcasters. So all of this to say the RSA model is still in critical condition I think you've described it as sort of still thriving.

This investment wasn't in any way a cure for what ails, the RSM model and I continue to expect that rates will move in the direction of local broadcast and I continue to expect that Scripps will benefit from those moves relative to the.

Joint venture.

Adam Simpson: So all of this to say, you know, the RSN model is still in critical condition. I think you described it as sort of still thriving. This investment wasn't, in any way, a cure for what ails the RSN model.

I don't know if theres more to say than what I already said in my prepared remarks, I guess I would say.

I think there is no math.

That supports the idea that local rights can move to streaming or move to a D to C product and support teams need to field, a good team and to win.

Adam Simpson: And I continue to expect that rights will be moved in the direction of local broadcasting, and I continue to expect that Scripps will benefit from those moves. Relative to the joint venture, you know, I don't know if there's anything more to say than what I already said in my prepared remarks. I guess I would say... I think there is no math that supports the idea that local rights can move to streaming or move to a D2C product and support a team's need to field a good team and win.

We've modeled in every other way and while streaming will continue to be an important part on the local and four incremental reach.

These teams need.

Broadcast reach and that's the direction, they're they're all moving in so my enthusiasm for the opportunity per script sports has not dampened at all on the National side I will tell you speaking to the leagues.

Adam Simpson: We've modeled it every other way, and while streaming will continue to be an important part on the local end for incremental reach, these teams need broadcast reach, and that's the direction they're all moving in. So, you know, my enthusiasm for the opportunity for Scripps Sports is not dampened at all. On the national side, I will tell you, speaking to the leagues, the owners, I think it's safe to say that REACH continues to be the primary component for all of these team deals. During Super Bowl week, you heard Roger Goodell say that he expects at least 90% of all games for the NFL to be broadcast on broadcast television, again, demonstrating the important power of reach. I don't think any of these leagues want to impair their asset over the long term by completely going behind a paywall and being inaccessible to most Americans, especially as we continue to see that streaming landscape get more fragmented, not consolidated.

The owners.

I think.

I think it's safe to say that reach continues to be.

The primary component for all of these team deals.

During the Super Bowl week, you heard Roger Goodell say that you expect at least 90% of all games or the NFL to be broadcast on broadcast television again, demonstrating the important power of reach I don't think any of these leagues want to impair their asset over the long term by completely going.

Behind the paywall and being inaccessible to most Americans, especially as we continue to see that streaming landscape get more fragmented not consolidated so we believe there will be a continued opportunity for broadcast networks new operates.

Adam Simpson: So we believe there will be a continued opportunity for broadcast networks, new opportunities for networks like ION, and, of course, we think there will be a continued opportunity for our affiliates that are partnered with the Big Four Network. For the record, Adam, I said survive, not thrive, for RSN. I think it's toast too, but that's a different story.

<unk> for networks like ion and of course, we think the continued opportunity for our affiliates that are partnered with the with the big four networks.

Got it for the record Adam I said survive thrive for they are S. N. I think it's toast too, but that's a different story can you just or at least I'll just quickly give us a thought on the shape of national for the year, just given sort of the mix between general market and Dr or still kind of lagging a bit.

Lisa Knutson: Can you, or Lisa, just quickly give us a thought on the shape of national for the year, just given sort of a mix between the general market and DR still kind of lagging a bit? Yeah. Part of my prepared comments, I talked about the fact that, obviously, you know, across the marketplace, we had a lower, up front. And so, therefore, we're really being aggressive in making up that ground in the scatter marketplace but also in DR. I am seeing, certainly, we saw it in the fourth quarter, and we're seeing it again in the first quarter, where CPMs, you know, in the fourth quarter were up 4% over 2022 Q4. And this year, we're seeing CPMs continue to be up versus our upfront pricing. You know, in January alone, they were up 35%.

Got it.

Part of my prepared comments I talked about the fact that obviously.

Across the marketplace, we had a.

Our lowered.

Upfront and so therefore, we're really and being aggressive in.

Making up that ground in the scatter marketplace, but also in D. R.

I am seeing certainly we saw it in the fourth quarter and we're seeing it again in first quarter where CPM.

In the fourth quarter were up 4% over 2022 Q4, and this year, we're seeing and TPN continue to be up versus our upfront pricing.

In January alone they were up 35% so.

Lisa Knutson: So I'm seeing good momentum, certainly, in the general market space in the scatter marketplace. I think the other really interesting story for Scripps, and I think Adam's remarks, we're really, really well positioned to capture CTV revenue, both from an upfront perspective as we go to market, but also, you know, continuing to drive organic growth, but also some of the new launches that I mentioned in my remarks. Got it. It's super helpful. Thank you both.

<unk> seen good momentum certainly in the general market space in the scatter marketplace I think the other really interesting story for Scripps and.

In Adam's remarks, we're really really well positioned to capture CTV revenue both from an upfront fee perspective, as we go to market, but also.

Continuing to drive organic growth, but also some of the new launches that I mentioned in my remarks.

Got it Super helpful. Thank you both I appreciate it.

Lisa Knutson: I appreciate it. Thanks, Dan. We'll now go to the line with Steven Cahall with Wells Fargo. Please go ahead.

Thanks, Dan.

We will now go to the line of Steven Cahall with Wells Fargo. Please go ahead.

Operator: Thanks. So three for me, so maybe first, Adam, I appreciate your comment about facts on sports streaming, JB, rather than speculation. So I was wondering if you could just tell us what discussions you've had, especially with ABC and Fox, as well, and whether those discussions have confirmed that this will be classified as a VMVPD in the minds of those counterparties. I think that would be really constructive for the market. And then, Lisa, just on national ads, maybe picking up on the last question. So a big sequential improvement in the Q1 guide, does that turn positive by Q2? It sounds like there's a lot of potential for it to do so, especially with where scatter is.

Yeah.

So.

Three for me so maybe first Adam I appreciate your comment about <unk>.

Facts on the sports streaming JV rather than speculation. So I was wondering if you could just tell us what discussions you've had especially with ABC and Fox as well.

And whether those discussions have confirmed.

This will be classified as the VA MVP in the minds of those Counterparties I think that would be really constructive to the market and.

And then Lisa just on National ads, maybe picking up on the last question. So a big sequential improvement in the Q1 guide does that turn positive by Q2, it sounds like Theres a lot of potential for it to do so, especially with where scatter is and then finally just on the political guide how do we think about how much of that versus your 2020 political is due to just defer.

Adam Simpson: And then finally, just on the political guide, how do we think about how much of that versus your 2020 political guide is due to just a difference in races? I think there's just fewer congressional races. And then how much of that is attributable to the comment you made about Trump's PAC putting more towards legal action and less towards ads. Thank you. Well, Steve, you know, I think I've said over and over that I've had direct conversations with executives at the top of Disney and with Fox. And they describe this as it is, a virtual MVPD, and they say the arrangement will be consistent with the arrangement affiliates have with other virtual MVPDs that will be carried along because, clearly, our broadcast networks or their broadcast networks are core to the offering given how much of the NFL or really the only NFL offering will come through the broadcast stations.

And races, I think there you just have fewer congressional races, and then how much of that is attributable to the comment you made about <unk>.

Trump's pack.

Adding more towards legal and less towards ads. Thank you.

Well Steve.

I think I've said over and over.

I've had direct conversations with executives at the top of Disney and Fox.

And they they describe this as it is the virtual mvpds and they describe the arrangement will be consistent with the arrangement affiliates have with other virtual mvpds that will will will be carried along because clearly our broadcast.

Our broadcast networks or their broadcast networks are are core to the offering given how much of the NFL or really the only NFL operating will come through the broadcast stations.

Adam Simpson: And that we will be compensated in exactly the same way that we're compensated for other virtual MVPDs. So I don't know if we can make it any clearer if, in fact, these, you know, and this is literally what was said to me on the day of the announcement. If these executives, as they say, are true to their word and will aggressively pursue cord cutters in order to bring them back to linear television, this stands to benefit Scripps in incremental distribution and incremental fees. Is that, I mean, is that, is that, is that helpful? It is, yes.

And that we will be compensated in exactly the same mechanism that we're compensated for other virtual mvpds.

I don't know if we can make it any clearer if in fact these and this is literally what was said to me on the day of the announcement. If these executives as they say are true to their word and will aggressively pursue cord cutters in order to bring them back to linear television this stands to benefit.

<unk> scripts and increment incremental distribution and incremental fees.

Yeah.

Does that I mean is there anything like that.

Is that helpful.

It is yes. Thank you okay.

Adam Simpson: Thank you. Okay. You know, this comes directly from ABC and Fox.

This comes directly from ABC and Fox.

Lisa Knutson: And this is consistent with what all of the affiliates have been saying. This is just another virtual MVPD, and we will be compensated for the carriage of our affiliates through this virtual MVPD. So, Steven, you know, we are seeing positive momentum that started, I think, certainly in our performance in the fourth quarter and moving into the first quarter with our guide. We are optimistic as we continue to see strength in scatter and in DR rates. Both rates are up year over year and year to date in the first quarter compared to 2023. So, we're really aggressively pursuing, you know, that I think we mentioned in our guide coming in potentially flat to last year, which I think is just probably the best in peer performance. And we expect that momentum to continue throughout the year. As for politics, you know, there are differences.

And this is consistent with what all of the affiliates have been saying. This is just another virtual mvpds and we will be compensated for the carriage of our affiliates through this virtual mvpds.

So Steven.

We are seeing positive momentum that started I think in certainly in our performance in fourth quarter and moving into first quarter with our guide we are optimistic and as we continue to see the strength in scatter and in and Dr rates, both rates are up year over year and year to date in the first quarter.

To 2023, so we're really aggressively pursuing them.

That I think we mentioned in our guide coming in potentially flat to last year, which I think is just probably certainly that's best in our peer performance and we expect that momentum to continue throughout the year as for political and there there are differences and I mentioned some of those differences in my prepared.

Lisa Knutson: And I mentioned some of those differences in my prepared remarks. You know, after redistricting, there were certainly less competitive House races than we saw in 2020. Some of the presidential toss-up states have changed. Florida was always, always squarely, a swing state.

Marks.

And after a redistricting there were certainly a less competitive house races than we saw in 2020.

Some of the presidential toss up states have changed and Florida was always squarely a.

Lisa Knutson: And with sort of migration into Florida over the last several years, that has changed. And so we're seeing, you know, some of those changes affect and give a little bit of less visibility into where the money will actually be spent, given the toss-up races this year. I think I mentioned, you know, the competitive races for the Senate, which were really where we were very, very strong this year. And we expect and are already seeing really great spending in Montana. You know, early this year and also in the back half of the year already laid a good foundation for the, Thank you. We'll now go to the line of Craig Huber with Huber Research Partners. Please go ahead. Yes, hi.

Wayne State and with.

Sort of migration into Florida over the last several years that has changed and so we're seeing.

Some of those changes affect and gives a little bit of.

Less visibility into where the money will actually be spent.

Given the concept races. This year I think.

I mentioned.

The competitive races for the Senate, which is really where were very very strong this year.

And we expect and are already seeing really great spending in Montana.

Early this year and also in the back half of the year already lane in a good foundation for the year.

Thank you.

Yeah.

Well now go the line of Craig Huber with Huber Research partners. Please go ahead.

Yes, hi, Thank you my first question, if I could let's focus on costs. If we could please maybe chase or somebody.

Operator: Thank you. My first question, if I could, let's focus on cost, if we could please, maybe Jason or somebody. How are you feeling about your cost base this year? I mean, you've obviously talked about this $40 million plus cost savings plan that should be fully reflected in the numbers by the middle of the year. Are you expecting that you're going to have to step up further on the cost-cutting front? Or are you guys pretty comfortable with where your costs are at right now as you kind of think about where your ad revenue trends are, etc. ?

How are you feeling about your cost base. This year I mean, you've obviously talked to this 40 million plus cost savings plan that should be fully in the numbers by the middle of the year are you expecting that you're going to have to step up further on the cost curve for you guys or are you guys pretty comfortable your cost to run right now as you've kind of think about your AD revenue trends or et cetera.

Jason Combs: And I think that from a cost perspective, you know, we have been aggressive with the restructuring; we will, you know, have more than $40 million in sort of annualized savings by the middle of this year. And I think the focal area will be just continuing to manage things as efficiently as possible. We have things this year, when you talk about politics, when you talk about some of the green shoots that Lisa's talking about in terms of nationally in the marketplace, that should, should be, you know, great benefits to the bottom line, in addition to our tight expense management, but I think you'll see us continue to manage things really tightly as we move throughout. Jason, housekeeping question, please.

I think that from a cost perspective, we have been aggressive with the restructure we will have.

More than $40 million in sort of a run rate annualized savings by the middle of this year.

And I think this whole area will be just continuing to manage things as efficiently as possible. We have things. This year. When you talk about political when you talk about some of the green shoots at least was talking about in terms of nationally at marketplace that should should be great benefits to the bottom line. In addition to our tight expense management, but I think youll see us continue to manage things really tightly as we move throughout <unk>.

First of the year.

Jason housekeeping question. Please.

Jason Combs: Your retrans subscribers, what was the decline year-over-year that goes into your retrans revenue number that you had in the fourth quarter, please? We were down mid-single digits, which is consistent with where we've been for a while. It actually was a slight improvement versus the prior quarter, but still in that mid-single digit range. Okay, good. Thank you for that. And then your other revenue line in EBITDA, can you, Jason, help us? How should we think about that line EBITDA and revenue for the full year? What are you budgeting there, please?

Retrans subs, what was the decline year over year that goes into your Retrans revenue number that you had in the fourth quarter. Please.

We were down mid single digits, which is consistent with where we've been for a while it actually was a slight improvement versus the prior quarter, but still in that mid single digits net.

Range.

Okay. Good. Thank you for that and then you.

Other revenue line and the EBITDA can you just help us how should we think about the EBITDA and revenue for the full year.

What are you budgeting there please yeah and so that other that other rollout include a bunch of different things, including tableau, which I haven't talked about where we are continuing to invest as we launched that so we guided to a loss of about $7 million in the first quarter I would say in general that will likely be somewhere between $7 million to $10 million each.

Jason Combs: Yeah. And so, that other roll-up includes a bunch of different things, including Tableau, which Adam talked about, where we're continuing to invest as we launch that. So, we guided to a loss of about $7 million in the first quarter.

Jason Combs: I would say, in general, that will likely be somewhere between $7 to $10 million each quarter this year, with revenue growing as the year progresses. Okay. Very good. That's all I have for right now. As a reminder, place your cell phone into the queue. You may press 1 and 0 on your telephone keypad. We'll now go to Jeff Peskind's line with Phoenix.

Quarter this year.

Revenue growing as the year moves forward.

Okay very good that's all I have for right now thank you.

As a reminder, place yourself into the queue. You May press. One then zero on your telephone keypad will now go to the line of Jeff Peskin with Phoenix. Please go ahead.

Operator: Please go ahead. Yes, thank you for your time here. Just one quick question. It sounds like you're going to defer the Berkshire preferred payout.

Yes. Thank you for your time here just one quick question it sounds like you're going to defer the FERC share.

Preferred payout.

Jason Combs: What's the plan for reducing the bank debt and pushing those out, and is there a plan for also going out past 2027? Yeah, so the decision to defer the Berkshire dividend is a decision that we make sort of on a quarterly basis. We did elect this quarter to defer that payment to really allow us to focus on maximizing the pay down of our traditional bank debt.

What's the plans for <unk>.

Reducing the bank debt and pushing those out and is there a plan for also going out past 2027.

Yes, so the decision to defer the Berkshire dividend, that's a decision that we make sort of on a quarterly basis. We did elect this quarter to defer that payment really allow us to focus on maximizing the pay down of our traditional bank debt and it really gives us from our perspective more flexibility in terms of debt pay down and refinancing our upcoming maturities.

Jason Combs: And it really gives us more perspective, more flexibility in terms of debt paydown and refinancing for upcoming maturities. You know, we also are very focused on the fact that we do have a maturity coming up in 26, and we're keeping a very close eye on the debt markets right now, which have improved over the last couple of months, to determine at what point in time we want to go ahead and take action and look to refinance that debt, which, you know, the goal would be to have that refinance, you know, at least 18 months in advance of maturity Great, thank you. Thanks Jeff. We'll go to the line of Michael Kupinski with Noble Capital Markets. Please go ahead.

We also are very focused on the fact that we do have a maturity come.

Coming up in 2006 that we're keeping a very close eye on the debt markets right now, which have improved over last couple of months to determine at what point in time, we want to go out and take action and look to refinance that debt which was.

The goal would be to have that refinanced at least 18 months in advance of maturity.

Great. Thank you.

Thanks, Jeff.

Well go to line of Michael Pinsky with Noble capital markets. Please go ahead. Thank.

Operator: Thank you. Thanks for taking my question. It's just a quick one.

Thank you. Thanks for taking my question just a quick one.

Lisa Knutson: It seems like the network business, the OTA business, is getting more competition. A couple of your peers have indicated that they're crossing certain hurdles in terms of distribution across the country. And I know that you're seeing some improving trends there, but I was just wondering if you could kind of give us a taste of what advertisers are seeing in terms of maybe shifting some dollars to some of the competition that's out there and whether or not you're hearing anything like that. And if you could just kind of give us a state of just the business in general for the OTA market. Yeah, hey Mike, it's Lisa.

It seems like the network business. The OTT business is getting more competition. A couple of your peers have indicated that they are crossing certain hurdles in terms of distribution across the country and I know that youre seeing some improving trends there, but I was just wondering if you can kind of give us a taste of what advertisers are seeing in terms of maybe shifts.

Some dollars to some of the competition, that's out there and whether or not youre hearing anything like that and if you could just kind of give us a state of the business in general for the OTT market.

Yeah, Hey, Mike It's Lisa.

Lisa Knutson: You know, we're not really seeing any competition from, I think, the expanding OTA multicast networks. In fact, you know, we're seeing strength in our DR ad rates. We're also seeing strength in demand for DR advertising. Typically, when other networks are launching OTA, they're primarily running DR advertising, and it's very sort of bottom-of-the-barrel advertising.

No we're not seeing.

Really any competition from and I think the they expanding otas multi cast network in fact.

Sure.

<unk> seen strengthen RDR AD rates were also seen strength in demand for Dr advertising typically windows.

Those other networks are lunching OTA, there primarily Dr advertising and it's very sort of bottom of the barrel advertising and we really are.

Lisa Knutson: And we really, you know, our networks are premium programming, and we're competing in both the hybrid DR and the premium DR ad rates. So we're not seeing any, you know, or worried about any of that competition. Gotcha. I mean, just in general, in terms of core advertising on the local level, I mean, are you seeing much variance between local and national on the core level, outside of politics, of course?

Our networks are premium programming and we're competing in both really the hybrid D R and the premium Dr AD rates. So we're not seeing any.

Our or worried about any of that competition.

Chip and interest in general in terms of core advertising on the local level. I mean are you seeing much variance between local and national in the core level.

Outside of political of course.

Lisa Knutson: Yeah, I think some of the trends that we're seeing both on the local level, which I included in my prepared remarks, you know, sort of the categories that are up year over year. We have different categories, certainly in the national ad marketplace, in the local marketplace, but I would say that certainly the momentum is equal across both segments. Gotcha. Okay. That's all I have.

Yeah, I think some of the trends that we're seeing both on the local level, which I included in my prepared remarks sort of the categories that are up year over year.

We have different categories, certainly in the national AD marketplace in the local marketplace, but I would say that certainly the momentum is.

Equal across both.

Across both segments.

Got you Okay. That's all I have thank you.

Michael A. Kupinski: Thank you. Thank you. We will return to the line of Craig Huber with Huber Research Partners. Please go ahead.

Thank you we will return to the line of Craig Huber with Huber Research partners. Please go ahead.

Operator: Thank you. For auto advertising, I'd be curious to hear your updated thoughts there, both on a national level and local, for the auto advertising outlook for the full year. Yes.

Thank you for auto advertisers I'd be curious to hear your updated thoughts there.

Both on a national level and local for all right.

We're touching almost directly.

I will give you.

Yes.

Lisa Knutson: I will give you a little bit of the fourth quarter and then full year and then some remarks that take us into Q1. So, fourth quarter auto was up, as we said, 9% versus Q4 of 22. The full year, 2023, auto was up 10%, which is really strong. This marks the sixth consecutive quarter of growth. And we saw, you know, really each quarter last year was, we saw great growth. Q1 of 2024. You know, so far in January, we finished up 3% and are pacing to be up, potentially up to 7% in February. And it's just a little too early to say about March.

We'll give you a little bit of fourth quarter, and then full year and then some remarks that tickets into Q Q1, So fourth quarter auto was up as we said, 9% versus Q4 of 'twenty to the full year 2023 auto was up 10%, which is really strong.

This marks the sixth consecutive quarter of growth.

And we sell to.

Really each quarter and last year was.

We saw great growth Q1.

Of 2024.

So far in January we finished up 3%.

And pacing to be up potentially up to 7% in February and it's just a little too early to say about March so we're seeing that momentum continue.

Lisa Knutson: So we're seeing that momentum continue. You know, domestic dealer auto groups were up year over year. Last year, foreign dealer groups were up, but it was really barely up, it was 1%. And we're continuing to see where things are lagging. And we're lagging as manufacturers, from a domestic perspective, were down year over year, last year, by 9%, and foreign manufacturers were up about 24%.

Domestic dealer auto groups were up year over year last year foreign dealer groups were up but it was really barely up it was 1% and.

We're continuing to see where things are lagging as manufacturers and from a domestic perspective, we're where we're down year over year last year by 9% and foreign.

Manufacturers were up about 24%.

Lisa Knutson: So, again, the automotive last year, a great story and continuing really that momentum into 2024. And then also, Jason, how you calculated, or your banks calculated, your net debt-to-EBITDA ratio trailing on an eight-quarter basis. What was that at the end of the year we just finished, and what are you projecting it to be at the end of the year? Yeah, so it was 5.7 at the end of last year.

So.

Again automotive last year, great story, and continuing really that momentum into 2024.

Then also Jason how are you.

Calculated on your banks.

Net debt to EBIDTA ratio trailing eight quarter basis, what was that at the end of the year. We just finished and what are your projected to be at the end of this year. Please.

Yeah. So it was $5 seven at the end of last year were focused.

Jason Combs: You know, we're focused, as I said in my prepared remarks, really focused on paying down debt and de-levering. We're not giving a year-end leverage target right now because of the sort of wide range of outcomes. When you talk about, for example, the political guide we gave, which can really swing that number, as well as some uncertainty in the timing of the advertising rebound, which, again, can really move that number as well.

<unk> focus as I said in my prepared remarks were really focused on paying down debt and delevering, we're not giving a year end leverage target right now because of the wide range of outcomes. When you talk about for example, the political guide regain which can really swing that number as well as some uncertainty in the timing of the advertising rebound, which again can really move that number as well so we're not.

Jason Combs: So we're not giving a specific guide, but, as I said, we're focused on de-levering this year and using the cash flow we're going to get through the political cycle, through continued growth and connected TV, and the benefits of our expense restructuring to pay down the maximum amount of debt possible. My final question I could ask on the CAPEX side, you mentioned a one-time project or two. If you take that out, what would your underlying CAPEX be? It would be around $60 million.

Giving a specific guide, but as I said, we're focused on Delevering this year and using the cash flow, we're going to get through the political cycle through growth continued growth in connected TV and the benefits of our expense restructuring to pay down the maximum amount of that possible.

My final question, if I could ask on the Capex side, you mentioned, a onetime project or to be take that out what would your underlying capex would be for the year. Please more than maintenance type levels trying to get to.

That'd be around $60 million.

Jason Combs: Thank you. Great. And with that, we have no further questions in queue at this time. Please continue. Thank you very much, Rich. Thanks to everyone for joining us today. Have a great day.

Okay, great. Thank you forgot 70 to 80.

Yeah.

Yes.

And with that we have no further questions in queue at this time. Please continue.

Thank you very much rich thanks to everyone for joining us today have a great day.

Operator: This conference will be available for replay after 11: 30 a.m. Eastern today through May 24th at midnight. You may access the AT&T teleconference replay system at any time by dialing 1-866-207-1041 and entering the access code 4751031. International participants may dial 1-402-970-0847. Again, those numbers are 1-866-207-1041 or 1-402-970-0847, access code 4751031. That does conclude our conference call for today. Thank you for your participation and for using the AT&T teleconference. You may now disconnect. We're sorry, your conference is ending now. Please hang up.

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Excess code for 751031 that does conclude our conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.

Oh.

Yeah.

Yeah.

Okay.

Yeah.

We're sorry your conferences ending now please.

Uh huh.