Q1 2024 Gray Television Inc Earnings Call

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Operator: Ladies and gentlemen, thank you for holding your call will begin momentarily.

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Operator: Good morning, ladies and gentlemen, and welcome to the Gray Television Q1 2024 earnings call. If you know you'd like to ask a question, you may join the queue at any time during the call by pressing star 1 on your telephone keypad. Again, that's star 1 on your telephone keypad to join the question queue. And without further ado, I will now turn the program over to Executive Chairman and CEO, Hilton Howell, Jr.

Speaker Change: Good morning, ladies and gentlemen, and welcome to the Gray television Q1, 'twenty 'twenty four earnings call.

Operator: No you'd like to ask a question you may join the queue at any time during the call by pressing star one on your telephone keypad.

Operator: Again, Thats star one on your telephone keypad to join the question queue.

Speaker Change: And without further Ado I will now turn the program over to executive Chairman and CEO Hilton Howell Junior.

Hilton Howell: Thank you, operator. Good morning, everyone.

Speaker Change: Thank you operator, good morning, everyone. Thank you for joining our first quarter 2024 earnings call with me here in Atlanta, our all of our executive officers, Pat La <unk>, our president and co CEO Sandy <unk>, our Chief operating officer, Kevin Latex, our chief legal and development Officer, Jim Ryan.

Hilton Howell: Thank you for joining our first quarter 2024 earnings call. With me here in Atlanta are all of our executive officers, Pat LaPlatney, our president and co-CEO, Sandy Breland, our chief operating officer, Kevin Latek, our chief legal and development officer, Jim Ryan, our chief financial officer, and, for the first time as an officer of this company, Jeff Gignac, currently our executive vice president of finance. And as you all know, on July 1st, Jeff will succeed Jim as the chief financial officer of Gray Television after Jim served 26 years in that chair and, by my count, over 100 public earnings calls. As usual, we will begin with the disclaimer that Kevin will provide.

Hilton Howell: Our Chief Financial Officer, and for the first time as an officer of this company Jeff Junior currently our executive Vice President of Finance and as you all know on July the first Jeff will succeed Jim as the Chief Financial Officer of Gray television after John serving 26 years.

Speaker Change: <unk> and.

Hilton Howell: That chair and by my Count over 100 public earnings calls as usual, we will begin with the disclaimer that Kevin will provide thank you Hilton and good morning, everyone. Gray uses its website as a key source of company information. The website address is www G. R. A y dot TV.

Kevin P. Latek: Thank you Hilton, good morning everyone. Gray uses its website as a key source of company information. The website address is www.gray.tv.

Kevin P. Latek: We filed our quarterly report on Form 10-Q with the SEC today. Included in the call may be a discussion of non-GAAP financial measures, and in particular adjusted EBITDA, the leverage ratio denominator, and certain leverage ratios. These metrics are not meant to replace gap measurements, but are provided as supplements to assist the public in its analysis and evaluation of our company. Included in our earnings release, as well as on our website, are reconciliations of these financial measures.

Kevin P. Latek: We filed our quarterly report on Form 10-Q with the S. E C. Today.

Kevin P. Latek: Included on the call may be discussion of non-GAAP financial measures and in particular, adjusted EBITA leverage ratio denominator and certain leverage ratios.

Kevin P. Latek: These metrics are not meant to replace GAAP measurements, but are provided as settlements to assist the public.

Kevin P. Latek: And its analysis and evaluation of our company included in our earnings release as well as on our website a reconciliation to these financial measures to the <unk>.

Kevin P. Latek: The gap measure is reported in our financial statement. Additionally, certain matters discussed in 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. 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 quarterly report on Form 10-Q and our most recent earnings release. The company undertakes no obligation to update these forward-looking statements.

Kevin P. Latek: Now I will return the call to Hilton. Thank you, Gavin.

Kevin P. Latek: GAAP measures reported in our financial statements.

Hilton Howell: Certain matters discussed in this call may include forward looking statements regarding among other things future operating results.

Hilton Howell: Statements are subject to a number of risks and uncertainties actual results in the future could differ from those expressed or implied in any forward looking statements.

Kevin P. Latek: As a result of various important factors that have been set forth in the Companys. Most recent reports filed with the SEC, including our most recent quarterly report on Form 10-Q, and our most recent earnings release and the company undertakes no obligation to update these forward looking statements I would turn the call to Hilton. Thank you Kevin once again, great television has begun a new.

Hilton Howell: Thank you, Kevin. Once again, Gray Television has begun a new year in an excellent and strong position. It's a testament to the power of our high-quality local news operations that our television stations grew core advertising revenues by 4% over the first quarter of 2023. We're extremely pleased with these superb results from our fantastic in-house sales and business development team.

Hilton Howell: And year in an excellent and strong position, it's a testament to the power of our high quality local news operations that our TV stations grew core advertising revenues by 4% over the first quarter of 2023, we're extremely pleased with the superb results from our fantastic and how sales and.

Hilton Howell: Throughout our markets, we are leveraging our intensive sales training and development efforts with our high-quality advertising platforms to deliver results for our advertisers. Our first core advertising results reflect growth in categories including automobile and national that have been challenging in the past. We appear to be growing not only revenues but also our share of the advertising budget. For the first quarter, the net income attributable to common shareholders was $75 million, or $0.79 per diluted share.

Hilton Howell: Business development teams throughout our markets, we are leveraging our intensive sales training and development efforts with our high quality advertising platforms to deliver results for our advertisers our first quarter core advertising results reflect growth in categories, including automobile and Nashville, but.

Hilton Howell: Have been challenging in the past we appear to be growing not only revenues, but also growing our share of advertising budgets.

Hilton Howell: For the first quarter. The net income attributable to common shareholders was $75 million or 79 cents per diluted share. Our adjusted EBITA was 197 million an increase of 21% from the first quarter of 2023. Meanwhile, we continued to focus on debt reduction and on April one.

Hilton Howell: Our adjusted EBITDA was $197 million, an increase of 21% from the first quarter of 2023. Meanwhile, we continue to focus on debt reduction, and on April 1, we used $50 million of our cash on hand to prepay portions of our term loans, as debt reduction and deleveraging remain a top priority for our company. In the first quarter of 2024, our TV station's core advertising business was higher on a pro forma basis than in the first quarter of 2019.

Hilton Howell: We used $50 million of our cash on hand to prepay portions of our term loans as debt reduction and deleveraging remains a top priority for our company in the first quarter of 2020 for our TV stations core advertising business was higher on a pro forma basis than the first quarter of 'twenty nine.

Hilton Howell: Importantly, we are guiding to 2024's full-year core advertising revenues to beat 2019's full-year core revenue on a pro forma basis, despite what we expect to be a large amount of displacement caused by very strong political advertising revenue later this year. Speaking of political revenue, we believe that Gray will undoubtedly, as it always has, again earn more than its fair share of political advertising revenue this year. Number one and number two stations that are hyper-local news focused have historically over-indexed on political revenue within their markets because these stations deliver the audience that matters to campaigns, and no one delivers that better than Gray Television.

Hilton Howell: Importantly, we are guiding to 'twenty 'twenty four is full year core advertising revenues to beat 2019 full year core revenue on a pro forma basis. Despite what we expect to be a large amount of displacement caused by very strong political advertising revenue later this year.

Hilton Howell: Sure.

Hilton Howell: Speaking of political revenue, we believe that gray will undoubtedly as it always has again earn more than its fair share of political advertising revenue. This year number one and number two stations that are hyper local news focused have historically over indexed on political revenue within their markets.

Hilton Howell: These stations deliver the audience that matters to campaigns and no one delivers that better than gray television.

Hilton Howell: In the first quarter, our political advertising revenue was slightly lower than our political advertising revenue in the first quarter of 2020 on a pro forma basis. This should not be a surprise to anyone because 2024 did not feature the same highly competitive presidential primary contest as the country experienced four years ago.

Hilton Howell: In the first quarter, our political abrogate advertising revenue was slightly lower than our political advertising revenue in the first quarter of 2020 on a pro forma basis.

Hilton Howell: This should not be a surprise to anyone because 2024 did not feature the same highly competitive presidential primary contests as the country experienced four years ago, we still expect political advertising revenues for the full year to be strong and will materialize later in the year as usual.

Hilton Howell: We still expect political advertising revenues for the full year to be strong and will materialize later in the year as usual. In fact, consistent with our expectation, we are currently guiding for political advertising revenue in the second quarter of 2024 to range between 55% and 72% higher than the second quarter of 2020 on a pro forma basis. Overall, of the seven most competitive presidential swing states, Gray's station covers all the markets in three big states: Arizona, Georgia, and Nevada.

Hilton Howell: In fact, consistent with expectation. We're currently guiding for political advertising revenue in the second quarter of 'twenty 'twenty four drained between 55% and 72% higher than the second quarter of 'twenty 'twenty on a pro forma basis.

Hilton Howell: Overall of the seven most competitive presidential swing States Grays station cover all the markets and three Big States, Arizona, Georgia.

Hilton Howell: And it has, and we have, a very strong presence in three of the four remaining states, North Carolina, Michigan, and Wisconsin. In addition, Gray has leading local news stations in 9 of the 11 states with governor's races and 26 of the 34 Senate races, including many of the most competitive governor and senate races in the country. Finally, all of our markets have Houses of Representatives, and many markets involve competitive primaries or general elections triggered by a historic wave of House resignations. All of our markets also have downed ballot races, and some appear likely to have very contentious referendums on the ballot this year as well. There is no such thing...

Hilton Howell: In Nevada.

Hilton Howell: And it has and we have a very strong presence in three of the four remaining states North Carolina, Michigan and Wisconsin.

Hilton Howell: In addition, gray has leading local news stations in nine of the 11 states with governors races. In 26 of the 34 Senate races, including many of the most competitive governor and Senate races in the country.

Hilton Howell: Finally, all of our markets have house of Representatives in many markets involved competitive primaries or general elections triggered by historic wave of house resignations all of our markets also have down ballot races, and some appear likely to have very contentious referendums on the balance of this year as well.

Hilton Howell: There is no.

Hilton Howell: Given this unparalleled exposure to competitive races, we expect that our political advertising revenues will come in at a very large and healthy amount in 2024, which will support our efforts to reduce our total debt. Finally, I'm thrilled to confirm that Gray has essentially completed the construction of Assembly Studios and the larger infrastructure work for Assembly Atlanta. We began this project, as many of you know, a few years ago when interest rates were low and demand for studio space in Georgia was white hot.

Hilton Howell: Given this unparallel exposure to competitive races, we expect that our political advertising revenues will come in at a very large and healthy amount in 'twenty 'twenty, four which will support our efforts to reduce our total debt.

Hilton Howell: Finally, I'm thrilled to confirm that gray has essentially completed the construction of Assembly studios and the larger infrastructure work for Assembly Atlanta. We began this project as many of you know a few years ago when interest rates were low and demand for steel space in Georgia was white Hot we saw then and still see today immense value for gray.

Hilton Howell: We saw then and still see today immense value for Gray in owning a multi-use development close to Buckhead that is anchored by world-class studio production facilities and a premier tenant under a long-term lease. By last spring, as the capital markets began to become more challenging, and Hollywood Strikes came into focus, we determined that it would be prudent to pause capital expenditures at the assembly site after completion of the studio portion, and that's exactly what we did.

Hilton Howell: Owning a multi use development close to bucket that is anchored by world class studio production facilities and a premier tenant under a long term lease my last spring as the capital markets began to become more challenging in Hollywood strikes came into focus we determined that it would be prudent to pause capital expenditures at the assembly side after.

Hilton Howell: As of the end of the first quarter of 2024, approximately 95 percent of our projected total of capital expenditures for Assembly Studios and Assembly Atlanta, net of reimbursements, are now behind us. As you all know, late last year, NBC Youth commenced its long-term lease for two-thirds of the Assembly Studios portion, and the studios are now contributing revenues to the totality of Gray Television. Today, we are still in the early innings of what we believe will be a decades-long valuable cash flow contributor to our company.

Hilton Howell: Completion of the studios portion and that's exactly what we did as of the end of the first quarter of 2020 for approximately 95% of our projected total of capital expenditures for Assembly Studios and Assembly Atlanta net of reimbursements are now behind US as you. All know late last year NBC you commence is long term lease for two thirds of the <unk>.

Hilton Howell: Assembly Studios portion and the studios are now contributing revenues to the totality of Gray television.

Hilton Howell: Today, we are still in the early innings of what we believe will be a decades long valuable cash flow contributor to our company. We will continue to carefully evaluate strategic opportunities to unlock the immense value that the investments we have created for our stakeholders, including through collaborations without outside partners for additional development.

Hilton Howell: We will continue to carefully evaluate strategic opportunities to unlock the immense value that the investments we have created for our stakeholders, including through collaborations with outside partners, for additional development at Assembly. There is no question that the tremendous reach and efficiency of our local broadcast television industry are still being rediscovered and reaffirmed by audiences, advertisers, sports leagues, and sports teams. Wall Street, however, seems to be missing this universal message. We therefore remain personally and professionally very disappointed that this company remains so undervalued given our operational success and near-term and long-term opportunities. We will continue to focus on executing and delivering for our viewers, our employees, and our investors. Pat will now provide some more color around our successful start to 2024.

Hilton Howell: At Assembly.

Pat: There is no question that the tremendous reach and efficiency of our local broadcast television industry is still getting rediscovered and reaffirmed my audiences advertisers sports leagues and sports teams.

Hilton Howell: Wall Street, however, it seems to be missing this universal message. We therefore remain personally and professionally very disappointed that this company remains so undervalued given our operational success and near term and long term opportunities.

Hilton Howell: We will continue to focus on executing and delivering for our viewers our employees and our investors Pat.

Hilton Howell: Pat will now provide some more color around our successful start to 'twenty 'twenty four.

Patrick LaPlatney: Thank you Hilton Looking at our first quarter financial results, it should be clear that Gray Stations is continuing to find and attract strong advertiser demand for our market-leading local television stations and premium brand safe digital products. In our markets, local businesses are doing generally well. We believe local businesses are tuning out the political and geopolitical noise to focus on finding customers, moving their products, and selling their services.

Speaker Change: Thank you Hilton.

Patrick LaPlatney: Looking at our first quarter financial results it should be clear the great stations are continuing to find and attract strong advertiser demand for our market, leading local television stations and premium brand safe digital products.

Patrick LaPlatney: Throughout our markets local businesses are doing generally well, we believe local businesses are tuning out the political and geopolitical noise to focus on finding customers moving their products and selling their services and.

Patrick LaPlatney: In fact, during the first quarter, our new local direct business, which is our local sales force finding a customer that's new to Gray, continued to break records set just a year earlier. For the first quarter of 24, our new local direct business brought in 18% more revenue than the first quarter of 23, which itself was 8% higher than the first quarter of 22. These strong results continued into April 24, just last month, which delivered 14% higher new local direct business than April 23. Meanwhile, our digital businesses are also very healthy.

Patrick LaPlatney: In fact during the first quarter, our new local direct business.

Patrick LaPlatney: Which is our local sales force finding a customer that's new to Gray continue to break records set just a year earlier in the first quarter of 'twenty for our new local direct business brought in 18% more revenue than the first quarter of 'twenty, three which itself was 8% higher than the first quarter 'twenty to these.

Patrick LaPlatney: These strong results continued into April 24, just last month, which delivered 14% higher new local direct business than April of 'twenty three.

Patrick LaPlatney: In the first quarter, we set new records for engagement with digital audiences, as well as double-digit growth in digital revenue. As we continue to expand our connected TV and fast channel offerings, as consumers increasingly find our content on those platforms, we are seeing significant growth in this space. In fact, our station's CTV fast revenue more than tripled over the same period last year. First quarter results also benefited from our successful efforts to bring professional sports back to our broadcast station. In addition to broadcasting the full season of games for the Phoenix Suns across Arizona,

Patrick LaPlatney: Meanwhile, our digital businesses are also very healthy in the first quarter, we set new records for engagement with digital audiences as well as double digit growth in digital revenue.

Patrick LaPlatney: As we continue to expand our connected GB and pass channel offerings and as consumers increasingly find our content on those platforms were seeing significant growth in this space in fact, our stations CTV fast revenue more than tripled over the same period last year.

Patrick LaPlatney: Our first quarter results also benefited from our successful efforts to bring professional sports back to our broadcast stations in.

Patrick LaPlatney: In addition to broadcasting the full season of games with Phoenix, SUNS across Arizona, our unmatched coverage in Georgia, and Louisiana allowed us to bring the M. B as Atlanta Hawks, and New Orleans Pelicans games to their local fans and all of the markets located in those states and some adjacent markets in.

Patrick LaPlatney: Our unmatched coverage in Georgia and Louisiana allowed us to bring the NBA's Atlanta Hawks and New Orleans Pelicans games to their local fans in all of the markets located in those states and some adjacent markets. In total, we partnered with 8 NBA and 3 WNBA teams this season to expand their reach while also bringing new viewers and new advertisers to our local stations. The impressive ratings that Gray's broadcast of basketball games generated, as well as those of our peers, confirm the reach of local broadcast television for professional sports fans, teams, and leagues. Looking ahead, we are upbeat about our core advertising guidance for the second quarter, despite a range that shows modest growth against a strong comp. 2023 second quarter.

Patrick LaPlatney: Total we partner with an H M B, a and three WNBA teams. This season to expand their reach while also bringing new viewers and new advertisers to our local stations.

Patrick LaPlatney: The impressive ratings the Grays broadcast of basketball games had generated as well as those of our peers confirms the reach of local broadcast television professional for professional sports fans teams and leagues.

Patrick LaPlatney: Looking ahead, we are upbeat about our core advertising guidance for the second quarter. Despite a range of shows modest growth against a strong comp to 2023 second quarter.

Patrick LaPlatney: It's important to remember that we're facing tough comps because Q2 of 2023 was very good. And last year's second quarter, we posted 4% growth in core advertising revenue on a year-over-year basis compared to an average 4% decline across our publicly traded broadcast peer group. We excelled last year, in part, because of having the NCAA Final Four and a couple of one-time only advertising campaigns that will not recur on our broadcast channels in the second quarter of 2015.

Patrick LaPlatney: It's important to remember that we're facing tough comps because Q2 of 2023 was very good in last year's second quarter, we posted 4% growth in core advertising revenue on a year over year basis.

Patrick LaPlatney: Paired to an average 4% decline across our publicly traded broadcast peer group. We had fell last year in part on having D and C. Double a final four and a couple of onetime only advertising campaigns that will not recur on a broadcast channels in the second quarter of 'twenty four.

Patrick LaPlatney: Speaking ahead to the summer, we're excited about the Summer Olympic broadcast from Paris on our NBC affiliates, which cover about 11% of U.S. TV households. We currently anticipate generating $15 to $20 million of advertising revenue related to those broadcasts in the third quarter of this year. We already have approximately $6 million in advertising revenue booked for the Olympics. Core Advertising Revenue consistently performs above average because we have the largest and most-watched news teams in the majority of our markets, and we intend to maintain that leadership.

Patrick LaPlatney: He headed the summer we're excited about the summer Olympic broadcasts from Paris on our NBC affiliates that cover about 11% of U S. TV households, we currently anticipate generating $15 million to $20 million of advertising revenue related to those broadcast and the <unk>.

Patrick LaPlatney: Third quarter of this year.

Patrick LaPlatney: We already have approximately 6 million of advertising revenue booked for the Olympics.

Patrick LaPlatney: Our core advertising revenue consistently performs above average because we are the largest and most watch news teams at the majority of our markets and we intend to maintain that leadership.

Patrick LaPlatney: Our content attracts audiences on linear television, on connected television, and on virtually every other platform that exists. We are a content-first company. And for a few high-profile examples of our recent successes in this area, I turn the call over to Sandy Breland.

Sandy Breland: Our content attracts audiences on linear TV on connected TV and on virtually every other platform that exists.

Sandy Breland: We think we are a content first company and for a few high profile. Examples of our recent successes in this area I turn the call over to Sandy Berlin. Thanks, Pat beyond the numbers Gray has continued to deliver exceptionally well from an operational perspective.

Sandy Breland: Thanks, Pat. Beyond the numbers, Gray has continued to deliver exceptionally well from an operational perspective. Late in March, we announced that CBS had retained Gray's in-house news research and consulting group, which we call our STRAT team, to provide market research and news consulting services to all 14 of CBS's owned and operated television stations. This first-of-its-kind partnership between a network and an affiliate group's news research division began on April 1. We are thrilled to partner with CBS stations on this news research venture. In the past few weeks, we've also made other important announcements that I would like to highlight briefly.

Sandy Breland: In March we announced that CBS had retained Grace in House News research and consulting group, which we call our strat team to provide market research and used consulting services.

Sandy Breland: All 14 of C. B assets owned and operated television station. This first of its kind partnership between our network and an affiliate groups and news Research Division began on April 1st we are thrilled to partner with CBS stations on this news research venture.

Sandy Breland: In the past few weeks. We've also made other important announcements that I would like to highlight briefly on January 26, the Columbia Journalism School honored Grace Tvs investigate TV unit and W. A N F. R. C. B S station here in Atlanta, among the 15 winners of the 'twenty 'twenty four <unk> Columbia Awards for their joint Mulch.

Sandy Breland: On January 26, the Columbia Journalism School honored Gray's TV's Investigate TV Unit and WANF, our CBS station here in Atlanta, among the 15 winners of the 2024 DuPont Columbia Awards for their joint multi-part investigative series, The Six, which exposed a critical shortage of public defenders in Georgia and many other states where defendants can languish in jail for months, even years, awaiting trial. On April 8th, Gray's Local News Live, a streaming news network that provides live news coverage from Gray's television markets and our D.C. Bureau, streams continuous and, frankly, excellent coverage of the total solar eclipse from Gray's D.C. Bureau and local reports from more than 20 markets along the path of totality, from KG&S in Eagle Pass, Texas, to WAGM in Frescale, Maine. It was pretty cool.

Sandy Breland: T part investigative series, six which exposed a critical shortage of public defenders in Georgia and many other states. We're defendants can languish in jail for months even years awaiting trial.

Sandy Breland: On April eight Gray's local news live streaming news network that provides live news conference from Grace television markets and our D. C Bureau streams continuous and frankly excellent coverage of the total solar eclipse from Gray's D. C Bureau, and local reports for more than 20 markets along the path of totality okay.

Sandy Breland: Excuse me from kg N S in Eagle pass, Texas to W. A G M and fresh gourmet and it was pretty cool last September we launched a new daily 30 minute News magazine investigates TV clients. Since then the share build audience throughout its first season with an average of 25% growth in adults 18 plus across.

Sandy Breland: In September, we launched a new daily 30-minute news magazine, Investigate TV+. Since then, the show built an audience throughout its first season with an average of 25% growth in adults 18 plus across all gray markets. This kind of ratings growth for any new syndicated program is rare in today's world. Moreover, the show is drawing higher audiences than nearly all prime-time cable news and cable entertainment programs, as well as many syndicated programs on broadcast television, even though it only reaches 36% of U.S. households at this time.

Sandy Breland: All gray markets this kind of ratings Greg for any new syndicated program is rare in today's world. Moreover, the shadow is drawing higher audiences than nearly all primetime cable news and cable entertainment programs as well as many syndicated program on broadcast television, even though it only reaches 36.

Sandy Breland: The program clearly has found an audience, so no surprise, we're thrilled to renew Investigate TV Plus for a second season. We also recently launched a Spanish-language version of this highly successful show and 26 of Gray's Telemundo Market. 2024 has begun very well, due in large part to the great work of our content professionals. Earlier, Hilton talked about how important it is for us to own and operate highly-rated television stations. The selected accomplishments I've highlighted here this morning are evidence that our employees are doing what it takes for us to maintain our station's high rankings and put us in a position to continue to over-index in this year's political advertising relative to other stations and platforms in our markets. I now turn the call over to Kevin. Thank you, Sandy.

Sandy Breland: Our sense of U S households at this time the program clearly have found an audience. So no surprise, we're thrilled to renew investigate TV plus for a second season. We also recently launched a Spanish language version of its highly successful show in 26 upgrades Telemundo markets.

Sandy Breland: 2024 has begun very well due in large part to the great work of our content professionals earlier Hilton talked about how important it is for us to own and operate highly rated TV station. The selected accomplishments I've highlighted here. This morning are evidence that our employees are doing what it takes for us to maintain our stations high ranking input.

Sandy Breland: US in a position to continue to over index in this year's political advertising relative to other stations and platforms in our markets I'll now turn the call over to Kevin. Thank.

Kevin P. Latek: Our retransmission revenues and network affiliation fees were largely stable, despite headwinds and subscriber trends in the pay TV industry. Indeed, we recently announced that we have completed the renewals of retransmission consent agreements with cable, satellite, and telco operators who collectively represent more than 70% of the Big Four traditional MVPD subscriber base in a three-year renewal cycle that began in the second half of 2022, for a number of reasons, including the strong and loyal viewership of our news station. We completed all of those negotiations covering roughly 400 operators without a single blackout.

Kevin: Thank you Sandy.

Kevin P. Latek: Okay.

Kevin P. Latek: Our retransmission revenues and network affiliation fees were largely stable despite.

Kevin P. Latek: Despite headwinds in subscriber trends in the pay TV industry.

Kevin P. Latek: Indeed, we recently announced that we've completed the renewals of retransmission consent agreements with cable satellite and telco operators, who collectively represent more.

Kevin P. Latek: More than 70% of the big four traditional mvpds subscriber base and a three year renewal cycle that began in the second half of 2022.

Kevin P. Latek: A number of reasons, including the strong and loyal viewership of our news station.

Kevin P. Latek: We completed all of those negotiations covering roughly 400 operators without a single blackout.

Kevin P. Latek: We remain comfortable with the guidance provided on the February earnings call for stable retransmission revenues and network affiliation fees for full year 2024. The other topic I want to highlight is the increasing litany of positive developments involving the new transmission standard for broadcast signals called Next Gen TV. It was less than seven years ago that the FCC approved this first advancement in broadcast technology since the 1990s. Importantly, next-gen TV deployment is already well ahead of HGTV and the DTV transition at the same seven-year mark.

Kevin P. Latek: We remain comfortable with the guidance provided on our February earnings call for stable retransmission revenues and network affiliation fees for full year 2024.

Kevin P. Latek: The other topic I wanted to highlight is the increasing litany of positive developments involving the new transmission standard for broadcast signals called Nextgen TV.

Kevin P. Latek: It was less than seven years ago that the FCC approved as first advancement in broadcast technology since the 19 nineties.

Kevin P. Latek: Importantly, nextgen TV deployment is already well ahead of HGTV and the D. T V transition at the same seven year Mark.

Kevin P. Latek: First, next-gen TVs did not go on sale until 2020. Yet, by 2026, the Consumer Technology Association projects that next-gen set sales in the U.S. will exceed smartphone sales in the U.S. at the same six-year mark in the product life cycle.

Kevin P. Latek: First the first next Gen. TV did not go on sale until 2020 get by 'twenty twenty-six the consumer Technology Association projects at Nextgen set sales in the U S will exceed smartphone sales in the U S. At the same six year Mark in the product lifecycle to date, just four years after the <unk>.

Kevin P. Latek: To date, just four years after the first set was sold, more than 10.3 million next-gen TV sets have been sold in the U.S. And there will be more next-gen channels available in 2024 than DTV channels in 2004. Furthermore, by 2026, fully 65% of TV set shipments in the U.S. are projected to include next-gen TV receiver chips. In addition to the successes with receiver rollouts, station transmitter build-outs continue, and the industry now delivers a next-gen signal reaching 75% of U.S. TV households.

Kevin P. Latek: Set was sold more than 10.3 million next Gen. TV sets have been sold in the U S.

Kevin P. Latek: And there will be more nextgen channels available in 'twenty 'twenty four than D. TV channels in 2004.

Kevin P. Latek: Backed by 2026 for a 65% of TV set shipments in the U S are projected to include Nextgen TV receiver chips.

Kevin P. Latek: In addition to the successes with receiver rollout station transmitter build outs continue.

Kevin P. Latek: And the industry now delivers a nextgen signal, reaching 75% of U S television households.

Kevin P. Latek: This milestone brings Gray and the industry much closer to being able to deliver a vastly improved picture and features for viewers, as well as new monetization opportunities for broadcasters. The Justice Passed on Saturday, and our NBC affiliate in Louisville. Kentucky, WAVE, airs the Kentucky Derby. Broadcast Made History is the first major sporting event broadcast in the United States using Dolby Vision's HDR as part of next-gen technology. Progress on next-gen TV across broadcasters and technology companies is tangible and important. We expect there will be many more impressive achievements and milestones announced over the next few months in this area. This concludes my remarks, and I now turn the call over to Jim Ryan.

James Ryan: This milestone brings gray in the industry are much closer to being able to deliver the vastly improved picture and features for viewers as well as new monetization opportunities for broadcasters.

James Ryan: Indeed, just this past Saturday.

James Ryan: Our NBC affiliate in Louisville.

James Ryan: Kentucky W E B E as the Kentucky Derby.

Kevin P. Latek: Broadcast made history as the first major sporting event broadcast in the United States using Dolby vision HDR as part of next Gen technology.

James Ryan: The progress in next Gen TV across broadcasters and technology companies is tangible and important.

James Ryan: We expect there will be many more impressive achievement of milestones announced over the next few months in this area.

James Ryan: Hilton's speech covered the key highlights of the quarter. As such, my remarks today will be very short. You will see a few changes in the definitions and metrics in our earnings release in 10Q today. These changes, and potentially a few other changes next quarter, result from comments that we received from the SEC recently as part of the agency's routine review and comment process that all public companies undergo every few years. Turning to our Q1-24 results, again, we're very pleased with our results, especially our plus 4% growth in core ad revenue.

Kevin P. Latek: This concludes my remarks, I'll now turn the call to Jim Ryan.

Kevin: Thanks, Kevin.

James Ryan: Pilgrim's has covered the key highlights of the quarter as such my remarks today will be very short.

James Ryan: You will see a few changes in the definitions in metrics in our earnings release and 10-Q today.

James Ryan: These changes and potentially a few other changes next quarter results from comments that we received from the SEC recently as part of the agency's routine review and comment process that all public companies undergo every few years.

James Ryan: Turning to our Q1 'twenty four results again were very pleased with our results, especially our plus 4% growth in core AD revenue.

James Ryan: While the Super Bowl on our 54 CBS channels allowed us to generate $18 million of core ad revenue compared to $6 million on our then 27 Fox channels in 2023, the quarter benefited from broad-based advertising demand, with most categories being up, including services and auto. Our operating expenses, excluding depreciation, amortization, impairment, and gain or loss on disposal of assets, were better than our initial expectations, and we'll continue to monitor our expenses for additional efficiencies as we proceed through 2024.

James Ryan: While the Super Bowl on our 54, CBS channels allowed us to generate $18 million of core AD revenue compared to $6 million on our then twenty-seven Fox channels in 2023, the quarter benefited from broad based advertising demand with most categories being up including services and auto.

James Ryan: Our operating expenses, excluding depreciation amortization impairment and gain loss on disposal of assets were better than our initial expectations and we'll continue to monitor our expenses for additional efficiencies as we proceed through 2024.

James Ryan: Demonstrating our commitment to debt reduction, we paid $50 million of revolver borrowings in February and prepaid an additional million of term loan debt on April 1st. These amounts are in addition to the routine quarterly term loan amortization of $3.75 million that we made in the first quarter. As of March 31, 2024, our leverage ratio was 5.63 times, and more importantly, our first lean leverage ratio was a very modest 2.34 times, both on a trailing eight-quarter basis, netting our total cash balance of $134 million and excluding the results of our unrestricted subsidiaries and our $110 million gain on sale of our BMI shares. And again, all of that's calculated in accordance with our senior credit agreement

James Ryan: Demonstrating our commitment to debt reduction, we paid 50 million of revolver borrowings in February and prepaid an additional million dollars of term loan debt on April 1st. These amounts are in addition to the routine quarterly term loan amortization of $3 75 million that we made in the first quarter.

James Ryan: As of March 31, 24, our leverage ratio was 563 times and more importantly, our first lien leverage ratio with a very modest 2.34 times, both on a trailing eight quarter basis, netting our total cash balance of $134 million and excluding the results of our unrestricted subsidiary.

James Ryan: <unk> and our $110 million gain and sale of our BMI Ishares and again all of that's calculated in accordance with our senior credit agreement.

James Ryan: Turning to our full-year guide, we are reaffirming the guidance of approximately $1.6 billion in core ad revenue for the year and again reaffirming our $1.5 billion of retransmission revenue for the year. We are reducing our Broadcast Operating Expense Guide for the full year to approximately $2.3 billion from the previous guide of $2.4 billion.

James Ryan: Turning to our full year guide, we are reaffirming the guidance of approximately 1.6 billion in core ad.

James Ryan: AD revenue for the year and again reaffirming our one 5 billion of retransmission revenue for the year, we are reducing our broadcast operating expense guide for the full year to approximately $2 3 billion from the previous guide of $2 4 billion and we look forward to a very successful too.

Jeff Gignac: We look forward to a very successful full year 24, including strong political ad spending later in the year. It's now time for me to introduce my successor as CFO. Jeff is the ideal person for this role, given his very close working relationship with Gray as a key banking partner for almost 20 years. I'm, therefore, very happy to turn the call over to Jeff.

Jeff Gignac: All year 24, including strong political AD spend need later in the year.

Jeff Gignac: It's now time for me to introduce my successor as CFO, Jeff is the ideal person for this role given he is very is very close working relationship with Gray is a key banking partner for almost 20 years, and therefore very happy to turn the call over to Jeff.

Jeff Gignac: Thank you, Jim. As Jim mentioned with my prior firm, I was the lead debt banker for virtually all of Gray's market activity for a very long time, including the recent acquisitions of Raycom, Quincy, and Meredith. Incidentally, I was also the lead debt banker to Raycom and Quincy, among others. From that long history, I've learned the business and come to know the talent in the dedicated management team at Gray. What attracted me to Gray is the exceptional set of assets and scale of the company. As you all know, the portfolio has number one and number two ranked local news stations in 102 out of 114 markets.

Speaker Change: Thank you Jim.

Jeff Gignac: Jim mentioned with my prior firm I was the lead banker for virtually all of Gray's market activity for a very long time.

Jeff Gignac: Including the recent acquisition of Raycom Quincy Meredith Incidentally I was also the lead banker to Ray Com Quincy, Rick how frequency among others.

Jeff Gignac: From that long history, I've learned the business and come to know the talented and dedicated management team it Greg.

Jeff Gignac: What attracted me to graze the exceptional set of assets and scale of the company as you. All know the portfolio has number one and number two ranked local news stations in 102 out of 114 markets.

Jeff Gignac: At this time, Gray's large-scale M&A for footprint expansion is complete, and the assets, key functions, and people are fully integrated. Today, you're seeing those results in our core business. When I first discussed the opportunity of joining Gray with Hilton, it was clear that deleveraging was his top priority, which aligned with my view.

Jeff Gignac: At this time, great large scale M&A for footprint expansion is complete and the assets key functions and people are fully integrated today youre seeing those results in our core business when I first discuss the opportunity of joining great with Hilton. It was clear that deleveraging was his top priority, which align with my view.

Jeff Gignac: Delivering is good for our shareholders, for our debt holders, and for our employees. It's also how we position the company to capitalize on changes in the media landscape and the most straightforward way to increase our equity value. In light of that, earlier this week, our board authorized spending up to $250 million of liquidity for debt repurchases, giving us another tool to implement our delevering plan in an efficient way. In late January, Gray took advantage of strong market conditions to launch a refinancing of the Revolver and 2026 term loan.

Jeff Gignac: Delevering is good for our shareholders for our debt holders and for our employees. It's also how we position the company to capitalize on changes in the media landscape and the most straightforward way to increase our equity value.

Jeff Gignac: In that light earlier this week, our board authorized spending up to 250 million of liquidity for debt repurchases, giving us another tool to implement our delevering plan in an efficient way.

Jeff Gignac: In late January Great took advantage of strong market conditions to launch a refinancing of the revolver in 2026 term loan.

Jeff Gignac: We successfully completed an amendment upsizing and extending the duration of our revolver with the banks who know us best, and we again thank them for their support. Obviously, the term loan marketing process became more challenging with news from three other media companies regarding their plans to bundle Sports Rights into a new virtual MVPD, which was completely misunderstood by the investment community in the first several days after its announcement.

Jeff Gignac: We successfully completed an amendment upsizing and extending the duration of our revolver with the banks you know was passed and we again thank them for their support.

Jeff Gignac: Obviously, the term loan marketing process became more challenging with news from three other media companies regarding their plans to bundle.

Jeff Gignac: Their sports rights into a new virtual mvpds.

Jeff Gignac: In the end, Gray made the decision to close the revolver and postpone the term loan refi process until the news cycle quieted down, and we could capitalize on our positive outlook for 2024. Going forward, you should expect to see us act quickly when necessary, but always in a smart way to manage our capital. The company has been and will continue to be very thoughtful about the cost of capital as measured over a period of time rather than at any specific point in time. And that's extremely important.

Jeff Gignac: Which was completely misunderstood by the investment community in the first several days after its announcement.

Jeff Gignac: In the end Gray made the decision to close the revolver and postpone the term loan refi process until the new cycle quieted down and we can capitalize on our positive outlook for 2024.

Jeff Gignac: Going forward you should expect to see US act quickly when necessary, but always in a smart way to manage our capital structure. The company has been and will continue to be very thoughtful about the cost of capital is being measured over a period of time rather than at any specific point in time.

Jeff Gignac: Our current low secured leverage at 2.34 times allows us access to multiple pockets of capital in the public and private markets. We also expect significant cash from political advertising later this year that will allow us to further reduce total indebtedness and extend our maturity program. We believe that we can do all this in a way that is positive for all stakeholders. And, lastly, as a new shareholder myself, I look forward to engaging further with all of our investors to maximize value for all of our stakeholders. And with that, I'll turn the call back to Hilton for some closing remarks. Thank you, Jeff.

Jeff Gignac: That's extremely important our current most secured leverage at 2.34 times allows us access to multiple pockets of capital in the public and private markets.

Jeff Gignac: We also expect significant cash from political advertising later this year that will allow us to further reduce total indebtedness and extend our maturity profile.

Jeff Gignac: We believe that we can do all of this in a way that is positive for all stakeholders in.

Jeff Gignac: And lastly, as a new shareholder myself I look forward to engaging further with all of our investors to maximize value for all of our stakeholders and with that I'll turn the call back to Hilton for some closing remarks.

Hilton Howell: Thank you Jeff and welcome on board. I'll leave all of you with this perspective. There are challenges in the media business, most of which are not of our making, but many of which provide opportunities for us, what we can control. Our leading local franchises. Expansion of digital ad sales, a retrans race. The expansion of sports content partnerships, implementing next-gen TV, and probably most important..., in the short, where we deploy cap. All of those things are going exceptionally well. So operator, at this time, we ask that you open the line for any questions from me or anyone here at this time.

Speaker Change: Jeff and welcome on Board.

Hilton Howell: I'll leave all of you with this perspective, there are challenges in the media business most of which are not of our making but many of which provide opportunities for us what we can control.

Hilton Howell: Our leading local franchises expansion of digital AD sells a retrans rates expansion of sports content partnerships.

Hilton Howell: Lamenting nextgen TV and probably most importantly.

Hilton Howell: In the short term.

Hilton Howell: Where we deploy capital.

Hilton Howell: All of those things are going exceptionally well.

Hilton Howell: So operator at this time, we ask that you open the line for any questions at me or anyone here at the table.

Operator: Absolutely, ladies and gentlemen. At this time, please press star 1 on your telephone keypad if you would like to ask a question. Again, that is star 1 on your telephone keypad to join the question queue. The first up, it looks like we have Daniel Kurnos. Your line is now open.

Operator: Yeah.

Operator: Absolutely ladies and gentlemen at this time. Please press star one on your telephone keypad. If you would like to ask a question again that is star one on your telephone keypad to join the question queue.

Daniel Kurnos: The first step it looks like we have Daniel Curnow. Your line is now open.

Daniel Kurnos: Great, thanks. Good morning. Nice start to the year, guys. Kevin, just a quick housekeeping question. What's left this year, either by quarter, however you want to put it, in terms of distribution renewals?

Daniel Kurnos: Great. Thanks, Good morning, nice start to the year guys.

Daniel Kurnos: Kevin just a quick housekeeping, what's the what's left this year either by quarter. However, you want to put it in terms of distribution renewals.

Kevin P. Latek: Good morning, Dan. We have a very small number of contracts with cable companies that cover about 30% of the big four traditional MVPD subs. Those will come up in the second half of the year.

Speaker Change: Hi, Good morning, Dan we have.

Kevin: A very small number of contracts with cable companies.

Kevin P. Latek: I cover about 30% of the big four traditional mvpds subs those would be in the <unk>.

Patrick LaPlatney: Perfect. And then look, the core You guys have been harping on this for a while, you know. I don't think any of us years ago would have thought you guys would have beaten 2019 at this point. You know, Pat spent a good amount of time, detailing it.

Kevin P. Latek: Come up in the second half of the year.

Patrick LaPlatney: Perfect and then I look at core.

Patrick LaPlatney: You guys have been harping on this for a while you know I don't think any of US years ago would've thought you guys would have beat in 2019 at this point.

Patrick LaPlatney: But I mean, is this sustainable? You know, how do you guys think this trend will go from here? And, you know, what are you guys doing differently to get such massive outperformance?

Patrick LaPlatney: Pat has been a good time good amount of time detailing it but I mean is this sustainable how do you guys think that trends from here and.

Patrick LaPlatney: Hey Dan, it's Pat. I'll start. Look, at a private company from 2010 through 2019... You know, we watched core deteriorate slowly, steadily, mostly in the auto category, for a long time, and to be ahead of 2019 now is, in my mind, pretty remarkable. But do I think it's sustainable? Yeah, I think we can continue to grow. I think that, you know, we now have a much more diverse basket, you know, of advertisers. If you go back to 18 or 19, it was probably 25 or 30%.

Patrick LaPlatney: What are you guys doing differently to get such massive outperformance.

Patrick LaPlatney: Hey, Dan It's Pat I'll start look at a private company from 20 <unk> through 2019.

Patrick LaPlatney: We watched core deteriorate slowly, but steadily mostly with the auto category.

Patrick LaPlatney: For a long time and to be ahead of 2019 now.

Patrick LaPlatney: In my mind pretty remarkable do I think it's sustainable yeah. I think we can continue to grow I think that you know we now have a much more diverse basket.

Patrick LaPlatney: Of advertisers if you go back to 18 or 19 auto was probably 25 or 30% today. It's you know mid to high teens and services are a huge part of our revenue in and so I think we're in much better shape I think the reasons for that at least for gray, it's our investment in training, it's our investment.

Patrick LaPlatney: Today, it's, you know, mid to high teens, and services are a huge part of our revenue, and so I think we're in much better shape. I think the reasons for that, at least for Gray, are our investment in training. It's our investment in, you know, going after or having a team that focuses on certain categories, verticals. We've had that team in place now for years, and the training in place, probably eight years now, so it's paying dividends for us, and I think we absolutely have the capacity to continue to grow.

Patrick LaPlatney: In.

Patrick LaPlatney: Going after or having a team that focuses on certain categories verticals.

Patrick LaPlatney: We've had that team in place now for years and in the training in place probably.

Patrick LaPlatney: Probably eight years now so it's paying dividends for us and I think I think we had we absolutely have the capacity to continue to grow and this is sandy Dan. The other thing I would add to that we talk a lot about.

Sandy Breland: Yeah, and this is Sandy. Dan, the other thing I would add to that is, we talk a lot about our laser focus on new local direct, and Pat talked about the increase over last year, but I will tell you, we challenge our stations, and they deliver month after month after month, continuing to set records there, and that's something we can control. And just one other point; we talked about the importance of strong content and strong-ranked stations. That also gives us an advantage and a competitive edge there.

Sandy Breland: Our laser focus on new local direct and Pat talked about the increase over last year, but I will tell you we challenge our stations and they deliver a month after month. After month continue minutes set records there and that's something we can control.

Sandy Breland: And just one other point, we talked about that the importance of strong content and strong ranked station that also gives us an advantage and a competitive edge there sure.

Daniel Kurnos: All right. Thanks so much. I appreciate it, guys.

Operator: Next up, we have Aaron Watts. Your line is now open.

Speaker Change: Alright. Thanks, so much appreciate it guys. Thanks.

Operator: Sam.

Aaron Lee Watts: Hey, everyone. Thanks for having me on.

Aaron Lee Watts: Next up we have Aaron what your line is now open.

Aaron Lee Watts: Yeah.

Aaron Lee Watts: Everyone. Thanks for having me on I've got a couple of questions. One on core advertising heard your comments around core and the tough comp dropped the camps and QQ.

Aaron Lee Watts: I've got a couple questions. One on CORE advertising. Heard your comments on CORE and the tough comp you're up against in 2Q. Anything more you can kind of tell us on the underlying themes, areas of strength and softness, looking forward, and any reason for optimism ad trends can improve from here, despite some of the macro uncertainties that seem to still be weighing on advertiser decisions?

Aaron Lee Watts: Anything more you can kind of tell us on the underlying themes areas of strength and softness.

Aaron Lee Watts: Looking forward and any reason for optimism AD trends can improve from here. Despite some of the macro uncertainties that seem to still be weighing on advertise our decision making.

Patrick LaPlatney: Yeah, again, we're a sort of mainstream company as opposed to a Wall Street company. I think, you know, early on in our comments, what we're seeing is... You know, local businesses doing well and advertising with us at the end of the day. So, you know, looking at the categories, you know, auto was, you know, auto again had this long, steady decline into COVID, then it came out of COVID pretty strong and started to level off a little bit.

Patrick LaPlatney: Yeah again, so we're we're a sort of the main street company as opposed to whole Wall Street Company I think that you know there early and our comments what we're seeing is.

Patrick LaPlatney: Local business is doing well and advertising with us at the end of the day, so looking at the categories.

Patrick LaPlatney: Auto was.

Patrick LaPlatney: Auto again had this long steady decline into Covid and it came out of Covid pretty strong start to level off a little bit but the services sector for US is extremely strong you know we had a we had a bump with with.

Patrick LaPlatney: But the services sector for us is extremely strong. You know, we had a bump with, you know, the gambling category, and now that's a little sort of lumpy. Some quarters it's up, some quarters it's down.

Patrick LaPlatney: With with the gambling category and now that's a little sort of lumpy some quarters, it's up some quarters, it's down but all in if you you know if you look at the look at the broad set of key categories for us. It's a good story. So you know again I think we're a better sales organization than we were a few years ago and we've invested heavily in that area.

Patrick LaPlatney: But all in, if you, you know, if you look at the broad set of key categories for us, it's a good story. So, you know, again, I think we're a better sales organization than we were a few years ago. And we've invested heavily in that area. And I think we can continue to grow. Sandy, do you have any comments on that? No, I agree.

Sandy Breland: I mean, and the nice thing, too, is we're seeing growth among multiple categories, not just auto, but legal, in particular, we've done very well. And we continue to see that grow. Furniture, restaurants, as well. I think our scale also adds a significant benefit. You know, you go back and look at the company five years ago; it was a very different company than it is today.

Sandy Breland: And I think we can continue to grow I see how do you read all the comments around great. I mean, the nice thing too is we're seeing growth among multiple categories, not just auto, but legal and particularly we've done very well, let me continue to see that grow.

Sandy Breland: The furniture, our restaurants as well so we're seeing it spread across multiple categories that growth I think our scale also adds to adds a significant benefit you go back and look at the company five years ago, a very different company. It is today.

Hilton Howell: You know, Aaron, this is Hilton. I want to just add one more thing.

Hilton Howell: And to the extent that they're on this telephone line right now, it's our people. Aaron, I mean, we give them the tools to do their job, and they do it. And one of the things I'm very, very proud of this company is that we execute across the board and at every moment we do the right thing and carry it out, and it all comes down to the people that we have in our TV stations and all of our 114 marketers.

Hilton Howell: You know Aaron that's held and I would add I would just add one other thing and to the extent that they're on this telephone one right now is our people and we give them the tools to do their job and they execute and one of the things I'm very very proud of this company is.

Hilton Howell: We execute across the board and in every moment, we we do the right thing and carry it out and it all comes down to the people that we have in our television stations in all of our 114 markets.

Aaron Lee Watts: Okay, yeah, thanks, Hilton. On the debt repurchase program, to date, I believe your focus has been on addressing that front-end term loan maturity, but you do also have debt trading at discounts to par value. How do you think about balancing attacking the nearest maturities with perhaps capturing greater discounts to further your deleveraging aspirations? Is this authorization a sign of maybe being more open to repurchasing discounted debt securities than you've been open to previously? Yeah, Aaron, I think you nailed it.

Aaron: Yeah, Thanks, Alan on Andy.

Aaron Lee Watts: On the debt repurchase program to date I believe your focus has been on addressing that front end term loan maturity, but you do also have debt trading at discounts to par value.

Aaron Lee Watts: Do you think about balancing attacking the nearest maturities with perhaps capturing greater discounts to further your deleveraging aspirations.

Aaron Lee Watts: Is this authorization a sign of maybe being more open to be purchasing discounted debt securities and then you've been open to you previously.

Jeff Gignac: Yeah, Aaron, I think you nailed it. I mean, it's a balanced approach with the front end, you know, the short maturities. We'll have to address those in due course here, but we're not oblivious to the fact that we've got debt trading in the 60s, and it would be nice to capitalize on some of that to accelerate the deleveraging. Again, not sacrificing our liquidity position or..., you know, or the need in the near term to maybe reapproach the markets for the refund.

Jeff Gignac: Yeah, Aaron I think you nailed it I mean, it's a balanced approach with the front end the short maturities will have to address those.

Jeff Gignac: <unk>.

Jeff Gignac: In due course here, but we're not oblivious to the fact that we've got that trading in the Sixty's and it would be nice to capitalize on some of that too but to accelerate the deleveraging again, not sacrificing our liquidity position or.

Jeff Gignac: Or the near the need in the near term.

Jeff Gignac: Maybe re approach the markets for the refinery.

Operator: All right, next up we have Steven Cahill of Wells Fargo. Your line is now open.

Operator: All right next up we have Steven Cahill of Wells Fargo. Your line is now open.

Steven Cahall: Yeah, thanks. I've got I've got a few.

Steven Cahill: Yeah. Thanks.

Steven Cahill: I've got a few so Kevin I was wondering if you could just talk about the structure of reverse comp on a medium term basis, it's something we've talked about before but I think youre looking to potentially convert fixed programming fees to something that's more variable just wondering if you're having any early conversations around those.

Steven Cahill: And how you think those conversations may trend over time.

Steven Cahill: And then Pat just to pick up on some of the advertising commentary I think you were the first media company I've heard in about 18 months talk about national advertising being better so I'd love to know what's going on underneath the surface there for for Gray.

Steven Cahill: And then lastly, Hilton so you've talked about how wall Street is kind of missing the point about the business fundamentals I know, we can have a myopic view I think a lot of the debate is just when theres going to be free cash flow that's available to the equity holder and how you can deleverage. So I'm wondering what you think about potentially helping with deleveraging whether you would look.

Steven Cahall: So Kevin, I was wondering if you could just talk about the structure of reverse comp on a medium-term basis. It's something we've talked about before, but I think you're looking to potentially convert fixed programming fees to something that's more variable. Just wondering if you're having any early conversations around those and how you think those conversations may evolve over time. And then, Pat, just to pick up on some of the advertising commentary, I think you're the first media company I've heard in about 18 months talk about national advertising being better.

Steven Cahill: Asset sales, whether you'd look at changes to the dividend or do you think you can get there purely organically. Thank you.

Steven Cahall: So I'd love to know what's going on underneath the surface there for Gray. And then, Hilton, you know, you've talked about how Wall Street is kind of missing the point about business fundamentals. I know we can have a myopic view, but I think a lot of the debate is just when there's going to be free cash flow that's available to the equity holder and how you can deleverage. So I'm wondering what you think about potentially helping with deleveraging, whether you would look at asset sales, whether you would look at changes to the dividend, or whether you think you can get there purely organically. Thank you.

Hilton Howell: Thank you, Steven. All right, Kevin, you want to start? Yes, Steven.

Hilton Howell: Thank you Steven Alright, Kevin you and start yes, Stephen R.

Kevin P. Latek: Yeah, Steven, our network affiliation agreements are up on the following schedule. We have ABC up at the end of this year, we have CBS and Fox up in the second half of 25, and we have NBC up at the very end of 25. There's not really...

Hilton Howell: Network affiliation agreements.

Kevin P. Latek: Are up in the following schedule, we have a b C. After the end of this year, we have CBS and Fox hub in the second half of 'twenty five and we have N Bcf at the very end of 'twenty five.

Kevin P. Latek: I'm not aware of any precedent where a network and an affiliate group have opened a negotiation early and changed the terms early. We've done, at Gray, countless negotiations with the networks. Typically, we buy something with an earlier expiration date, and we'll add years to other markets so that they all have a coterminous end, so we don't reopen the existing contract. We live with whatever contracts exist until they expire, and then we roll into whatever has been negotiated either recently or sometimes two or three years in advance. Where we are now is that we are not acquiring anything.

Kevin P. Latek: There's not really.

Kevin P. Latek: I'm not aware of any precedent where.

Kevin P. Latek: A network and that affiliate group have open a negotiation early in change of terms early we've done a gray we've done countless negotiations.

Kevin P. Latek: With the networks typically we buy.

Kevin P. Latek: We buy something with an earlier exploration date.

Kevin P. Latek: We will add years to other markets. So they all have a coterminous and so will we.

Kevin P. Latek: We don't reopen the existing contract we live with whatever contracts exist until they expire and then we roll into whatever.

Kevin P. Latek: All of our stations are on the same schedule with all four networks. We will likely talk with CBS and Fox a year from now, so I think there'll be a lot of other broadcasters who will be talking to all the networks before we will, and we would. The networks are very aware of what's happening with cord cutting and will be adjusting the programming fees to reflect where WeTrans is at and the exclusivity of the content we're receiving.

Kevin P. Latek: Has been negotiated either recently or sometimes you know two or three years in advance where we are now is we are not acquiring anything.

Kevin P. Latek: All of our stations are on the same schedule with all four networks.

Kevin P. Latek: We will likely talk with CBS and Fox.

Kevin P. Latek: A year from now.

Kevin P. Latek: So I I think there'll be a lot of other broadcasters, who will be talking to.

Kevin P. Latek: All of the networks before we will and we would expect that all.

Kevin P. Latek: All broadcasters, including those.

Kevin P. Latek: Two one.

Kevin P. Latek: The networks are Christopher are very aware of what's happening with cord cutting and will be.

Kevin P. Latek: Adjusting.

Kevin P. Latek: The.

Kevin P. Latek: But we are not, I don't anticipate us, other than ABC at the end of this year, having any conversations about any changes to our existing contracts until those contracts are over. And again, that's not until the second half of 25.

Kevin P. Latek: Programming fees to reflect where retrans as AD and the exclusivity of the content we were receiving.

Kevin P. Latek: But we are not.

Kevin P. Latek: I don't anticipate us on the a b C. At the end of this year, having any conversation Don.

Kevin P. Latek: Any changes to our existing contracts until those contracts are over and again.

Patrick LaPlatney: So Steven, your question around national, you know, we had a good quarter in the first quarter for national. There were a number of categories that I think contributed to that. One that I'd point out would be consumer goods for us, which was up, you know, high single digits. Look, national for us is a much smaller piece than local, which we have more control over. But at the end of the day, you're gonna see national, it's gonna be a little bit lumpy, but this quarter was a very good one. And I think it's due, in large part, just to a sort of broad. You know, the number of categories that happen to be up in Q1. Ryan, Steven, I guess I'm the last one.

Speaker Change: Not until the second half of 'twenty five.

Ryan: Yeah, So Steven to your question around National we had a good quarter in the first quarter for national.

Patrick LaPlatney: There were a number of categories that I think contributed to that one that I'd point out would be consumer goods for us which was up.

Patrick LaPlatney: High single digits.

Patrick LaPlatney: Look national for US is a much smaller piece than local which we have more control over but at the end of the day, you're going to see national is it's going to be a little bit lumpy, but this quarter was a very good one and I and I think it's due in large part just to sort of abroad.

Hilton Howell: Ryan, Steven, I guess I'm the last one here. So let me say that I read everything that you write, and I appreciate every comment that you have, some of which I greatly disagree with. But I appreciate every word you write. That being said, we're going to do it the way Greta does everything else. We actually. And it's really simple.

Speaker Change: A number of categories that happen to be up in Q1.

Speaker Change: Alright, and Steven I guess on the last one here.

Hilton Howell: So let me say that I read everything that you're right and I. Appreciate every comment that you have some of which I greatly differ world, but I. Appreciate every word you are right that being said, we're going to do it the way great great as everything else we execute.

Hilton Howell: We don't intend to sell any assets. We see no panic. We are not concerned. We will operate our TV stations and our other assets, and we are generating a huge amount of free cash flow. And we will use that to de-leverage the company. We have no intentions; our board has not even considered cutting the dividend or picking any... Some of our competitors may have chosen to do so. Each company is its own best guide in that regard.

Hilton Howell: And it's really simple and we don't intend to sell any assets. We see no panic. We are not concerned we will operate our our television stations at our other assets and we are generating a huge amount of free cash flow and we will use that to deleverage the company we have.

Hilton Howell: No intentions, our board has not even considered cutting the dividend nor picking anything some of our competitors may have chosen to do so each company has their own.

Operator: Gray, as this quarter's results demonstrate, is a stunning company. We have spent 30 years assembling some of the finest assets. And the people sitting around this table and talking to you today represent one of the greatest, in my judgment, media companies currently operating, and I think our results demonstrate that. So what we're going to do is go to work every day. We're not going to sell things, we're not going to blink, and we're not going to panic.

Operator: Best Guy.

Operator: <unk> in that regard grey as this quarter's results I think demonstrate is a stunning company. We have spent 30 years. So amongst some of the finest assets and the people around this table and talking to you today represent one of the greatest in my judgment media companies.

Operator: Operating and I think our results demonstrate that so what we're going to do is go to work every day.

Operator: And we're just going to reduce our debt, just like we've done. For the last 30 years, we have moved our debt ratio up to what we consider to be as high as we would ever like it to be due to the opportunities to acquire both Quincy and Meredith. And that completed a remarkable footprint for our company, and now we are enjoying the fruits of those efforts. So, we're just going to carry on and, um...

Operator: We're not going to sell things, we're not going to blank and we're not going to panic and we're just going to reduce our debt just like we've done.

Operator: For the last 30 years, we moved our debt ratio up to what we considered to be as high as we would ever like it to be due to the opportunities to acquire both Quincy and Meredith and that completed a remarkable footprint for our company and now we are enjoying the fee.

Operator: Fruits of those efforts and so we're just going to carry on and.

Craig Anthony Huber: All right. Real quick, ladies and gentlemen, I want to remind you how to join the queue. You can press star 1 on your telephone keypad. Again, that's star 1 on your telephone keypad to join the question queue. The next step is Craig Huber. Your line is now open.

Operator: That's all there is to it.

Craig Anthony Huber: Paul Wright real quick ladies and gentlemen, I want to remind you how to join the queue. You can press star one on your telephone keypad.

Hilton Howell: Great, thank you. Last call, you guys talked about how revenues starting to generate off that got delayed because Hollywood Strikes and stuff. Just update us on when you think the full revenues will start coming through. It sounds like a 2025 event. That's my first question. Sure, Craig, this is Hilton.

Craig Anthony Huber: Then Thats star one on your telephone keypad to join the question queue.

Hilton Howell: Next up we have Craig Huber Your line is now open.

Hilton Howell: Oh, great. Thank you I wanted to ask what the Assembly Atlanta project cure them in <unk>.

Hilton Howell: Call you guys talked about how the revenues starting to generate off that got delayed because of the Hollywood strikes and stuff maybe.

Hilton Howell: Just update us on your thoughts on when you think you had the full revenues will start coming through it sounds like 2025 event. That's my first question I'll take the second one after that sure. Craig. This is Hilton let me see if I can answer that for you.

Hilton Howell: Let me see if I can answer that for you. Obviously, we have a long-term lease with the Universal Production Services division of Comcast NBCU. And what that effectively does is create a financial 70% occupancy rate for all of our studios. The other 30% of not only assembly but third rail studios, which are two separate businesses but all operated together, have always been producing, but we have had a lag in commitment. And what everyone has told me, it is because of the lack of actually getting greenlit due to a potential IOTC strut. By the end of the month of May, it is my understanding... will either fully matriculate, or it'll go away.

Hilton Howell: Obviously, what we have a long term lease with the Universal production services Division of Comcast NBC, you and what that effectively create a financial 70% occupancy rate for all of our studios the other 30%.

Hilton Howell: Not only assembly, but third rail studios, which are two separate businesses, but all operated together.

Hilton Howell: How have always been producing but we have had a lag in commitments.

Hilton Howell: What everyone has told me it is because of a lack of actually getting Greenland do a due to a potential biopsies strike.

Hilton Howell: By the end of the month of May It is my understanding.

Hilton Howell: That issue will either fully matriculate, where it'll go away.

Hilton Howell: in terms of what we're doing, because the only issue that we have is getting TV productions that are getting quotes left and right, getting greenlit from Hollywood. And so I think that greenlight is going to come. And I think it's just a matter of time. In the meantime, we're in a remarkable position. We've got, I think, about four productions shooting currently, and our reviews from people using our studios have been superb. And so I anticipate that we will see a more fully leased out 100 percent sometime during the course of 2024, and then it will carry on, obviously, in future years. Great, I appreciate that.

Hilton Howell: And I think once that happens I think we're going to have a great boom in terms of what we're doing because the only issue that we have is getting television productions that are getting quotes left and right getting green lit from Hollywood and so I think that greenlight is going to come and I think it's just a matter of time in the meantime.

Hilton Howell: We're in a remarkable position we've got I think about four production shooting currently.

Speaker Change: And I'll.

Hilton Howell: Our reviews from people using our studios have been superb and so I anticipate that we will see a more fully leased out 100% sometime during the course of 2024 and then it will carry for obviously in future years.

Craig Anthony Huber: My other question, if I could ask, just for the longer term here. You guys have plenty of broadcast spectrum. Continued role of ATSC 3.0. Just curious, when do you think you might start being able to monetize that to some degree? When can we start seeing somewhat of some material revenues? I assume the whole thing will be late this decade, but just maybe talk about what you're kind of doing on that front with the extra spectrum you have.

Speaker Change: Great I appreciate that and my other question if I could ask.

Craig Anthony Huber: Longer term here.

Craig Anthony Huber: You guys have plenty of broadcast spectrum of course and with the continued rollout of Herc three point out just curious when do you think you might start be able to monetize that to some degree when can we start seeing somewhat of some material revenues off of that and I think the whole thing, but maybe it'll be late this decade, but just maybe talk about what you've kind of do on that front. The extra spectrum you have thank you.

Patrick LaPlatney: Yeah, it's Pat. So I would say that we'll start seeing revenues... probably the first quarter of next year, in terms of material revenues.

Patrick LaPlatney: Yeah, It's Pat So I would say that we'll start seeing revenues.

Patrick LaPlatney: It's a little bit difficult to forecast. It will be a matter of years. I'm not certain it'll be the end of the decade, though. I think it'll be sooner than that. So, you know, although I can't give you a hard and fast number there, but we'll start seeing money next year, and I think in a few years the money will be meaningful.

Pat: Probably first quarter of next year.

Patrick LaPlatney: In terms of material revenues.

Patrick LaPlatney: Now, it's a little bit difficult to forecast it will be a matter of years.

Patrick LaPlatney: I'm not certain it'll be the end of the decade, I think it'll be sooner than that.

Patrick LaPlatney: So.

Patrick LaPlatney: Although I can't give you a hard and fast number there, but we will start seeing money next year and I think in a few years the money will be meaningful.

Operator: All right, next up we have James Goss. James, your line is now.

James Charles Goss: Okay, just one thing following up on what you just said, what sort of monetization efforts do you think can be made with Next Gen TV? How will it come into play? So there's a number of different areas. One of the sort of primary ones is digital data delivery. So getting data into automobiles, taking data that gets offloaded from the cellular networks.

Operator: Alright next step we have James Goss James Your line is now open.

James Charles Goss: Okay. Just one thing following following up on what you just said what sort of monetization.

James Charles Goss: Efforts do you think can be made with Nextgen TV.

James Charles Goss: How will it come into play do you expect.

Speaker Change: Yeah. So.

James Charles Goss: There's a number of different areas.

James Charles Goss: One of the sort of primary is digital.

James Charles Goss: Digital data delivery.

Patrick LaPlatney: There are a number of conversations that have been going on in that area for years. I think that'll probably be the first. But, you know, a little longer term, the new 3.0 standard gives us the ability to target ads, which can be a game changer. All of our current impressions on linear television are targetable. That really changes the paradigm for local TV. And ultimately, that's where 3.0 leads us.

James Charles Goss: So getting data into automobiles, taking data that gets offloaded from the cellular networks, there's a number of conversations that.

Patrick LaPlatney: It had been going on in that area for years, I think that'll probably be the first but a little longer term.

Patrick LaPlatney: The new three part of standard gives us the ability to target ads, which you know can be a game changer if at.

Patrick LaPlatney: All of our current impressions on linear television.

Patrick LaPlatney: It's going to take a little bit of time, but we'll get there. Okay. And there was also a discussion earlier about fast channels and connected TV offerings. What sort of economic model are you pursuing along those lines?

Patrick LaPlatney: We're targeting <unk>.

Patrick LaPlatney: That really changes the paradigm for local television and ultimately that's where three point of leaves us it's going to take a little bit of time, but we'll get there.

Patrick LaPlatney: Yeah.

Patrick LaPlatney: Okay and.

Patrick LaPlatney: There was also discussion earlier about fast channels and.

Patrick LaPlatney: It's an ad sales model, Jim, and while it's a small number today, we expect it to grow dramatically as we roll out more of our stations on the fast platforms. So we're in the early stages of rollout right now. And as you might guess, the more stations you roll out, the higher the revenue. And in a rollout period, it's going to grow quicker than it would in a sort of a static period. So we'd expect that, again, the small number today to grow significantly over the next few years.

Patrick LaPlatney: Connected TV offerings.

Speaker Change: Sort of economic model are you pursuing.

Patrick LaPlatney: Along those lines.

Patrick LaPlatney: It's an AD sales model, Jim and while it's a small number today, we expect it to grow dramatically as we roll out more of our stations on the SaaS platforms. So we're in the early stages of rollout right now and as you might guess the more stations you rollout the higher the revenue in <unk>.

Patrick LaPlatney: And a rollout period is going to grow quicker than it would in a sort of a static period. So.

James Charles Goss: Okay, one last one. Jeff mentioned, and welcome, Jeff, that Wall Street sort of misunderstood the sports JV impact, and I wonder if you might expand on that a little bit. What do you think was the nature of the misunderstanding? Please clarify what we should understand about it.

Patrick LaPlatney: So we would expect that again small number today to grow significantly over the next few years.

Speaker Change: Okay, One last one Jeff mentioned and.

Speaker Change: Welcome Jeff.

James Charles Goss: That.

Speaker Change: Wall Street to.

James Charles Goss: Sort of misunderstood the sports JV impact and I Wonder if you might expand on that a little bit what do you think was the nature of the misunderstanding and please clarify what we should understand about it.

Jeff Gignac: I mean, I'll start, and Kevin can correct me, but look, the Sports JV, when it was first announced, there were very few details about what it meant as it relates to the existing distribution channels and who it was targeting, et cetera. And so.

Jeff Gignac: Hi.

Speaker Change: I can take either.

Jeff Gignac: Either one of US can I mean, I'll start and Kevin can correct me, but.

Jeff Gignac: Look.

Jeff Gignac: The sports JV when it was first announced there were very few details about what it meant as it relates to the existing distribution channels and who it was targeting etcetera and so.

Jeff Gignac: If we are, if it is another avenue for us and another MVPD, virtual MVPD using our programming, that should be a positive for us. So that, I think, is the crux of why I use the term misunderstanding about it, because it was. It was declared as, you know, the latest way that we're going to get disintermediated, and, in fact, it should help us to be part of the plan going forward. I just echo that.

Jeff Gignac: If we are if it is another avenue for us and another mvpds virtual mvpds using our programming.

Jeff Gignac: That should be a positive for us. So that I think is that is the crux of why I used the term misunderstanding on it because it was.

Jeff Gignac: It was declared as the latest way that we're going to get disintermediation and in fact, it should help us to be part of the plan going forward.

Kevin P. Latek: I just echo that I think we probably fielded four dozen phone calls on the JV in two days, and a fair number of questions seemed to stem from the idea that this sports JV was going to have 14 linear channels, 12 cable, and then the reference to the two broadcast channels, Fox and ABC, somehow meant a national ABC network and a national Fox network that don't exist. It is disappointing, frankly, that a lot of people did not understand that the way that broadcast networks work is that there are local TV stations that carry a certain number of hours of content a day.

Kevin P. Latek: I'd just echo that.

Kevin P. Latek: I think we probably feel that four dozen phone calls on the JV in two days.

Kevin P. Latek: And a fair number of questions seem to stem from the idea that this sports JV was going to have 14 linear channels 12 cable and then you referenced the two broadcast channels Fox and ABC somehow Matt.

Kevin P. Latek: A national ABC network and National Fox network that don't exist.

Kevin P. Latek: Is disappointing frankly to a lot of people do not understand that the way. The broadcast networks work is that there are local television stations that carry certain number of hours a day of content two hours a day for Fox sports.

Kevin P. Latek: Two hours a day for Fox, plus sports, and about 15 hours a day for ABC, plus sports content. So, for example, if you're in Cedar Rapids and you want to watch Fox, you don't turn on the Fox network; you turn on the Fox affiliate. If you're in Cedar Rapids and you want to watch ABC, you don't turn on ABC Network, that's an ABC-affiliated TV station in Cedar Rapids that's owned by Gray Television. People just seem to completely miss that.

Kevin P. Latek: Sports and about 15 hours a day for a B C plus sports content.

Kevin P. Latek: So for example, if you're in Cedar Rapids, and you want to watch Fox you don't turn on the Fox Network, you turn on the Fox affiliate.

Kevin P. Latek: Owned by another broadcaster appear in Cedar Rapids, and you want to watch a B C. You don't turn on a B C network you turn on the ABC station.

Kevin P. Latek: ABC affiliated television station in Cedar Rapids, that's owned by Gray television.

Operator: I think the comments from the networks to us privately and the comments publicly return people to the understanding that broadcasting is different than a cable channel that's distributed to all homes at essentially the same time with the same content. And as that sunk in, people, I think, started to appreciate what we really said in the statement we issued that day, which was a virtual MVPD that carried local affiliates would compensate the local affiliates for their signals.

Operator: People just seem to completely miss that I think the comments from them the networks to us privately in the comments publicly.

Operator: Return people see the understanding that broadcast is different than a cable channel that is distributed.

Operator: To all homes at essentially the same time.

Operator: It was the same content.

Operator: And is that Sage and people I think started to appreciate what really we said in the statement, we issued that day, which was a virtual mvpds.

Operator: And therefore, as we learned in subsequent conversations, the target audience here contributes a significant amount of money and distribution for the cable channels that are distributed there as well as the two broadcast networks. The industry does not end every time somebody announces a new virtual MVPD, but it seems like that's what happened for that first week. So I think we are at the point where people understand now what a virtual MVPD is and how slim these offerings will be, and that a virtual MVPD that carries Fox and ABC affiliates is a benefit to those networks.

Operator: <unk> local affiliates will compensate the local affiliates for their signals.

Operator: And therefore as we learn more.

Operator: Anytime and many subsequent conversations with target audience here is not to destroy the linear.

Operator: The traditional Mvpds sub base that is.

Operator: <unk>.

Operator: It contributes a significant amount of.

Operator: Money in distribution for the cable channels that are distributed there as well as the two broadcast networks.

Operator: But it is going to target the cord never crowd so to the extent they are bringing in people that.

Operator: They do not currently pay for television.

Operator: Incremental revenue for all of us. So if it's successful it's incremental revenue and that's a good thing.

Speaker Change: There are.

Operator: Couple there are three or four virtual mvpds today.

Operator: <unk> has already gone out of business. So this is another new virtual mvpds there may be more in the future, it's a dynamic business and.

Operator: Our.

Operator: The industry does not and every time somebody announces a new virtual mvpds, but that seems like that's what happened for that first week.

Operator: So I think I think we are at the point, where people understand now what virtual mvpds and how some of these offerings will be and that the virtual mvpds that carries Fox and ABC affiliates is a benefit to the Fox and ABC affiliates.

John Kornreich: All right, next up we have John Kornreich. Your line is now open.

John Kornreich: Two questions, I guess, for Jim. One, should we expect... leveraged to get a little bit under five by the end of this year? And secondly, can we be hopeful that net retrans, which by your forecast will, I guess, decline by about 3% this year, could resume some small growth in 2025 and 2026?

John Kornreich: Alright next step we have John Kornreich. Your line is now open.

John Kornreich: Two questions I guess for Jim.

Speaker Change: One sure.

John Kornreich: Should we expect.

John Kornreich: Leverage to get a little bit under five by the end of this year.

John Kornreich: And secondly, Ken we'd be hopeful that net retrans, which by your forecast.

Jeff Gignac: Yeah, John, it's Jeff. I'll take your first one in terms of leverage towards the end of the year. I don't think we quite get below five, but we should be getting into the low fours by then.

John Kornreich: I guess declined by about 3% this year could resume some small growth in 'twenty five and 26.

Jeff Gignac: Yeah, John It's Geoff I'll take your I'll take the first one.

Jeff Gignac: In terms of leverage towards the end of the year.

Jeff Gignac: Low five. Sorry, I'll be at a low five by the end of the year. Sorry about that, yes, a low five. You had me excited for a minute. Yeah, my apologies. And the other question is: So this is Jim. I'll lead off, and Kevin can provide a little bit more color. Given the pace of our sub-renewals after we finished the remaining roughly 30% this year, at rate renewals, I mean, we have about 18 months where we don't have any re-trans agreements up for renewal. So I think the re-trans is going to be more stable in 25. I think as you get past 25 and into 26, If we have an opportunity again to grow, Kevin,

Jeff Gignac: I think we quite get below five, but we should be getting into the low fours by the end of the year.

Speaker Change: I'm, sorry, low fives by the end of the year.

Speaker Change: Sorry about that yes robot you have me excited for a minute.

Speaker Change: My apologies.

Jim: And the other question is.

Speaker Change: Anybody can take it I guess.

Jeff Gignac: So this is Jim I'll lead off and Kevin can provide a little bit more color.

Jim: Given the pace of our sub renewals after we finish the remaining roughly 30% this year.

Jim: At that rate renewals I mean.

Jeff Gignac: We have about 18 months, where we don't have any retrans agreements up for renewal. So I think the retrans is getting and be more stable.

Jim: Stable in 'twenty five.

Jeff Gignac:

Kevin: And then I think as you get past twenty-five it into 'twenty six 'twenty.

Jeff Gignac: 27.

Jeff Gignac: We have an opportunity again to grow Kevin can feel free to add more color I think that's correct.

James Ryan: The NBPD network contracts were set at a time when we all anticipated that retrends would be in a different position, or I should say the traditional NBPD sub-numbers would be higher than they are today. And we fully expect that we will be resetting those prices when we renew in 2025, and that should allow us to return to net retrends growth going forward.

James Ryan: The.

James Ryan: Fixed fee.

James Ryan: Where contracts were set at a time when we are anticipated that retrans.

James Ryan: It would be in it.

James Ryan: Would be in a different position or I should say.

James Ryan: Traditional mvpds subs.

James Ryan: Our numbers will be higher than they are today.

James Ryan: And we fully expect that we will be resetting those prices.

Kevin P. Latek: After 25

James Ryan: When we renew in 2025.

Kevin P. Latek: I would say after 25, whether it occurs in 25 will depend on a couple of puts and takes with our renewals this year and sub-losses and also sub-migrations, subs that move from traditionals to the virtuals, just how that flows. I think this year we're looking at, and we talked about, you know..., stable to maybe a low single-digit decline on net. Next year there's still some puts and takes. I'd say as we look over a number of years, we should see net re-trends returning to a growth trajectory.

Kevin P. Latek: And that should allow us to return to net retrans growth going forward.

Kevin P. Latek: After 25.

Kevin P. Latek: I would say after twenty-five at whether it occurs in twenty-five will depend on a.

Kevin P. Latek: A couple of puts and takes with our renewals this year and sub losses and also sub migrations subset move from traditional to the virtual.

Kevin P. Latek:

Kevin P. Latek: How that flows so it.

Kevin P. Latek: I think I think this year, we're looking at I think we talked about.

Kevin P. Latek: Stable to maybe low single digit decline on that next year.

John Kornreich: Kevin, what is your calculated subdecline of late?

Kevin P. Latek: Still some puts and takes I'd say as we look over a number of years, we should see net retrans returning to a growth trajectory.

Kevin P. Latek: Gray's experience is fairly consistent with the overall industry. Our TV households break down to about 45% roughly in large markets, 45% in mid-sized markets, and the balance in small markets, and that skews a little bit more towards the mid-sized markets than the overall U.S. population distribution, but our experience with the MVPDs is, I'd say, pretty similar to what you read in estimates for the overall industry.

Kevin: What is the your calculated as their sub decline.

Kevin P. Latek: Of late.

Kevin P. Latek: Aye.

Kevin P. Latek: Grays experience is fairly consistent with the overall industry.

Kevin P. Latek: Our TV households breakdown about 40.

Kevin P. Latek: It's about 45% roughly and large markets, 45% of mid size markets and the balance in small markets and that skews.

Kevin P. Latek: Now a little bit more towards mid size markets than the overall U S population distribution, but our experience with the Mvpds as I'd just say, it's pretty similar to what you read overall and estimates for the overall industry.

Operator: Thank you very much for your attention.

John Kornreich: Thank you very much.

Craig Anthony Huber: All right. Next up, we have Davis Huber. Your line is now open.

Craig Anthony Huber: Okay. Thank you very much variances.

Craig Anthony Huber: Hi everybody. Thanks for taking the questions. I want to ask a follow-up question on the retrans because I think your guidance shows a mid single-digit decline in the second quarter. And you could just give some data on cord cutting, but Are you able to sort of segment out what the pressure is between cord cutting versus the mixed shift of linear subs moving to virtual? Because I know YouTube has had, you know, some nice growth over the past couple of quarters, especially with Sunday tickets. So just wanted to ask for a comment there.

Craig Anthony Huber: Thank you Sir.

Craig Anthony Huber: Alright next up we have Davis Hebert your line is now open.

Speaker Change: Hi, everybody. Thanks for taking the questions I wanted to ask a follow up on the Retrans because I think your guidance shows.

Craig Anthony Huber: Mid single digit declines in the second quarter.

Craig Anthony Huber: And you could just give some data on cord cutting but.

Craig Anthony Huber: Are you able to sort of segment out what the pressure is between cord cutting versus mix shift of linear subs moving to virtual because I know Youtube has had some nice growth over the past couple of quarters, especially with the Sunday ticket. So just wanted to ask or a comment there.

Kevin P. Latek: I haven't really thought through it philosophically what's the bigger driver or what the relative breakdown is. The traditional MVPD subs are declining double digits, that's fairly well known, and the virtuals and the DTCs are growing at a pretty healthy clip, that's also fairly well known. We're not immune to that at all, and we're exposed to it on the same level as everybody else.

Kevin P. Latek: I haven't really thought through philosophically, what's the bigger driver or what the relative breakdown is the traditional mvpds subs are declining double digits, that's fairly well known in the.

Kevin P. Latek: The virtual and the D. T. CS are growing at a pretty healthy clip that social barely one hour or so.

Kevin P. Latek: We probably are a bit more exposed than others in terms of the price difference, the revenue difference we get from a traditional sub versus a virtual sub because our traditional rates are at the high end of the industry. And there are some broadcasters who are probably still looking at some kind of parity between traditional rates and what they receive from the networks for the virtuals. I think that the large groups have had more success in driving their traditional retrenches rates, and so those who have higher rates are obviously going to have a bigger delta when they move to essentially the same fee that's paid to all affiliates and all markets of all quality levels. So we probably are a bit more exposed in that area.

Kevin P. Latek: <unk>.

Kevin P. Latek: We're not immune to that at all and were exposed to at the same level as everybody else, we probably are a bit more exposed.

Kevin P. Latek: Than others in terms of the price difference the revenue difference, we get from a traditional sub versus a virtual sub.

Kevin P. Latek: Because our traditional rates are at the high end of the industry.

Kevin P. Latek: And there are some broadcasters who probably are.

Kevin P. Latek: Still looking at kind of parity between traditional rates and what they received from the networks with the virtual.

Kevin P. Latek: The large groups.

Kevin P. Latek: <unk>.

Kevin P. Latek: We have had more success in driving their traditional retrans rates and so.

Kevin P. Latek: Those who have higher rates are obviously going to have a bigger delta.

Kevin P. Latek: When they moved to a funded essentially the same fee.

Kevin P. Latek: On the flip side, as those fees on the virtual side can move closer to a market rate, Gray would benefit more than others. So we are all rolling in the same direction as an industry, meaning broadcast affiliates, to return our rights to us, that is, our ability to negotiate for the distribution of our signals. We succeed there, which unfortunately will not be quick because it's a Washington solution. I think we will see good benefits for Gray as well as the whole industry. Your next question is going to be when that is going to happen, and I can't tell you when anything is going to happen in Washington.

Kevin P. Latek: Paid all affiliates and all markets all quality levels.

Kevin P. Latek: So we probably are a bit more exposed in that area on the flip side of it sooner we can.

Kevin P. Latek: And as those fees on the virtual side.

Kevin P. Latek: Can move closer to a market rate gray would benefit more than others. So we're all rowing the same direction as an industry, meaning broadcast affiliates.

Kevin P. Latek: To return our rights to us that is a.

Kevin P. Latek: Ability to negotiate for the distribution of our signals on all platforms, not just our platform's minus three or four.

Kevin P. Latek: And when.

Kevin P. Latek: We succeed there, which I Unfortunately will not be quick because it's a washington solution.

Kevin P. Latek: I think we will see.

Kevin P. Latek: Good good benefits for gray as well as the whole industry.

Craig Anthony Huber: Yeah, it makes sense. Thank you for that.

Kevin P. Latek: But I yeah.

Speaker Change: Following questions here, one second happened and I can't tell you with anything is going to happen in Washington.

Craig Anthony Huber: Now, if I could just follow up with one kind of all-encompassing sports question. I think one, I think broadcasting clearly offers an incredible reach medium. But you have NBC doing exclusive NFL games on Peacock, and so there seems to be some experimentation with doing exclusive sports on streaming. What sort of commitment levels do you get from your broadcast partners in terms of keeping sports on the broadcast medium and limiting some of that leakage to streaming services?

Speaker Change: Makes sense.

Speaker Change: Thank you for that and if I could just following up with one kind.

Craig Anthony Huber: All encompassing sports question.

Craig Anthony Huber: I think one I think broadcast is clearly <unk>.

Craig Anthony Huber: Offers an incredible reach medium.

Craig Anthony Huber: But you have NBC doing exclusive NFL games on Peacock.

Craig Anthony Huber: Yes.

Craig Anthony Huber: So there seems to be some experimentation with doing exclusive sports on streaming what sort of commitment levels do you get from your broadcast partners in terms of keeping sports on the broadcast medium.

Craig Anthony Huber: And then my second question on sports is, what sort of feedback have you gotten on your sort of, you know, early innings? Distribution of local games, NBA, etc. What's been the feedback, I guess, from either fans or the teams themselves?

Craig Anthony Huber: And limiting sort of that leakage to streaming services.

Craig Anthony Huber: And then my second question is on sports is what sort of feedback have you gotten on your sort of.

Patrick LaPlatney: Thank you.

Patrick LaPlatney: Early innings.

Patrick LaPlatney: Yep, sure. To answer your second question first, I mean, the feedback's been extraordinary from the fans, from the teams, and there's a really good reason for that. I mean, the numbers, the audience that we're generating for these teams, significantly above their, you know, former levels or, you know, what they're currently doing, right? So in You know, in Phoenix, we were up, you know, 70, 80%. In some of the other markets where we did smaller packages, we did some five and 10 game packages. You know, in some markets, the numbers were double or triple what they were on the current carrier.

Patrick LaPlatney: Distribution of local games.

Patrick LaPlatney: NBA et cetera, what's been what's been the feedback I guess from either fans or the teams themselves. Thank you, yes sure to answer your second question first I mean, the feedbacks been extraordinary from the fans.

Patrick LaPlatney: From the teams and there is a really good reason for that I mean, the numbers the audience that we're generating for these teams is.

Patrick LaPlatney: Significantly above there.

Patrick LaPlatney: Former levels or what they are currently doing right so and.

Patrick LaPlatney: In Phoenix, we were up 70, 80% some of the other markets, where we did smaller packages. We did some five and 10 game packages.

Patrick LaPlatney: So obviously, the teams are going to be excited about that, but the fans, you know, many of whom have been sort of disenfranchised over the last few years, are able to see their team, and it's a really exciting moment. And so the feedback's been extraordinary, not only from the fans but also from the advertisers. They're really excited to have those games reach the types of audiences that they're now reaching.

Patrick LaPlatney: In some markets the numbers were double or triple what they were on the current carrier.

Patrick LaPlatney: So obviously the teams are going to be excited about that but the fans.

Patrick LaPlatney: Who many of which have been sort of disenfranchised over the last few years are able to see their team and it's it's a it's a really exciting moment in Tianjin.

Patrick LaPlatney: <unk> been extraordinary and not only from the fans, but also from the advertisers. They are really excited to have those games reached the types of audiences that they are now reaching.

Patrick LaPlatney: As far as the networks and sports go, you know, they're dabbling in, you know, direct-to-consumer, you know, with a small number of games and, you know, a lot of the games are, in the case of NBC, the vast majority of the sports they do are simulcast. So we're not, you know, some of the audiences, there's a little bit of audience leakage there So we continue to be very, very effective in selling those high-profile sports properties.

Patrick LaPlatney: As far as the networks and sports yeah, they're they're dabbling in.

Patrick LaPlatney: Direct to consumer.

Patrick LaPlatney: Hi.

Patrick LaPlatney: With a small number of games and.

Patrick LaPlatney: You know a lot of the games or the case of NBC. The vast majority of the sports they do with simulcast so we're not you know some of the audience is theres a little bit of audience leakage, there, but not a lot.

Patrick LaPlatney: So I can't, as far as commitments go, I can't get into that, but I think you're going to see some experimentation in that area. I think you'll see that with a number of the leagues, but I think that broadcast television has clearly illustrated its value over the last...

Patrick LaPlatney: And so we continue to be very very effective in selling those high profile sports properties.

Patrick LaPlatney: I can't as far as commitments go I can't I can't get into that but I think youre going to see some experimentation in that area I think youll see that with.

Patrick LaPlatney: David, just one additional point to that is that in Phoenix, the Suns are where we have the full commitment, the full season commitment, and side-by-side games, where games are carried on national cable, and our local broadcast on our station just absolutely... Significantly higher ratings. People are turning to us to see the game, and the feedback has been fantastic from both the team and the fans. And Pat mentioned the small package of games that we had.

Patrick LaPlatney: With a number of the leagues, but I think that broadcast TV.

Patrick LaPlatney: Is clearly illustrated its value over the last six months, yes, David just one additional point to that is that in Phoenix, SUNS, where we have the full commitment the fall season commitment and you know in side by side gains when games are carried on national cable, our local broadcast and our station.

Patrick LaPlatney: Absolutely.

Patrick LaPlatney: Just to give you one example, so in New Orleans with the Pelicans, their ratings were up over 200% and over 300% in adults 25 to 54. So, as you're probably no surprise, we're getting great feedback from both the teams and the fans.

Patrick LaPlatney: Significantly hiring people are turning to us to see the game and the feedback has been fantastic on both the talent and the fan.

Patrick LaPlatney: Matt mentioned, the small package of gains that we had just to give you. One example, so in new Orleans with the pelikan their ratings were up over 200% and over 300% in adults 25 to 54, so probably no surprise, we're getting great feedback from both the teams and the fan I think one other sort of interesting point there is that.

Patrick LaPlatney: I think one other sort of interesting point there is that, in Phoenix, where we have an independent station, KTVK, the number one billing station in that market. And for some context, if you go back, 10 quarters.

Patrick LaPlatney:

Patrick LaPlatney: Uh huh.

Patrick LaPlatney: In Phoenix, where we have an independent station K T B K.

Patrick LaPlatney: The number one billing station in that market and for some context. If you go back 10 quarters to go back when we made the Meredith acquisition.

Patrick LaPlatney: If you go back to when we made the Merit of Acquisition, our CBS station and our, you know, KTVK, The Independent, were the number three and four stations in that market from a revenue perspective. They're now the number one and number two stations in the market, in fairness. KPHO, CBS had the Super Bowl in the first quarter, but KTBK is the number one station in Phoenix.

Patrick LaPlatney: Our CBS station in our K K G. VK the independent we're the number three and four stations in that market from a revenue perspective.

Patrick LaPlatney: They are now the number one and number two stations in the market now in fairness.

Patrick LaPlatney: So I think that tells you a little bit about the value and the impact of local sports and, you know, where that can go. So we're excited about that, and certainly shout out to the team.

Patrick LaPlatney: K P. H O. The CBS had the Super Bowl in first quarter, but <unk> is the number one station in Phoenix. So I think that tells you a little bit about the value of the impact of local sports and and and.

Hilton Howell: http://TheBusinessProfessor.com Well, David, this is Hilton.

Hilton Howell: David, this is Hilton. You asked for some anecdotes. Let me give you a couple of them, just real quick. We took our board to Phoenix because we are really proud of what we're doing with the Suns and the Mercury, and took them to a game on one Sunday afternoon and held our board meeting out there. And I walked in because the hotel we were staying in didn't have our independent channel on the television.

Hilton Howell: Where that could head. So we're excited about that and certainly shout out to the team there absolutely.

Hilton Howell: I think may be family.

Hilton Howell: Well David this resulted in U S for some anecdotes, let me give you a couple of them just real quick.

Hilton Howell: We took our board to Phoenix, because we are really proud of what we're doing with the sons and the Mercury.

Hilton Howell: And took them to a game one Sunday afternoon held our board meeting out there.

Hilton Howell: I asked them if they could program it, and the guy that was sitting there behind the thing, I said, are you part of the company that brought the Suns to live free TV? I said, yeah, actually, I am. And he went, oh, my God, I'm a college student. I can't afford to, like, pay X, Y, Z.

Hilton Howell: And I'll walk down because the hotel, we were saying and didn't have our independent on the TV and I asked them if they could program and the guy that was sitting there behind this thing goes.

Hilton Howell: Are you part of the companies that bought the SUNS to live free television said, yes, actually I am and he goes Oh, My God I'm, a college student I can't afford to pay X y Z. The fact, you brought it back to free TV. It's unbelievable that night, we go up and we had all our board at a dinner and we were just talking about.

Hilton Howell: The fact that you brought it back on free TV is unbelievable. That night, we went up, and we had all our board at dinner, and we were just talking about what we had done with the Suns and where we were going to go to the game, et cetera, et cetera. We freaking got three of our folks that were serving us our dinner applauding because we brought the Suns back to the market. Now, if that doesn't tell you something, I don't know what does. Those are great anecdotes, and we are thrilled with our experience with the Suns, and I think everybody in Arizona is, too.

Hilton Howell: What we have done with the signs and where we're going to go to the game et cetera et cetera, and then we freaking got three of our folks that work.

Hilton Howell: Serving us our dinner.

Hilton Howell: Applauding because we brought the sons back to the market now if that doesn't tell you something.

Hilton Howell: What does.

Hilton Howell: Those are great anecdotes, and we're thrilled with our experience with the sons and I think everybody in Arizona as June.

Operator: Alright, and it looks like we have time for just one more question. So, Michael Kupinski, you'll be our final question.

Michael Kupinski: All right and it looks like we have time for just one more question. So Michal krupinski, you'll be our final question.

Michael Kupinski: You have always prided yourself on local direct business, which has been an incredible success for you. The agency business looked like it ticked up in the last quarter, 48% of your revenue. I assume that's because of the pickup in national, but I was wondering if maybe that was maybe a little political. Do you anticipate that the agency business will be a greater percent of total revenues as national recovers?

Speaker Change: Most of my questions have been already addressed but a quick one here.

Michael Kupinski: You've always prided yourself on local direct business, which has been just an incredible success for you.

Michael Kupinski: The agency business looked like it ticked up in the last quarter.

Michael Kupinski: 48% of your revenue.

Michael Kupinski: Assume that's because of the pickup in national but I was wondering if maybe provide a little color. There if that was maybe a little political.

Michael Kupinski: And then maybe because of some of your initiatives like sports or targeting advertisers that have a broader geographic reach? Some thoughts on what you think agency business will be in terms of the quote-unquote norm of local direct versus an

Michael Kupinski: Do you anticipate that the agency business will be a greater percent of total revenues as Nashville recovers and then maybe because of some of your initiatives like sports or targeting advertisers that have a broader geographic reach I was just.

Michael Kupinski: Some thoughts of what what you think agency business will be in terms of the quote unquote norm.

Patrick LaPlatney: Yeah, so because we skew to midsize and smaller markets, we have a lower percentage of agency business than most groups. You know, so I think that I wouldn't say that we think our, You know, our revenue, the agency share of our revenue is going to grow significantly going forward. Again, I think, you know, the area that we control the most is local direct, so, or control better is local direct, and, you know, Sandy may have some comments on this.

Sandy Breland: Local direct versus agency, yeah, so because we skew to midsize and smaller markets, we have a lower percentage of agency business than most groups.

Sandy Breland: So I think that I don't I wouldn't say that we think our.

Sandy Breland: Our revenue in.

Sandy Breland: The agency share of our revenue is good to going to grow significantly going forward again, I think the area that we control. The most is local direct so our control better as local direct and.

Patrick LaPlatney: Certainly, politics plays a part in that as well, right? Oh yeah, that's true, right, for the first quarter, yeah, yeah. So you'll see a lot of, you know, in a political year, obviously, agency business goes up. And when the nation is strong, it'll be agency business. Yes, absolutely.

Patrick LaPlatney: Sandy you may have some comments certainly political plays a part in that as well, yes that is true right for <unk> for first quarter, yes, yeah. So you'll see a lot of pointing out what our political you're obviously agency business was strong and it'll be agency side business too, yes, yes, absolutely.

Patrick LaPlatney: Yeah, so we should just look for that to go up this year but maybe kind of go back to more of a normalized level in the 43-44% range going forward.

Patrick LaPlatney: Yes. So we should just look for that to go up this year, but maybe kind of go back to more of a normalized in the $43 44 per cent range going forward.

Michael Kupinski: Yeah, we'd go back to a more normalized range. Okay. All right. Thank you.

Operator: All right.

Hilton Howell: And with that, we'll now turn the program back over to Chairman Howell for closing remarks. Thank you, operator.

Operator: Okay, Yeah, we'd go back to a more normalized range going forward.

Hilton Howell: Thank you, operator. Before we close out this morning, I just want to take a moment to thank Jim Ryan for his time with our company. I don't know if he's feeling a sense of great elation that this is his last earnings call. I know that he'll have other phone calls to talk to you guys, but for, what, 26 years?

Hilton Howell: Alright, thank you.

Hilton Howell: And with that we'll now turn the program back over acute chairman Hal Walsh for closing remarks. Thank you operator before we close out this morning, I just want to take a moment to fad.

Hilton Howell: Jim Ryan for his time with our company I don't know if he's feeling a sense of great elation that his last earnings call I know that it will have other phone calls to talk to with you guys, but for what 26 years.

Hilton Howell: And as I mentioned at the beginning, over a hundred of these calls, he has been there, steady. And I greatly thank him for his time and service, and I will say we still have him around to help us out for the next year. And I also want to welcome Jeff Geniak to our company. I could not be more proud of that individual and the succession that we have accomplished. Jeff knows our company well.

Hilton Howell: And as I mentioned at the beginning over 100 of these calls.

Hilton Howell: He has been there steady.

Hilton Howell: And true.

Hilton Howell: And I greatly thank him for his time and service and I will say, we still have around to help us out for the next year and I also want to welcome Jeff Junior to our company I cannot be more proud.

Hilton Howell: He may know some parts of it better than the rest of us around this table, and now he's going to create the financial numbers that all of you look at. So thank you, Jim, and welcome, Jeff. With that, we'll sign off for Q1, and we'll see you next quarter.

Hilton Howell: That individual in the succession.

Hilton Howell: We have accomplished Jeff knows our company. He may know some parts of it better than the rest of us around this table and now he's getting to know the people and the assets that create the financial numbers that all of you look at and so thank you Jim and welcome Jeff with that we'll sign off for Q1, and we'll see you next quarter.

Operator: All right, ladies and gentlemen, this does conclude your call. You may now disconnect your lines, and thank you very much again for joining us today.

Speaker Change: Thank you.

Operator: All right, ladies and gentlemen that does conclude your call. You may now disconnect your lines and thank you very much again for joining us today.