Q1 2024 Gray Television Inc Earnings Call
Okay.
Speaker Change: Ladies and gentlemen, thank you for holding your call will begin momentarily.
Speaker Change: Once again, ladies and gentlemen, thank you for holding your call will begin momentarily.
Speaker Change: [music].
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Gray television Q1, 'twenty 'twenty four earnings call.
Speaker Change: 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.
Speaker Change: 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.
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 <unk>, our president and co CEO Sandy <unk>, our Chief operating officer, Kevin <unk>, our chief legal and development Officer, Jim Ryan.
Speaker Change: 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 jobs will succeed Jim as the Chief Financial Officer of Gray television after John serving 26 years.
Speaker Change: Ours.
Speaker Change: That chair by Marc held 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: We filed our quarterly report on Form 10-Q with the S. E C. Today.
Kevin: Included on the call may be discussion of non-GAAP financial measures and in particular, adjusted EBITA leverage ratio denominator and certain leverage ratios. These.
Kevin: These metrics are not meant to replace GAAP measurements, but are provided as supplements to assist the public in.
Kevin: 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 GAAP measures reported in our financial statements.
Kevin: 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 Companys. Most recent reports filed with the SEC.
Kevin: E C, 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.
Hilton Hatchett Howell: I'll turn the call to Hilton Thank you Kevin.
Hilton Hatchett Howell: Once again, great television has begun a new year and 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 for.
Hilton Hatchett Howell: Our fantastic and how sales and 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.
Hilton Hatchett Howell: Automobile and Nashville, but have been challenging in the past we appear to be growing not only revenues, but also growing our share of advertising budgets for.
Hilton Hatchett 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.
Hilton Hatchett Howell: Meanwhile, we continue to focus on debt reduction and on April one 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.
Hilton Hatchett Howell: Higher on a pro forma basis than the first quarter of 'twenty 19, 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 core.
Hilton Hatchett Howell: By very strong political advertising revenue later this year.
Hilton Hatchett 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 Hatchett Howell: These stations deliver the audience that matters to campaigns and no one delivers that better than gray television.
Hilton Hatchett Howell: In the first quarter, our political advertising revenue was slightly lower than our political advertising revenue in the first quarter of 'twenty 'twenty on a pro forma basis.
Hilton Hatchett Howell: This should not be a surprise to anyone because 'twenty 'twenty four 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.
Hilton Hatchett Howell: As usual in fact, consistent with expectation. We are currently guiding for political advertising revenue in the second quarter of 2024 drained between 55% and 72% higher than the second quarter of 'twenty 'twenty on a pro forma basis.
Hilton Hatchett Howell: Overall of the seven most competitive presidential swing States Grays station cover all the markets in three Big States, Arizona, Georgia.
Hilton Hatchett Howell: In Nevada.
Hilton Hatchett Howell: And it has and we have a very strong presence in three of the four remaining states North Carolina, Michigan and Wisconsin.
Hilton Hatchett 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 Hatchett 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 ballot this year as well.
Hilton Hatchett Howell: There is no.
Hilton Hatchett 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 Hatchett 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 Hatchett 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 by 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 <unk>.
Hilton Hatchett Howell: <unk> 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.
Hilton Hatchett Howell: As you all know late last year MPC you commence 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.
Hilton Hatchett 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 an outside partners for additional development.
Hilton Hatchett Howell: At Assembly.
Hilton Hatchett Howell: There is no question that the tremendous reach and efficiency of our local broadcast television industry is still getting rediscovered and reaffirmed by audiences advertisers sports leagues and sports teams.
Hilton Hatchett 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 Hatchett Howell: 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 'twenty 'twenty four.
Hilton Hatchett Howell: You Hilton.
Pat: Looking at our first quarter financial results it should be clear the gray stations are continuing to find and attract strong advertiser demand.
Pat: Our market, leading local television stations and premium brand safe digital products.
Hilton Hatchett Howell: The router 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.
Hilton Hatchett Howell: In fact during the first quarter, our new local direct business.
Hilton Hatchett Howell: 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.
Hilton Hatchett Howell: These strong results continued into April 24, just last month, which delivered 14% higher new local direct business than April of 'twenty three.
Hilton Hatchett Howell: 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.
Hilton Hatchett Howell: As we continue to expand our connected TV 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.
Hilton Hatchett Howell: Our first quarter results also benefited from our successful efforts to bring professional sports back to our broadcast stations in.
Hilton Hatchett Howell: In addition to broadcasting the full season of games, the Phoenix SUNS across Arizona, our unmatched coverage in Georgia, and Louisiana allowed us to bring the Mba's, Atlanta Hawks, and New Orleans Pelicans games to their local fans and all of the markets located in those states and some adjacent markets.
Hilton Hatchett Howell: 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.
Hilton Hatchett Howell: The impressive ratings the Grays broadcast of basketball games are generated as well as those of our peers confirms the reach of local broadcast television professionals for professional sports fans teams and leagues.
Hilton Hatchett Howell: 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.
Hilton Hatchett Howell: 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.
Hilton Hatchett Howell: Paired to an average 4% decline across our publicly traded broadcast peer group. We had fell last year in part on having D. NCWA 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.
Hilton Hatchett Howell: 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 television households.
Hilton Hatchett Howell: We currently anticipate generating $15 million to $20 million of advertising revenue related to those broadcast and the <unk>.
Hilton Hatchett Howell: Third quarter of this year.
Hilton Hatchett Howell: We already have approximately 6 million of advertising revenue booked for the Olympics.
Hilton Hatchett Howell: Core advertising revenue consistently performs above average.
Hilton Hatchett Howell: Two of the largest and most watch news teams at the majority of our markets and we intend to maintain that leadership.
Hilton Hatchett Howell: Our content attracts audiences on linear TV on connected TV and on virtually every other platform that exists.
Hilton Hatchett Howell: We are a content first company.
Hilton Hatchett Howell: For a few high profile examples of our recent successes in this area I turn the call over to Sandy Berlin. Thanks that beyond the numbers. The gray has continued to deliver exceptionally well from an operational perspective late in March we announced that CBS had retained Grace in House News research and consulting group, which we call our stretching to provide mark.
Sandy Berlin: Research and used consulting services to all 14 of C. B assets owned and operated television station. This first of its kind partnership between our network and an affiliate groups News Research Division began on April 1st we are thrilled to partner with CBS stations on this news research venture.
Hilton Hatchett Howell: 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. Our CBS station here in Atlanta, among the 15 winners of the 'twenty 'twenty four <unk> Columbia Awards for their joint multi.
Hilton Hatchett Howell: 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.
Hilton Hatchett Howell: 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.
Hilton Hatchett Howell: Excuse me from K G N S in Eagle pass, Texas, Tw, AGM and fresh gourmet and it was pretty cool last September we launched a new daily 30 minute News magazine investigates TV plus.
Hilton Hatchett Howell: Since then the share build 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 shadow is drawing higher audiences than nearly all primetime cable news.
Hilton Hatchett Howell: 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.
Hilton Hatchett Howell: Program clearly have found an audience. So no surprise, we're thrilled to renew investigate TV plus for a second season.
Hilton Hatchett Howell: We also recently launched a Spanish language version of its highly successful show in 26 of Grace Telemundo markets.
Hilton Hatchett Howell: 2024 S began 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 are highlighted here. This morning are evidence that our employees are doing what it takes for us to maintain our stations high ranking.
Hilton Hatchett Howell: 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. Thanks. Thank.
Kevin: Thank you Sandy.
Kevin: Our retransmission revenues and network affiliation fees were largely stable despite.
Kevin: Despite headwinds in subscriber trends in the pay TV industry.
Kevin: 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: 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: A number of reasons, including the strong and loyal viewership of our news station.
Kevin: We completed all of those negotiations covering roughly 400 operators without a single blackout.
Kevin: 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: The other topic I want to highlight is the increasing litany of positive developments involving the new transmission standard for broadcast signals called Nextgen TV.
Kevin: It was less than seven years ago that the FCC approved its first advancement in broadcast technology since the 19 nineties.
Kevin: Importantly, nextgen TV deployment is already well ahead of HGTV and the D. T V transition at the same seven year Mark.
Kevin: The FERC <unk> with.
Kevin: The first next Gen. TV did not go on sale until 2020 get by 2026, 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.
Kevin: 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.
Kevin: And there will be more nextgen channels available in 2024, then D TV channels in 2004.
Kevin: In fact by 2026 for a 65% of TV set shipments in the U S are projected to include Nextgen TV receiver chips.
Kevin: In addition to the successes with receiver rollout station transmitter build outs continue.
Kevin: And the industry now delivers a nextgen signal, reaching 75% of U S television households.
Kevin: 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.
Kevin: Indeed, just this past Saturday.
Kevin: Our NBC affiliate in Louisville.
Kevin: Kentucky W E E and the Kentucky Derby.
Kevin: Broadcast meet history, it's the first major sporting events broadcast in the United States using Dolby vision HDR as part of Nextgen technology.
Kevin: The progress in next Gen TV across broadcasters and technology companies is tangible and important.
Kevin: We expect there will be many more impressive achievement of milestones announced over the next few months in this area.
Kevin: This concludes my remarks, I'll now turn the call to Jim Ryan.
James C. Ryan: Thanks Shannon.
James C. Ryan: Hilton has covered the key highlights of the quarter as such my remarks today will be very short.
James C. Ryan: You will see a few changes in the definitions in metrics in our earnings release and 10-Q today.
James C. 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 C. 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 C. Ryan: All 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 C. Ryan: Our operating expenses, excluding depreciation amortization impairment and gain loss on disposal of assets were better than our initial expectations and we will continue to monitor our expenses for additional efficiencies as we proceed through 2024.
James C. 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 C. Ryan: As of March 31, 24, our leverage ratio was 563 times and more importantly, our first lien leverage ratio with a very modest 2.3 or four 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 C. 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 C. Ryan: Turning to our full year guide, we are reaffirming the guidance of approximately 1.6 billion in core ad.
James C. Ryan: 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. We look forward to a very successful two four.
James C. Ryan: Full year, 'twenty, four including strong political AD spend need later in the year.
James C. Ryan: It's now time for me to introduce my successor as CFO, Jeff is the ideal person for this role I'll give it. He is very is very close working relationship with gray is a key banking harder for almost 20 years and therefore are very happy to turn the call over to Jeff.
Jeff Junior: Thank you Jim.
Jeff Junior: 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 Junior: Including the recent acquisitions of Raycom, Quincy and Meredith Incidentally I was also the lead banker to Ray Com Quincy, Rick how frequency among others.
Jeff Junior: From that long history, I've learned the business and come to know the talented and dedicated management team it Greg.
Jeff Junior: 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 Junior: 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 grade with Hilton. It was clear that deleveraging was this top priority, which aligned with my view.
Jeff Junior: 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 Junior: 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 Junior: In late January Great took advantage of strong market conditions to launch a refinancing of the revolver in 2026 term loan.
Jeff Junior: 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 Junior: Obviously, the term loan marketing process became more challenging with news from three other media companies regarding their plans to bundle.
Jeff Junior: There are sports rights into a new virtual mvpds.
Jeff Junior: Which was completely misunderstood by the investment community in the first several days after its announcement.
Jeff Junior: In the end Gray made the decision to close the revolver and postpone the term loan refi process until the new cycle quieten down and we can capitalize on our positive outlook for 2024.
Jeff Junior: 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 Junior: That's extremely important our current most secured leverage at 234 times allows us access to multiple pockets of capital in the public and private markets.
Jeff Junior: 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 Junior: We believe that we can do all of this in a way that is positive for all stakeholders.
Jeff Junior: 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 Hatchett Howell: Thank you, Jeff and welcome on Board.
Hilton Hatchett 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.
Jeff Junior: Our leading local franchises expansion of digital AD sells a retrans rates expansion of sports content partnerships.
Jeff Junior: Lamenting nextgen TV and probably most importantly.
Jeff Junior: In the short term.
Jeff Junior: Where we deploy capital.
Jeff Junior: All of those things are going exceptionally well.
Speaker Change: So operator at this time, we ask that you open the line for any questions at me or anyone here at the table.
Speaker Change: 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.
Speaker Change: The first step it looks like we have Daniel Curnow. Your line is now open.
Daniel Louis Kurnos: Great. Thanks, Good morning, nice start to the year guys.
Daniel Louis Kurnos: Kevin just a quick housekeeping what.
Daniel Louis Kurnos: What's left this year either by quarter. However, you want to put it in terms of distribution renewals.
Daniel Louis Kurnos: Good morning, Dan we have.
Daniel Louis Kurnos: A very small number of contracts with cable companies I.
Kevin: I cover about 30% of the big four traditional mvpds subs those would be in the <unk>.
Daniel Louis Kurnos: Come up in the second half of the year.
Daniel Louis Kurnos: Perfect.
Daniel Louis Kurnos: And then look the core.
Speaker Change: You guys have been harping on this for a while you know.
Daniel Louis Kurnos: I don't think any of us years ago would've thought you guys would it be in 2019 at this point.
Daniel Louis Kurnos: Pat has been a good time.
Daniel Louis Kurnos: Mount of time detailing it but I mean is this sustainable how do you guys think that trends from here.
Daniel Louis Kurnos: What are you guys doing differently to get such massive outperformance.
Daniel Louis Kurnos: Hey, Dan It's Pat I'll start look at a private company from 'twenty 10 through 2019.
Pat: We watched core deteriorate slowly, but steadily mostly with the auto category.
Pat: For a long time and to be ahead of 2019 now.
Pat: 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.
Pat: 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 at 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.
Daniel Louis Kurnos: In.
Daniel Louis Kurnos: Now going after or having a team that focuses on certain categories verticals.
Daniel Louis Kurnos: We've had that team in place now for years and in the training in place Prob.
Daniel Louis Kurnos: 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: 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 contango minutes that records, there and that's something we can control.
Sandy: 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.
Speaker Change: Alright, thanks, so much I appreciate it guys.
Speaker Change: Thanks, Dan.
Daniel Louis Kurnos: Next up we have Aaron Watts. Your line is now open.
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 into Q.
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.
Aaron Lee Watts: Yeah again, so we're we're a sort of the mainstream company as opposed to whole Wall Street company I think in that you know there early and our comments what we're seeing is.
Aaron Lee Watts: Local business is doing well and advertising whether it's at the end of the day. So you know looking at the categories.
Aaron Lee Watts: Auto was.
Aaron Lee Watts: 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 you know.
Aaron Lee Watts: 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.
Aaron Lee Watts: 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 so how do you read all the comments around Graham and then and the nice thing too is we're seeing growth among multiple categories, not just auto, but legal and particularly we've done very well and we continue to see that grow the.
Aaron Lee Watts: 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 very different company. It is today.
Aaron Lee Watts: You know Aaron that Sheldon I want I want to just add one other thing and to the extent that they're on this telephone one right now is our people I mean, 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 as we execute across the board.
Aaron Lee Watts: And in every moment, we would 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 Alan.
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. However, 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 than you've been open to you previously.
Speaker Change: Yeah, Aaron I think you nailed it I mean, it's a balanced approach with the front on the short maturities will have to address those.
Speaker Change: And 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.
Aaron Lee Watts: Or the near the need in the near term.
Aaron Lee Watts: Maybe re approach the markets for the refinery.
Aaron Lee Watts: All right next up we have Steven Cahill of Wells Fargo. Your line is now open.
Steven Cahill: Yes. 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 and.
Steven Cahill: And how you think those conversations may trend over time.
Aaron Lee Watts: And then Pat just to pick up on some of the advertising commentary I think you are 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.
Aaron Lee Watts: 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 as potentially helping with deleveraging.
Hilton Hatchett Howell: Other you would look at asset sales, whether you'd look at changes to the dividend or do you think you can get there truly organically. Thank you.
Speaker Change: Thank you Steven Kevin you and start Yeah Stephen R.
Speaker Change: Network affiliation agreements.
Speaker Change: Our app 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.
Speaker Change: There's not really.
Speaker Change: I'm not aware of any precedent where.
Speaker Change: The network and the affiliate group have open a negotiation early and change the terms early we've done agree we've done countless negotiations.
Speaker Change: With the networks typically we buy.
Speaker Change: We buy something with an earlier exploration date.
Speaker Change: We will add years to other markets. So they all have a coterminous and so will we.
Speaker Change: We don't reopen the existing contract we live with whatever contracts exist until they expire and then we roll into whatever.
Speaker Change: 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.
Speaker Change: All of our stations are on the same schedule with all four networks.
Speaker Change: We will likely talk with CBS and Fox.
Speaker Change: A year from now.
Speaker Change: So I I think there'll be a lot of other broadcasters, who will be talking to.
Speaker Change: All of the networks before we will and we would expect that all.
Speaker Change: All broadcasters, including those.
Speaker Change: Two one.
Speaker Change: The networks are Christopher are very aware of what's happening with cord cutting and will be.
Speaker Change: Adjusting.
Speaker Change: The.
Speaker Change: Programming fees to reflect where retrans as AD and the exclusivity of the content we were receiving.
Speaker Change: But we are not.
Speaker Change: I don't anticipate us on the a b C. At the end of this year, having any conversations on.
Speaker Change: Any changes to our existing contracts until those contracts are over and again.
Speaker Change: Not until the second half of 'twenty five.
Speaker Change: Yeah, So Steven to your question around National we had a good quarter in the first quarter for national.
Speaker Change: 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.
Speaker Change: High single digits.
Speaker Change: 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.
Speaker Change: A number of categories that happened to be up in Q1.
Speaker Change: Alright, and Steven I guess on the last one here.
Speaker Change: 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 different world, but I. Appreciate every word you right that being said, we're going to do it the way great greater as everything else we execute.
Speaker Change: And it's really simple we don't intend to sell any assets. We see no panic. We are not concerned we will operate our our TV stations and 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.
Speaker Change: 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.
Speaker Change: Best guess.
Speaker Change: <unk> in that regard grey as this quarter's results I think demonstrate.
Speaker Change: As a stunning company. We have spent 30 years some like 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.
Speaker Change: Totally operating and I think our results demonstrate that so what we're going to do is go to work every day.
Speaker Change: We're not going to sell things, we're not gonna blank and we're not going to panic and we're just going to reduce our debt just like we've done.
Speaker Change: 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 <unk>.
Speaker Change: Fruits of those efforts and so we're just going to carry on and.
Speaker Change: That's all there is to it.
Speaker Change: Alright, real quick ladies and gentlemen, I want to remind you how to join the queue. You can press star one on your telephone keypad.
Speaker Change: Then Thats star one on your telephone keypad to join the question queue.
Speaker Change: Next up we have Craig Huber Your line is now open.
Craig Anthony Huber: Oh, great. Thank you wanted to ask what the Assembly Atlanta project cure them in La.
Craig Anthony Huber: Last call you guys talked about how the revenues are starting to generate off that got delayed because of the Hollywood strikes and stuff maybe.
Speaker Change: Just update us on your thoughts on when you think you're doing full revenues will start coming through it sounds like it's 2025 event. That's my first question I will take the second one after that if I could sure. Craig. This is Hilton let me see if I can answer that for you.
Hilton Hatchett Howell: Obviously, 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 Hatchett Howell: Not only assembly, but third rail studios, which are two separate businesses, but all operated together.
Hilton Hatchett Howell: How have always been producing but we have had a lag in commitments.
Hilton Hatchett 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 Hatchett Howell: By the end of the month of May It is my understanding.
Hilton Hatchett Howell: That issue will either fully matriculate, where it'll go away.
Hilton Hatchett 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.
Hilton Hatchett Howell: He's getting television productions that are getting quotes left and right getting green lit from Hollywood and so I think that green light is going to come and I think it's just a matter of time in the meantime.
Hilton Hatchett Howell: We're in a remarkable position we've got I think about four production shooting currently.
Hilton Hatchett Howell: And.
Hilton Hatchett Howell: Our reviews from people using our studios have been superb and so I anticipate that we will see.
Hilton Hatchett Howell: A more fully leased out 100%.
Hilton Hatchett Howell: Sometime during the course of 2024 and then it will carry for obviously in future years.
Speaker Change: Great I appreciate that and my other question if I could ask.
Speaker Change: Longer term here.
Speaker Change: You guys have plenty of broadcast spectrum of course and with the continued rollout of ATSG 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 will 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.
Speaker Change: Yeah, It's Pat So I would say that we'll start seeing revenues.
Pat: Probably first quarter of next year.
Pat: In terms of material revenues.
Pat: Now, it's a little bit difficult to forecast it will be a matter of years.
Pat: I'm not certain it'll be the end of the decade, though I think it'll be sooner than that.
Pat: So.
Pat: 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.
Pat: Alright, Thanks definitely 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.
James Charles Goss: Yeah. So.
James Charles Goss: There's a number of different areas.
James Charles Goss: One of the sort of primary is digital.
Pat: Digital data delivery.
Pat: So getting data into automobiles, taking data that gets offloaded from the cellular networks, there's a number of conversations that.
Pat: I have been going on in that area for years, I think that'll probably be the first but a little longer term.
Pat: The new three part of standard gives us the ability to target ads.
Pat: You know can be a game changer if at.
Pat: All of our current impressions on linear television.
Pat: We're targeting <unk>.
Pat: 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.
Pat: Okay.
Speaker Change: Okay and.
Pat: There was also discussion earlier about fast channels and.
Pat: Connected TV offerings.
Pat: Sort of economic model are you pursuing.
Pat: Along those lines.
Pat: 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 a in a rollout period is going to grow quicker.
Pat: And then it would in a sort of a static period. So we would expect that again small number today to grow significantly over the next few years.
Pat: Okay, one last one Jeff mentioned.
Pat: And welcome Jeff.
Pat: <unk>.
Pat: Wall Street.
Jeff Junior: Misunderstood this 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.
Pat: Hi.
Pat: Okay.
Speaker Change: None of US can I mean, I'll start and Kevin can correct me, but.
Speaker Change: 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 etcetera and so.
Speaker Change: If we are if it is another avenue for us and another mvpds virtual mvpds using our programming.
Speaker Change: That should be a positive for us so that I think is the is the crux of why I use the term misunderstanding on it because it was.
Speaker Change: 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.
Speaker Change: I would just echo that.
Speaker Change: I think we probably feel that four dozen phone calls on the JV in two days.
Speaker Change: 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 the reference to the two broadcast.
Speaker Change: Panels, Fox and ABC somehow Matt.
Speaker Change: A national ABC network and National Fox network that don't exist.
Speaker Change: 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.
Speaker Change: Force and about 15 hours a day for a B C plus sports content.
Speaker Change: So for example, if you're in Cedar Rapids, and you want to watch box you don't turn on the Fox Network, you turn on the Fox affiliate.
Speaker Change: Owned by another broadcaster here in Cedar Rapids, and you went onto ABC you don't turn on a B C network you turn on the ABC station.
Speaker Change: ABC affiliated television station in Cedar Rapids, that's owned by Gray television.
Speaker Change:
Speaker Change: People just seem to completely miss that I think the comments from them.
Speaker Change: Network to us privately in the comments publicly.
Speaker Change: Return people see the understanding that broadcast is different than a cable channel that is distributed.
Speaker Change: Do all homes at essentially the same time.
Speaker Change: It was the same content.
Speaker Change: 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 that carries local affiliates will compensate the local affiliates for their signals and therefore as we learn.
Speaker Change: And many subsequent conversations to target audience here is not to destroy the linear.
Speaker Change: The traditional mvpds subbase that.
Speaker Change: Is.
Speaker Change: Contributes a significant amount of.
Speaker Change: Money in distribution for the cable channels that are distributed there as well as to broadcast networks.
Speaker Change: But it is going to target the cord never crowd so to the extent they are bringing in people from do.
Speaker Change: They do not currently pay for television.
Speaker Change: 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.
Speaker Change: Couple there are three or four virtual mvpds today.
Speaker Change: <unk> has already gone out of business. So this is another new virtual mvpds there may be more in the future.
Speaker Change: Dynamic business and.
Speaker Change: Yes.
Speaker Change: 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.
Speaker Change: So I think I think.
Speaker Change: We are at the point, where people understand now what a 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.
Speaker Change: All right next up we have John Kornreich. Your line is now open.
John Kornreich: Two questions I guess for Jim.
Speaker Change: One.
John Kornreich: Should we expect.
John Kornreich: Leverage too.
John Kornreich: 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.
John Kornreich: I guess declined by about 3% this year could resume some small growth in 'twenty five and 26.
John Kornreich: Yeah, John It's Geoff I'll take your I'll take the first one.
Geoff: In terms of leverage towards the end of the year.
Geoff: Don't think we quite get below five, but we should be getting into the low fours by the end of the year.
Geoff: 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.
Speaker Change: And the other question is.
Speaker Change: Anybody can take it I guess.
Speaker Change: So this is Jim I'll lead off and Kevin can provide a little bit more color.
Speaker Change: Given the pace of our sub renewals after we finish the remaining roughly 30% this year.
Speaker Change: But that rate renewals I mean.
Speaker Change: We have about 18 months, where we don't have any retrans agreements up for renewal. So I think the retrans is getting to be more stable.
Speaker Change: Stable in 'twenty five.
Speaker Change:
Speaker Change: And then I think as you get past twenty-five it into 'twenty six.
Speaker Change: 27.
Speaker Change: We have an opportunity again to grow Kevin can feel free to add more color I think that's correct.
Speaker Change: The.
Speaker Change: The fixed fee network contracts were set at a time when we are anticipated that retrans would.
Speaker Change: It would be in it.
Kevin: Would be in a different position or I should say the traditional mvpds subs.
Kevin: Numbers will be higher than they are today.
Speaker Change: And we fully expect that we will be resetting those prices.
Speaker Change: We renew in 2025.
Speaker Change: And that should allow us to return to net retrans growth going forward.
Speaker Change: After 25.
Speaker Change: I would say after twenty-five at whether it occurs in twenty-five will depend on a.
Speaker Change: A couple of puts and takes with our renewals this year and sub losses and also sub.
Speaker Change: Migrations are subset move from traditional to the virtual.
Speaker Change: Just how that flows so it.
Speaker Change: I think I think this year, we're looking at we've talked about.
Speaker Change: Stable on the maybe low single digit decline on that next year.
Speaker Change: 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.
Speaker Change: Kevin.
Kevin: Is your calculated the sub decline.
Kevin: Of late.
Speaker Change: I.
Speaker Change: Greys experience is fairly consistent with the overall industry.
Speaker Change: Our.
Speaker Change: TV households breakdown about 40.
Speaker Change: It's about 45% roughly and large markets, 45% of mid size markets and the balance in small markets and that skews.
Speaker Change: You know 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.
Speaker Change: Okay. Thank you very much variances.
Speaker Change: Thank you Sir.
Speaker Change: Alright next up we have Davis Herbert your line is now open.
James Davis Hebert: Hi, everybody. Thanks for taking the questions I wanted to ask a follow up on the Retrans because I think your guidance shows.
James Davis Hebert: Mid single digit declines in the second quarter and.
James Davis Hebert: And you can just give some data on cord cutting but.
James Davis Hebert: 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 Sunday ticket. So just wanted to ask or a comment there.
Speaker Change: 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.
James Davis Hebert: The virtual and the D. T. CS are growing at a pretty healthy clip that social barely one hour or so.
James Davis Hebert: <unk>.
Speaker Change: 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.
Speaker Change: Than others in terms of the price difference the revenue difference, we get from a traditional sub versus a virtual sub.
Speaker Change: Our traditional rates are at the high end of the industry.
Speaker Change: And there are some broadcasters who probably are.
Speaker Change: Bill can you kind of parity between traditional rates and what they receive from the networks with the virtual.
Bill: The large groups.
Speaker Change: <unk>.
Bill: Have had more success in driving their traditional retrans rates and so.
Bill: Those who have higher rates are obviously going to have a bigger delta.
Bill: When they moved to a funded essentially the same fee.
Bill: It's paid all affiliates and all markets.
Bill: Quality levels.
Speaker Change: So we probably are a bit more exposed in that area on the flip side of it sooner we can.
Speaker Change: As those fees and the virtual side.
Speaker Change: 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 to.
Speaker Change: To return our rights to us that is.
Speaker Change: <unk> to negotiate for the distribution of our signals on all platforms, not just our platform's minus three or four.
Speaker Change: And.
Speaker Change: When we.
Speaker Change: We succeed there, which unfortunately will not be quick because it's a washington solution.
Speaker Change: I think we will see.
Speaker Change: Good good benefits for gray as well as the whole industry.
Speaker Change: But yeah.
Speaker Change: Your following question to me one second happened and I can't tell you with anything is going to happen in Washington.
Speaker Change: Makes sense.
Speaker Change: Thank you for that and if I could just following up with one kind of all encompassing sports question.
Speaker Change: I think one I think broadcast is clearly offers an incredible reach medium.
Speaker Change: But you have NBC doing exclusive NFL games on Peacock.
Speaker Change: Yes.
Speaker Change: So there seems to be some experimentation with doing exclusive.
Speaker Change: Sports on streaming what sort of commitment levels do you get from your broadcast partners in terms of keeping sports on the broadcast medium.
Speaker Change: And limiting sort of that leakage to streaming services.
Speaker Change: And then my second question is on sports is what sort of feedback have you gotten on your sort of.
Speaker Change: Early innings.
Speaker Change: Distribution of local games.
Speaker Change: Et cetera.
Speaker Change: What's been the feedback I guess from either fans or the teams themselves. Thank you.
Speaker Change: To answer your second question first I mean, the feedbacks been extraordinary from the fans.
Speaker Change: 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.
Speaker Change: Significantly above there.
Speaker Change: Former levels or what they are currently doing right so and.
Speaker Change: 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.
Speaker Change: In some markets the numbers were double or triple what they were on a current carrier.
Speaker Change: So obviously the teams are going to be excited about that but the fans.
Speaker Change: 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 churn. So the feedback has been extraordinary and not only for the fans, but also from the advertisers they're really excited to have those games reached the types of audiences that they are now reaching.
Speaker Change: As far as the networks and sports yeah, there they're dabbling in.
Speaker Change: Direct to consumer.
Speaker Change: Hi.
Speaker Change: With a small number of games and.
Speaker Change: You know a lot of the games or the case of NBC. The vast majority of the sports they do with simulcast.
Speaker Change: So we're not you know some of the audience is theres, a little bit of audience leakage, there, but not a lot.
Speaker Change: And so we continue to be very very effective in selling those high profile sports properties.
Speaker Change: 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.
Speaker Change: With a number of the leagues, but I think that broadcast TV.
Speaker Change: Is clearly illustrated its value over the last six months Yeah, David just one additional point to that is that in Phoenix The center, where we had 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.
Speaker Change: Absolutely.
Speaker Change: Significantly hiring people are turning to us to see the game and the feedback has been fantastic on both the talent and the fan.
Speaker Change: Matt mentioned, the small package of games 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.
Speaker Change:
Speaker Change: Uh huh.
Speaker Change: In Phoenix, where we have an independent station K T B K.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: They are now the number one and number two stations in the market now in fairness.
Speaker Change: K P. H O. The CBS had the Super Bowl in first quarter, but KGB Kay as 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.
Speaker Change: Where that could head. So we're excited about that and certainly shout out to the team there absolutely.
Speaker Change: I think may be family.
Speaker Change: Well David this resulted in U S for some anecdotes, let me give you a couple of them just real quick.
Speaker Change: We took our board to Phoenix, because we are really proud of what we're doing with the sons and the Mercury.
Speaker Change: And took them to a game one Sunday afternoon held our board meeting out there.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Serving us our dinner.
Speaker Change: Applauding because we brought the sons back to the market now if that doesn't tell you something.
Speaker Change: What does.
Speaker Change: Those are great anecdotes, and we're thrilled with our experience with the sons and I think everybody in Arizona as June.
Speaker Change: Alright, and it looks like we have time for just one more question. So Michal krupinski, you'll be our final question.
Michael A. Kupinski: Most of my questions have been already addressed but a quick one here.
Michael A. Kupinski: You've always prided yourself on local direct business, which has been just an incredible success for you or.
Michael A. Kupinski: The agency business looked like it ticked up in the last quarter.
Michael A. Kupinski: 48% of your revenue.
Michael A. 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 A. Kupinski: Do you anticipate that the agency business will be a greater percentage of total revenues as national 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 A. Kupinski: Some thoughts of what what you'd think agency business will be in terms of the quote unquote norm.
Michael A. Kupinski: 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.
Michael A. Kupinski: So I think that I don't I wouldn't say that we think our.
Michael A. Kupinski: Our revenue is.
Michael A. Kupinski: The agency share of our revenue is going 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.
Michael A. Kupinski: 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 putting out a political you're obviously agency business goes option was strong and it'll be agency side business too.
Michael A. Kupinski: Italy.
Michael A. Kupinski: Yeah. 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% range going forward.
Michael A. Kupinski: Okay, Yeah, we'd go back to a more normalized range going forward.
Speaker Change: Alright, thank you.
Michael A. Kupinski: And with that we'll now turn the program back over acute chairman Hal Walsh for closing remarks.
Hal Walsh: Thank you operator before we close out this morning, I just want to take a moment.
Hal Walsh: In fact, Jim Ryan for his time with our company I don't know if he's feeling a sense of great elation that.
Hal Walsh: Last earnings call I know that it will have other phone calls to talk to with you guys, but for what 26 years.
Hal Walsh: And as I mentioned at the beginning over 100 of these calls.
Hal Walsh: He has been there steady.
Hal Walsh: And true.
Hal Walsh: And I greatly thank him for his time and service and I will say, we still have them 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 of that individual in the succession that we have accomplished Jeff knows our company.
Hal Walsh: He may know some parts of it better than the rest of us around this table and now he is getting to know the people and the assets that create the financial numbers that all of you look at and so thank you Joe and welcome Jeff with that we'll sign off for Q1, and we'll see you next quarter.
Jeff Junior: Thank you.
Speaker Change: 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.